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vil Appeal Nos.
4397 98 of 1989 etc.
From the Judgment and Order dated 30.11.1988 of the Central Administrative Tribunal at New Delhi in O.A. Nos. 838 of 87 and 1502 of 1987.
606 K. Sibal, Additional Solicitor General, A. Subba Rao, C.V.S. Rao and M.S. Ganesh for the appellants.
Respondent No. 1 in person.
D.K. Garg, R.P. Oberoi and D.B. Vohra for the respondents.
The judgment of the Court was delivered by R.M. SAHAI, J.
Seniority in services is usually irksome.
But the nature of dispute amongst officers in Class 'A ' of Indian Defence Estates Service, who were promoted from Class 'B ' of Military and Cantonment service where they were working as Assistant Military Estates Officers (AMEO) and Assistant Military F. states Officers (Technical) (AMEOT), is slightly, unusually.
That is why apart from correctness or otherwise of directions issued by the Tribunal (Central Administrative Tribunal, New Delhi) for re determining seniority one of the issues debated was if this Court in exercise of its powers under Article 136 of the Constitution of India should interfere with orders of Tribunal if sub stantial justice has been done between parties.
To this may be added, yet, another, namely, if the Union of India should have approached this Court by way of Special Leave Petition not for sake of justice or injustice, legality or illegality of any provision but because it may have to pay few thou sands, may be few lakhs more.
But, first, manner of appointment of two group of offi cers and rules by which they were governed from time to time may be noticed as even though initially posts of both AMEO and AMEOT were sanctioned and created by the President in 1962 and they were governed for some time by different set of rules but were brought in common stream in 1976 and were promoted in Class 'A ' before fresh rules were enforced in 1983 and 1985, yet entire thrust of attack to justify dif ferential treatment to AMEOT was rounded on difference in method of their selection.
AMEOS were included in Class II of Military Land and Cantonment Service (Class I and II) Rules, 1951 for the first time in 1964.
Relevant amendment by notification issued in 1964 was incorporated in 1951 Rules when it was amended in 1968.
Amended Rule 4(v)(c) read as under: "Class II of the Service shall consist of Executive Officers Class II, Assistant Military Estates Officers and such other posts, as may, by order of the Government be declared to be included in Class II cadre of the Service." 607 Manner of appointment to this class was provided by Rule 5(b) which is extracted below: "(b) Appointment to Class II Cadre of the Service shall be made in the following manner, namely: (1) upto 20% of vacancies in Class II, by promotion from among the serving Class III staff of the Military Lands and Cantonments Service having service and educational qualifi cations specified in sub rules (c) and (e); (2) upto 20% of vacancies by direct recruitment made by a selection from among serving employees of Cantonment Boards having service and educational qualifications specified in sub rules (d) and (e); (3) the remaining vacancies from among the candidates who qualify at the Examination and are recommended by the Com mission but who fail to secure Class I appointment in any of the Central Services. 'Provided that (i) for a period of five years commencing from the 29th January, 1966, 30 per cent of the permanent vacancies to be filled by direct recruitment in any year shall be reserved for being filled in by the Emer gency Commissioned Officers of the Armed Forces of the Union who were commissioned on or after the 1st November, 1962, and who were released at any time thereafter." In 1981 service known as Military Lands and Cantonment Service (Group A) was constituted.
75% of the substantive vacancies, in this Group 'A ', junior scale, were to be filed by direct competition and 25% by promotion from a panel prepared on the basis of selection on merit in ratio 1:1 from amongst Cantonment Executive Officer Group 'B ' and Assistant Military Estates Officer Service (Group B) who had not rendered less than 3 years regular service.
AMEO (Technical) on the other hand were officers who were released from Engineering Service of Army after 1962.
Since there was increase in work load and they were to be absorbed as well they were appointed on recommendation of UPSC (Union Public Service Commission) in 1964 and 1965 against posts which were created from time to time by the Military Land and Cantonments Department as is clear 608 from various orders issued in 1963, 1967 and 1970 which have been extracted in the order of Tribunal to demonstrate that the Director, Military Lands and Cantonment, Ministry of Defence, issued letters conveying the sanction of the Presi dent to the creation of various posts in the Military Lands & Cantonment Service which included Assistant Military Estates Officers (Technical).
Although the appointment letter issued to each officer mentioned that the post was temporary yet each was appointed on probation of two years.
The word "Technical" appears to have been added because they were engineers.
Otherwise there was neither difference in pay nor in work as the AMEOT were appointed to work as AMEO as well.
AMEOT were thus qualified persons holding rank in Army.
To say that they were lesser in merit than AMEO, only, because they had not appeared in competitive examination was being uncharitable to them.
To misfortune of AMEOT they were neither included in the Class II cadre of 1951 Rules nor any other rule was applied to them.
Presumably because of method of recruitment.
All the same it was very unsatisfactory that posts of AMEOT were being created and selections made in pursuance of advertise ment issued by the UPSC yet they were not being provided any statutory basis.
Realising this rules were framed under Article 309 in 1968, but these rules again did not provide for promotions, seniority etc.
However, the anomoly was finally removed, when officers appointed prior to 1967 or under 1968 Rules as AMEOT were included in Class II of 1951 Rules by amending Rule 3 in 1976 which read as under: "3.
The Service shall be constituted by officers appointed (i) in accordance with these rules; (ii) in accordance with the Military Lands and Cantonments Service (Assistant Military Estates Officers Technical) Recruitment Rules, 1968; and (iii) in consultation with the Commission, as Assistant Military Estates Officer (Technical), prior to the 1st January, 1967.
" Thus from this date officers appointed as AMEOT either under the 1968 Rules or prior to it became members of Mili tary Lands and Cantonment Service (MLC) to whom 1951 Rules applied.
On that there is no dispute.
But what about 1964 to 1976? Should they be 609 deemed to have served under no rules as claimed by AMEOS and strangely even by Union, or they were governed by Central Civil Services (Temporary)Rules 1965 (CCS Rules).
And if so what was its effect on their promotion and seniority.
For this one of the appointment letter issued to AMEOT contain ing terms and conditions is extracted below: MEMORANDUM Subject: Recruitment to the post of Assistant Military Estate Officer (Technical) Military/Lands & Cantonments Service.
On the recommendation of the Union Public Service Commission, the President is pleaded to offer Shri Mahandra Pal Singh, a temporary post of Assistant Military (Estate Officer Technical) in the Military Lands & Cantonment Serv ice Under Ministry of Defence.
xxx xxx xxx The terms and conditions of appointment are as follows: (i) The post is temporary.
In the event of its becoming permanent his claim for permanent absorption will be Consid ered in accordance with the rules in force.
(ii) He will be on probation for a period of two years from the date of appointment which may be extended at the discre tion of the competent authority.
Failure to complete the period of probation to the satisfaction of the competent authority will render him liable to discharge from service or reversion to his parent department in case he is holding a permanent posts.
XXX XXX XXX (iv) The appointment may be terminated at any time on one month 's notice given by either side, viz., the appointee or the appointing authority, without assigning any reasons, or by reverting the individual to his parent department, in case he is holding a lien.
The appointing authority, howev er, reserves the right of terminating the services of the appointee forthwith or before the expiry of the stipulated 610 period of notice by making payment to him of a sum equi .
valent to the pay and allowance for the period of notice or the unexpired portion thereof.
(v) He will be subject to conditions of service as applica ble to temporary civilian Government servants paid from Defence Services Estimates in accordance with the orders issued by Govt.
of India from time to time.
He will be subject to Field Service Liability Rule, 1957.
" What stands out Clearly from it is that they were appointed in Military Lands and Cantonment Service (MLC) under Minis try of Defence.
That is clear from the order creating the posts from time to time.
Letter dated 27th April, 1963 is extracted below: "To The Director, Military Lands & Cantts.
New Delhi.
Subject: Establishment of the New Eastern Command Sanction of Staff.
Sir, Consequent on the establishment of the New Eastern Command and re organisation of the existing Eastern Command into Central Command, I am directed to convey the sanction of the President to the creation of the following posts in the Military Lands and Cantts.
Services: 1.
Director, Military Lands & Cannts.
Asstt.
Director, ML & C. 1 3.
Military Estates Officer (Bihar & Orissa) 1 4.
Asstt.
Estates Officer, (Technical Class II) 2" Therefore it is too late to claim that they were not ap pointed to Military Land and Cantonment Service under Minis try of Defence.
Was their status effected or nature of employment altered because 611 Central Civil Service (Temporary service) 1965 Rules applied to them.
These rules applied to 'service under the Govern ment of India in the Ministry of Defence . paid out of the Defence Service Estimates '.
Purpose of the rule was not to create a cadre or grade of temporary employees but to provide statutory basis to employees of different depart ments mentioned in it and accord them a quasi permanent status if they fulfilled the requirements mentioned in Rule 3.
Seniority, promotion etc.
were to be governed by the rules under which the temporary employee was appointed.
Therefore, seniority of an employee and its determination depended on service in the cadre to which he belonged or to which he was appointed.
That the AMEOT were appointed to MLC service cannot be disputed.
Nor it can be disputed that they were appointed to posts which were created by the President and its sanction was conveyed by the Director of MLC.
The only shortcoming was that there was no declaration that these posts were included in Class II Cadre.
That also stood removed in 1976.
Since it included every AMEOT whether appointed under 1968 Rules or even prior to it all those AMEOT who were appointed in 1964 or 1965 also become member of service to whom 1951 Rules applied.
Automatic consequence of it was that seniori ty of AMEOT was to be determined under Rule 11 of 1951 Rules on length of regular service in the cadre.
That is what the tribunal held.
And rightly.
Whether service rendered by the respondents between 1964 to 1976 was regular or it could be deemed to be regular as held by the Tribunal is different.
Assuming, the Tribunal committed error in applying 1951 Rules to service of AMEOT prior to 1976, does it call for any interference? Is the order not just and fair? Effect of Tribunal 's order is that it cured the injustice perpetrated due to absence of exercise of power by the Government under Rule 4(v)(c) of 1951 Rules as it stood amended since 1964.
Substantial justice being one of the guidelines for exercise of power by this Court the order is not liable to interfer ence.
What is baffling is filing of the SLP by Union Govern ment.
Not because of any injustice to AMEO as that has been taken care of by Tribunal by protecting all those who are working but because if it works out seniority of AMEOT from back date it may have to pay substantial amount and creation of superanuary posts may further entail cost.
Justice is alert to differences and sensitive to discrimination.
It cannot be measured in terms of money.
A government of a welfare state has gruelling task of being fair and just and so justice 612 oriented in its approach and outlook.
Mere rectification of its mistakes or omissions by Courts and Tribunals should not prompt parties or it to approach this Court by Special Leave merely for taking a chance or to protect some vested inter est except for sake of justice or for laying down law for benefit of Court and its guidance.
Neither was in this case.
Injustice to respondents is apparent as admittedly these officers were promoted in Class 'A ' in 1978 and are working since then uninterruptedly yet when review DPC were held in pursuance of the judgment given by Allahabad High Court and seniority list was published in 1987, they were ignored as they were working as ad hoc resulting in pushing up AMEOS who were junior to them.
AMEOs were granted seniority from the date of appointment in MLC service whereas similar benefit was denied to AMEOT as they were working as ad hoc.
To remove this irritant Tribunal directed that they shall be deemed to be holding regular posts.
Officers working since 1964 without any flaw could not be treated as ad hoc.
In any case once review DPCs were held it was incumbent on it to include these persons and if necessary to evaluate their services or get it evaluated by appropriate authority regu larise them and then determine seniority.
But in ignoring them in 1987 even when they had become member of MLC service was arbitrary and unjustified.
Two other objections one about delay and other about nonjoinder raised, again, by Union Govt. may be examined.
As regards former suffice it to say that the occasion to ap proach Tribunal arose when seniority of respondents was disturbed and panels recommended in 1972 and 1979 were redrawn in 1987 and seniority were refixed in Group 'B ' with effect from March 1968.
Therefore objection of claim being slate or belated cannot be accepted.
Nor there is any sub stance in defect due to non joinder of parties.
Objection stands answered by the ratio in Col. D.D. Joshi & Others vs Union of India & Others, ; ; where it was held that it was not necessary to implead all parties if chal lenge was to validity of rule.
As regards Ranga Reddy & Others vs State of Andhra Pradesh., relied on behalf of the appellant in support of the submis sion that the order passed by the Tribunal was vitiated in the absence of interested parties cannot be accepted as some of those officers who were directly affected or were immedi ately likely to be effected got themselves impleaded before the Tribunal.
Therefore, the defect, if any, stood removed.
Moreover the Tribunal protected interests of all 613 these persons who were working at present by directing that they shall not be disturbed.
Non impleadment of these who may be effected in future could not render the petition vulnerable.
In the result both the appeals fail and are dismissed.
The respondents shall be entitled to costs from Union of India.
Y. Lal Appeals dismissed.
| A commercial vessel which arrived at Paradip Port was rummaged by the Customs Officers and contraband goods worth more than Rs.1,40,000 were recovered.
The officers also detained the vessel by issue of a notice to the Master of the vessel with a copy to the second respondent, the Deputy Conservator of Paradip Port Trust.
At the instant of the second respondent and another, the vessel was shifted to the reads far away from the port in the high sea.
This resulted in the interruption of the rummaging operation and the vessel being left unguarded for about 38 hours, during which period it was alleged that the contraband goods disappeared from the vessel.
The second respondent was asked to show cause as to why he should not be proceeded against and why penalty should not he imposed on him, under Sections 117 and 151 of the .
In his reply, the second respondent took the plea that the Customs and Central Excise Authorities had no jurisdiction to initiate proceedings against him and that section 151 of the Act was not attracted.
Rejecting his plea, the Collector imposed a penalty of Rs.1,000 under section 117 of the Act.
The said order of the Collector was challenged in the High Court by way of writ petitions.
The High Court allowed the writ petitions and quashed the penalty.
This appeal, by special leave, is against the orders of the High Court quashing the penalty, On behalf of the appellant it was contended that Section 133 706 creates an offence and also prescribes a penalty, and though the section s referable to Court in so far as prosecution and punishment is concerned for the offence, there would be no bar to deal with that offence under section 117 of the Act.
It was also contended that there would be no double jeopardy if in an appropriate case one has been prosecuted and punished under the sections in Chapter XVI of the Act and also sub jected to penalty under the provisions other than those in Chapter XVI if the Act for offences including those in Chapter XVI of the Act.
Allowing the appeal, HELD: 1.
Where the same Act or event constitutes an offence ruder Chapter XVI and at the same time constitutes a contravention or abetment of contravention of any of the provisions of the Act or failure 0 perform any duty pre scribed under the Act or amounts to noncompliance with any of the provisions of the Act, there will be possibility of prosecution and punishment under Chapter XVI of the Act and any other provision of law and the same time confiscation and penalty under Chapter XIV of the Act.
[710G H] 2.
In the instant case, the vessel could, therefore, lawfully be detained, rummaged and the goods suspected seized.
There may be cope for holding that there was inten tional obstruction on the part of he second respondent if the allegations are proved.
Where there was an order for seizure it would amount to obstruction under section 186 IPC if the goods were not allowed to be removed.
Obstruction is not confined to physical obstruction and it includes anything which makes it more difficult for the police or public servant to carry out their duties.
[711B; F] Santosh Kumar vs State. ; and Hinchliffe vs sheldon, [1955] 1 WLR 1207, referred to.
In the Collector 's order, though there was discussion of offence under section 133 and failure to perform duty under section 151, the order itself was passed ex facie under the provi sions of section 117 of the Act.
There is no discussion in the High Court 's order on this aspect of the matter and here is no indication as to whether this was urged or not before the High Court.
Further, since the second respondent is not represented before his Court, the said order is set aside and the cases remanded to the High Court for fresh disposal in accordance with law in the light of the observations made hereinabove after giving opportunities to the parties or making their submissions on the basis of the evidence al ready on record.
[711H; 712A B]
|
Civil Appeal No. 2218 of 1969.
Appeal by Special Leave from the Judgment and Decree dated 14 3 1969 of the Calcutta High Court in appeal from Appellate Decree No 718 of 1962.
D. N. Mukherjee and N. R. Chaudkary for the Appellant.
Purshottam Chatterjee, P. K. Chatterjee and Rathin Das, for the Respondents.
The Judgment of tho Court was delivered by SARKARIA, J.
This appeal by special leave is directed against a judgment, dated March 14, 1969, of the High Court at Calcutta.
22 The appellant had the interest of a Darpatnidar in the land in suit, measuring 9 acres (27 bighas).
The plaintiff by a lease deed (Ex.
A) dated July 10, 1941, granted to the defendant respondents a lease of this land for the purpose of raising and taking sand out of the land for a period of 9 years ending on July 13, 1949.
In this lease deed, the property was described to be Patni Mahal.
Under the terms of this lease, the lessee had an option of renewal for another 9 years.
Subsequently on April 27, 1950, appellant made a similar grant (exhibit
I) for another 9 years expiring on April 13, 1959 but this grant was called a "licence".
The respondents did not pay the licence fee for the period from 1362 (14 4 1955) to 1365 B.S.
The plaintiffs thereupon issued notice, dated March 31, 1966, terminating the licence and then filed Suit No. 37 of 1960 for ejectment of the respondent in the Court of the Munsif, Second Court, Chandernagore.
The suit was resisted by the defendant respondents, inter alia, on the ground that the land had vested in the State under the West Bengal Estates Acquisition Act, 1953 (hereinafter referred to as the Acquisition Act); that they were tenants, and not licensees, under the plaintiff and after the date of vesting with effect from April 14, 1955, became direct tenants under the State in respect of suit land and were paying rent to the State.
The Trial Court dismissed the suit holding: (i) that the defendants were not licensees, but were tenants; and (ii) that the plaintiff was not in khas possession on the date of the vesting (April 14, 1955); so he could not retain the land under Section 6(1) (i) of the Act In the result, the suit was dismissed.
The first appellate Court reversed the decision of the trial court and decreed the suit with the finding that the grant being a licence, the plaintiff intermediary was entitled to retain the holding under Section 6 (1) (i) of the Act.
Allowing the Second Appeal by the defendants, the High Court held: (a) that if the lease (Ex.A), being a lease for 9 years, was void under Section 107 of the , it would still operate as a lease from month to month; (b) it was not a licence; and (c) section 28 of the Act applied and, as the plaintiff was not directly working the mine in the land, he could not retain it.
23 Aggrieved, the plaintiff has come in appeal by special leave to this Court.
The principal question that falls to be determined is: whether Section 6 or Section 28 of the Acquisition Act governs the case ? The High Court has held that it is Section 28, and not Section 6, which is applicable; while the appellant contends that Section 6 is applicable by virtue of which he is entitled to retain the holding.
Section 6, so far as relevant for our purposes, is in these terms: "6.
Rights of intermediary to retain certain kinds (1) Notwithstanding anything contained in Sections 4 and 5, an intermediary shall, except in the cases mentioned in the proviso to sub section (2) but subject to the other provisions of that sub section, be entitled to retain with effect from the date of vesting;. . . (i) Where the intermediary is. an institution established exclusively for a religious or a charitable purpose, or both, or is a person holding under a trust or an endowment or other legal obligation exclusively for a purpose which is charitable or religious or both land held in khas by such . institution or person, not being a tenant, by leave or licence of such. institution or person.
" The contention of the learned counsel for the appellant is that since the suit land was held by the appellant intermediary in khas for a religious purpose through a licensee the defendant being a licensee, and not a tenant he would be entitled to retain and hold this land from the date of vesting by virtue of clause (i) of sub section (1) of Section 6.
The other relevant provisions are in Chapter IV of the Acquisition Act.
They are as follows: "Sec. 27.
Provisions of Chapter IV to override other pro visions of the Act.
The provisions of this Chapter shall have effect notwithstanding anything to the contrary elsewhere in this Act." "Sec. 28.
Right of intermediaries directly working mines.
So much of the land in a notified area held by an intermediary immediately before the date of vesting (including sub soil rights therein, but excluding rights in hats and bazars not in the khas possession of the intermediary and land comprising forests, if any) as was comprised in or as appertained to any mine which was being directly worked 24 by him immediately before such date shall with effect from such date be deemed to have been leased by the State Government to such . intermediary.
The terms and conditions of such lease shall be as agreed upon between him and the State Government, or in default of agreement as may be settled by the Mines Tribunal: Provided that all such terms and conditions shall be consistent with the provisions of any Central Act for the time being in force relating to the grant of mining leases.
" Section 2(j) of the , defines 'Mine ' to mean "any excavation where any operation for the purpose of searching for obtaining mineral has been or is being carried on and includes. " "Minor Minerals" as defined in clause (e) of Section 3 of the Mines and Minerals (Regulation and Development) Act, (No. 67 OF 1957) include "ordinary sand".
Clause (c) of the same Section defines "mining lease" as a "lease granted for the purpose of undertaking mining operations, and includes a sub lease granted for such purpose.
" Clause (d) of the same Section defines "mining operations" to mean "any operations undertaken for the purpose of winning any minerals.
" Before the High Court, it was common ground between the parties that the land in dispute has a sub soil deposit of sand and the rights granted to the respondent, under the document (exhibit I); styled as a 'licence ', were "to raise" and "take" away that deposit of sand.
Before us, an attempt was made to deviate from that stand by con tending that the deposits of sand are on the surface in the shape of sand dunes and for removing the same no excavation or mining operations are necessary.
The contention must be repelled.
The definition of "mining operations" and "mine", noticed above, are very wide.
The expression "winning of mineral" in the definition of 'mining operations ' is spacious enough to comprehend every activity by which the mineral is extracted or obtained from the earth irrespective of whether such activity is carried out on the surface or in the bowels of the earth.
As pointed out by this Court in B. Dass vs State of Uttar Pradesh(1), it is wrong to assume that mines and minerals must always be sub soil and that there can be no minerals on the surface of the earth.
It is true that in the definition of "Mine", the term "excavation", in the ordinary dictionary sense, means "hole", "hollow" or "cavity made by digging out".
But the word "any" prefixed to "excavation" (1) ; 25 in the context of the phrase "for the purpose of searching for or obtaining mineral" gives it a much more extensive connotation, so that every "excavation", be it in the shape of an open cast cavity or a subterranean tunnelling, will fall within the definition of 'Mine '.
Similarly, it is not a requirement of the definition of 'mining operation ' that the activity for winning the mineral, must necessarily be an under ground activity.
The essence of 'mining operations ' is that it must be an activity for winning a mineral, whether on the surface or beneath the surface of earth.
Thus considered, the land ill dispute having large deposits of sand, which is a minor mineral, was admittedly being excavated and removed by the defendant, was at the date of vesting "comprised in or appertained to a mine" within the meaning of Section 28.
Having seen that the land in dispute is a 'mine ' in which 'mining operations ' were being carried on, the further question to be considered is, whether this mine was "being directly worked" by the appellant intermediary ? The word "directly", according to Webster 's New World Dictionary means "in a direct way, without a person or thing 1 coming between"; "immediately: as directly responsible".
The use of the expression "directly" in the context of the word "worked", follow ed by the words "by him", unmistakably shows that the legislative intent was to allow only those intermediaries to retain land comprised in or appertaining to a mine, as lessees under the State, who immediately before the date of vesting, were working the mine under their immediate control, management and supervision.
Thus construed, the phrase "being directly worked by him" in the Section will not take in a case were the mine was being worked through a lessee or licensee to whom the right to conduct mining operations and to take away the mineral had been granted by the intermediary in consideration of receiving a periodic rent, royalty or a like amount.
It was contended by the learned counsel for the appellant, that this interpretation of the phrase "directly worked by him", is inapplicable to an intermediary who is an idol because an idol, albeit a juristic person, has perforce to work the mine through a lessee or licensee.
The argument is ingenious but untenable.
The idol held the suit land comprised in the mine as an intermediary, only in the juristic sense, but, in fact he was exercising his rights in the suit land, through his human representative, the Shebait, Mohanta Srimat Dandi Swami.
The Shebait could in that representative capacity, directly work the mine himself.
But, instead of doing so, he, on April 27, 1950 granted the right of carrying on mining operations in the land and taking away the mineral, on payment of an annual sum for a period of 9 years to 3 196SCI/79 26 the respondents.
Thus, irrespective of whether this transaction or grant, dated April 27, 1950, was a lease or a license, the fact remains that immediately before the date of vesting, the mine in the suit land, was not being "directly worked " by the intermediary within the con templation of Section 28.
The provisions of Section 6(1) (i) of the Acquisition Act, extracted earlier, give to an intermediary a right to retain land held by him in khas for the purposes mentioned therein, through a licensee.
Section 28, as construed by us, denies the right to retain the land comprised in a mine or appertaining to a mine, it, at the material date, it was not being directly worked by the, intermediary but through a licensee, or other agency to whom the right to conduct mining operations had been granted by the intermediary.
In that respect, the provisions of Section 28 (in Chapter IV) are contrary to those of Section 6(1) (i).
In this situation, according to the legislative mandate in Section 27, the provisions of Section 6(1)(i) must yield to those in Section 28.
Assuming arguendo, that the plaintiff was at the material time, holding the land in khas through a licensee and fulfilled all other conditions which entitled him to retain under Section 6(1) (i), then also, this case being in conflict with Section 28, the latter Section would prevail over the former.
In this view of the matter, it is not, strictly speaking, necessary to resolve the controversy as to whether the transaction (exhibit I) dated April 27, 1950, was a lease or a license.
But, as in the Courts below, and here also, a good deal of argument was addressed on this point, we propose to go into the same.
It is well settled that in ascertaining the real character of a document, regard must be had to the substance of the transaction and not merely the words or the form in which it is dressed.
The Agreement (exhibit I), which is named as a licence, is to be construed in the light of this cardinal canon.
The Agreement (exhibit I) is not a very lengthy document.
The material part of this document may be extracted as below: "This deed of Agreement is executed to the effect following: . . .
We the First Party, have been carrying on the business of sand near Haripal Station.
Sand was necessary for carrying on the said business and the said sand Lying inside the land described in the schedule below should be taken out and proposal having been made to the second parties for the purpose of business, the second parties agreed to take settlement to the effect that we can take out 27 the sands of the said lands and become bound by the agreement on the following terms and conditions of taking out the sand from the said land only.
TERMS AND CONDITIONS 1.
The sand which is in the said land belongs to the own share of the First Party and should be taken out within the month of Chaitra from 1357 to 1365.
Save and except the raising of the said sand there will be no right, title and interest in the land with the First Party.
No right, title and interest will accrue to the First Party in respect of the land.
The First Party for the purpose of raising sand, will pay Rs. 66/ (Rupees sixty six) per annum as the price of the said sand.
If the Government fixes any new amount of demand, then, save and except this, they will take the said amount of Rs. 66/ and/or the Second Party will not be entitled to claim the same.
If the amount is not paid within the month of Chaitra every year, then the parties will not be entitled to raise the sand next year, and for realisation of the said amount of Rs. 66/ , Second Party can bring a suit against the First Party, and will get the arrears of interest at the rate of 12%.
At the end of the stipulated period, the Second Party will take khas possession of the said land; and the licence of the First Party will be revoked. " (Emphasis added) From what has been extracted above, the following characteristics of the transaction are clear: F (i) A right to "raise" and "take out" and remove sand "lying inside" the land in dispute was granted by the plaintiff to the defendant.
The words "raise" and "take out sand" from "inside" the land are wide enough to include not only the "right to carry out all the operations" necessary for extracting sand, but also to take it away and appropriate it.
Construed in the context of the document as a whole, these words put it beyond doubt that rights to carry out mining operations" [within the definition in clause (d) of Section 3 of the Central Act 67 of 1957] for winning sand and to appropriate it were granted.
(ii) The rights were granted for a period of 9 years, commencing from April 27, 1950.
28 (iii)These rights were granted for a "price" fixed on yearly basis, irrespective of the quantity of sand extracted.
The "price" fixed is Rs. 66/ per annum.
This consideration is payable 0in the month of Chaitra every year.
In case of default, the First Party (grantee) shall not be entitled "to raise" the sand "next year" and the Second Party (grantor) shall have a right to recover the arrears of rent together with interest at 12% by bringing a suit against the First Party.
(iv) "The Second Party will be entitled to take khas possession of the land" "at the end of the stipulated period".
This condition, (contained in paragraph 4 of exhibit
I) read along with the other parts of the document, necessarily implies that if the First Party continues to pay the "price", as stipulated, (a) he shall be entitled to enter into and remain in exclusive khas possession of the land for the purpose of carrying out the mining operations for the full stipulated period of 9 years and (b) the Second Party (plaintiff) will not be entitled to retake khas possession of the land and revoke the so called "license" before the end of the said period of 9 years.
It is contended on behalf of the appellant that, according to Condition 2 of the Agreement (extracted above), "except the raising of the sand", no right, title and interest in the land was given to the defendant.
It is submitted that in view of this express condition, the transaction was only a 'licence '.
Relying on Paragraph 899 of Halsbury 's Laws of England, 3rd Edition, Vol. 26, it is maintained that, in any case, it is not a 'lease ' as defined in Section 105 of the , but only a contract to sell sand, the price being pay able in yearly instalments.
It is emphasised that the essential characteristic of a "lease" is that the subject is one which is occupied and enjoyed and the corpus of which does! not in the nature of things and by reason of user disappear.
Reference has also been made to the dictum of the Judicial Committee of the Privy Council in Raj Kumar Thakur Giridhari Singh vs Megh Lal Pandey(l), and the decision of the House of Lords in Gowan vs Christie(2).
We are unable to accept these contentions.
Para 899 of Halsbury 's Laws of England (ibid) reads, thus: "A lease may be granted of land or any part thereof, and since minerals are a part of the land it follows that a (1) L. R 44 I.A.246.
(2) [1873] L. R. 29 lease can be granted to the surface of the land and the A minerals below, or of the surface alone, or of the minerals alone.
It has been said that a contract for the working and getting of minerals alone though for convenience called a mining lease, is not in reality a Lease, at all in the sense in which one speaks of an agricultural lease, and that such a contract, properly considered, is really a sale of a portion of 1 the land at a price payable by instalments, that is, by way of rent or royalty, spread over a number of years.
" This statement of the law in England, appears to be founded on the observations of Cairns, L. J. in Gowan vs Christie (ibid) and Gozens Hardy, L.J. in Aldam 's Settled Estate(1).
In Raj Kumar Thakur Giridhari Singh (ibid), Lord Shaw, delivering the opinion of the Board, said that "it must be born in mind also that the essential characteristic of a lease is that the subject is one which is occupied and enjoyed and the corpus of which does not in the nature of things and by reason of the user disappear".
Counsel for the appellant has adopted this very argument.
But this observation should not be torn out of the context.
Lord Shaw had further observed: "In order to cause the latter speciality to arise, minerals must be expressly denominated, so as thus to permit of the idea of partial consumption of the subject leased".
Thus, Lord Shaw had himself pointed out that minerals may be made a part of the subject matter of a lease, and in such a case the lease would permit the idea of the partial consumption of the subject matter of the lease.
It is important to bear in mind that the term "lease" occurring in the definition of "mining lease" given in Section 3(c) of Act 67 of 1957 does not appear to have been used in the narrow technical sense in which it is defined in Section 105 of the .
But, as rightly pointed out by a Bench of the Calcutta High Court in Fala Krishna Pal vs Jagannath Marwari(2), a settlement of the character of a mining lease is everywhere in India regarded as 'lease '.
A mining lease, therefore, may not meticulously and strictly satisfy in all cases, all The characteristics of a 'lease ' as defined in the .
Nevertheless, in the accepted legal sense, it has always been regarded as a lease in this country.
In Fala 's case (ibid) Mukerji, J., speaking for the Bench, held that a coal mining settlement may be regarded as satisfying the requirements of Section 105 and treated as a lease because under such H (1) at page 56.
(2) I. L. R. 30 settlement some portion, however small, of the surface has to be used for carrying on the mining operations and taking the coal out.
Be that as it may, in the instant case, as shall be presently discussed, the transaction evidenced by exhibit I, not only falls within the definition of a "mining lease" under Act 67 of 1957, but also partakes of all the essential characteristics of a 'lease ' defined in Section 105 of the .
Section 105, , defines a 'lease ' of immovable property as "a transfer of a right to enjoy such property, made for a a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
" In the second paragraph of the Section, it is expressly stated that the price so paid in consideration of the transfer is called "the premium, and the money, share, service, or other thing to be so rendered, is called the rent.
" The definition of 'immovable property ' given in Section 3, Para I of that Act is in the negative, and is not exhaustive.
Therefore, the definition given in Section 3(26) of the General Clauses Act (X of 1897) will apply to the expression used in this Act, except as modified by the definition in the first clause of Section 3.
According to the definition given in Section 3(26) of the General Clauses Act, "immovable property" shall include land, benefits to arise out Or land, and things attached to the earth, or permanently fastened to anything attached to the earth".
In short, the expression 'immovable property ' comprehends all that would be real property according to English Law and possibly more.
(See 1 I.A. 34).
Thus, every interest in immovable property or a benefit arising out of land, will be 'immovable property ' for the purpose of Section 105, .
A right to carry on mining operations in land to extract a specified mineral and to remove and appropriate that mineral, is a 'right to enjoy immovable property ' within the meaning of Section 105; more so, when as in the instant case it is coupled with a right to be in its exclusive khas possession for a specified period.
The 'right to enjoy immovable property ' spoken of in Section 105, means the right to enjoy the property in the manner in which that property can be enjoyed.
If the subject matter of the lease is mineral land or a sand mine, as in the case 31 before us, it can only be enjoyed and occupied by the lessee by working it, as indicated in Section 108, , which regulates the rights and liabilities of lessors and lessees of immovable property.
In the view we take, we are supported by the observations of the Judicial Committee in Nageshwar Bux Roy vs Bengal Coal Company(1).
Delivering the opinion of the Board, Lord Macmillan said: "In considering the character and effect of acts of possession in the case of a mineral field, it is necessary to bear in mind the nature of the subject and the possession of which it is susceptible.
Owing to the inaccessibility of minerals in the earth, it is not possible to take actual physical possession at once of a whole mineral field: it can be occupied only by extracting the minerals and until the whole minerals are ex hausted the physical occupation must necessarily be partial." In H. V. Low & Co. Ltd. vs Jyoti Prasad Singh Deo(2), the law, as laid down in Gowan 's case (ibid), was strongly relied upon by the appellants, therein.
Negativing this contention, the Judicial Committee pointed out that the rights and liabilities of lessor and lessee are defined in Section 108 of the , and the appellant h ad not shown that the respondent had failed, or was not in a position to perform the duties incumbent on a lessor under Section 108 of the said Act.
The discussion will not be complete without noticing, the decision of the Patna High Court in Commissioner of Income Tax, Bihar & Orissa vs Kumar Kanakhaya Narain Singh(3), which is ill point.
In that case.
after an exhaustive survey of all the decisions on the subject, (including some of those which have been cited before us) a Full Bench consisting of three eminent Judges, held that coal mining settlements whereby certain rights of entering upon the land of the settlor, sinking shafts etc.
and winning and taking away the coal are granted in consideration of receiving a salami and annual sums computed on the amount of coal raised and the amount of coke manufactured, subject always to a minimum annual sum which was always payable irrespective of what coal was raised or coke manufactured, were not "a sale of coal", but could be regarded as 'leases ' within the meaning of Section 105 read with Section 108, , or with (1) [1930] L. R. 58 I. A. 29.
(2) [1931] 1. L. R. ; L. R. 58 I. A. 392.
(3) 1.
L. R. (XX) Patna 13.
32 in the legal acceptance of the term "lease" in this country.
This decision of the High Court was affirmed by the Judicial Committee, and the appeal filed by Kumar Kanakhaya was dismissed.
(See L.R. 70 I.A. 180).
The ratio of the Patna case applies with greater force to the facts of the case before us, because, herein, (a) the annual fixed payment had no relation, whatever, with the quantity of sand extracted and appropriate(i, and, what is more important, (b) the defendant was given a right to enter into and remain in khas possession of the mineral field for the stipulated period of 9 years.
The transaction (exhibit I), though labelled as a licence, has all essential elements of a 'lease ' ever.
under Section 105 of the Transfer for Property Act.
In short, stripped of the form in which it is draped, the Agreement (exhibit I), in substance and in fact, is a 'lease ' in the accepted legal sense of the term and not a 'licence ' as defined in Section 52 of the Indian Easements Act.
If this be the correct construction of the document, and we think it is so it is doubtful whether Section 6(1) (i) could cover the appellant 's case and give him a right to retain the land in dispute eve if Section 28 was out of his way.
In sum, we may reiterate that even on the assumption that the respondent was a licensee, the appellant will not be entitled to retain the holding because he was not directly working the mine immediately before the date of vesting, and as such, will not be entitled to retain, due to the overriding operation of Section 28.
For all the foregoing reasons, the appeal fails and is dismissed.
In the circumstances of the case, however, there will be no order as to costs.
V.D.K. Appeal dismissed.
| The appellant was convicted under section 34 of the Mysore Excise Act and sentenced to three months R.I. and a fine of Rs. 100/ for being in possession of 48 bottles of liquor, recovered from the car being driven by him.
It was contended that the provisions of section 54 had not been complied with, and the search was made without jurisdiction.
Allowing the appeal, the Court, ^ HELD: 1.
The Inspector who searched the car of the appellant had not made any record of any ground on the basis of which he had a reasonable belief that an offence under the Act, was being committed, before proceeding to search the car, and thus the provisions of section 54 were not at all complied with, thereby rendering the entire search without jurisdiction and, as a logical corollary, vitiating the conviction.
[1132H, 1133A B] 2.
Both, Sections 53 and 54 contain valuable safeguards for the liberty of the citizen in order to protect them from ill founded or frivolous prosecution or harassment.
[1133B]
|
Civil Appeal Nos. 12 and 13 of 1977.
From the Judgement and order dated 17 11 1976 of the Andhra Pradesh High Court in Writ Appeal Nos.
591 592/76.
U. R. Lalit R. N. Sachthey and Girish Chandra for the Appellant in C. A. 12/77.
M. Abdul Khadar and G. Narayana Rao for the Appellant in C.A. 13/177.
T. section Krishna Murthy Iyer and A. Subba Rao for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
These two appeals (one by the State of Andhra Pradesh and the other by the Union of India) by certificate are directed against a Division Bench Judgment of the Andhra Pradesh High Court dated 17 11 1977 confirming the decision of a Single Judge by which an order passed by the Central Government compulsorily retiring M. E. Reddy, respondent No. I (hereinafter referred to 740 as Reddy) from service in public interest was quashed in a writ petition filed before the High Court.
The facts of the case lie within a very narrow compass particularly in view of the fact that we have decided not to go into the question of malafide alleged against respondent No. 3, Mr. K. Brahmanand Reddy before the High Court because Reddy in a previous Writ filed in the High Court against the order of suspension had expressly withdrawn all the allegations against Mr. K. Brahmanand Reddy respondent No. 3 in the High Court.
We shall, however, touch the fringes of this question so far as it directly affects the order impugned passed by the Government of India.
Reddy started his career in the Police Service as Deputy Superintendent of Police in the year 1948.
In the year 1958 Reddy was appointed to the Indian Police Service and 1952 was the year of his allotment.
On 31 7 1958 Reddy was promoted as Superintendent of Police in the State of Andhra Pradesh and held charge of a number of Districts from time to time.
Reddy was also awarded the President Police Medal near about the 14th August, 1967, but the award of the President Police Medal was withheld as Reddy was placed under suspension by the Government on 11 8 1967 pending departmental enquiry into a number of allegations made against him.
It is not necessary for us to detail those allegations which are not germane for the purpose of deciding these appeals.
In 1969 Reddy filed a writ petition in the Andhra Pradesh High Court praying that the order of suspension passed against him dated 11 8 1967 may be quashed as it was passed on false allegations and at the instance of Mr. K. Brahmanand Reddy who was the Chief Minister of Andhra Pradesh at that time.
A large number of Limitations in support of the plea of malice were made by Reddy.
The writ petition was admitted by the High Court which passed an order dated 17 7 1969 staying all further proceedings including the written statement by Reddy to the six charges framed against him by the department.
When the writ came up for hearing before the single Judge, the State Government represented to the High Court that it had decided to withdraw the order of suspension and reinstate the respondent No. 1, Reddy.
The State Government accordingly withdrew the order of suspension and directed that the period of suspension may be treated as on duty.
Thereafter Reddy filed an application before the High Court seeking permission to withdraw the petition as also the allegations made in the petition against the Chief Minister respondent No. 3 in the High Court.
The High Court accepted the 741 prayer of Reddy and allowed the petition to be withdrawn and passed A the following order: "It seems that orders reinstating the petitioner and virtually cancelling the suspension order are being issued.
The learned Advocate for the petitioner therefore desires to withdraw the writ petition.
The writ petition is therefore dismissed as withdrawn".
As a result of these developments the departmental proceedings against Reddy were dropped and he was given Selection Grade which appears to have been withheld because of the order of suspension passed against Reddy.
On 27 4 1971 Reddy was given the Selection Grade with retrospective effect from 6 6 1969.
Thereafter by an order dated 28 4 1971 Reddy was promoted to the Rank of Deputy Inspector General of Police by the State Government.
It appears that during the course of the departmental enquiry the following entry appears to have been made in the Annual Confidential Report of Reddy: "He is under suspension.
Allegation against him is that he concocted a case against Venugopala Reddy (attempt to rape) to please the Inspector General of Police K. K. Nanmbiar.
There is also a strong suspicion about his integrity.
The Anti corruption Branch are enquiring into the allegations.
In this enquiry allegations are proved".
After the proceedings were dropped and Reddy was promoted as Deputy Inspector General of Police he made a representation to the Government that the adverse entry contained in the Annual Confidential Report may be expunged.
The Government of Andhra Pradesh after considering the representation of Reddy passed the following order dated 20 4 1974: "The Government, after careful consideration, have decided that as the statements are factual it would be sufficient if a suitable entry is made in the said confidential report to the effect that the suspension was subsequently lifted and the period was treated duty and that further action was stayed as there were no good grounds to hold him guilty of any of the charges levelled against him.
(3) A suitable entry has accordingly been made in the confidential report for the year ending 31 3 1968".
We have expressly referred to this order of the Government to show that it completely demolishes the case of malafide pleaded by 11 625SCI/79 742 Reddy against Mr. K. Brahmanand Reddy, respondent No. 3 in the High Court because if Mr. K. Brahmanand Reddy had any animus against the officer he would not have accepted his representation and denuded the effect of the adverse entry made at the time when Reddy was suspended.
According to the allegations made by the State of Andhra Pradesh on the 7th August, 1975 a Review Committee consisting of the Chief Secretary, Home Secretary and the Inspector General of Police considered various cases of police officers including the case of Reddy and made their recommendations.
On 11th September, 1975 the Government of India after considering the report of the Review Committee ordered compulsory retirement of Reddy in public interest on the expiry of three months ' notice from the date of service of order on him.
This order was passed by the Central Government in consultation with the State Government hereinafter referred to as the impugned order) as may be extracted thus: "In exercise of the powers conferred by Sub rule 3 of Rule 16 of the All India Service (Death cum Retirement) Rules, 1958, the President, in consultation with the Government of Andhra Pradesh, is pleased to order the retirement of Sri M. E. Reddy a member of the Indian Police Service borne on the cadre of Andhra Pradesh, in the public interest, on the expiry of three months from the date of service of this order on him".
This order purports to have been passed under sub rule (3) of Rule 16 of the All India Service (Death cum Retirement) Rules, 1958 which reads as follows: "16(3) The Central Government, in consultation with the State Government, may require a member of the Service who has completed 30 years of qualifying service or who has attained the age of 55 years to retire in the public interest provided that at least three months ' previous notice in writing will be given to the member concerned".
An analysis of this Rule clearly shows that the following essential ingredients or the Rule must be satisfied before an order compulsorily retiring a Government servant is passed: 1.
That the member of the Service must have completed 30 years of qualifying service or the age of SO years (as modified by notification dated 16 7 1969), 2.
That the Government has an absolute right to retire the Government servant concerned because the word require" clearly confers an unqualified right on the Central Government; 743 3.
That the order must be passed in public interest; 4.
That three months ' previous notice in writing shall be given to the Government servant concerned before the order is passed.
It may be noted here that the provision gives an absolute right to the Government and not merely a discretion, and, therefore, impliedly it excludes the rules of natural justice.
It is also not disputed in the present case that all the conditions mentioned in Rule referred to above have been complied with.
It is a different matter that the argument of Reddy is based on the ground that the order is arbitrary and mala fide with which we shall deal later.
On a perusal of the impugned order passed by the Government of India it would appear that the order fully conforms to all the conditions mentioned in Rule 16 (3).
It is now well settled by a long catena of authorities of this Court that compulsory retirement after the employee has put in a sufficient number of years of service having qualified for full pension is neither a punishment nor a stigma so as to attract the provisions of article 311 (2) of the Constitution.
In fact, after an employee has served for 25 to 30 years and is retired on full pensionary benefits, it cannot be said that he suffers any real prejudice.
The object of the Rule is to weed out the dead wood in order to maintain a high standard of efficiency and initiative in the State Services.
It is not necessary that a good officer may continue to be efficient for all times to come.
It may be that there may be some officers who may possess a better initiative and higher standard of efficiency and if given chance the work of the Government might show marked improvement.
In such a case compulsory retirement of an officer who fulfils the conditions of Rule 16 (3) is undoubtedly in public interest and is not passed by way of punishment.
Similarly, there may be cases of officers who are corrupt or of doubtful integrity and who may be considered fit for being compulsorily retired in public interest, since they have almost reached the fag end of their career and their retirement would not cast any aspersion nor does it entail any civil consequences.
Of course, it may be said that if such officers were allowed to continue they would have drawn their salary until the usual date of retirement.
But this is not all absolute right which can be claimed by an officer who has put in 30 years of service or has attained the age of 50 years.
Thus, the general impression which is carried by most of the employees that compulsory H retirement under these conditions involves some sort of stigma must he completely removed because rule 16 (3) does nothing of the sort.
744 Apart from the aforesaid considerations we would like to illustrate the jurisprudential philosophy of rule 16 (3) and other similarly worded provisions like Rule 56 (j) and other rule relating to the Government servants.
It cannot be doubted that rule 16 (3) as it stands is but one of the facets of the doctrine of pleasure incorporated in Article 310 of the Constitution and is controlled only by those contingencies which are expressly mentioned in Article 311.
If the order of retirement under rule 16 (3) does not attract Article 311 (2) it is manifest that no stigma of punishment is involved.
The order is passed by the highest authority, namely, the Central Government in the name of the President and expressly excludes the application of rules of natural justice as indicated above.
The safety valve of public interest is the most powerful and the strongest safeguard against any abuse or colourable exercise of power under this Rule.
Moreover, when the Court is satisfied that the exercise of power under the rule amounts to a colourable exercise of jurisdiction or is arbitrary or made it can always be struck down.
While examining this aspect of the matter the Court would have to act only on the affidavits, documents, annexures, notifications and other papers produced before it by the parties.
It cannot delve deep into the confidential or secret records of the Government to fish out materials to prove that the order is arbitrary or mala fide.
The Court has, however, the undoubted power subject to any privilege or claim that may be made by the State, to send for the relevant confidential personal file of the Government servant and peruse it for its own satisfaction without using it as evidence.
It seems to us that the main object of this Rule is to instil a spirit of dedication and dynamism in the working of the State Services so as to ensure purity and cleanliness in the administration which is the paramount need of the hour as the Services are one of the pillars of our great democracy.
Any element or constituent of the Service which is found to be lax or corrupt, inefficient or not up to the mark or has outlived his utility has to be weeded out.
Rule 16 (3) provides the methodology for achieving this object.
We must, however, hasten to add that before the Central Government invokes the power under Rule 16 (3), it must take particular care that the rule is not used as a ruse for victimisation by getting rid of honest and unobliging officers in order to make way for incompetent favourites of the Government which is bound to lead to serious demoralisation in the Service and defeat the laudable object which the rule seeks to subserve.
If any such case comes to the notice of the Government the officer responsible for advising the Government must be strictly dealt 745 with.
Compulsory retirement contemplated by the aforesaid rule is designed to infuse the administration with initiative and activism so that it is made poignant and piquant, specious and subtle so as to.
meet the expanding needs of the nation which require exploration of "fields and pastures now".
Such a retirement involves no stain or stigma nor does it entail any penalty or civil consequences.
In fact, the rule merely seeks to strike a just balance between the termination of the completed career of a tired employee and maintenance of top efficiency in the diverse activities of the administrating.
An order of compulsory retirement on one hand causes no prejudice to the Government servant who is made to lead a restful life enjoying full pensionary and other benefits and on the other gives a new animation and equanimity to the Services.
The employees should.
try to understand the true spirit behind the rule which is not to penalise them but amounts just to a fruitful incident of the Service made in the larger interest of the country.
Even if the employee feels that he has suffered, he should derive sufficient solace and consolation from the fact that this is his small contribution to his country for every good cause claims its martyr.
These principles are clearly enunciated by a series of decisions of this Court starting from Shyam Lals(1) case to Nigams (2) case which will be referred to hereafter.
In the case of Shyam Lal vs The State cf Uttar Pradesh & Anr.(1) This Court clearly held that compulsory retirement does not amount to removal or termination nor does it involve any stigma.
In this connection, a Bench of 5 Hon 'ble Judges of this Court observed as follows: "There is no such element of charge or imputation in the case of compulsory retirement.
The two require ments for compulsory retirement are that the officer has completed twentyfive years ' service and that it is in the public interest to dispense with his further services.
It is true that this power of compulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence in Note l to article 465 A 746 make it abundantly clear that an imputation or charge is not in terms made a condition for the exercise of the power.
In other words, a compulsory retirement has no stigma or implication of misbehaviour or incapacity".
"The more important thing is to see whether by compulsory retirement the officer loses the benefit he has earned as he does by dismissal or removal.
The answer is clearly in the negative.
The second element or determining whether a termination of service amounts to dismissal or removal is, therefore, also absent in the case of termination of service brought about by compulsory retirement.
The foregoing discussion necessarily leads us to the conclusion that a compulsory retirement does not amount to dismissal or removal and, therefore, does not attract the provisions of Article 311 of the Constitution or of rule 55".
The same principle was reiterated by another Bench of S Hon 'ble Judges of this Court in the case of T. G. Shivacharan Singh & Ors.
vs The State of Mysore.(1) In this case, the Court was considering the scope of rule 285 which was almost in the same terms as rule 16 (3) and provided that a Government servant could be retired, after completing qualifying service of 30 years or on attaining the age of 50 years if such retirement was considered in public interest.
In this connection, the Court observed as follows: "It would thus be clear that though the normal age of retirement under R. 95 (a) is 55 years, under R. 285 it is competent to the Government to retire compulsorily a government servant prematurely if it is thought that such premature retirement is necessary in the public interest . . .
Mr. Venkataranga Iyengar contends that this Rule is invalid, because it contravenes article 14 as well as article 16 (1) of the Constitution.
In our opinion this contention can no longer be entertained.
because it is concluded by a long series of decisions of this Court".
Even the constitutionality of the provisions concerned was upheld by this Court.
The leading case on the subject which has been decided some years before and has been consistently followed by latter decisions 747 of this Court is the case of Union of India vs Col. J. N. Sinha & Anr.(1).
This Court was considering the scope and ambit of rule 56 (j) which is also worded in the same terms as rule 16 (3).
Rule 56 (3) runs thus: "Notwithstanding anything contained in this Rule the appropriate authority shall, if it is of the opinion that it is in the public interest so to do have the absolute right to retire any Government servant by giving him notice of not less than three months in writing or three months ' pay and allowances in lieu of such notice.
(i) if he is in Class I or Class II Service or post the age for the purpose of direct recruitment to which is below 35 years, after he has attained the age of 50 years.
(ii) In any other case after he has attained the age of 55 years.
D Provided that nothing in this clause shall apply to a Government servant referred to in clause (e) who entered Government service on or before 23rd July 1966 and to a Government servant referred to in clause (f)".
After considering the various shades, aspects, purpose and object E of such provision this Court observed as follows: "But if on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the principles of natural justice".
"The right conferred on the appropriate authority Is an absolute one.
That power can be exercised subject to the conditions mentioned in the rule, one of which is that the concerned authority must be of the opinion that it is in public interest to do so.
If that authority bona fide forms that opinion, the correctness of that opinion cannot be challenged before courts.
It is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is 748 an arbitrary decision Compulsory retirement involves no civil consequences.
The aforementioned rule 56 (j) is not intended for taking any penal action against the government servant.
That rule merely embodies one of the facets of the pleasure doctrine embodied in Article 310 of the Constitution.
Various considerations may weigh with the appropriate authority while exercising the power conferred under the rule.
In some cases, the government may feel that a particular post may be more usefully held in public interest by an officer more competent than the one who is holding.
It may be that the officer who is holding the post is not inefficient but the appropriate authority may prefer to have a more efficient officer.
It may further be that in certain key posts public interest may require that a person of undoubted ability and integrity should be there.
There is no denying the fact that in all organisations and more so in government organisations, there is good deal of dead wood.
It is in public interest to chop off the same.
Fundamental Rule 56 (j) holds the balance between the rights of the individual government servant and the interests of the public.
While a minimum service is guaranteed to the government servant, the government is given.
power to energies its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest".
The observations made above clearly reveal the object of this rule and lay down that where an officer concerned is of doubtful integrity he can be compulsorily retired under this rule.
Mr. Krishnamurthy Iyer appearing for Reddy submitted that the order impugned is passed on materials which are non existent in as much as there are no adverse remarks against Reddy who had a spotless career throughout and if such remarks would have been made in his confidential reports they should have been communicated to him under the rules.
This argument, in our opinion, appears to be based on a serious misconception.
In the first place, under the various rules on the subject it is not every adverse entry or remark that has to be communicated to the officer concerned.
The superior officer may make certain remarks while assessing the work and conduct of the subordinate officer based on his personal supervision or contact.
Some of these remarks may be purely innocuous, or may be connected with general reputation of honesty or integrity that a particular officer enjoys.
It will indeed be difficult if not impossible to prove by positive evidence 749 that a particular officer is dishonest but those who has had the opportunity to watch the performance of the said officer from close quarters are in a position to know the nature and character not only of his performance but also of the reputation that he enjoys.
The High Court has also laid great stress on the fact that as adverse entries had not been communicated to Reddy, therefore, the order impugned is illegal.
We find ourselves unable to agree with the view taken by the High Court or the argument put forward by learned counsel for Reddy.
Moreover, the appellant had denied in their counter affidavit at page 59 Vol.
II that there was no adverse entry against the officer concerned prior to 1968.
This averment is contained in para 6 of the counter affidavit filed by Under Secretary to the Government of India in the High Court.
This aspect as considered by this Court in the case of R. L. Butail vs Union of India ors.(l) and the matter is concluded by the very apt observations made by Hidayatullah, C.J. who spoke for the Court and observed as follows: "These rules abundantly show that a confidential report is intended to be a general assessment of work performed by a Government servant subordinate to the reporting authority, that such reports are maintained for the purpose of serving as data of comparative merit when questions of promotion, confirmation etc.
arise.
They also show that such reports are not ordinarily to contain specific incidents upon which assessments are made except in cases Where as a result of any specific incident a censure or a warning is issued and when such warning is by an order to be kept in the personal file of the Government servant.
In such a case the officer making the order has to give a reasonable opportunity to the Government servant to present his case.
The contention, therefore, that the adverse remarks did not contain specific instances and were, therefore, contrary to the rules, cannot be sustained.
Equally unsustainable is the corollary that because of that omission the appellant could not make an adequate representation and that there fore the confidential reports are vitiated".
G "It may well be that in spite of the work of the appellant being satisfactory, as he claimed it was, there may have been other relevant factors, such as the history of the appellant 's entire service and confidential reports through out the period of his service, upon which the appropriate authority may still decide to order appellant 's retirement under F.R. 56 ( j ) ".
750 In this case the Court followed and endorsed the decision of this Court in the case of J. N. Sinha (supra).
Here we might mention that the appellants were fair and candid enough to place the entire confidential personal file of Reddy before us starting from the date he joined the Police Service and after perusing the same we are unable to agree with Mr. Krishnamurthy Iyer that the officer had a spotless career.
The assessment made by his superior officers from the very beginning of his service until the impugned order was passed show that at best Reddy was merely an average officer and that the reports show that he was found to be sometimes tactless, impolite, impersonated and suffered from other infirmities though not all of them were of a very serious nature so as to amount to an adverse entry which may be communicated to him.
We might also mention that before passing an order under rule 16(3) it is not an entry here or an entry there which has to be taken into consideration by the Government but the overall picture of the officer during the long years of his service that he puts in has to be considered from the point of view of achieving higher standard of efficiency and dedication so as to be retained even after the officer has put in the requisite number of years of service.
Even in the last entry which was sought to be expanded through a representation made by Reddy and other entries made before it appears that the integrity of Reddy was not above board.
Even in the case of State of Uttar Pradesh vs Chandra Mohan Niganm & Ors.(1) on which great reliance has been placed by Mr. Krishnamurthy Iyer, it was observed thus: "We should hasten to add that when integrity of an officer is in question that will be an exceptional circumstance for which orders may be passed in respect of such a person under rule 16(3), at any time, if other conditions of that rule are fulfilled, apart from the choice of disciplinary action which will also be open to Government.
Thus, even according to the decision rendered by this Court in the aforesaid case the fact that an officer is of doubtful integrity stands on a separate footing and if he is compulsorily retired that neither involves any stigma nor any error in the order.
We might also refer to an observation made by the Single Judge of the High Court whose judgment was confirmed by the Division Bench, who appears to have misconstrued a judgment of this Court and by the process of such misconception seems to have ignored the later decisions of this Court given by small Benches on the exact question at 751 issue.
The learned Judge relied on the decision in the case of Madan Mohan Prasad vs State of Bihar & Ors.(1) in support of the view that the order of retirement even if it is in public interest violates Article 311 (2) of the Constitution even though no punishment was intended.
The learned Judge observed as follows: "In Madan Mohan vs State of Bihar (supra) the Supreme Court considered the validity of retirement order of a Judicial officer who for the reason that he worked for seventeen years asserted was permanent member of the service when his retirement was ordered under Bihar pension Rules of 1950 questioned the order under article 32 of the Constitution of India that it was a punishment within the meaning of article 311 (2) of the Constitution of India".
and then relies on certain observations of this Court in order to hold that the termination of service of the officer casts a stigma on his character and attracts Article 311(2) of the Constitution.
The learned Judge further relied on a decision of this Court in support of the proposition that a judgment rendered by S Judges of the Supreme Court would prevail over a judgment of a smaller Bench.
So far this part of the observation is concerned, there can be no doubt.
But the learned Judge appears to have completely misconstrued the decision in Madan Mohan 's case (supra) which was not a case of compulsory retirement at all, nor was it a case where the officer concerned was retired under a rule like rule 56(j) or 16(3) as we have indicated in this case.
On the other hand, in that case what happened was that the officer was appointed as a temporary Munsif and under the terms of the notification by which he was appointed it was provided that the appointment of temporary Munsif could be terminated by giving one month 's notice.
The High Court it appears, was not satisfied with the work of Munsif and accordingly decided to terminate his services.
But the Chief Minister in one of his speeches on the floor of the House had made certain observations implying that the services of the Munsif were being terminated on account of inefficiency and misconduct.
In these peculiar circumstances, therefore, this Court held that the termination of the Munsif even though he was a temporary servant cast a stigma and, therefore, attracted Article 311 of the Constitution.
In this connection, the Court observed as follows: "It seems to us that on the facts of this case, the order dated January 15, 1972 violates Article 311(2) of the Constitution.
The petitioner had first been holding a temporary post and then a permanent post for nearly seventeen 752 years.
The Chief Minister s statement in the Assembly that his services were not satisfactory and the Government was considering serving show cause notice and the fact that his services were terminated without any enquiry being held would inevitably lead the public to believe that his services had been terminated on account of inefficiency or misconduct.
This did cast a stigma on his character".
It is, therefore, manifest that the facts of this case and the points involved were absolutely different from the facts of the present case.
The aforesaid case relied upon by the High Court would have absolutely no application to the present case where Reddy was neither a temporary servant nor was his service terminated.
The Single Judge of the High Court was, therefore, absolutely wrong in equating the principles of compulsory retirement under rule 16(3) with termination of the services of a temporary employee under the rules.
Similarly, the case of J. N. Sinha (supra) was followed and relied on by later decisions of this Court in the case of N. V. Puttabhatta vs The State Mysore & Anr.(1) as also in the case of State of Assam and Anr.
vs Basanta Kumar Das etc.
etc.(2) Again, in the case of Tara Singh etc.
vs State of Rajasthan & Ors(8) it was pointed out that compulsory retirement under the provisions similar to rule 16(3) cannot amount to a stigma, and the incidents of compulsory retirement were adroitly summed up by Ray, C.J. who observed as follows: "The right to be in public employment is a right to hold it according to rules.
The right to hold is defeasible according to rules.
The rules speak of compulsory retirement.
There is guidance in the rules as to when such compulsory retirement is made.
When persons complete 25 years of service and the efficiency of such persons is impaired and yet it is desirable not to bring any charge of Inefficiency or incompetency, the Government passes order of such compulsory retirement.
The Government servant in such a case does not lose the benefits which a Government servant has already earned.
These orders of compulsory retirement are made in public interest.
This is the safety valve of making such orders so that no arbitrariness or bad faith creeps in".
753 "There is no stigma in any of the impeached orders of compulsory retirement".
The learned Chief Justice pointed out that having regard to the safeguards contained in the rules particularly the fact that the retirement was in public interest the safety valve of safeguarding malafide or arbitrariness in the order was clearly contained in the provision itself.
J. N. Sinha 's case (supra) was endorsed and followed in this case also.
In a recent decision of this Court in the case of Mayenghoan Rahamohan Singh vs The Chief Commissioner (Admn.) Manipur & Ors.
the Court observed as follows: "Compulsory retirement is not a punishment.
There is no stigma in compulsory retirement".
"The affidavit evidence is that the order of compulsory retirement was made in public interest.
The absence of recital in the order of compulsory retirement that it is made in public interest is not fatal as long as power to make compulsory retirement in public interest is there and the power in fact is shown in the facts and circumstances of the case to have been exercised in public interest".
In this case, the Court was considering the scope of rule 56(j) which, as already indicated, is couched in the same terms as rule 16(3).
Learned counsel for Reddy heavily relied on the decision of this Court in the case of State of Uttar Pradesh vs Chandra Mohan Nigam & Ors.
(supra) and contended that as the Government of India while passing the impugned order had not considered the report of the Review Committee the order is vitiated by an error of law.
We have gone through this decision and we are unable to agree with the contentions put forward by learned counsel for Reddy.
The decision referred to above is not an authority for holding that the decision of the Review Committee is binding on the Government of India.
All that is necessary is that the Government of India should, before passing an order under rule 16(3) consider the report of the Review Committee which is based on full and completed analysis of the history of the service of the employee concerned.
In the instant case, it is clearly pleaded by the appellants in the High Court that the report of the Review Committee was in fact considered by the Government of India before passing the impugned order.
The confidential file placed before us also clearly shows that on the note sheet the notes by the 754 Secretary on the recommendations of the Review Committee the Home Minister, Mr K. Brahmananda Reddy has appended his signatures and has passed the order that Reddy should be compulsorily retired.
Furthermore, in Nigam 's case (supra) referred to above what had weighed with the Court was that after the Review Committee had submitted its report to the Government, the Government ordered a second Review Committee just in order to enable the Review Committee to give an adverse report against the officer concerned.
Such a course of action was condemned and deprecated by this Court.
In the instant case, however, there is no allegation by Reddy that any second Committee was ever appointed.
Even so in Nigam 's case (supra) this Court did not depart from the ratio laid down in Sinha 's case (supra) and followed by later cases but observed as follows: "As stated earlier, even in the case of compulsory retirement under rule 16(3), an order may be challenged in a court if it is arbitrary or mala fide.
If, however, the Government reaches a decision to prematurely retire a Government servant, bona fide the order, per se, cast any stigma on the employee nor does the employee forfeit any benefit which he has already earned by his service, nor does it result in any civil consequences".
The Court at page 531 of the Report clearly pointed out that the instructions issued by the Government for constituting the Review Committee were not mandatory.
We have already indicated above that this Court made it absolutely clear that where a person was retired under Rule 16(3) on the ground that his integrity was in question, the observations made by this Court would have no application.
in the instant case, it has been clearly averred by the appellants that the integrity of Reddy was not beyond suspicion and the remarks were rot expressly expunged by the Chief Minister.
Reliance was also placed by learned counsel for Reddy on a recent decision of this Court in the case of Smt.
S.R. Venkataraman vs Union of India & Anr.
The facts of this case, however, are, clearly distinguishable from the facts of the present case.
In that case there was a finding of fact by this Court that the order of retirement was mala fide and amounted to victimisation and the allegation made by the appellant before this Court were not only not disputed but counsel for the Union of India went to the extent of saying that he was not in a position to support the impugned order which was 755 unfair.
It was in the background of these circumstances that the Court held that the order was malafide and observed as follows: "The appellant has pointed out in this connection that her service record was examined in March, 1976 by the Departmental Promotion Committee, with which the Union Public Service Commission was associated, and the Committee considered her fit for promotion to the selection grade subject to clearance in the departmental proceedings which were pending against her, and that she was retired because of bias and animosity.
Our attention has also been invited to the favourable entry which was made in her confidential report by the Secretary of the Ministry.
Mr. Lekhi, learned counsel for the Union of India, produced the relevant record of the appellant for our perusal.
While doing so he frankly conceded that there was nothing on the record which could justify the order of the appellant 's premature retirement.
He went to the extent of saying that the Government was not in a position to support that unfair order" "The influence of extraneous matters will be undoubted where the authority making the order has admitted their influence.
It will therefore he a gross abuse of legal power to punish a person or destroy her service career in a manner not warranted by law by putting a rule which makes a useful provision for the premature retirement of government servants only in the 'public interest ', to a purpose wholly unwarranted by it, and to arrive at quite a contradictory result.
An administrative order which is based on reasons of fact which do not exist must therefore be held to be infected with an abuse of power".
These observations, however, do not apply to the facts of the present case.
Lastly, Mr. Krishnamurthy Iyer, learned counsel for Reddy heavily relied on a decision of the Calcutta High Court in the case of Chief Security Officer, Eastern Railway & Anr.
vs Ajay Chandra Bagchi on a perusal of this decision we are of the opinion that this case was not correctly decided as it is directly opposed to the ratio decidendi of J. N. Sinha 's case (supra) where this Court held that the rule in question expressly excludes the principles of natural justice and, therefore, it is manifest that the Calcutta High Court was in error in basing 756 its decision on rules of natural justice.
The Calcutta High Court in this case had observed as follows: "Thus even if the Railway authorities had absolute right to retire the Respondent petitioner subject to the requirements as mentioned hereinbefore and in terms of paragraph 3 of Chapter XVII of the Regulations read with item 6 of the instructions in the Form in Appendix XVlI in the admitted position of the case, viz., certain adverse entries were taken into consideration in having him compulsorily retired, the action as taken is thus certainly against all principles of natural justice and norms of fair play and as such the action so taken cannot be supported.
The said right under paragraph 3 of Chapter XVII read with item 6 of the instructions in the Form in Appendix XVIII can be used and those principles can be applied or resorted to subject to the principles of natural justice, which incidentally is the restraint put on the pretended misuse of power".
The High Court seemed to rely on certain adverse entries which were taken into consideration when the order of retirement was passed.
We have already pointed out relying on the dictum of this Court laid down by Hidayatullah, C.J. that the confidential reports can certainly be considered by the appointing authority in passing the order of retirement even if they are not communicated to the officer concerned.
Thus, the two grounds on which the Calcutta decision was based are not supportable in law.
For these reasons, therefore, we hold that the decision of the Calcutta High Court referred to above was wrongly decided and is hereby overruled.
On a consideration of the authorities mentioned above we are satisfied that there is no legal error in the impugned order passed by the Government of India retiring Reddy.
It was, however, contended by counsel for Reddy that reading the order as a whole it contains an odour of victimisation, so as to make the order arbitrary.
We are, however, unable to find any material on the record to show that the order was in any way arbitrary.
The Government of India acted on the orders passed by the Home Minister concerned who had considered the report of the Review Committee in its various aspects.
There is nothing to show that Reddy was victimised in any way.
On the other hand, the history of his service shows that he was always given his due.
He was taken in the I.P.S. and allotted the year 1952.
He was promoted to the selection grade also at the proper time.
The order of suspension was withdrawn and the departmental enquiry was dropped 757 and the officer was reinstated and later promoted as D.I.G. These facts completely militate against the concept of victimisation.
It appears that on an overall consideration of the entire history of the service of Reddy and the various stages through which he had passed it was considered in the interest of administration and to ensure better initiative and efficiency to retire him in public interest.
We are also unable to find any element of arbitrariness in the impugned order.
For these reasons, therefore, the first contention raised by learned counsel for Reddy must be rejected.
It was then contended that the order was mala fide and passed because Respondent No. 3, the Chief Minister of Andhra Pradesh bore serious animus against Reddy and wanted him to do certain things which he refused to do, hence he was compulsorily retired.
Apart from the fact that all the allegations regarding mala fide stood withdrawn as indicated in the earlier part of the judgment it is alleged in the counter affidavit and this averment has not been disputed before us that on 5 1 1970 the following Memo was filed on behalf of Reddy before the High Court: "The petitioner withdraws the writ petition including the allegations against the Hon 'ble Chief Minister of Andhra Pradesh.
The writ petition may kindly be dismissed as with drawn".
Furthermore, the counter affidavit at p. 73 Vol.
IV contains a letter submitted by the Second Go Pleader on 5 1 1970 the relevant part of which runs thus: "I have discussed the matter with the Advocate for the petitioner.
He agrees to withdraw the writ petition as also the allegations made thereunder against the Hon 'ble Chief Minister and is prepared to file a Memo.
Copy of which is enclosed herewith" Once Reddy had withdrawn the allegations of malafide against respondent No. 3 in the High Court, it is not open to him to revive those allegations in these proceeding when the impugned order is passed.
The impugned order as held by us is a bona fide order and does not suffer from any legal infirmity, and, therefore, we cannot permit Reddy to play a game of hide and seek with the Court by withdrawing the allegations of mala fide against respondent No. 3 in the High Court and then reviving them when after some time an adverse order against him was passed.
Moreover, if respondent No. 3 was really inimically disposed towards Reddy he would not have either dropped the departmental enquiry or reinstated him, or have promoted him to the rank 758 of D.I.G. Furthermore, the Chief Minister Mr. K. Brahmananda Reddy has himself filed a personal affidavit before the High Court which is contained at page 235 Vol.
III wherein he has categorically denied all the allegations made against him by Reddy.
The assertions made in the affidavit are fully supported by circumstantial evidence and the conduct of Reddy himself.
For these reasons, therefore, the second contention regarding the impugned order being mala fide is also rejected.
The result is that all the contentions raised by counsel for Reddy fail.
We are clearly of the opinion that the High Court committed a clear error of law in quashing the impugned order which was fully justified by rule 16(3), and did not suffer from any legal infirmity and was also in consonance with the law laid down by this Court starting from Shyamlal 's case upto Sinha 's and Nigam 's case (supra) discussed above.
We, therefore, allow the appeals, set aside the order of the High Court and restore the impugned order retiring Reddy.
In the peculiar circumstances of the case there will be no order as to costs.
S.R. Appeal allowed.
| The petitioner, who was an Advocate, was authorised by the Government to represent it in all the civil cases in a district court.
Considering the pendency of a large number of Government cases before courts and tribunals the Government appointed nine Assistant Government Pleaders during the term of office of the petitioner as Government Pleader and asked him to make over all the land acquisition cases to one of the Assistant Government Pleaders.
The petitioner refused to comply with the Government 's instructions and stated That he would himself conduct all the cases.
The Government, however, stuck to its stand.
His writ petition impugning the Government 's decision was dismissed by the High Court.
Dismissing the petition under article 136.
^ HELD: 1.
The definition of Government Pleader contained in section 2(7) of the Code of Civil Procedure is an inclusive definition which, read along with O. 21, rr. 4 and 8(c) clearly yields the inference that Government may have as many Government Pleaders as it likes to conduct its cases.
The section vests no sole control on one Government Pleader over others and the Government is perfectly free to put a particular Government Pleader in charge of particular cases.
Government Pleaders and Assistant Government Pleaders who had been appointed according to administrative rules of the State are Government Pleaders within the meaning of the definition in section 2(7) of the Code.
Each one of them may depute other lawyers and exercise control over such surrogates.
[763 G; 764 C] 2.
The Bihar Rules regarding Government Pleaders, which are purely administrative prescriptions and which serve as guidelines and on which no legal right can be founded do not help the petitioner.
The allocation of work or control inter se is an internal arrangement and there is no error in the behaviour of the Government.
[764F G] 3.
When there were several thousand cases in the courts in the State and hundreds of cases before Tribunals it was but right that Government did not sacrifice the speedy conduct of cases by not appointing a number of pleaders.
It is inconceivable how the petitioner would have discharged his duties to the court and to the client of this crowd of land acquisition cases was posted in several courts more or less at the same time.
[765D E] Ramachandran vs Alagiriswami, A.I.R. 1961 Madras 450, approved.
Despite the national litigation policy evolved by the All India Law Ministers ' Conference in 1957 and the recommendation of the Law Commission there is still a proliferation of government cases in courts uninformed 760 by such policy.
It is important that the State should be a model litigant with accent on settlement.
Time has come for State Governments to have a second look, not only at the litigation policy but lawyers ' fees rules especially in mass litigation involving ad valorem calculations in fixing fees in land acquisition cases.
[762 B; 763 CI 2.
The politicisation of Government Pleadership which is a public office is an issue of moment in a developing society controlled by the politics of skill and enjoying a legal monopoly.
It is a healthy practice that the Government appoints these lawyers after consultation with the District Judge.
Governments under our Constitution shall not play with law offices on political or other impertinent considerations as it may affect the legality of the action and subvert the rule of law itself [765 C]
|
Civil Appeal No. 272 of 1970.
Appeal by Special Leave from the Judgment and Order dated 14 4 1969 of the Mysore High Court in W.P. No. 2889/67.
R. N. Nath and M. Veerappa for the Appellant.
2 M. Natesan and Mrs. section Gopalakrishnan for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
Whether a motor vehicle passing through the territory of the State of Mysore on way to its destination in another State is a motor vehicle "kept" in the State of Mysore (now Karnataka) within the contemplation of Section 3(1) of the Mysore Motor Vehicles Taxation Act, 1957 (hereinafter referred to as the Taxation Act), is the short question that falls for consideration in this appeal by special leave directed against a judgment, dated April 14, 1969, of the High Court of Mysore.
The material facts bearing on the question are as follows : The respondent, M/s. T. V. Sundaram Iyengar & Sons.
Pvt. Ltd., whose registered office is in the State of Tamil Nadu, is a dealer in motor vehicles which are manufactured at Bombay.
Some of those vehicles are sold in Mysore State, while others are sold outside Mysore State.
But those vehicles which are sold outside the State of Mysore in other States pass through its territory under temporary registration number plates issued after receipt of token tax by the Bombay Motor Vehicles Authority.
Such vehicles enter the State of Mysore at its border in Belgaum District and go out at its border in Kolar District, thus running through the territory of Mysore State by road over a distance of about 400 miles.
The R.T.O., Belgaum, issued a communication, dated September 27, 1966, to the respondent demanding tax on such vehicles (new cars and chassis) passing through the territory of Mysore.
After exhausting, his remedies under the Taxation Act, the respondent filed a petition under Article 226 of the Constitution, to challenge the validity of the demand notices and the Circular, dated October 10, 1966, issued by the Transport Commissioner, directing recovery of tax at the rates specified in Part of the Schedule to the Taxation Act, in respect of those vehicles which do no more than pass through the State of Mysore to reach their destination.
The Division Bench of the High Court, who heard the writ petition held that such vehicles which merely pass through Mysore State are not those "kept" in the State of Mysore within the meaning of Section 3(2) of the Taxation Act.
and, as such, are not taxable under the Taxation Act.
In the result, the High Court allowed the writ petition and quashed the direction of the Commissioner in paragraph 6 of his Circular of October 10, 1966, for the recovery of the tax in question from the respondent.
Hence.
this appeal by the State.
3 The material part of Section 3 reads as follows : "section 3.
Levy of tax. (1) a tax at the rates specified in part A of the Schedule shall be levied on all motor vehicles suitable for use on roads, kept in the State of Mysore: Provided that in the case of motor vehicles kept by a dealer in or manufacturer of such vehicles for the purpose of trade, the tax shall only be levied and paid by such dealer or manufacturer on vehicles permitted to be used on roads in the manner prescribed by rules made under the . Explanation.
A motor vehicle of which the certificate of registration is current shall, for the purpose of this Act, be deemed to be a vehicle suitable for use on roads.
(2) Notwithstanding anything contained in sub section (1), taxes at the rates specified in Part B of the Schedule shall be levied on motor vehicles belonging to or in the possession or control of persons, not ordinarily residing in the State of Mysore and kept in the State of Mysore by such persons for periods shorter than a quarter, but not exceeding thirty days.
(3). . . . . . . . " The appellant State maintains that sub section (2) of the Section was applicable to such vehicles because while passing through the territory of the State they use the roads of the State over a distance of 400 miles during their journey interspersed by halts in the State, and therefore, it can be said that such vehicles are kept for use on roads in the State within the meaning of Section 3(2).
According to the learned counsel for the appellant the test of whether a vehicle is exigible to tax under Section 3(2) is whether it is suitable for use on roads and, in fact, substantially uses the roads in the State of Mysore.
In the present case, the argument proceeds, this test was satisfied because for an appreciable period such vehicles remain in the territory of the State and use its roads, and as such, are taxable under sub section (2) of Section 3.
The contention does not stand a close examination.
Sub section (2) is to be read with sub section (1).
Thus read, it is plain that in order to be taxable under the Section a Motor vehicle must be capable of use on road, and further it must be kept in the State of Mysore, though in the case of vehicles belonging to persons not resident in the State, the duration of such 'keeping ' may be for a 4 period shorter than a quarter but not exceeding thirty days.
In the present case, there is no dispute that the vehicles concerned are capable of use on roads, and in fact, they journey by road through the State.
The problem thus resolves itself into the issue : Whether the motor vehicles of the respondent which merely pass through the State of Mysore are 'kept ' for the duration of their journey in the State of Mysore within the meaning of Section 3(2) ? In our opinion, the High Court has rightly answered this question in the negative.
The word 'kept ' has not been defined in the Taxation Act.
We have, therefore, to interpret it in its ordinary popular sense, consistently with the context.
The word 'kept ' has been repeatedly used in the Section.
In sub section (1), it occurs in association with the phrase "for use on roads".
In that context the ordinary dictionary meaning of the word 'keep in ' is 'to retain ', 'to maintain ' or cause to stay or remain in a place 'to detain ', 'to stay or continue in a specified condition, position etc. ' In association with the use of the vehicle, therefore, the word 'kept ' has an element of stationariness.
It is something different from a mere state of transit or a course of journey through the State.
It is something more than a mere stoppage or halt for rest food or refreshment etc., in the course of transit through the territory of the State.
The unsoundness of the contention of the appellant 's counsel, viz, that a vehicle capable for use on roads, owned by a non resident, remaining for one or two days in the territory of Mysore State in course of transit, will also be exigible to tax under section 3, can be demonstrated by taking an example.
Supposing the respondents take their vehicles (capable for use on road) by rail through the territory of Mysore State to their outside destination, and in the course of that journey, the train halts for a week, in all, at stations in Mysore State, then, if the wide interpretation demanded by the appellant is adopted such vehicles will be exigible to tax.
This indeed will be an absurd result.
Such an interpretation of the word 'kept ' will be wholly beyond the ken of the Legislature.
In the view we take, we can derive support from two decisions of the English Courts.
In Dudley vs Holland,(1) the appellant carried on a garage business adjoining a public road.
He had bought a motor car in the course of 5 his business and was offering for sale in the garage showroom.
He moved that car into the public road in order to allow the showroom to be rearranged.
There was no excise licence in force for the car.
It was found there by a police constable.
The appellant was charged with unlawfully keeping on a public road a mechanically propelled vehicle for which an excise licence was not in force, contrary to Section 7 of the Vehicles (Excise) Act, 1962.
The question for the opinion of the Court was whether the mere presence of a stationary mechanically propelled vehicle on a public road, constitutes "keeping" the vehicle on the road within the meaning of Section 7 of the Vehicles (Excise) Act, 1962.
Lord Parker, C.J., who delivered the leading judgment of the Court, answered this question in the negative, in these terms: "I approach the word 'keeps ' in what seems to me the ordinary meaning of some continuing process; not a mere isolated moment, but a keeping of the car there, at any rate for some interval of time.
It is no doubt a matter of degree and fact in every case.
In my judgment, 'keeping ' means something more than that, both according to its ordinary meaning and when it appears in conjunction with the other word 'uses '.
" The principle is applicable to the present case.
A mere state of running through or even halting of the vehicle in the course of the journey through the State of Mysore for its outside destination, will not be sufficient to constitute 'keeping ' of that vehicle in the State within the meaning of Section 3.
The other case is Biggs vs Mitchell.(1) The ratio of this case has been extracted in words and Phrases Legally Defined, Vol. 3 at page 116.
In Biggs vs Mitchell, the interpretation of the word 'keep ', as used in Section 11 of Statute (1772) 12 Geo.
3 c. 61, came up for consideration.
That Section enacted that no person or persons should have or 'keep ' at any one time, being a dealer or dealers in gunpowder, more than 200 lb. of gunpowder, and not being such more than 50 lb. of gunpowder in any house, mill, etc., occupied by the same person or persons within certain limits.
The question before the Court was whether a person who receives powder in the course of transit, and makes a necessary halt, instead of sending it on immediately, can be said to be "keeping ' the same within the meaning of Section 11.
Crompton, J. answered this question thus: 6 "It seems to me that it is not made out that the mere halting in London, for the purpose of sending from one railway to another, when it is necessary that there should be halting in some place or other, is a 'keeping '. .I think there can be no keeping within section 11, when it is in course of transit." On parity of reasoning, a vehicle in transit through the State of Mysore or even making a necessary halt for a short interval during transit, cannot be said to be a vehicle 'kept ' for use on roads in the State of Mysore.
In the light of all that has been said above, we uphold the interpretation put by the High Court on Section 3 of the Taxation Act, and answer the question posed at the commencement of this judgment in the negative, and dismiss this appeal, leaving the parties to pay and bear their own costs in this Court.
P.B.R. Appeal dismissed.
| Section 18 of the Court of Wards Act, 1879, provides that the Court of Wards "may sanction the giving of leases or farms of the whole or part of any property under its charge, and may direct the mortgage or sale of any part of such property, and may direct the doing of all such other acts as it may judge to be most for the benefit of the property and the advantage of the ward".
In exercise of the power conferred by this section the Court of Wards sanctioned a deed of prospecting license in favour of B, the predecessor in interest of the appellant, and the same was executed on 26 3 1915.
Subsequently, on 23 11 1917 the manager of the Court of Wards executed a deed modifying the terms of the deed dated 26 3 1915, by virtue of which the period of license could be extended up to 26 3 1951 under certain conditions.
On 10 8 1937 the respondent having become major assumed management of the estate and thereafter repudiated the aforesaid deeds and contested their validity on the grounds, inter alia, (1) that the deed dated 26 3 1915 was not for the benefit of the ward as the clause therein relating to the payment of the cess was less advantageous to him than the corresponding clause in the prospecting license executed by the then proprietor of the estate on 26 11 1907 in respect of another property known as the Bokaro license, and that the Court of Wards executed the deed in question without bestowing any thought to it, (2) that the Court of Wards had no power to enter into the transaction dated 23 11 1917 as it had the effect of preventing the ward from dealing with his estate for over a period of 32 years after he attained majority, (3) that in granting the deed dated 23 11 1917 the Court of Wards considered only the benefit of the grantee and not that of the ward and (4) that the deed was void because no sanction had been given to it by the Court of Wards, as required by section 18 of the Court of Wards Act, 1879.
Held, (1) that the Court of Wards is not in the same position as a guardian of the properties of a minor.
It is a statutory body with powers defined by the Court of Wards Act, 1879.
Under section 18 326 of the Act the Court of Wards is given the power to judge for itself whether a transaction entered into by it on behalf of the ward is for the benefit of the property and the advantage of the ward and its act cannot be impugned in a court of law by the ward on attaining majority unless he shows that it did not act bona fide and in the interests of the ward and that its action amounted to a fraud on the power, or that it did not, in fact, apply its mind to the question whether the act was for the benefit of the property or the advantage of theward, and that though it purported to exercise the power unders.
18, it did not, in fact, come to a. judgment as required bythe section.
Its decision cannot be questioned on the ground that it was erroneous on the merits, or that it was reached without considering some aspects which ought to have been considered, unless the failure to consider them was of such a character as to amount to there being no exercise of judgment at all; Allcroft vs Lord Bishop of London: Lighton vs Lord Bishop of London, ([1891] A.C. 666), relied on.
(2)that assuming that the cess clause in the deed dated 26 3 1915 was less advantageous to the ward than that in the Bokaro license, as the Court of Wards had applied its mind to the question and formed its own judgment on it, its decision is not open to question; (3)that the Court of Wards was competent to enter into the transaction dated 23 11 1917 and extend the period of license so as to enure for a period beyond the date of the ward coming of age, as section 18 of the Act which confers authority on the Court of Wards is general and unqualified in terms and there is no provision in the Act such as there is in section 29(b) of the , that a lease by the Court of Wards was to enure for a period related to the minority of the ward; (4)that assuming that the words in section 18 that the act should be "for the benefit of the property and the advantage of the ward" should be read cumulatively and not disjunctively, the deed dated 23 11 1917 satisfies the requirements of the section inasmuch as the benefits which the transaction conferred on the estate in the form of minimum ground rent, salami and royalty must also enure to the advantage of the ward who will be the person who will receive this revenue; (5)that the requirements as to sanction under section 18 of the Act must be held to be satisfied if the transaction in all its essential particulars had been sanctioned by the Court of Wards, even though there were details to be worked out in furtherance of the sanction and the document as finally drafted had not been submitted again for its approval.
A mere recital in the deed that the transaction was sanctioned is not conclusive and it must be shown that, as a matter of fact, sanction was given, and as the order of the Court of Wards dated 9 10 1917 contained the sanction to the proposal in 327 all its essential particulars it was sufficient compliance with the requirements of the section; Gulabsingh vs Seth Gokuldas, (40 I.A. 117) and Ramkanai Singh Deb Darpashaha vs Mathewson, (42 I.A. 97), relied on.
and (6) that section 18 only requires that the transaction should be entered into with the sanction of the Court of Wards and if the transaction subsequently turns out to be bad on the merits, either in part or in toto, it does not render the sanction originally given ineffective.
|
Appeal Nos. 858 to 861 of 1964.
Appeals by special leave from the judgment and order of the Andhra Pradesh High Court in Second Appeals Nos. 720 and 724 to 726 of 1957.
C.B. Agarwala and T. V. R. Tatachari, for the appellants (in all the appeals).
P. Ram Reddy and K. R. Sharma for the respondent (in all the appeals. ) The Judgment of the Court was delivered by Shelat, J.
All these four appeals by special leave raise a common question regarding interpretation of section 11(1) of the Madras Commercial Crops Market Act, XX of 1933 and Rule 28 of the Rules made thereunder and therefore can be disposed of by a common judgment.
The Act was originally enacted by the Madras Legislature.
It was a law in force immediately before the constitution of the State of Andhra Pradesh and governed the territories now forming part of that State.
By virtue of Andhra Pradesh Act of 1953 and the Adaptation of Laws Order passed on November 1, 1953 by the State Government of Andhra Pradesh it became applicable to the newly formed State of Andhra Pradesh.
By a Notification dated June 27, 1949 the then Government of Madras, in exercise of the power conferred on it by section 2(1)(a), declared coconuts and copra to be commercial crops.
Under section 4 of the Act, the State Government also declared the District of East Godavari as the "notified area" for purposes of the Act in respect of coconuts and copra.
By a further notification dated December 5, 1950 issued under section 4(a) of the Act it established a Market Com 976 mittee at Rajahmundry for the said notified area.
The said Market Committee levied the following fees, viz., (1) a licence fee under section 5(1) of the Act read with Rule 28(3); (2) a licence fee for storage, wharfage etc., under section 5(3) read with Rule 28(3); (3), a registration fee under section 18 read with Rule 37; (4) a fee on the said goods bought and sold within the notified area and under section II (1) read with Rule 28(1); and (5) a fee under the same section on consign ments of coconut oil.
Contesting the levy of fees under items 2 to 5 as being illegal on the ground that they sold coconuts and copra to customers outside the notified area and in some cases outside the State, the appellants filed various suits in the court of the District Munsif, Amalapuram for refund of the said fees collected by the said Committee at different times.
The Market Committee resisted the said suits claiming that the aforesaid provisions conferred power upon it to levy the said fees and that the said levy was valid and legal.
The said suits were tried together and the District Munsif by his judgment dated October 17, 1955, inter alia, held that the levy under section 11(1) read with Rule 28(1) though called a "fee" was really a "tax", that the said provisions empowered the Committee to impose the said tax only when the said goods were bought and sold within the notified area, that the sales effected by the appellants were to customers outside the said area and in some cases outside the State, that the Committee had no power to levy and collect the said fees ' and therefore the appellants were entitled to refund of the said fees and accordingly passed decrees in all the suits.
In appeals by the Committee, the Subordinate Judge, Amalapuram, held that though the appellants purchased the said goods within the notified area they exported them to their customers outside the notified area and outside the State and relying upon the decision in Kutti Koya vs State of Madras() he held that though section II (1) called the said levy as fee it was in substance a tax and that such a tax being oil sales completed at the places of their customers outside the State offended article 286 of the Constitution and was therefore illegal.
The Subordinate Judge, except for deleting the relief granted in respect of licence fee under section 5(3) of the Act, dismissed the appeals and confirmed the judgment and decree of the Trial Court.
The Market Committee thereupon filed Second Appeals in the High Court of Andhra Pradesh.
Before the High Court the controversy centered round the question of fee under section 11 (1) only.
By its common judgment dated November 8, 1961 the High Court relying upon the judgment of a Division Bench of that Court in Satyanarayana and Venkataraju Firm vs Godavari Market Committee(2) held that the word "fee" in section II (1) was in fact a fee and not a tax, The Division Bench also held that the said goods were pur (1) A.I.R., 1954 Mad. 621.
(2) A.I.R. 1959 Andh.
Pradesh 398.
977 chased by the appellants from producers or petty dealers within the notified area and then sold by them to customers outside the said area or the State, that the transactions which were the subjected matter of the levy under section 11(1) were transactions consisting of purchase of the said goods by the appellants and the corresponding sales to them by the producers and petty dealers and not the subsequent sales effected by them to their customers outside the notified area or the State, that therefore the transactions on which the said fee was levied were effected and completed inside the notified area and fell within the expression "bought and sold" in section 11 (1) and therefore the Market Committee rightly levied the said fee on those.
transactions.
In the result, the Division Bench allowed the appeals and dismissed the appellants ' suits.
It is this judgment and decree against which these appeals are directed.
The preamble of the Act states that the Act was passed for making provisions for better regulation of buying and selling of and the establishment of markets for commercial crops.
As stated in M.C.V.S. Arunachala Nadar vs The State of Madras(1), the Act was the result of long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of Commmercial crops to provide suitable and regulated markets, to eliminate middlemen and bring face to face the producer and the buyer so that they meet on equal terms thereby eradicating or at any rate reducing the scope for exploitation of the producers.
It therefore provided a machinery for regulating trade by providing a common place where facilities would be furnished by way of space, buildings and storage accommodation, and where market practices would be regularised and market charges clearly defined and unwarranted ones prohibited, where correct weighment would be ensured by licensed weighmen and all weights would be checked and stamped, where payment on hand would be ensured, where provision would be made for settlement of disputes, where daily prevailing prices would be made available to the grower and reliable market information provided regarding arrivals, stocks, prices etc., and where quality standards would be fixed when necessary and contract forms standardized for purchase and sale.
The result of the implementation of the Act would be thus to give reasonable facilities to the growers of commercial crops ensuring proper price for their commodities.
Section 4(a) (1) provides for the formation of a market com mittee for enforcing the provisions of the Act and the Rules and bylaws framed thereunder.
Sub section (2) lays down that the Committee shall establish in the notified area such number of markets providing such facilities, as the State Government may from time to time direct, for purchase and sale of commercial crops.
Section 5 (1) [1959] Suppl.
1 S.C.R. 92.
978 prohibits any person to set up, establish or use, continue or .allow to be continued any place within the notified area for the purchase or sale of commercial crops except under a licence and in accordance with the conditions thereof.
The Market Committee, however, can exempt from the provisions of this sub section any person who carries on the business of purchasing or selling any .,commercial crop in quantities not exceeding those prescribed by the Rules.
It also exempts from the provisions of this section a person selling a commercial crop which has been grown by him or a co operative society selling a commercial crop which has been grown by any of its members and also a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by the rules.
Section 6 provides that every market committee shall consist of such number of members not exceeding twelve as may be fixed by the State Government and provides for representatives of licencees under section 5 and buyers, sellers and buyers and sellers registered under the Rules prescribed in that behalf.
Section II (1) with which we are concerned in these appeals reads: "The Market Committee shall, subject to such rules as may be made in this behalf, levy fees on the notified commercial crop or crops bought and sold in the notified area at such rates as it may determine.
" The Explanation to sub section (1) provides that all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area.
Sub section 2 provides that the fee chargeable under sub section(1) shall be paid by the purchaser of the commercial crop concerned provided that where such a purchaser cannot be identified the fee shall be paid by the seller.
Section 12 provides that all monies received by a market committee shall be paid into a fund and all expenditure incurred by the market committee shall be defrayed out of the said fund.
The expenditure which the committee can incur is for purposes set out in section 13 which incidentally reflect the object and purpose of the Act.
Section 18 empowers the State Government to make rules including rules for licence fee under section, 5, the registration fee and the prohibition of buying and selling ,of commercial crops in the notified area by persons not so registered and the fee to be levied on commercial crops bought and sold in the notified area.
Rule 28 lays down the maximum fee leviable on commercial crops under section 11 (I) as also the maximum fee payable for licences and registration.
Rule 28 A provides that the fees referred to in sub rule (1), that is, "fees" under section 11 (1), shall not be levied more than once on a commercial crop in a notified area.
These provisions clearly show the policy of safe_guarding the interests of the producers and of guaranteeing to them 979 reasonable return for the crops they would bring to sell without being exploited.
Mr. Agarwala raised the following contentions: (1) that the fee charged by the Market Committee under s.11(1) was on sales effected by the appellants with their customers, some of whom were admittedly outside the notified area and the rest outside the State; (2) that that was the footing on which the parties proceeded with the suits but that case was given up in the High Court and the High Court was in error in permitting the Committee to shift its case and argue that the fee was levied not on those sales but on transactions of purchase entered into by the appellants with the producers and other petty dealers.
It is true that in para 3 of their plaint the appellants averred that their business activities consisted of buying coconuts and copra in East Godavari District and selling them to customers outside the notified area and even the State and that those sales were completed at the respective places of those customers.
The appellants ' case therefore was that in respect of these sales with customers some of whom were outside the notified area and the rest outside the State, the levy of fee was in the former case beyond the ken of section II (1) and in the latter case repugnant to article 286 of the Constitution.
The written statement of the respondent committee denied these allegations.
The Committee asserted that both the purchases and sales took place in the notified area and that though the fee levied by it was on sales by the appellants and though delivery of the said goods thereunder took place outside the notified area the sales in respect thereof were made within the notified area and therefore the question of the levy under section 11 (1) being repugnant to article 286 of the Constitution did not arise.
Besides these pleadings Mr. Agarwala drew our attention to certain notices of demand and circulars issued by the Committee in which it was stated that the said fee was being levied on goods exported outside East Godavari District and that the traders were liable to pay it both on coconuts exported to outsiders and also consumed internally.
That presumably was stated because if the goods were "bought and sold" within the notified area, even if they were subsequently exported outside, section 11(1) would apply.
The practice followed by the appellants and not denied by the Committee was that they used to despatch these goods by rail to their customers.
Railway receipts and hundies were then sent to their bankers at the destination and railway receipts were delivered to the customers on their honouring the hundies Thus the goods were delivered outside the notified area and the sales effected by the appellants to their customers were also completed at places outside the notified area and in some cases outside the State.
On these facts the District Munsif held that property in the goods having passed at destination, sales took place outside the 980 notified area and therefore the fee charged by the Committee was illegal as section 11(1) permitted such a levy only on goods bought and sold within the notified area.
On appeal by the Committee, the Subordinate Judge held that the said fee was a tax, that it was a tax on sales outside the notified area and the State and was not therefore warranted under section 11 (1) and was repugnant to article 286.
It seems that in both the courts, the real issue was lost sight of, viz., whether the goods in respect of which the fee under section 1 1 (I) was levied were goods "bought and sold" within the notified area as envisaged by the section.
In the High Court however the questions convassed were (1) whethe r the fee provided in section 11 (1) was a fee or a tax and (2) even if it was a fee whether the Committee had the power to levy it in respect of goods sold by the appellants outside the notified area.
As already stated the Trial Judge and the Subordinate Judge had proceeded on the footing that the said fee was levied on sales entered into by the appellants with their customers who undoubtedly were outside the notified area.
But the real question that ought to have been dealt with by the Trial, Judge and on appeal by the Subordinate Judge was not whether the appellant 's sales were to customers outside the notified area or the State but whether the fee which was levied was valid.
The question of the validity of the levy entailed another question, viz., whether the levy was on transactions effected by the appellants before they sold those goods to their customers.
Were the appellants entitled to a refund of the fees levied on them under section II (1) ?, was the principal question in the suits.
To decide that question it was necessary for the court to go into the question whether the fee was charged on the sales by the appellants or on the transactions made between them and those from whom they purchased the goods in question.
Since neither the Trial Court nor the Subordinate Judge had gone into that question, it was necessary for the High Court to go into it not only to do justice to the parties but also because that was the real issue arising in the suits and was the crux of the litigation.
There was therefore no question of the High Court allowing the respondent Committee to make out a new case.
The question from the very inception was whether the Committee was competent to levy the fee in question under section 11(1).
To answer that question the court necessarily had to enquire on which transactions could the said fee be levied under section 11(1) and whether it was rightly levied by the Com mittee.
The High Court answered these questions by holding that it was levied, on the transactions effected by the appellants with those from whom they bought the said goods, that section 11(1) dealt with those transactions and was not therefore concerned with the subsequent sales entered into by the appellants with their customers outside the notified area.
Since, according to the High Court, those transactions were admittedly effected within the noti 981 fied area the levy was valid and warranted under section 1 1 (1).
In our view the High Court approached the question from a correct angle and therefore there was no question of its having allowed the Committee to change its case or make out a new case.
That being the position, the next question is whether the Committee could levy fee under section II (1) on the transactions effected by the appellants before they sold those goods to their customers.
Mr. Agarwala 's contention was that the fee levied under section 11(1) could only be in respect of goods "bought and sold" and not in respect of transactions where goods were only "bought" or only "sold".
According to him it is only when a person bought goods and sold those identical goods within the notified area that the fee under section 11(1) could be levied.
According to him, the transactions effected by the appellants consisted in their purchasing the said goods; they stopped at the stage of goods "bought".
Therefore, the other ingredient for a valid levy of the fee not being present the fee levied in the present case was not in accordance with the requirements of section 11 (1) and was unwarranted.
This contention raises the question as to the meaning of the words "bought and sold" in section 11(1).
At first sight they would appear to be susceptible of three meanings; viz., (1) that they mean duality of transactions where the same person buys goods and sells those identical goods in the notified area; (2) that they mean "bought" or "sold" the conjunctive "and" meaning in the context of the sub section the disjunctive "or" and (3) that they apply to a transaction of purchase as the concept of purchase includes a corresponding sale.
When a person buys an article from another person, that, other person at the same time sells him that article and it is in that sense that section 11(1) uses the words "bought and sold.
" The incidence of the fee under section 11(1) is on the goods thus "bought and sold".
This last interpretation was favoured by the High Court of Madras in Louis Dreyfus & Co. vs South Arcot Groundnut Market Committee(1) which has been accepted by the High Court in the present case.
If the construction commended to us for acceptance by Mr. Agarwala were to be correct, viz., that the appellant 's transactions stopped at the stage of goods "bought", they would not be transactions in respect of goods "bought and sold".
If the fee was levied on sales effected by the appellants with their customers its levy would not be valid under section 1 1 (1) and would also be repugnant to article ' 286 where goods were delivered outside the State.
But it is a well settled rule of construction that the court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the (1) 982 manifest intention of the legislature enacting that statute.
The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods.
The mischief to prevent which the Act was enacted was the exploitation of these producers by middlemen and those buying goods from them and therefore the Act provided facilities such as market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated and controlled market and a fair price was obtained by them.
If the construction suggested by Mr. Agarwala were to be accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer and the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them.
Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer ? The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price.
The Act thus aims at transactions which such a producer would enter into with those who buy from him.
The words "bought and sold" used in section 11(1) aim at those transactions where under a dealer buys from a producer who brings to the market his goods for sale.
The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other.
Such a construction is commendable because it is not only in consonance with the words used in section 11(1) but is consistent with the object of the Act as expressed through its various provisions.
The construction on the other hand canvassed by the appellants is defeative of the purpose of the Act and should, unless we are compelled to accept it, be avoided.
The construction which we are inclined to accept acquired some support from the fact that section II makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable.
Mr. Agarwala at first also urged that the fee under section 11 (1) amounted to a tax and that it was in fact a sales tax.
But at the last moment he stated that he did not wish to press that contention and requested us not to express any opinion thereon.
Since the contention is not pressed we need not express any opinion on that ques 983 tion and confine ourselves to the question as to the interpretation of the words "bought and sold" in that section.
In our view the construction placed by, the High Court on section 11(1) was a correct construction and therefore the respondent committee had rightly charged the appellants with said fee.
The appeals therefore fail and are dismissed with costs.
One hearing fee.
| In a prosecution for murder the only eye witness having named the appellant as the assailant in her deposition in the committal court, left out his name in her evidence in the Sessions Court.
She was declared hostile and was allowed to be cross examined.
The Sessions Judge questioned the appellant with reference to the statement of the witness in the committal proceedings and informed him, that it was marked under section 288, Cr.
P.C. He however did not pass an order transferring the earlier deposition to the record of the Sessions Court.
Treating the previous statement as substantive evidence and relying upon the other circumstances in the case, the Sessions Court and the High Court on appeal convicted the appellant.
On appeal to this Court, HELD : The High Court and the Sessions Court were right in convicting the appellant.
Although the technical requirement of section 288, namely, that an order should be passed to indicate that the statement is transferred so as to be read as substantive evidence, was not complied with there was no substantial departure from the requirements of the law and no prejudice was caused to the appellant since he was informed that the statement was being used under section 288.
[124 E G] [Desirability of an order indicating why the earlier deposition was being transferred to the record of the trial court, pointed out.
[124 C D]
|
Civil Appeals Nos.
2001 2002 of 1978.
Appeals by Special Leave from the Judgment and order dated 14 12 1971 of the Kerala High Court in Income Tax Reference No 19 of 1969.
V. section Desai, section P. Nayar and Miss A. Subhashini for the Appellant section T. Desai, N. Sudhakaran and P. K. Pillai for the Respondent.
The Judgment of the Court was delivered by TULZAPURKAR, J.
These appeals by special leave raise a common question whether on proper construction of the Agreement dated November 10, 1955, entered into by the assessee with Kamala Mills Ltd., the latter was the "manager" of the assessee within the meaning of section 384 read with section 2(24) of the and if so, whether the remuneration paid by the assessee to the latter in the two calendar years 1957 and 1958 relevant to the assessment years 195859 and 1959 60 cannot be allowed as business expenditure under section 10(2) (xv) of the Indian Income Tax Act, 1922? The facts giving rise to the question may briefly be stated as follows: The assessee (M/s Alagappa Textiles (Cochin) Ltd.) is a public limited company carrying on business of manufacture and sale of yarn and has its registered office at Alagappa Nagar in Kerala State.
It entered into an Agreement dated November 10, 1955 with Kamala Mills Ltd. Coimbatore for financing and managing the assessee mills at Alagappa Nagar for a period of five years.
Clause 8 of the Agreement provided that Kamala Mills Ltd. shall be paid, for the services rendered by it by way of purchases, sales and management, remuneration at the rate of 1% on all purchases made by it for the assessee mills and at half a per cent on all sales of yarn, yarn waste and cotton waste and other products of the mill.
Pursuant to the aforesaid term Kamala Mills Ltd. drew remuneration to the tune of Rs. 1,03,547/ and Rs. 18,294/ respectively for the calendar years 1957 and 1958 727 corresponding to the assessment years 1958 59 and 1959 60.
These amounts were assessed to tax in the hands of Kamala Mills Ltd. The assessee in its assessment proceedings for the said two assessment years claimed deduction in respect of the said two amounts as business expenditure under section 10(2) (xv) of the Act.
The claim was disallowed by Income Tax officer on the ground that under section 384 of the new , which had come into force on April 1. 1956, the continuation of a body corporate as manager was prohibited for the period beyond six months from the coming into force of the Act, that remuneration paid to Kamala Mills Ltd. subsequent to October 1, 1956, was illegal being in violation of section 384 and, therefore, the deduction claimed in respect of such payment for the calendar years 1957 and 1958 could not be allowed.
In the appeals preferred by the assessee against the decision of the Income Tax officer, it was contended that though the payment of remuneration to a body corporate as Manager after October 1, 1956 was illegal under section 384, the payments were for services rendered and were fully justified by commercial expediency and as such the same should be allowed under section 10(2) (xv) of the Act.
It was also urged that even if the expenses incurred were in violation of the statute such expenses should be allowed since in computing the profits even of illegal business only the net profit was taxed after allowing all the expenses.
The Appellate Assistant Commissioner was not impressed by these arguments; but he disallowed the deduction mainly on the ground that the assessee by its own conduct had disputed its liability to pay any remuneration to Kamala Mills Ltd. after October 1, 1956 and in that behalf he relied on an admitted fact that the assessee had filed a suit against Kamala Mills Ltd. to recover such remuneration which had been paid to it in contravention of section 384 on the basis that since the payment was illegal Kamala Mills Ltd. was holding such amounts of remuneration in trust for and on behalf of the assessee and in such a situation the deduction could not be allowed.
The assessee carried the matter in further appeals to the Tribunal, but the Tribunal confirmed the view of the taxing authorities that under section 384 of the it was not legal for the assessee to have permitted Kamala Mills Ltd. to continue to work as its Manager after October 1, 1956 and that the payment of remuneration after the said date was illegal and could not be considered as valid expenditure for the purpose of Income Tax Act.
fn this behalf the Tribunal relied on two decisions in C.I.T. vs Haji Aziz and Abdul Sakoor Bros. and Raj Woollen Industries vs C.I.T. An argument was raised before the Tribunal that Kamala 728 Mills Ltd. was not only a manager but also a financier and that the remuneration should be treated as having been paid to the financier While observing that it was a new case put forward by the assessee, the Tribunal negatived the contention holding, on construction of the Agreement, that it was by virtue of its position as Manager that Kamala Mills Ltd. was allowed to carry on the financial affairs of the assessee and the remuneration was payable to it as Manager and in no other capacity.
The Tribunal also held that the claim for deduction was in respect of a disputed liability inasmuch as the assessee had not merely filed a suit to recover the amount but had in the meantime obtained a decree against Kamala Mills Ltd., and, therefore, the amounts could not be lawfully claimed as permissible deduction.
At the instance of the assessee the following question was referred to the High Court for its opinion: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in disallowing the claim of the assessee for deduction of Rs. 1,03,547/ and Rs. 18,294/ from the income of the assessment years 1958 59 and 1959 60 as not an admissible business expenditure under sec.
10(2)(xv) of the Indian Income Tax Act, 1922 " The High Court answered the question in the negative in favour of the assessee and against the Department.
The High Court, on construction of the Agreement dated November 10, 1955, took the view that since in the matter of the exercise of its powers and the discharge of its functions thereunder Kamala Mills Ltd. could not be said to be "subject to the superintendence control and direction of the Board of Directors" of the assessee, Kamala Mills Ltd. was not a "manager" of the assessee within the definition given in section 2(24) of the , and, therefore, the illegality under section 384 was not attracted and as such the remuneration paid by the assessee to Kamala Mills Ltd. for services rendered during the calender years 1957 and 1958 was allowable as a business expenditure under section 10(2) (xv) of the Act.
As regards the decree that had been obtained by the assessee against Kamala Mills Ltd. the High Court observed that the appeal filed by Kamala Mills Ltd. against the said decree was still pending in the High Court and if ultimately the appeal was dismissed and the amounts were recovered back from Kamala Mills Ltd., the assessee could be taxed on those amounts under section 41(1) of the 1961 Act, but that could not be a valid ground for disallowing the deduction claimed by the assessee.
The Revenue has challenged in these appeals the view of the High Court that Kamala Mills Ltd. was not the Manager of the 729 assessee within the meaning of section 384 read with section 2(24) of the and the further view that the remuneration paid to Kamala Mills Ltd. during the calendar years 1957 and 1958 was deductible as business expenditure under section 10(2) (xv) of the Act.
Before we consider the principal question relating to the proper construction of the Agreement dated November 10, 1957, it will be desirable to note the relevant provisions of the Indian Companies Act, 1913 as also the new , which have a bearing on the question at issue.
Since the Agreement between the assessee on the one hand and the Kamala Mills Ltd. On the other was entered into at a time when the Indian Companies Act, 1913 was in force it will be proper first to refer to the definition of 'Manager ' given in section 2(9) of the said Act.
Section 2(9) ran thus: "2(9) "manager" means a person who, subject to the control and direction of the directors has the management of the whole affairs of a company, and includes a director or any other person occupying the position of a manager by whatever name called and whether under a contract of service or not.
It will be clear that to satisfy the aforesaid definition a person, which could include a firm, body corporate or an association of persons, apart from being in management of the whole affairs of.
a company had to be "subject to the control and direction of the directors".
This definition has undergone a substantial change under the .
Under this Act section 2(24) defines the expression "manager" thus.
2(24) "manager means an individual (not being the managing agent) who, subject to the superintendence, control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not." In this definition three conditions are required to be satisfied: (a) the manager must be an individual, which means that a firm or a body corporate or an association is excluded and cannot be a manager (a fact which is expressly made clear in section 384), (b) he should have the management of the whole or substantially the whole affairs of the company and (c) he should be subject to the superintendence, control and directions of the Board of Directors in the matter of managing the affairs of the company.
Subject to the changes made in the aspects 730 covered by (a) and (b), in both the definitions the aspect that a manager has to work or exercise his powers under the control and directions of the Board of Directors is common and essential.
In fact it is this aspect which distinguishes 'Manager ' from 'Managing Agent '.
If the definition of 'Manager ' as given in section 2(24) is compared with that of 'Managing Agent ' as given in section 2(25) it will appear clear that though there is an overlapping of the functions of the manager as well as the managing agent of the company the essential distinction seems to be that whereas the manager has to be subject to the suprintendence, control and direction of the Board of directors the managing agent is not so subject.
Section 384 of the in express terms prohibits, after the commencement of the Act, the appointment of a firm or a body corporate or an association of persons as a manager as also the continuation of such employment after expiry of six months from such commencement.
It runs thus: "384.
No company shall, after the commencement of this Act, appoint or employ, or after the expiry of six months from such commencement continue the appointment or employment of, any firm, body corporate or association as its manager.
The aforesaid provision positively disqualifies a firm, body corporate or association from being appointed as manager of a company or from continuing the employment of a firm, body corporate or association as manager after the expiry of six months from the commencement of the Act.
Obviously, to attract the prohibition or disqualification contained in section 384, a firm, body corporate or association must be a "manager" within the meaning of section 2(24), that is to say, it should be in management of the whole or substantially the whole of the affairs of a company, and should be under superintendence, control and direction of the Board of directors of the company.
It was not seriously disputed that under the terms and conditions contained in the Agreement dated November 10, 1955, Kamala Mills Ltd. could be said to be in management of substantially the whole of the affairs of the assessee mills but the question is whether it was working under the superintendence, control and direction of the Board of directors of the assessee so as to be its 'Manager ' within section 2(24) of the Act? Turning now to the Agreement in question it may be stated that at the commencement of the deed the parties thereto have been described in a particular manner, namely, the assessee has been described 731 and referred to as the "Company" while Kamala Mills Ltd. has been described and referred to as the "Managers" throughout the document.
Then follow two recitals which make very clear the object or purpose with which the Agreement was entered into; according to these recitals the assessee was not having sufficient finance to carry on its business of manufacture and sale of yarn and the Board of directors thought it proper of find out a financier who was agreeable to help the assessee monetarily and take active interest in its business and that since Kamala Mills Ltd. agreed to assist the assessee with sufficient finance and to manage the assessee 's mill on certain terms and conditions which the Board of Directors had approved, the Agreement was executed between the parties.
Then follow the operative parts of the deed setting out the terms and conditions on which Kamala Mills Ltd. agreed to provide sufficient finance as also to manage the business of the assessee.
Clause 1 enlisted in sub clauses (b) to (m) the powers and functions which were to be exercised and performed by Kamala Mills Ltd. during the period of five years for which the Agreement was to operate; such powers were conferred and functions entrusted for the purpose of "managing and running the mill" of the assessee; inter alia, Kamala Mills Ltd. was to make purchases of all cotton, staple fibre or any other raw material for the manufacture of the yarn and to enter into contracts in that behalf at such rates and prices as it may deem fair and proper and make payments for all such purchases and incur all expenses incidental thereto; it was also to make purchases of all stores and spares and other materials necessary for the manufacture of yarn; it was to appoint all staff, technical or non technical and workers skilled and unskilled as also clerks and other staff necessary for the working of the mill and fix their terms and remuneration and could discharge or dismiss or take disciplinary action against them; it had to sell and make contracts for sale for immediate or future delivery of yarn, yarn waste or cotton waste or any other material or products of the mill at such rates or prices and on such terms and conditions as it may think fit; it could decide, lay down and change from time to time the programme of manufacture of yarn and other products of the mill and to insure against fire and other risks all cotton, yarn, material, stock in trade and incur and pay all premia necessary in that behalf; it could pledge, secure and hypothecate all stocks and stores and stock in trade with such bank or banks where arrangements for overdrafts shall have been completed by the Board of Directors; and it could claim, demand, realise and sue for all goods, materials and amounts due to the assessee in the exercise and carrying out of any or all of the powers conferred under sub cls.
(a) to (k).
Clause 2 of the Agreement stipulated that Kamala Mills Ltd. shall 732 provide funds or arrange for finance necessary for exercising the powers of purchase of cotton, stores and other materials and for payment of wages, salaries, commissions and allowances and for meeting all expenses incidental to manufacture and sale of yam and other pro ducts of the mill.
Under clause 3 the assessee was to open a separate Current Account and an overdraft Account for a limit not exceeding Rs. 30,00,000/ with such bankers as Kamala Mills may require with power to Kamala Mills to operate on the said accounts exclusively by itself and in the name of the assessee and it was to have power to receive, endorse, sign, transfer and negotiate all bills, cheques, drafts etc.
that may be received in the name of the assessee in the course of the management of the mill and it was specifically agreed that no one except Kamala Mills shall have power to operate on the said accounts.
Clause 4 entitled Kamala Mills Ltd. to charge the assessee interest at the rate of 7.5% per annum with half yearly rests on all advances made by it and funds provided for the purposes set out in clause 2.
Clause 5 gave Kamala Mills Ltd. a first and prior charge on all the stocks and stores and stock in trade for all the moneys and amounts that may be advanced by it to the assessee except to the extent of any charge or security of such stocks and stores and stock in trade that may be created in favour of the banks for the overdraft account and such charge in favour of Kamala Mills was to be a possessory charge.
Clause 8 quantified the remuneration payable to Kamala Mills Ltd. for services rendered by way of purchases, sales, and the management of the mill at the rate of 1 % on all purchases made by it for the assessee mill and at 0.5% on all sales of products effected for and on behalf of the assessee.
Clause 10 required Kamala Mills Ltd. to maintain proper accounts in respect of all purchases, sales and expenses, commissions and remunerations due to it etc.
and submit to the assessee monthly statements of accounts.
Clause 11 put the outer limit of Rs. 15,00,000/ at any one point of time on the advances and financial assistance to be given by Kamala Mills Ltd. to the assessee and it was provided that if and when sums over and above the said limits become necessary to be advanced, Kamala Mills would be entitled to appropriate and take for itself as owner such quantity of yarn as may be in stock as in value would be equivalent, at cost or market value whichever was lower, to the sum that it may be obliged to advance over and above Rs. 15,00,000/ .
Clause 13 of the Agreement is very important having a crucial bearing on the question at issue and may be set out verbatim.
It ran thus: "13.
The Company (assessee) either represented by its Managing Agent or Board of Directors shall not exercise the powers delegated to the Managers (Kamala Mills Ltd.) 733 under the foregoing clauses, except by way of general supervision and advice, nor interfere with the discretion of the Managers in the exercise of their functions and powers vested in them by virtue of this Agreement.
" Under cl. 14 it was provided that the Managers ' (Kamala Mills Ltd.) powers were limited in the manner aforesaid and they were not and shall not be deemed to be managers in charge of the whole affairs of the company within the meaning of section 2(9) of the Indian , a significant provision showing the intention of the parties that Kamala Mills Ltd. was not to be regarded as a 'Manager ' under the Indian Companies Act, 1913.
Clause 16 is significant and it provided that the Agreement shall be, in force for a period of five years commencing from the date thereof and that "this Agreement for management being an Agency coupled with interest", it could be revoked before the expiry of the said period of five years by 12 months notice in writing being given by one party to the other but if the assessee were to revoke it the assessee shall be liable to compensate Kamala Mills for the loss of remuneration for the unexpired period of the Agreement at the average rate at which Kamala Mills Ltd. had been earning by way of remuneration under the Agreement till the date of such notice of termination.
A modification by introducing one additional term.
in the Agreement was made on November 21, 1955 but the additional term is not material for our purposes.
On a perusal of the aforesaid clauses of the Agreement in question two or three things stand out very clearly.
It is true that at the commencement of the deed Kamala Mills Ltd. has been described and referred to as the "Managers" of the assessee throughout the document but mere label or nomenclature given to a party in the document will not be decisive.
It is also true that the.
several powers and functions were entrusted to Kamala Mills Ltd. under cl. 1 of the Agreement to enable it "to manage or run the mill" of the assessee.
But simply because powers and functions were given to Kamala Mills Ltd. for the purpose of "managing and running the mills" of the assessee, it would not follow that Kamala Mills Ltd. was in truth and substance a 'manager ' of the assessee within the meaning of section 2(24) of the 1956 Act.
For this purpose the Agreement will have to be read as a whole and the Court will have to decide that was the true, intention of the parties in entering into such agreement.
The two recitals clearly indicate the object with which and the purpose for which the Agreement was entered into.
It does appear that the assessee was in financially straightened circumstances and on that account was utterly unable to carry on its business of manufacture and sale of yarn and, therefore, 734 the board of directors were in search of a financier who would make available the necessary finances for the running of the mill as also to take active interest in the business of the assessee and when Kamala Mills Ltd. agreed "to assist the company (assessee) with sufficient finance and manage the mill" belonging to the assessee on terms and conditions that were approved b y the Board of Directors of the assessee that the Agreement was entered into between the parties; in other words, it is clear that the dominant object with which the Agreement was entered into was that Kamala Mills Ltd. should really act as financier so that the assessee mill could run and since heavy finances were to be procured by Kamala Mills Ltd. large powers and functions connected with the working of the mill were entrusted to it.
This aspect becomes abundantly clear from cl. 16 of the Agreement wherein the parties expressly provided that this Agreement for management was by way of and amounted to an Agency coupled with interest so far as Kamala Mills Ltd. was concerned and, therefore, revocation of the Agreement before the expiry of the five years ' period was made dependent upon 12 months ' notice in writing being given by one party to the other and further if such revocation was done by the assessee suitable compensation was made payable to Kamala Mills Ltd. In other words, managerial functions were incidental and had to be entrusted to Kamala Mills because of the financier 's role undertaken by it.
The large powers and functions entrusted to Kamala Mills Ltd. under the several sub clauses of cl. 1 of the Agreement do show that management of substantially the whole, if not the whole, of the affairs of the assessee company had been made over to Kamala Mills Ltd. But the crucial question is whether such management was to be done by Kamala Mills Ltd. under "the superintendence, control and direction of the Board of Directors" of the assessee and in that behalf cl. 13 of the Agreement which we have quoted above is very eloquent.
In terms it provided that so far as the powers conferred and the functions entrusted to Kamala Mills Ltd., were concerned, the Board of Directors shall not exercise or perform the same except by way of general supervision and advice and it was further made clear that the Board of Directors shall not interfere with the discretion of Kamala Mills Ltd. in the exercise of their functions and powers vested in it by virtue of the Agreement.
In other words, the general supervision or advice of the Board of Directors was of such character that the Board had not say whatsoever nor could it interfere with the discretion of Kamala Mills Ltd. in the matter of the exercise of the powers and the discharge of the functions entrusted to Kamala Mills Ltd. under the Agreement.
It is thus clear to us that the dominant object of the Agreement was that Kamala Mills Ltd. should act as financiers of the assessee mill and in the 735 matter of the exercise of its powers and discharge of its functions Kamala Mills Ltd. was never "subject to the superintendence, control or direction" of the Board of directors of the assessee.
If this position clearly emerges on true construction of the Agreement in question then it is obvious that Kamala Mills was not acting or working as the "Manager" of the assesses within the meaning of section 2(24) of the and as such the illegality of section 384 of that Act was not attracted.
In this view of the matter, the remuneration paid by the assessee to Kamala Mills Ltd. for the two calendar years 1957 and 1958 relevant to the assessment years 1958 59 and 1959 60 could not be regarded as being in violation of section 384 of the and as such the expenditure incurred by way of paying such remuneration would be deductible as business expenditure under section 10 (2) (xv) of the Income Tax Act.
In view of our aforesaid conclusion the aspects whether the assessee had disputed its liability to pay such remuneration to Kamala Mills Ltd. Or had filed a suit at the instance of the Company Law Board to recover it back from Kamala Mills Ltd. Or had obtained a decree in that behalf against Kamala Mills Ltd. become irrelevant.
However, we would like to place on record the fact that the decree obtained by the assessees against Kamala Mills Ltd. has been reversed or set aside in appeal by the Kerala High Court a fact which was brought to our notice by the Advocate on Record for the assessee communicated to him by his client in a letter dated 22nd August, 1979.
However, even 7 if in further appeal the trial court 's decree were restored and the assessee were to recover back the remuneration the assessee can be taxed on the two amounts under section 41(1) of the 1961 Act.
In our view, therefore, the High Court was right in answering the question in favour of the assessee.
The appeals are, therefore, dismissed with costs.
V.D.K. Appeals dismissed.
| Respondent, assessee (M/s. Alagappa Textiles (Cochin) Limited company was carrying on business of manufacture and sale of yarn.
It entered into an Agreement dated November 10, 1955 with Kamala Mills Ltd., Coimbatore for financing and managing the assessee Mills at Alagappa Nagar for a period of five years.
Clause 8 of the Agreement provided that Kamala Mills Ltd. shall be paid for the services, rendered by it by way of purchases, sales and management remuneration at the rate of 1% on all purchases made by it for the assessee Mills and at half a percent on all sales of yarn, yarn waste and cotton waste and other products of the Mill.
Clause 13 of the agreement was to the effect that "the company (assessee) either represented by its managing Agent or Board of Directors shall not exercise the powers delegated to the Managers (Kamala Mills Ltd. under the foregoing clauses, except by way of general supervision and advice nor interfere with discretion of the managers in the exercise of their functions and powers vested in them by virtue of this Agreement." Clause 14, provided that the Managers (Kamala Mills Ltd.) powers were limited in the manner aforesaid and shall not be deemed to be manager in charge of the whole affairs of the company within the meaning of section 2(9) of the companies Act, 1913.
Clause 16 provided that the agreement shall be in force for a period of five years commencing from the date thereof and that "this Agreement for management being an Agency coupled with interest" could be revoked before the expiry of the said period of five years by 12 months ' notice in writing being given by one party to the other, but if the assessee were to revoke it the assessee shall be liable to compensate Kamala Mills for the loss of remuneration for, the unexpired period of the Agreement at the average rate at which Kamala Mills Ltd. had been earning by way of remuneration under the Agreement fill the date of such notice of termination Pursuant to the aforesaid terms, Kamala Mills Ltd. drew remuneration to the tune of Rs. 1,03,547/ and Rs. 18,249/ respectively for the calendar years 1957 and 1958 corresponding to the assessment years 1958 59 and 1959 60.
The amounts were assessed to tax in the hands of Kamala Mills Ltd. Respondent, Assessee in its assessment proceedings for the said two assessment years claimed deduction in respect of the said two Amounts as business expenditure under section 10(2)(xv) of the Income tax Act.
The claim was disallowed by the Income Tax officer on the ground that under section 384 of the companies Act.
1956 which had come into force on April 2, 1956 the continuation of a 724 body corporate as manager was prohibited for the period beyond six months from the coming into force of the Act, that the remuneration paid to Kamala Mills Ltd. subsequent to October 1, 1956 was illegal being in violation of section 381.
The Appellate Assistant Commissioner rejected the Appeal mainly on the ground that the assessee by its own conduct had disputed its liability to pay any remuneration to Kamala Mills Ltd. as after October 1, 1956 and in that behalf he relied on an admitted fact that the assessee had filed a suit against Kamala Mills to recover such remuneration which had been paid to it in contravention of section 384 of the on the basis that since the payment was illegal Kamala Mills was holding such amounts of remuneration in trust for and on behalf of the assessee.
Respondent carried the matter in further appeals to the Tribunal, but the Tribunal confirmed the view of the taxing authorities.
On a reference, the High Court answered the question in the negative in favour of the assessee and against the Revenue.
The High Court held that Kamala Mills could not be said to be "subject to the superintendence, control and directions of the Board of Directors" of the respondent and therefore was not a "manager" of the assessee within the meaning of section 2(14) of the , so as to attract the illegality under section 384 ibid.
and (b) that in view of the provisions of section 41(1) of the Income tax Act, the pendency of an appeal against the Judgment the suit for recovery could not be a valid ground for disallowing the deduction permissible under ) section 10(2)(xv) of the Income tax Act.
Dismissing the appeal by Revenue by special leave, the Court ^ HELD: 1.
Section 384 of the in express terms prohibits, after the commencement of the Act, the appointment of a firm or a body corporate or an association of persons as manager as also the continuation of such employment after expiry of six months from such commencement.
To attract the prohibition or disqualification, under this section, a firm, body corporate or association must be a "manager" within the meaning of section 2(24), that is to say, it should be in management of the whole or substantially the whole of the affairs of a company and should be under superintendence, control and direction of the Board of Directors of the company [730 C D, E F] 2.
Section 2(24) of the requires three conditions to be satisfied: (a) the Manager must be an individual, which means that a firm or body corporate or an association is excluded and cannot be a Manager (a fact which is expressly made clear in section 384).
(b) he should have the management of the whole or substantially the whole affairs of the company and (c) he should be subject to the superintendence, control and directions of the Board of Directors in the matter of managing the affairs of the company.
Subject to the changes made in the aspect covered by (a) and (b), in both the definitions [section .2(9) of 1913 Act and section 2(24) of the 1956 Act], the aspect that a Manager has to work or exercise his powers under the control and directions of the Board of Directors is common and essential.
In fact, it is this aspect which distinguishes 'Manager ' from "Managing Agent".
A comparison of the definition of "Manager" as given in s; 2(24) of the 1956 Act with that of "Managing Agent" in section 2(25) makes it clear that though there is an overlapping of the functions of the Manager as well as the Managing Agent of the company the essential distinction is that whereas the 725 Manager has to be subject to the superintendence, control and direction of the Board of Directors, the managing Agent is not so subject.
[729 G H, 730 A C] 3.
On a perusal of the clauses and in particular clauses 8, 13, 11 and 16 of the Agreement dated November 10, 1955 in the instant case, two or three things stand out very clearly.
It is true that at the commencement of the deed Kamala Mills Ltd. has been described and referred to as the "Managers" of the asses see throughout the document but mere label or nomenclature given to a party in the document will not be decisive.
It is also true that the several powers and functions were entrusted to Kamala Mills Ltd. under clause 1 of the Agreement to enable it "to manage or run the Mill" of the assessee.
But simply because powers and functions were given to Kamala Mills Ltd. for the purpose of "managing and running the Mills" of the assessee, it could not follow that Kamala Mills Ltd. was in truth and substance a 'manager ' of the assessee within the meaning of section 2(24) of the 1956 Act.
For this purpose the Agreement will have to be read as a whole and the Court w ill have to decide what was the true intention of the parties in entering into such Agreement.
[733 E G] 4.
The dominant object with which the Agreement was entered into was that Kamala Mills Ltd. should really act is a financier so that the assessee Mill could run and since heavy finances were to be procured by Kamala Mills Ltd. large powers and functions connected with the working of the mill were entrusted to it.
This aspect become abundantly clear from cl. 16 of the Agreement wherein the parties expressly provided that this Agreement for management was by way of and amounted to an Agency coupled with interest so far as Kamala Mills Ltd. was concerned and, therefore, revocation of the Agreement before the expiry of five years ' period was made dependent upon 12 months ' notice in writing being given by one party to the other and further if such revocation was done by the assessee suitable compensation was made payable to Kamala Mills Ltd. In other words, managerial functions were incidental and had to be entrusted to Kamala Mills because of the financier 's role undertaken by it.
The large powers and functions entrusted to Kamala Mills Ltd. under the several sub clauses of cl. 1 of the Agreement do show that management of substantially the whole, if not the whole, of the affairs of the assessee company had been made over to Kamala Mills Ltd. [734 B E] 5.
Clause 13 of the Agreement which is very eloquent.
provided that so far as the powers conferred and the functions entrusted to Kamala Mills Ltd. were concerned, the Board of directors shall not exercise or perform the same except by way of general supervision and advice and it was further made clear that the Board of Directors shall not interfere with the discretion of Kamala Mills Ltd in the exercise of their functions and powers vested in it by virtue of the Agreement.
In other words, the general supervision or advice of the Board of directors was of such character that the Board had no way whatsoever nor could it interfere with the discretion of Kamala Mills Ltd. in the matter of the exercise of the powers and the discharge of the functions entrusted to Kamala Mills Ltd. under the Agreement.
It is thus clear that the dominant object of the Agreement was that Kamala Mills Ltd. should act as financiers of the assessee Mill and in the matter of the exercise of its powers and discharge of its functions Kamala Mills Ltd. was never "subject to the superintendence control or direction" of the Board of 726 directors of the assessee.
This is the position which clearly emerges on true construction of the Agreement.
[734 F H, 735A] 6.
Therefore, Kamala Mills Ltd. was not acting or working as the "Manager" of the assessee within the meaning of section 2(24) of the and as such the illegality of section 384 of the Act was not attracted.
In this view of the matter, the remuneration paid by the assessee to Kamala Mills Ltd. for the two calendar years 1957 & 1958 relevant to the assessment years 1958 59 and 1959 60 could not be regarded as being in violation of section 384 of the companies Act, 1956 and as such the expenditure incurred by way of paying such remuneration would be deductible as "Business Expenditure" under section 10(2)(xv) of the Income tax Act, 1922.
[735A D]
|
Appeal No. 1948 of 1966.
Appeal from the judgment and decree dated March 22, 1965 of the Gujarat High Court in First Appeal No. 718 of 1960.
Purshottam Trikamdas, M.H. Chhatrapati and A.K. Varma, for the appellant.
G.L. Sanghi, Urmila Kapur and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The appellant was the owner of land bearing survey No. 910 situated on the Bhachau Rahapur Road in Kutch District.
In November 1949 the Government of Kutch took possession of the land under an arrangement that the Government would give to the appellant in exchange other suitable lands of equal value.
On that date Kutch was part of the territory of India and the Land Acquisition, Act, 1894 was in force there.
After taking possession of the land the Government constructed thereon the State Guest House and the Court House.
Thereafter the Government was neither willing to return the land nor to give other suitable land in exchange and instead it decided to acquire the land compulsorily.
On February 1, 1955 the Government issued a notification under sec.
6 (1 ) of the Land Acquisition Act declaring that the land was needed for public purposes stating that possession of the land had already been taken over and directing the Collector to take action under sec.
The necessary action was duly taken and in due course the Collector made his award on April 22, 1957.
The appellant objected to the amount of compensation and asked the Collector to make a reference to the Court under sec.
The Collector duly made the reference.
At the hearing of the reference before the District Judge, Kutch, the Government conceded that the appellant was entitled to the market value of the land as on February 1, 1955.
The District Judge awarded compensation accordingly.
The Government filed an appeal in the High Court.
At the hearing of the appeal the Government contended that in the absence of a notification under sec. 4( 1 ), no compensation could be awarded to the appellant.
The High Court accepted the contention and observed that the appellant would be at liberty to contend in other proceed 62 ings that the acquisition was bad in the absence of a notification under sec.
4( 1 ).
In this view of the matter the High Court allowed the appeal and set aside the order of the District Judge.
The present appeal has been filed after obtaining a certificate from the High Court.
The main question arising in this appeal is whether the Government can take up inconsistent positions in Court at successive stages of the same litigation to the detriment of its opponent and whether having conceded before the District Judge that the appellant was entitled to the market value of the land on February 1, 1955 it could at the appellate stage resile from that position and contend that there was no notification under sec.
4(1) on that date and that consequently its opponent was not entitled to any compensation.
The scheme of the Land Acquisition Act is well known.
If the Government desires to acquire land, it has to issue a preliminary notification under sec.
4( 1 ) declaring that the land is needed or is likely to be needed for any public purpose.
This notification has to, be issued in order to give an opportunity to all persons interested in the land under section 5A( 1 ) to object to the acquisition within 30 days after the issue of the notification.
After hearing the objections the Collector has to make a report under sec.
5A(2).
On considering this report the Government may issue a notification under sec.
6 (1 ) declaring that the land is needed for a public purpose.
In cases covered by see.
17(4) the Government may direct that the provisions of sec.
5A shall not apply and if it does so a declaration may be made under sec.
6( 1 ) at any time after the publication of the notification under sec.
4 (1 ).
When the Collector has made an award under sec.
11, he may under see.
16 take possession of the land which thereupon vests in the Government.
Section 18 requires the Collector to make a reference to Court on the application of any person interested in the land who has not accepted the award.
It is the market value of the land at the date of the publication of the notification under sec.
4( 1 ) that can be awarded as compensation by the Collector under sec.
11 and by the Court under sec.
These provisions show that the issue of the notification under sec.
4(1) is a condition precedent to the acquisition of the land.
Where the procedure under sec.
5A has to.
be followed, there must necessarily be an interval of time between the issue of the notification under sec.
4(1) and the notification under sec.
But where sec.
5A does not stand in the way, the prior publication of a notification under 4( 1 ) is not a condition precedent to the publication of a notification under sec.
6( 1 ).
For this reason this Court held in Somavanti vs State of Punjab(1) that where an order was passed [1963] 2, S.C.R. 775, 821 823. 63 under sec.
17(4) dispensing with the procedure Under sec.
5A, it was lawful for the Government to publish both the notifications on the same date.
The procedure under sec.
5A being entirely for the benefit of the persons interested in the land they may waive it, see Toronto Vol.
36, p. 444: "A statutory right which is granted a privilege may be waived either altogether or in a particular case.
" If all persons interested in the land waive the benefit of the procedure under sec.
5A the Government may lawfully issue a composite notification under secs.
4 ( 1 ) and 6 ( 1 ).
In this background let us examine ,the facts of the present case.
The Government having constructed buildings on the land was not in a position to restore it and had: no option but to acquire it compulsorily.
With a view to make the acquisition the Government published a notification under sec.
6( 1 ) on February 1, 1955.
On finding that there was no separate notification under sec.
4( 1 ) the Government had a choice between two courses of conduct.
It could say that in the absence of such a notification the acquisition was invalid and that no compensation could be awarded under sec.
If it did so it would be compelled to start fresh acquisition proceedings and pay a larger sum by way of compensation.
The other course was to treat the notification of February 1, 1955 as.
a composite one under secs.
4(1) and 6(1) with the consent of the appellant and to say that the market value of the land on that day could be awarded by way of compensation.
The Government elected to choose the latter course.
At the hearing of the reference, it conceded that the appellant was entitled to the market value of the land on February 1, 1955.
The appellant agreed to accept compensation on that footing.
Having regard to the consent of both parties, it could properly be assumed that the procedure of section 5A had1 been waived by the appellant and that the notification of February 1, 1955 could be treated as a composite one under sections 4 ( 1 ) and 6 ( 1 ).
The District Judge could therefore lawfully award the market value of the land that day.
Relying on the concession made by the Government, the appellant acted to its detriment.
It did not challenge the acquisition and took no steps to recover the land.
The result is that the Government has been in adverse possession of the land for more than 12 years since 1949 and has gained an advantage which it could not otherwise obtain.
In these.circumstances the Government cannot be permitted to resile from the election which it deliberately made and to say that the appellant is not entitled to the market value of the land on February 1, 1955.
A party litigant cannot be permitted to take up inconsistent positions in (1) 64 Court to the deteriment of his opponents [see Rama Charan Chakrabarty vs Nimai Mondal(1), Bigelow on Estoppel, 6th ed., page 783].
He cannot approbate or reprobate (see Halsbury 's Laws of England, 3rd, ed., vol.
15 article 340).
The concession cannot now be retracted.
The High Court should have disposed of the appeal before it on the footing that the appellant is entitled to the market value of the land on February 1, 1955.
As the High Court did not hear the appeal on the merits, the matter must be remanded to it for final disposal.
In the result, the appeal is allowed, the order of the High Court is set aside and the matter is remanded to the High Court for disposal on the merits.
The respondent shall pay to the appellant the costs of the appeal in this Court.
R.K.P.S. Appeal allowed.
(1) 15 C.L.J. 58.
| In 1949 the Government took possession of certain land belonging to the appellant under an arrangement whereby the Government was to give to the appellant in exchange other suitable lands of equal value.
After the Government had constructed some buildings on the land, it decided to acquire the land compulsorily.
On February 1, 1959, the .Government issued a notification under section 6(1) of the Land Acquisition Act, 1894, declaring that the land was needed for public purposes and stating that possession of the land had already been taken.
The Collector made an award on April 22, 1957 but the appellant objected to the amount of compensation and the Collector, on his application, made a reference to the Court under section 18.
At the hearing of the reference before the District Judge, the Government concluded that the appellant was entitled to the market value of the land as on February 1, 1955 and the District Judge awarded compensation accordingly.
Thereafter the Government filed an appeal in the High Court and contended that in the absence of a notification under section 4(1); no compensation could be awarded to the appellant.
The High Court allowed the appeal and set aside the order of the District Judge.
On appeal to this Court, HELD: Allowing the appeal: The Government having constructed buildings on the land was not in a position to restore it and had no option but to acquire it compulsorily.
With a view to make the acquisition the Government published a notification under sec.
6(1) on February 1, 1955.
On finding that there was no separate notification under sec.
4(1) the Government had a choice between two courses.
It could say that in the absence of such a notification the acquisition was invalid and that no compensation could be awarded under sec.
If it did so it would be compelled to start fresh acquisition proceedings and pay a larger sum by way of compensation.
The other course was to treat the notification of February 1, 1955 as a composite one under sections 4(1) and 6(1) with the consent of the appellant and to say that the market value of the land on that day could be awarded by way of compensation.
The Government elected to choose the letter course and the appellant agreed to accept compensation on that footing.
Having regard to the consent of both parties, it could properly be assumed that the procedure of section 5A had been waived by the appellant and that the notification of February 1, 1955 could be treated as a composite one under sections 4(1) and 6(1).
The District Judge could therefore lawfully award the market value of the land on that day.
[63 C G] Somavanti.
vs State of Punjab, , 821 823 and Toronto Corpr.
vs Russell, ; referred to.
61 Furthermore, relying on the concession made by the Government the appellant had acted to its detriment in that it did not challenge the acquisition and the Government had come to be in adverse possession of the land for more than 12 years.
In these circumstances the Government could not be permitted to resile from the election which it deliberately made and to say that the appellant was not entitled to the market value of the land on February 1, 1955.
[63 G H] Rama Charan Chakrabarty vs Nimai Mondal, 15 C.L.J. 58; referred to,
|
Civil Appeal No. 22 15(NA) of 1988.
From the Judgment and Order dated 2.11.87 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 478 of 86 D (Order No. 877 of 1987 D.) A.K. Ganguli, T.V.S.N. Chari, P. Parmeswaran and Sushma Suri for the Appellant.
Soli J. Sorabjee, R. Narain, Kamal Mehta, P K. Ram and D.N. Misra for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal under section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ').
The appeal is directed against the order dated 2nd November, 1987 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal ').
The respondent, viz., M/s Ambalal Sarabhai Enterprises manufacture sorbitol failing under item 68 of the erstwhile Central Excise Tar iff.
There was a visit to the factory premises of the re spondent by the Central Excise Officers on 26th February, 1985.
It was 787 allowed that it was found that the respondent manufactured and captively consumed starch hydrolysate but the respondent had failed to take out a licence with reference to the said manufacture of starch hydrolysate and had been removing the same without, according to the appellant, payment of duty and without observing the necessary central excise formali ties.
It was the view of the revenue that starch hydrolysate was glucose and, therefore, fell under Item 1 E of the Central Excise Tariff, which covered glucose in whatever form including liquid glucose.
Accordingly, a show cause notice was issued to the respondent.
A reply was filed on behalf of the respondent contending that starch hydrolysate was not "goods" since the same was not marketable and, therefore, no excise duty would be payable on the same.
In those circumstances, it was submitted that the proposed adjudication by the Collector following the aforesaid notice was without jurisdiction in view of section 11A of the Act.
It was urged that starch hydrolysate is not glucose and that even if the same was liable for duty it would not be under item E.
According to him, starch hydrolysate was an interme diate product in the manufacture of sorbitol and no duty could be demanded on the same.
There were adjudication proceedings thereafter.
In the said proceedings, affidavits were filed on behalf of the respondent, witnesses on behalf of the revenue were cross examined and the Collector also cross examined the witnesses of the respondent.
By an order dated 6th December, 1985, the Collector of Central Excise, Baroda rejected frae contention of the respondent.
It was held by him that starch hydrolysate was glucose and fell under item 1 E of the Central Excise Tariff and that the respondent had suppressed the fact of manufacture thereof for consumption in the further manufacture of sorbitol.
In the premises, he ordered the respondent to pay excise duty amounting to Rs.34,92,559.55 paise and imposed a penalty of Rs. 10 lakhs.
Aggrieved by the said order of the Collector, the respondent preferred an appeal before the Tribunal.
The Tribunal by its order dated 2nd November, 1987, being the order under appeal, held that starch hydrolysate manufac tured by the respondent is not and never was marketable commodity, and hence that would not be "goods" on which excise duty could be charged.
In the premises, the Tribunal allowed the appeal filed by the respondent and set aside the order of the Collector.
Aggrieved thereby, the appellant has come up in appeal to this Court under section 35L(b) of the Act.
On behalf of the appellant, Shri Ganguly contended that the Tribunal misdirected itself in applying the proper test for the determination of the question.
He urged that the true test to determine in a 788 matter of this nature was to consider not only whether starch hydrolysate was actually marketable but also to consider whether conceptually the said goods in question were capable of being marketable.
It was urged by Shri Ganguly that the Tribunal had misdirected itself in not appreciating this aspect of the matter and did not as such examine or view the evidence on record in the proper per spective.
He urged that in the aforesaid light and in view of the findings made by the Collector, there was no ground for the Tribunal to interfere with the order of the Collec tor.
He further submitted that in any event, if the Tribunal was not fully satisfied with the evidence on record to determine whether starch hydrolysate were goods in the sense of being marketable, then the Tribunal should have, in the facts and the circumstances of the case and in the interest of justice, remanded the matter back for appraisement and examination in the light of the true principle or the Tribu nal should have examined or called for the fresh evidence to determine this question.
The Tribunal not having done so, has failed to render justice and as such the order of the Tribunal is bad, according to Shri Ganguly.
Shri Ganguly further submitted that in starch hydrolysate the percentage of dissolved solids present is 64.
It was submitted that the criterion laid down in the IS Specification for liquid glucose or glucose syrup, the two terms are being used synonymously by the Indian Standard Institution, was not satisfied in this case.
The IS Specification defines liquid glucose or glucose syrup as "a refined and concentrated non crystalizable aqueous solution of d glucose, maltose and other polymers of d glucose, obtained by controlled hydroly sis of starch containing material".
The United States Phar meopeia XIX describes liquid hydrolysis of starch, consist ing chiefly of dextrose, dextrins, maltose and water and in these circumstances and in view of the components and the dictionary meaning as discussed by the Tribunal in its order, it is urged that it cannot be said that the said goods is the same thing as glucose or glucose syrup.
In the premises, it was contended that the Tribunal has not consid ered this aspect of the matter.
We are concerned in this appeal with starch hydrolysate and, therefore, if the process or activity of the assessee brings into existence an article different and distinct from what it was before the process and a new identifiable arti cle known in the market as such comes into being, then the use of such starch hydrolysate captively would attract duty on the part of the assessee even in captive consumption.
It is not in dispute as the Tribunal noted in the instant case that starch is hydrolysed by the respondent.
The operation of hydrolysis, it is contended, results in bringing into being starch hydrolysate which is utilised in the manufac ture of sorbitol.
The question is whether 789 starch hydrolysate is "goods".
The case of the respondent was that the starch hydrolysate being wholly unstable and quickly fragmented and losing its character in a couple of days, the same could, therefore, neither be stored nor marketed.
In the premises, it was the case of the respondent that starch hydrolysate was not marketable product and would not, therefore, be "goods" on the manufacture of which excise duty could have been demanded or would have been payable and, therefore, for non payment of duty, there has been no negligence or failure on the part of the respondent and as such section 11 A of the Act was not applicable.
In this connection, it would be instructive to refer and it would be necessary to rely on the principles laid down by this Court in South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors.
, ; There, the appellant compa nies manufactured sugar by carbonation process and paid excise duty on sugar manufactured by them under Item I of Schedule I to the Act.
According to one affidavit filed on behalf of the respondents, filed in those proceedings, these manufacturers employed a process of burning lime stone with coke in a lime kiln with a regulated amount of air whereby a mixture of gases was generated consisting of carbon dioxide, nitrogen, oxygen and a small quantity of carbon monoxide.
The gas thus produced was thereafter compressed so as to achieve pressure exceeding atmospheric pressure and then passed through a tank containing sugarcane juice so as to remove impurities from it and to refine the juice.
For that process of refining it was only the carbon dioxide in the gas which was used and the other gases, i.e., nitrogen, oxygen and carbon monoxide escaped into the atmosphere by a vent provided for the purpose.
The carbon dioxide content in this mixture of gases ranged from 27 to 36.5%.
Similarly, another company manufactured Soda ash by solvay ammonia soda process for which also carbon dioxide was required and this was produced by the petitioner therein by burning lime stone with coke in a kiln in the same manner as the appellant sugar manufacturing companies employing the carbonation process.
The respondents therein regarded all the companies as manufacturers of compressed carbon dioxide and levied excise duty on them under Item 14 H in Schedule I to the Act.
Writ petitions were filed in the High Court challenging the validity of the excise duty but the same petitions were dismissed.
It was contended, inter alia, on behalf of the appellants therein that the lime kiln was maintained to generate a mixture of gases and not carbon dioxide and at no stage in the process of generating this mixture and passing it through the sugarcane juice was carbon dioxide which formed one of the contents of the mixture either com pressed, liquidified or solidified.
The mixture of gases so generated was not carbon dioxide as known to the market nor was it accord 790 ing to the specifications laid down by the Indian Standards Institution which required the carbon dioxide content to be at least 99%.
It was, therefore, contended that the excise duty sought to be recovered on the contend of carbon dioxide in the mixture of gases could not fall under Item 14 H.
It was further contended that the duty being on goods it could be charged only on goods known as carbon dioxide in the trade and marketable as such.
As is evident from the said narration of facts the contentions urged were more or less similar to the contentions involved in the instant appeal before us.
It was held by this Court that the gas generated by the appellant companies was kiln gas and not carbon dioxide as known to the trade, i.e., to those who dealt in it or who used it.
The kiln gas in question, therefore, was neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore, could not attract item 14 H in the First Schedule.
This Court reiter ated at p. 31 of the report that the Act in question charges duty on manufacture of goods.
The word "manufacture" implies a change but every change in the raw material is not manu facture.
There must be such a transformation that a new and different article must emerge having a distinct name, char acter or use.
The duty is levied on goods.
As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning.
The diction ary meaning of the expression is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market.
It would be such an article which would attract duty under the Act.
This Court referred to the previous decision in the case of Union of India vs Delhi Cloth & General Mills Ltd., [1963] Suppl.
1 SCR 586.
Therefore, in this instant appeal, in order to determine whether starch hydrolysate was "goods" or not, it is necessary to determine whether there was any application of process to the raw materials and as a result of that application there emerged new and different article having a distinctive name, character or use and the resultant product being goods in the sense of being marketable or marketed.
In this connection, Shri Soli Sorabjee referred us to the observations of this Court in Union Carbide India Ltd. vs Union of India and Ors., There, this Court reiterated that in order to attract excise duty, the article manufactured must be capable of being sold to a consumer.
Entry 84 of List I of Schedule VII to the Consti tution specifically speaks of "duty of excise on tobacco or other goods manufactured or produced in India" and it is now well accepted that excise duty is an indirect tax, in which the burden of the imposition is passed on to the ultimate consumer.
This Court held that in that context, the expres sion "goods manufactured or produced" must refer to articles which 791 are capable of being sold to a consumer.
To become "goods", an article must be something which can ordinarily come to the market to be bought and sold.
The Court found in that case that aluminium cans prepared by the appellants therein were employed entirely by it in the manufacture of flash lights and were not sold as aluminium cans in the market.
It also appeared from the records that aluminium cans at the point of levy of excise duty existed in a crude and elemen tary form which were incapable of being employed as a compo nent in a flashlight.
These cans had sharp uneven edges and in order to use them as a component in making flashlight cans, these cans had to undergo various processes such as trimming, threading and redrawing.
After that these were reeded, beaded and anodized or painted, it was at that point only that these became distinct and complete component capable of being used as flashlight cans for housing battery cells and having a bulb fitted to the can.
This Court noted that it was difficult to believe that the elementary and unfurnished form in which these existed immediately after extrusion sufficed to attract a market.
The assertion of the appellant on affidavit that aluminium cans were unknown in that form in the market had not been proved to the contrary by any satisfactory material by the respondents therein.
This Court further found that not a single instance had been provided by the respondents domenstrating that such alumini um cans had a market.
The conduct of the appellants in the past, having regard to the circumstances of the case, would not serve as evidence of the marketability of the aluminium cans, it was in that case.
This Court noted that record disclosed that whatever aluminium cans were produced by the appellants were subsequently developed by it into a complet ed and perfected component for being employed as flashlight cans.
In those circumstances, the aluminium cans produced by the appellants were not liable to excise duty under section 3 of the Act read with Item 27 of the Central Excise Tariff.
In the case of Bhor Industries Ltd., Bombay vs Collector of Central Excise, Bombay, ; , this Court had to deal with the liability to duty on intermediate products and it was reiterated that liability to excise duty arises only when there is manufacture of goods which is marketable or capable of being marketed.
It was held that excise is a duty on goods as specified in the Schedule.
The taxable event in the case of excise duties is the manufacture of goods.
Under the Act, in order to be goods as specified in the Entry, it was essential that as a result of manufacture goods must come into existence.
For articles to be goods, these must be known in the market as such or these must be capable of being sold in the market as goods.
Actual sale 792 is not necessary.
User in the captive consumption is not determinative but the articles must be capable of being sold in the market or known in the market as goods.
It is, there fore, necessary to find out whether these are goods, that is to say, articles as known in the market as separate distinct identifiable commodities and whether the tariff duty levied would be as specified in the Schedule.
Marketability, there fore, is an essential ingredient in order to be dutiable under the Schedule to .
In that case, the Court found that crude PVC firms as produced by the appellant were not known in the market and could not be sold in the market and was not capable of being marketa ble.
The Court further reiterated that it was the duty of the revenue to adduce evidence or proof that the articles in question were goods.
The Tribunal went wrong, it was held, in not applying the test of marketability.
There being no contrary evidence found by the Tribunal in that case, it was held that in those circumstances, no excise duty should be charged.
It is in this light, therefore, that the evidence dis cussed by the Tribunal in this case, have to be viewed in order to test the validity of the order impugned.
The case of the respondent had always been that starch hydrolysate was not being marketed and is not capable of being marketed in view of its highly unstable character resulting in fer mentation even if kept for a day or two.
Shri Ganguly ap pearing for the revenue sought to urge that the Tribunal was wrong in approaching the problem in that light.
The test was not whether the starch hydrolysate was not of a highly unstable character and resulted in fermentation even in a day or two, but whether it was capable of being marketable.
He submitted that the test applied was not the true test.
He urged that even transient items of articles can be goods, provided that these were known in the market as distinct and separate articles having distinctive and separate uses, these would still become goods if these were capable of being marketed even during short period.
From a conceptual and jurisprudential point of view, Shri Ganguly is right.
But we are concerned with the question whether actual goods in question were marketed or, in other words, if not, wheth er these are marketable or not.
It is true that the goods with unstable character can be theoretically marketable if there was a market of such transient type of articles which are goods.
But one has to take a practical approach.
The assessee produced evidence in the form of affidavit.
One Shri Khandot.
who filed an affidavit in support of the case of the respondent, had stated in his affidavit that com pletely hydrolysed starch would start fermenting and decom posin and at higher concentration it would start crystaliz ing out within two or three days.
This is evidence indicat 793 ing propensity of its not being marketed.
It is good evi dence to come to this conclusion that it would be unlikely to be marketable as it was highly unstable.
There was evi dence as noted by the Tribunal that it has not been marketed by anyone.
There is also an admission of the Superintendent of the appellant that no enquiry whatsoever was conducted by the Department as to whether starch hydrolysate was ever marketed by anybody.
It was pointed out by the revenue that even according to the respondent, it stored starch hydroly sate in tanks before transporting it through pipes but according to the appellant, the storage of starch hydroly sate was only for a period of a few hours only as a step in the process of transfer thereof to sorbitol.
It, therefore, appears to us that there was substantial evidence that having regard to the nature of the goods that this was unlikely that the goods in question were marketable.
This should be judged in the background of the evidence that the goods have not been marketed in a pregmatic manner.
All this again would have to be judged in the light of the fact that revenue has not adduced any evidence whatsoever though asked to do so.
It was pointed out that if the Department was to charge duty of excise on this starch hydrolysate as one form of glucose it would be the burden on the Department to establish that starch hydrolysate was not merely marketable but was being marketed as glucose in some form.
This would be so since what is liable for duty under item E is glucose in any form and, therefore, in order to demand duty under that section, the Department must establish that the product on which duty was demanded was known in the market as glu cose in one form or the other.
There .is no such evidence as observed by the Tribunal.
The Tribunal noted and, in our opinion, rightly that revenue cannot be said to have dis charged its burden of establishing that by applying the process of hydrolysis to starch for production of starch hydrolysate the respondent manufacturers any excisable goods in the sense of being goods known in the market and being marketed or marketable.
Our attention was drawn to the affidavit of Shri P.D. Khander, Chemist, who was a Food Technologist and was holding a degree of B.Sc.
(Chemistry).
He was carrying on business of dealing in glucose.
He stated in his affidavit as follows: .
I have been the starch hydroly sate made by Sarabhai M. Chemicals.
It is completely hydrolysed starch.
It appears as aqueous syrup containing about 66 71% reduc ing sugars expressed as Dextrose.
It is nei ther glucose or dextrose in any form nor glucose in liquid state nor liquid glucose.
In order to find out the market for completely hydrolysed starch as is made in Sarabhai M. Chemicals, at 794 their instance, I had made trade inquiries.
However, there is no market for such sub stance.
Since it can act only as an intermedi ate product for the manufacture of Sorbitol.
Dextrose or Glucose and Fructose and every manufacturer of Glucose, Dextrose, Sorbitol and Fructose would have his own plant for hydrolysing starch, it is commercially not a viable proposition both the manufacturers of Glucose, Dextrose, Sorbitol or Fructose or the persons undertaking the process of hydrolysing starch either to purchase completely hydroly sed starch from the market or sell or under take process of hydrolysing starch for the purpose of sale in the market, because at lower concentration, starch which is complete ly hydrolysed would start fermenting and decomposing.
At higher concentration, it would start crystallising out within two or three days.
" This affidavit evidence remains uncontradicted Shri Ganguly, however, drew our attention to an order of the Tribunal in M/s. Anil Starch Products Ltd., Ahmedabad vs The Collector of Central Excise, Ahmedabad being Appeal No. ED(SB)(T) 1534/81 D arising out of the Revision Order No. 820/81.
He referred to the observations at page 117 of the Paper Book which dealt with the evidence of one Shri Khabho lia, where, according to Shri Ganguly, the Tribunal came to a different conclusion.
But the Tribunal in that case relied on the decision of the Allahabad High Court in the case of Union of India vs Union Carbide India Ltd., There the Allahabad High Court held that things would be nevertheless goods even these did not have a general market, where they can be easily bought and sold.
The High Court hold that the fact that products might not be known to the general public or to the traders in general would not change the position and therefore the test did not appear to be sound.
This decision of the Allahabad High Court which was relied upon by the Tribunal was set aside by this Court in Appeal in the case of Union Carbide India Ltd. vs Union of India & Ors.
(supra).
In view of the test laid down and in view of the evidence discussed, it is difficult to sustain the order of the Tribunal.
In this connection, it appears that there was no market enquiry by the Revenue.
Reference may be made to the crossexamination of Shri Shukla, Superin tendent (Central Excise) by Shri Nanawati as appears at pp.
235 237 of the present paper book.
In view of the fact that there was positive evidence that starch hydrolysate was never marketed and in view of further fact that in the light of the nature of the goods being highly unstable, it is highly improbable that the goods were capable of being marketed and there being in spite of 795 the opportunities, no evidence produced at all that the goods, in fact, were capable of being marketable, in our opinion, it must be held as did the Tribunal that the starch hydrolysate were not dutiable under the Act.
In the premises, the revenue has failed to discharge its onus to prove that starch hydrolysate was dutiable.
In the premises, the Tribunal cannot be said to have committed any error.
The appeal must, therefore, fail and is, accordingly, dismissed.
In the facts and the circumstances of the case, there will, however, be no orders as to costs.
R.S.S. Appeal dis missed.
| The respondent was engaged in the manufacture of sorbi tol, which fell under items 68 of the Central Excise Tariff.
During a visit to the factory premises by the Central Excise Officers it was found that the respondent also manufactured and captively consumed starch hydrolysate which, according to the appellant, was glucose and fell under Item E of the Central Excise Tariff.
In reply to the show cause notice issued by the appellant, the respondent contended that starch hydrolysate was not 'goods ' since the same was not marketable and therefore no excise duty was payable on it; and that even if the same was liable for duty it would not be under Item 1 E.
There were adjudication proceedings thereafter, and the adjudicator held that starch hydrolysate was glucose and fell under item E, and that the respondent had suppressed the fact of manufacture thereof.
In the premises, the adjudicator ordered payment of excise duty and further imposed a penalty.
The Tribunal, however, allowed the respondent 's appeal and held that starch hydrolysate manufactured by the re spondent was not, and never was, a marketable commodity, and hence that would not be 'goods ' on which excise duty could be charged.
The Revenue appealed to this Court.
Before this Court, it was inter alia contended on behalf of the appellant: (i) that the Tribunal misdirected itself in applying the proper test for the determination of the question, and that the true test to determine in a matter of this nature was to consider not only whether starch hydrolysate was actually marketable but also to consider whether conceptually the said goods were capable of being marketed, and the Tribunal should have examined or called for fresh evidence to deter mine that question; and (ii) even transient items of arti cles could he 'goods '.
provided these were known in the market as distinct and separate articles having distinct and separate uses, and if these were capable of being marketed even during short period.
784 785 On behalf of the respondent it was contended that; (i) starch hydrolysate which was utilised in the manufacture of sorbitol, was not being marketed and was not capable of being marketed in view of its highly unstable character resulting in fragmentation even if kept for a day or two; and (ii) starch hydrolysate was not marketable product and would not therefore be "goods" on the manufacture of which excise duty could have been demanded or would have been payable and therefore for non payment of duty, there had been no negligence or failure.
Dismissing the appeal, this Court, HELD: (1) If the process or activity of the assessee brings into existence an article different and distinct from what it was before the process and a new identifiable arti cle known in the market as such comes into being, then the use of such article in the instant case starch hydrolysate would attract duty on the part of the assessee even in captive consumption.
[788G] South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors.
, ; , referred to.
(2) The word "manufacture" implies a change but every change in the raw material is not manufacture.
There must be such a transformation that a new and different article emerges having a distinct name, character or use.
[790D] Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586.
(3) Duty is levied on goods.
As the does not define "goods", the legislature must be taken to have used that word in its ordinary, dictionary meaning.
The dictionary meaning of the expression is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market.
It would be such an article which would attract 'duty ' under the Act.
[790E] Union Carbide India Ltd. vs Union of India & Ors., (4) It is true that the goods with unstable character can be theoretically marketable if there was a market of such transient type of articles which are goods.
But one has to take a practical approach.
[792G] 786 (5) It was the duty of the Revenue to adduce evidence or proof that the articles in question were goods.
If the Department was to charge duty of excise on this starch hydrolysate as one form of glucose it would be the burden on the Department to establish that starch hydrolysate was not merely marketable but was being marketed as glucose in some form.
The Revenue has not produced any evidence whatsoever though asked to do so.
Bhor Industries Ltd. Bombay vs Col lector of Central Excise, Bombay; , [793A F] (6) It appears that there was no market enquiry by the Revenue.
In view of the fact that there was positive evi dence that starch hydrolysate was never marketed and in view of further fact that in the light of the nature of the goods being highly unstable, it was highly improbable that the goods were capable of being marketed and there being in spite of the opportunities, no evidence produced at all that the goods, in fact, were capable of being marketable, it must be held, as did the Tribunal, that the starch hydroly sate were not dutiable under the .
[794G 795A]
|
Appeal Nos.
724 725 of 1992.
From the Judgment and Order dated 13.11.90 & 10.8.90 of the Central Administrative Tribunal, New Bombay in M.P. No. 855/90, & O.A. No. 799 of 1989.
N.M. Ghatate, Anand Prasad and S.V. Deshpande for the Appellant.
T.C. Sharma and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Special leave granted in both the matters.
B.G. Kajrekar joined service as Chief of Police on August 1, 1954 in Dadra and Nagar Haveli.
He worked in that capacity upto April 19, 1966.
Thereafter he was sent on deputation to the Central Reserve Police, 62 Neemuch (Madhya Pradesh).
He came back to his original post in Dadra and Nagar Haveli on November 17, 1967 and worked as Chief of Police upto April 6, 1971.
He was transferred to Delhi Armed Police on April 7, 1971 where he worked as Deputy Superintendent of Police till his retirement on July 31, 1977.
He has thus, put in about twenty three years of service.
Kajrekar was not given pension on the ground that throughout his service he worked on officiating basis and was never appointed substantively to any of the posts held by him.
Kajrekar challenged the action of the respondents, denying pension to him, before the Central Administrative Tribunal, Bombay.
The Tribunal rejected his application on the ground that he retired from service without holding lien on any substantive post and as such was not entitled to pension under Rule 13 of the Central Civil Services (Pension) Rules, 1972 (the Rules).
The application of Kajrekar was disposed of ex parte by the Tribunal and his prayer for restoration and hearing was also rejected.
These appeals by way of special leave petitions are against the orders of the Central Administrative Tribunal.
It is not disputed that the post of Chief of Police under Dadra and Nagar Haveli Administration was declared permanent with effect from June 14, 1967.
On that date the appellant had already put in about thirteen years of service but his case for confirmation was not considered on the ground that there were no Recruitment Rules for the post in existence.
The Recruitment Rules for the post of Chief of Police under the Administration of Dadra and Nagar Haveli came into force on January 19, 1980.
The said Rules provided "by transfer on deputation" as the method of recruitment to the post of Chief of Police.
The Recruitment Rules have no relevance to the question of confirmation of the appellant as he had retired from service on January 31, 1977 much before the coming into force of the Recruitment Rules.
It was incum bent on the respondents to have considered the question of confirmation of the appellant before his retirement, specially when he was being retired after serving the respondents for twenty three years.
It was wholly arbitrary on the part of the respondents to have kept the appellant as an unconfirmed employee for a period of twenty three years on the ground that there were no Recruitment Rules for the post he was holding.
The Union Territory of Dadra and Nagar Haveli in its counter filed in this Court has stated that after the publication of the Recruitment Rules 63 a Departmental Promotion Committee was convened on July 4, 1981 for considering the question of confirmation of the appellant as Chief of Policy.
The Departmental Promotion Committee did not recommend the appellant for confirmation on the ground that during the course of his service, two departmental enquiries were instituted against the appellant.
The enquiries could not be completed before the appellant 's retirement and the findings were made available thereafter.
The proceedings of the Departmental Promotion Committee further show that as a result of the enquiries Rs. 4,000 was to be deducted from the gratuity amount of the appellant as a measure of punishment.
The Departmental Promotion Committee found that the confidential reports of the appellant for the last three years were good but the Committee declined to recommend confirmation because of the two enquiries.
It is not disputed that the findings in the two enquiries were never communicated to the appellant during the period of his service.
Those were served on him only after retirement.
The question of his confirmation which was due in the year 1967 could not have been linked with the enquiries which were initiated at a much later stage.
The Departmental Promotion Committee should have considered the appellant for confirmation on the basis of the record of the appellant as existed in the year 1967/1968.
There is no material before us to show that the service record of the appellant prior to 1970 was adverse in any manner rather the averments made by the appellant in the rejoinder to the effect that there was nothing adverse against him on the record prior to 1971, have not been controverted.
Even the Departmental Promotion Committee found the confidential reports of the appellant for the last three years as good.
We are of the view that on the availability of a permanent post of Chief of Police on June 14, 1967 the appellant was entitled to be confirmed against the said post.
It was wholly arbitrary for the respondents to have deferred the question of confirmation of the appellant on the ground that there were no Recruitment Rules.
We, therefore, hold that the appellant having served the respondents for about thirteen years on June 14, 1967 when the post of Chief of Police was made permanent and there being nothing adverse against him at that point of time, he was entitled to be confirmed in the said post.
In that view of the matter the appellant was a confirmed employee when he retired from service on July 31, 1977.
We, therefore, direct the respondents to treat the appellant as having 64 been retired as a confirmed employee and fix his pension and other post retiral benefits on that basis.
We further direct the respondents to complete the pension case of the appellant within three months from today and pay him all the arrears of the pension within two months thereafter alongwith 12% interest on the said arrears.
We allow the appeals with costs which we quantify as Rs. 10,000.
G.N. Appeals allowed.
| The respondent accused was prosecuted for committing rape on a child of 8/9 years of age.
The prosecution case was that: while the prosecutrix (P.W.4), her father (P.W.5) and elder sister (P.W.7) were in their fields, it suddenly started raining and all the three ran towards their house; P.W.4 got separated from the two kins and was following them when the accused, then aged about 16 years, took her under a mango tree and committed rape on her; P.W.5, who in the meantime returned to the fields in search of P.W.4, saw the accused lying on her, he raised an alarm whereupon P.W.7, rushed to the spot and the accused ran away leaving P.W.4 crying and bleeding per vagina.
The victim was got medically examined the same day and the doctor (P.W.1), besides mentioning the injuries on the private part of the prosecutrix, reported that she had been subjected to sexual intercourse.
At the trial P.W.5, P.W.7 and the doctor (P.W.1) who had medically examined the prosecutrix, supported the prosecution case in its totality.
The trial court held that the accused had committed an offence of rape under s.376, I.P.C. on the prosecutrix, and sentenced him to suffer R.I. for a period of five years.
18 The accused riled an appeal before the High Court which acquitted him.
The State filed the appeal by special leave to this Court.
Allowing the appeal, this Court, HELD: 1.I. Courts must be wary, circumspect and slow to interfere with reasonable and proper findings based on appreciation of evidence as recorded by the lower courts, before upsetting the same and acquiring an accused involved in the commission of heinous offence of rape of hapless girl child.
[p.24B C] 1.2.
The High Court without appreciating or properly discussing the evidence committed an error in setting aside the findings recorded by the trial court which were based on proper appreciation of evidence and were not unreasonable much less perverse.
The judgment of the High Court is based on conjectural findings and cannot be sustained.[pp.22B C; 25A] 3.
The statement of prosecutrix (PW4) is clear, cogent and specific.
The Sessions Judge recorded her statement on being satisfied that she was capable of giving evidence.
She narrated the occurrence in a simple and straight forward manner.
The prosecution case was fully supported by her during her statement and nothing has been brought out in the cross examination from which any doubt could be caused about her veracity.
Her statement receives ample corroboration from the testimony of her father (PW5) who is found to be a truthful and reliable witness.
The medical evidence of PWl has supported the prosecutrix in all material particulars.
The evidence of PW7 who had also seen the accused running away from the scene of crime further lands credence to the prosecution version.
[pp.21E H; 22A] 2.1.
There is no legal compulsion to look for corroboration of the evidence of the prosecutrix before recording an order of conviction.
Evidence has to be weighed and not counted.
Conviction can be recorded on the sole testimony of the prosecutrix, if her evidence inspires confidence and there is absence of circumstances which militate against her veracity.
[p.22D] 2.2.
In the instant case the evidence of the prosecutrix is found to be reliable and trustworthy.
No corroboration was required to be looked for, though enough was available on the record.
The medical evidence provided sufficient corroboration.
[p.22E] 19 3.1.
There is no inflexible axiom of law which lays down that the absence of injuries on the male organ of the accused would always be fatal to the prosecution case and would discredit the evidence of the prosecutrix, otherwise found to be reliable.
Every case has to be approached with realistic diversity based on peculiar facts and circumstances of that case and inferences have to be drawn from the given set of facts and circumstances.
[p.24D F] Rahim Beg & Anr.
vs State of UP.
, , distinguished.
The doctor (PW3), who had examined the respondent, found him to be capable of sexual intercourse and according to him the absence of injury on the male organ of the accused was not suggestive of the fact that he had not indulged in sexual intercourse with the prosecutrix, then of tender years of age.
His evidence was not at all challenged on this aspect by the defence.
[p.24F G] 4.1.
The judgment of the High Court acquitting the accused is set aside.
The accused is convicted under S.376 IPC for having committed rape on the prosecutrix and sentenced to suffer regorous imprisonment for a period of five years.
[pp. 25H; 26A] 4.2.
Though for such an offence a more severe sentence would have been desirable but neither the State sought enhancement of the sentence by filing an appropriate petition nor any notice in this regard had been issued to the accused, and without putting him on such a notice, the Court 'cannot enhance the sentence. 'Me provision prescribing more stringent minimum sentence under Section 376 was also incorporated in the Code by an amendment only with effect from December, 1982, after the offence in the instant case had been committed.
[p.25D G]
|
ivil Appeal Nos.
572 574 and 575 of 1972.
(Appeals by Special Leave from the Judgment and Order dated 13 7 1971 of the Kerala High Court in Tax Revision Cases Nos. 42, 45, 58 and 44 of 1970.) S.V. Gupte (In CA No. 572/72), K. M, K. Nair and A. C.I Pudissery for the appellant in all the appeals T. A. Ramachandran, for the respondents in all the appeals.
The Judgment of P.N. Bhagwati and R.S. Sarkaria, JJ. was delivered by Bhagwati, J., section Murtaza Fazal Ali, J. gave a separate opinion.
BHAGWATI, J.
The facts giving rise to these appeals are set out in the judgment about to be delivered by our learned brother section Murtaza Fazal Ali and we do not think it necessary to reiterate them.
So far as Civil Appeals 572 574 of 1972 are concerned, it would be sufficient to state briefly the following facts as these are the only facts necessary for appreciating the question of law which arises for determination in these appeals.
In the assessments of the assessee to sales tax for three assessment years.
the returns filed by him on the basis.
of his books of account appeared to the Sales Tax Officer to be incorrect and incomplete since certain sales appearing in the books of account of one Haji P.K. Usmankutty as having been effected by the assessee in his favour were not accounted for in the books of account maintained by the assessee.
The assessee applied to the Sales Tax Officer for affording him an oppor tunity to cross examine Haji Usmankutty in regard to the correctness of his accounts, but this opportunity was denied to him and the Sales Tax Officer proceeded to make a best judgment assessment under section 17, sub section (3) of the Kerala General Sales Tax, 1963.
The assessee ap pealed but without success and this was followed by a revi sion application to 236 the High Court.
The High Court took the view that the assessee was entitled to an opportunity to cross examine Haji Usmankutty before any finding could be arrived at by the Sales Tax Officer that the returns filed by the assessee were incorrect and incomplete so as warrant the making of 'the best judgment assessment and since no such opportunity had been given to the assessee, the High Court quashed the order of the Sales Tax authorities and remanded the case to the Sales Tax Officer for making fresh assessments according to law after giving an opportunity to the assessee to cross examine Haji Usmankutty.
The facts in Civil Appeal No. 575 of 1972 are almost identical, save that instead of Haji Usmankutty, certain wholesale dealers were sought to be cross examined in that case and the opportunity to cross examine them was denied by the Sales Tax authorities.
Since the High Court quashed the orders of assessments in both cases, the State preferred an appeal by special leave in each case challenging the correctness of the view taken by the High Court.
Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi judicial functions and they are bound to observe principles of natural justice in reaching their conclusions.
It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, West Bengal(1) that a taxing officer "is not lettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law", but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice.
It is, however, necessary to remember that the rules of natural justice are not a con stant: they are not absolute and rigid rules having univer sal application.
It was pointed out by this Court in Suresh Koshy George vs The University of Kerala & Ors.(2) that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel vs Duke of Norfolk and Ors.(3): "There are in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal.
The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth.
Accordingly, 1 do not ' derive much assistance from the definitions of natural justice which have been from time to time used, but, whatev er standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.
" One of the rules which constitutes a part of the prin ciples of natural justice is the rule of audi alterem partera which requires that (1) ; (2) ; (3) [1949] 1 All.
England Reports 108.
237 no man should be: condemned unheard.
It is indeed a re quirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because, as pointed out by this Court in A.K. Kraipak and Ors.
vs Union of India,(1) "the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice" and justice, in a society which has accepted socialism _as its article of faith in the Constitu tion, is dispensed not only by judicial or quasi judicial authorities but also by authorities discharging administra tive functions.
This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotation.
It has a variable content depending on the nature of the inquiry, the framework of the law under which it is held, the constitu tion of the authority holding the inquiry, the nature and character of the rights affected and the consequences flow ing from the decision.
It iS, therefore, not possible to say that in every case the rule of audi alterem partem requires [that] a particular specified procedure to be followed.
It may be that in a given case the rule of audi alterem partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the in quiry should be permitted to be cross examined by the party affected while in some other case it may not.
The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.
Now, in the present case, we are not concerned with a situation where the rule of audi alterem partem has to be read _into the statutory provision empowering the taxing authorities to assess the tax.
Section 17, sub section (3), under which the assessment to sales tax ha 's been made on the assessee provides as follows: "If no return is submitted by the dealer under subsection (1) within the pre scribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return.
" It is clear on a plain natural construction of the language of this provision that it empowers the Sales Tax Officer to make a best judgment assessment only where one of two condi tions is satisfied: (1) 238 either no return is submitted by the assessee or the return submitted by him appears to the Sales Tax Officer to be incorrect or incomplete.
It is only on the existence of one of these two conditions that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment.
The ful filment of one of these two pre requisites is, therefore, a condition precedent to the assumption of jurisdiction by the Sales Tax Officer to make assessment to the best of his judgment.
Now, where no return has been submitted by the assessee, one of the two conditions necessary for the applicability of section 17, subsection (3) being satisfied, the Sales Tax Officer can, after making such inquiry as he may consider necessary and after taking into account all relevant materials gathered by him, proceed to make the best judgment assessment and in such a case, he would be bound under the proviso to give a reasonable opportunity of being heard to the assessee.
But in the other case, where a return has been submitted by the assessee, the Sales Tax Officer would first have to satisfy himself that the return is incorrect or incomplete before he can proceed to make the best judgment assessment.
The decision making process in such a case would really be in two stages, though the in quiry may be continuous and uninterrupted: the first stage would be the reaching of satisfaction by the Sales Tax Officer that the return is incorrect or incomplete and the second stage would be.
the making of the best judgment assessment.
The first part of the proviso which requires that before taking action under sub section (3) of section 17, the assessee should be given a reasonable opportunity of being heard would obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under section 17, sub section (3), follows upon the inquiry and the "reasonable opportunity of being heard" must extend to the whole of the inquiry, including both stages.
The requirement of the first part of the proviso that the asses see should be given a "reasonable opportunity of being heard" before making best judgment assessment merely em bodies the audi alterem partem rule and what is the content of this opportunity would depend, as pointed out above, to a great extent on the facts and circumstances of each case.
The question debated before us was whether this opportunity of being heard granted under the first part of the proviso included an opportunity to cross examine Haji Usmankutty and other wholesale dealers on the basis of whose books of accounts the Sales Tax Officer disbelieved the account of the assessee and came to the finding that the return submit ted by the assessee were incorrect and incomplete.
But it is not necessary for the purpose of the present appeals to decide this question since we find that in any event the assessee was entitled to this opportunity under the 'second part of the proviso.
The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasona ble opportunity to prove the correctness or completeness of such return.
This requirement obviously applies at the first stage of the enquiry before the Sales Tax Officer comes to the conclusion that the return submitted by the assessee is incorrect or incomplete so as to warrant the making of a best judgment assessment.
The question is what is the content 239 of this provision which imposes an obligation on the Sales Tax Officer to give and confers a corresponding right on the assessee to be afforded, a reasonable opportunity "to prove the correctness or completeness of such return".
Now, obviously "to prove" means to establish the correctness ,or completeness of the return by any mode permissible under law.
The usual mode recognised by law for proving a fact is by production of evidence and evidence includes oral evi dence of witnesses.
The opportunity to prove the correct ness or completeness of the return would, therefore, neces sarily carry with it the right to examine witnesses and that would include equally the right to Cross examine witnesses examined by the Sales Tax Officer.
Here, in the present case, the return filed by the assessee appeared to the Sales Tax Officer to be incorrect or incomplete because certain sales appearing in the books of Hazi Usmankutty and other wholesale dealers were not shown in the book 's of account of the assessee.
The Sales Tax Officer relied on the evi dence furnished by the entries in the books of account of Hazi Usmankutty and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete.
Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other whole sale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross examining Hazi Usmankutty and other wholesale dealers with reference to their accounts.
Since the evidentiary material procured from or produced by Hazi Usmankutty and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incor rect and incomplete, the assessee was entitled to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross examination.
It can hardly be disputed that cross examination is one of the most efficacious methods of establishing truth and exposing falsehood.
Here, it was not disputed on behalf of the Revenue that the assessee in both cases applied to the Sales Tax Officer for summoning Hazi Usmankutty and other wholesale dealers for cross examina tion, but his application was turned down by the Sales Tax Officer.
This act of the Sales Tax Officer in refusing to summon Hazi Usmankutty and other wholesale dealers for cross examination by the assessee clearly constituted in fraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee.
We do not wish to refer to the decisions of various High Courts on this point Since our learned brother has dis cussed them in his judgment .
We are of the opinion that the view taken by the Orissa High Court in Muralimohan Prabhudayal vs State of Orissa(1) and the Kerala High Court in M. Appukutty vs State of Kerala(2) and the present cases represents the correct law on the subject.
We accordingly dismiss the appeals with no order as to costs.
(1) 26 S.T,C, 22.
(2) 14 S.T.C, 489.
240 FAZAL ALl, J.
These appeals by special leave involve an interesting question of law as to the interpretation of section 17(3) of the Kerala General Sales Tax, 1963 hereinafter referred to as 'the Act ' and the proviso thereof read with r. 15 framed under the Act.
The assessment years in question are 1965 66, 1966 67 and 1967 68.
in the case of the re spondent K.T. Shaduli in Civil Appeals Nos. 572 574 of 1972 and 1967 68 in the case of Nallakandy Yusuff in Civil Appeal No. 575 of 1972.
But both the cases involve an identical question of law.
In this view of the matter, we propose to deal with all these appeals by one common judg ment.
The assessee in Civil Appeals Nos.
572 574 of 1972 filed his sales tax returns before the Sales Tax Officer who on an examination of .the accounts found that the returns submit ted by the assessee were both incorrect and incomplete inasmuch as certain entries in the books of account of Haji P.K. Usmankutty revealed Certain transactions which were not accounted for in the assessee 's book 's of account.
The Sales Tax Officer, after hearing the assessee, made an assessment to the best of his judgment under section 17(3) of the Act read with r. 15 made under the Act.
The Sales Tax Officer thus rejected the accounts of the assessee as they did not re flect the goods said to have been purchased by Haji P.K. Usmankutty.
The assessee sought an opportunity to cross examine Haji Usmankutty with respect to the correctness of his accounts which were relied upon by the Sales Tax Offi cer, but this opportunity was refused to him by the Sales Tax Officer as also the other appellate authorities.
Simi larly in the case of the respondent Nallakandy Yusuff, in Civil Appeal No. 575 of 1972, the return filed by the asses see was rejected by the Sales Tax Officer on the ground that certain transactions shown in the accounts of some wholesale dealers were not reflected in his books of account and the opportunity asked for by the assessee for cross examining the said wholesale dealers was refused to him.
The order of the Sales Tax Officer was confirmed by the Appellate Author ities under the Act.
Both the assessees then filed a revi sion application before the High Court which allowed the application of the assessees, quashed the orders of the Sales Tax Authorities and remanded the cases to the Sales Tax Officer for giving an opportunity to the respondents for cross examining the wholesale dealers concerned and then making assessments in accordance with the law.
The State having obtained special leave from this Court hence these appeals before us.
The short question that fell for determination before the High Court was, whether under the provisions of the Act the opportunity of being heard which was to be given to the assessees, would include within its sweep the right of cross examination of a third party whose accounts were the basis of the best judgment assessments made by the Sales Tax Officer and the examination of which later on showed that the returns filed by the assessees were incorrect and incom plete.
The High Court, on a consideration of section 17(3) and the Rules made under the Act came to the conclusion that the assessees were entitled to a fair hearing and the opportuni ty of being heard could not be said to be complete unless in the circumstances of these cases the as 241 sessees were allowed to cross examine Haji P.K. Usmankutty and other wholesale dealers on whose accounts reliance was placed by the Sales Tax Authorities.
A provision of law authorising the Taxing Authorities to make a best judgment assessment in default of the assessee complying with the legal requirements is not a new one, but existed in section 23(4) of the Income tax Act, 1922 as amended by the Indian Income tax (Amendment) Act, 1939, the relevant part of which runs thus: If any person fails to make the return required by any notice given under sub section (2) of section 22 and has not made a return or a revised return under sub section (3 ) of the same section or fails t6 comply with all the terms of a notice issued under sub section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub section (2) of this section, the Income tax Officer shall make.
the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered: Provided x x x x" Describing the nature and character of a best judgment assessment, Lord RuSsell of Killowen in delivering the judgment of the Privy Council in Income tax Commissioner vs Badridas Ramrai Shop, Akola,(1) observed as follows: "The Officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying informa tion.
He must not act dishonestly or _vindic tively or capriciously, because he must exer cise judgment in the matter.
He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him.
in arriving at a fair and proper estimate; and though there must necessarily be guess work in the matter, it must be honest guess work." These observations were quoted with approval by this Court in Raghbar Mandal Harihar Mandal vs State of Bihar(2).
Mr. Gupte learned counsel for the appellant submitted that the main object of the best judgment assessment was to pena lise the (1) (1937) 64 IA.
102, 114 115.
(2) 8 S.T.C.770.
242 assessee for either not filing a return or for filing a return which was defective and if at this stage he is given a full fledged 'hearing including the right to summon and cross examine witnesses, then this would amount to condoning the default committed by the assessee.
It was also argued that as the Income tax authorities are not bound by the technical rules of evidence, the assessee cannot claim cross examination of witnesses as a matter of right.
In support of his submission he relied upon a decision of this Court in Dhakeswari Cotton Mills Ltd vs Commissioner of Income Tax, West Bengal(1), where agreeing with a similar argument put forward by the Solicitor General in that case this Court observed thus: "As regards the second contention, we are in entire agreement with the learned Solici tor General when he say 's that the Income tax Officer is not lettered by technical rules of evidence and pleadings, and that he is entitled to action material which may not be accepted as evidence in a Court of law, but there the agreement ends, because it is equal ly clear that in making the assessment under sub section (3) of section 23 of the Act, the Income tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all.
There must be something more than bare suspicion to support the assessment under section 23 (3).
" There can be no doubt that the principle that as the tax proceedings are of quasi judicial nature, the Sales Tax authorities are not strictly bound by the rules of evidence which means that what the authorities have to consider is merely the probative value of the materials produced before them.
This is quite different from saying that even the rules of natural justice do not apply to such proceedings so as to deny the right of cross examination to the assessee where the circumstances clearly justify such a course and form one of the integral parts of the materials on the basis of which the order by the Taxing Authorities can be passed.
The admissibility of a document or a material in evidence is quite different from the value which the authority would attach to such material.
The Privy Council has held that the Taxing Authorities can even base their conclusion on their private opinion or assessment provided the same is fully disclosed to the assessee and he is given an opportu nity to rebut the same.
In these circumstances, therefore, we do not agree with Mr. Gupte that merely because the technical rules of evidence do not strictly apply, the right of crossexamination cannot be demanded by the assessee in a proper case governed by a particular statute.
This Court further fully approved of the four proposi tions laid down by the Lahore High Court in Seth Gurmukh Singh vs Commissioner of Income tax, Punjab(2).
This Court was of the opinion that the Taxing Authorities had violated certain fundamental rules of (1) ; (2) 243 natural justice in that they did not disclose to the asses see the information supplied to it by the departmental representatives.
This case was relied upon by this Court in a later decision in Raghubar Mandal Harihar Mandal 's case (supra) where it reiterated the decision of this Court in Dhakeswari Cotton Mills Ltd. 's case (supra), and while further endorsing the decision of the Lahore High Court in Seth Gurmukh Singh 's case(") pointed out the rules laid down by the Lahore High Court for proceeding under sub section
(3) of section 23 of the Income tax Act and observed as follows: "The rules laid down in that decision were these: (1 ) While proceeding under sub section (3) of section 23 of the Income tax Act, the Income tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee the material on which he is going to found that estimate; (3) he is not however debarred from relying on private sources of informa tion, which sources he may not disclose to the assessee at all; and (4) in case he proposes to use against the assessee the result of any private inquiries made by him, he must commu nicate to the assessee the substance of the information so proposed to be utilised to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and should further give him ample opportunity to meet it, if possible.
" It will thus be noticed that this Court clearly laid down that while the Income tax Officer was not debarred from relying on any material against the assessee, justice and fair play demanded that the sources of information relied upon by the Income tax Officer must be disclosed to the assessee so that he is in a position to rebut the same and an opportunity should be given to the assessee to meet the effect the aforesaid information.
We, however, find that so far as the present appeals are concerned, they are governed by the provisions of the Kerala General Sales Tax Act, the provisions of which are not quite identical with the provisions of the Income tax Act and the Kerala Act appears to have fully incorporated all the essen tial principles of natural justice in section 17(3) of the Act.
In these circumstances, therefore, the answer to the ques tion posed in these appeals would have to turn upon the scope, interpretation and content of section 17(3) of the Act, the proviso thereto and r. 15 framed under the Act.
It is true that the words "opportunity of being heard" are of very wide amplitude but in the context the sales tax pro ceedings which are quaSi judicial proceedings all that the Court has to see is whether the assessee has been given a fair hearing.
Whether the hearing would extend to the right of demanding cross examination of witnesses or not would naturally depend upon the nature of the materials relied upon by the sales tax 244 authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case.
It is .difficult to lay down any hard and fast rule of universal application.
We would, therefore, first try to interpret the ambit of section 17(3) and the proviso thereof in order to find out whether a right of cross examination of witnesses whose accounts formed the basis of best judgment assessment is conferred on the assessee either expressly or by necessary intendment.
Section 17(3) of the Act runs thus: "If no return is submitted by the dealer under subsection (1) Within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such re turn.
" An analysis of this provision would show that this sub section contemplates two contingencies (1) where the asses see does not file his return at all; and (2) where the assessee files his return which, however, is found to be incorrect or incomplete by the assessing authority.
The sub section further enjoins on the assessing authority a duty to consider the necessary materials and make an enquiry before coming to its conclusion.
The proviso expressly requires the assessing authority to give to the assessee a reasonable opportunity of being heard even if the assessee had committed default in not filing the return.
Since the statute itself contemplates that the assessee should be given a reasonable opportunity of being heard, we are not in a position to agree with the contention of the learned counsel for the appellant that if such an opportuni ty is given, it will amount to condonation of default of the assessee.
The tax proceedings are no doubt quasi judicial proceedings and the Sales tax authorities are not bound strictly by the rules of evidence, nevertheless the authori ties must base their order on materials which are known to the assessee and after he is given a chance to rebut the same.
This principle of natural justice which has been reiterated by this Court in the decisions cited above has been clearly incorporated in section 17 (3) of the Act as men tioned above.
The statute does not stop here, but the second part of the proviso confers express benefit on the assessee for giving him an opportunity not only of being heard but also of proving the correctness or completeness of such return.
In view of this provision it can hardly be argued with any show of force that if the assessee desires the wholesale dealers whose accounts are used against him to be cross examined in order to prove that his return is not incorrect or incomplete he should not be conceded this opportunity.
Apart from anything else, the second part of the proviso itself confers this specific right on the asses see.
It is difficult to conceive as to how the 245 assessees would be able to disprove the correctness of the accounts of Haji P.K. Usmankutty or the other wholesale dealers, unless he is given a chance to cross examine them with respect to the credibility of the accounts maintained by them.
It is quite possible that the wholesale dealers may have mentioned certain transactions in their books of account either to embarrass the assessees or due to animus or business rivalry or such other reasons which can only be established when the persons who are responsible for keeping the accounts are brought before the authorities and allowed to be croSs examined by the assessees.
This does not mean that the assessing authority is bound to examine the whole sale dealers as witnesses in presence of the assessees: it is sufficient if such wholesale dealers are merely ten dered by the sales tax authorities for cross examination by the assessees for whatever worth it is.
In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to crosS examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incor rect and incomplete.
We are fortified in our view by a decision of this Court in C. Vasantilal and Co. vs Commis sioner of Income tax, Bombay City(1), where this Court observed as follows: "The Income tax Officer is not bound by any technical rules of the law of evidence.
It is open to him to collect materials to facilitate assessment even by private enquiry.
But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it.
" It will be noticed that if the Sales tax authorities refused the prayer of the assessees to cross examine the wholesale dealers, then such refusal would not amount to an adequate opportunity of explaining the material collected by the assessing authority.
Mr. Gupte learned counsel for the appellant relied on a decision of the Gujarat High Court in Jayantilal Thakordas vs Stale of Gujarat(2).
In the first place the Gujarat High Court in that case was concerned with the Bombay Sales Tax Act which did not contain any .express provision like the one which is to be found in the second part of the proviso to s.17(3) of the Kerala General Sales Tax Act and, there fore, any decision given by the Gujarat High Court would have no application to the facts of the present appeals.
In Jayantilal Thakordas 's case (supra) the Court was merely called upon to interpret the import of the words "reasonable opportunity of being heard" and the Judges held that as ample opportunity was given to the assessee therefore concerned to show cause why the sales said to have been suppressed (1) , 209.
(2) 23 S.T.C. 11.
(3) 14 S.T.C. 489.
246 by him should not be included in his turnover, the rules of natural justice were duly complied with.
The Court further pointed out that the sales tax authorities were not strictly bound by the rules of evidence nor did the Act require the assessing authorities to do more than what they had done in that case.
The Gujarat High Court seems to have dissent ed from the view taken by a single Judge of the Kerala High Court in M. Appukutty vs State of Kerala(3).
Finally, it does not appear from the facts mentioned in the judgment of the Gujarat High Court that the assessee had at any time made a specific prayer for cross examining the representa tives of the firm of M/s A. Alibhai & Co. In these circum stances, therefore, Jayantilal Thakordas 's case (supra) does not appear to be of any assistance to the appellant.
We might, however, state that we are not prepared to go to the extent to which the Gujarat High Court has gone even in interpreting the content and ambit of an opportunity given to the assessee of being heard so as to completely exclude the right of cross examination.
We have already held that whether the reasonable opportunity would extend to such a right would depend upon the facts and circumstances of each case.
We feel that the correct law on the subject has been laid down by a Division Bench of the Orissa High Court in Muralimohan Prabhudayal vs State 07 Orissa(1) where the High Court, while adumbrating the 4th proposition, namely, as to how the assessee was to rebut the. , material used by the Department against him, observed as follows: "It is the amplitude and ambit of this fourth proposition which needs examination.
There cannot be any controversy that the assessee can adduce independent evidence of his own to disprove the particulars proposed to be used against him . .
A third party 's accounts are proposed to be used against the assessee and if such accounts are relied on, the assessee 's accounts are to be discarded . .
If the assessee gets an opportunity by cross examination, he can establish that the accounts of the third party are wrong and manipulated to suit the interest of the third party, or that they were intended to be adversely used against the assessee with whom the third party had inimical rela tionship.
It is difficult to accept the contention in such a case, that the ample and reasonable opportunity to be given to the assessee would not include within its sweep the right of cross examination." The High Court in the present appeals has relied on its earlier decision in Appukutty vs State of Kerala (supra) where a single Judge of the Kerala High Court pointed out that the fact that a third party maintaining some secret accounts had made certain entries in his accounts which may connect the assessee will not give jurisdiction to the assessing authority to use that information unless the assessee has been (1) 26 S.T.C. 22.
247 given an opportunity to Cross examine him effectively.
As no such opportunity was given, the Court held that the proceedings stood vitiated.
In our opinion, the decision of the Kerala High Court was substantially correct and in consonance with the language of section 17(3) and the proviso thereto.
Other cases have also been cited before us which, howev er, are based on the peculiar language of the statutes which the Courts were construing and which are different from the language used in the Act.
Finally, apart from the provisions of section 17(3.) and the proviso thereto, the rules further reiterate what the provi so contemplates.
Rule 15 which deals with provisional as sessment where a return is incorrect and incomplete runs thus: "If the return submitted by the dealer appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after issuing a notice to the dealer calling upon him to produce his ac counts to prove the correctness or complete ness of his return at time and place to be specified in the notice and after scrutiny of all the accounts if any, produced by the dealer and after taking into account all relevant materials gathered by it determine the turnover of the dealer to the best of its judgment, and fix provisionally the annual tax or taxes payable at the rate or rates speci fied in Section or notified under Section 10.
Before determining the turnover under this rule, the dealer shall be given a reasonable opportunity of being heard and also to prove the correctness or completeness of the return submitted by him.
" The Rule clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove the correctness or completeness of the same.
It also en joins that a reasonable opportunity of being heard should be given to the assessee to prove the correctness or complete ness of the return submitted by him.
Thus the requirement of the second part of the proviso to section 17(3) is reiterated in r. 15.
We understand that such a provision in the Act is peculiar to the Kerala Act and is not to be found in other sales tax statutes which provide for best judgment assess ment.
Thus on a true interpretation of section 17(3), the proviso thereto and r. 15, the inescapable conclusion would be that the assessee has been given stationary right to prove the correctness of his return by showing that the materials on the basis of which his return is found to be incorrect or incomplete are wrong and if for this purpose the assessee makes an expire prayer for cross examining the wholesale dealers whose accounts formed the sheet anchor of the notice issued to the assesee, he is undoubted ly entitled to cross examine such wholesale dealers.
In view of the language in which the Rules are couched it seems to us that a determinative issue arises in this case the Department taking the stand that the returns filed by the assessees are incorrect and incomplete, whereas the assessees contend that the 17 240SCI/77 248 returns are correct and that the accounts of the wholesale dealers which formed the basis of the information of the Sales tax Authorities were wrong and incorrect.
Such an issue can only be determined after examination of ' the accounts of both the parties and after affording the asses sees the right to cross examine the wholesale dealers con cerned, particularly when the assessee makes a specific prayer to this effect.
For these reasons, therefore, we are convinced that the judgment passed by the High Court in all these appeals is correct in law and the High Court has rightly decided the issues involved.
The appeals accordingly fail and are dismissed with no order as to costs.
P.B.R. Appeals dismissed.
| Section 17(3) of the Kerala General Sales Tax Act 1963 provides that if the return submitted by an assessee appears to be incorrect or incomplete.
the assessing authority may assess the dealer to the best of its judgment.
The proviso to the sub section enacts that before taking action under the sub section, the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness to completeness of such return.
Relying on the evidence furnished by entries in the books of account of some other dealers, the Sales Tax Officer disbelieved the assessee 's accounts and came to the conclusion that the return field by him was incorrect and incomplete and made a best judgment assessment under section 17(3).
The assessee 's request to cross examine the deal ers in regard to the correctness of their accounts was rejected by the Sales Tax Officer.
In revision the High Court quashed the order of the Sales Tax Officer.
Dismissing the State 's appeal, (Per Bhagwati and Sarkaria.
JJ) HELD .
The assessee was entitled to cross examine the dealers under the second part of the proviso to section 17(3).
The Sales Tax Officer 's refusal to summon the dealers for cross examination by the.
assessee constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the order of assessment made against him.
[239 F] (1) The rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is not an inflexible rule having a fixed connotation.
It has a variable content depending on the nature of the in quiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the right affected and the coil sequences flowing from the decision.
The rule of audi alterem partem does not require in every case a specified procedure to be followed.
In a given case, the rule of audi alterem partem may import a requirement that witnesses, whose statements are sought to be relied upon by the author ity holding the inquiry, should be permitted to be cross examined by the party affected while in some other cases it may not.
The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.
[237 B D] (2) (a) It is only on the existence of one of two condi tions, namely, that no return is .submitted by the assessee or the return submitted appears to be incorrect or incom plete that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment.
[237 H] 234 (b) The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasonable opportunity to prove the correctness or complete ness of such return.
"To prove" means to establish the correctness or completeness of the return by any mode per missible under law.
The opportunity to prove would, there fore, necessarily carry with it the right to examine wit nesses and that would include equally the right to cross examine witnesses examined by the Sales Tax Officer.
[238 G H] In the instant case, the assessee could prove the cor rectness and completness of his return only by showing that the entries in the books of account of the dealers on which the Sales Tax Officer relied, were false, bogus or manipu lated and that his return should not be disbelieved on the basis of such entries.
This could not be done unless an opportunity to cross examine the dealers was given.
[239 B] Murlimohan Prabhudayal vs State of Orissa, 26 S.T.C. 22 and M. Appukutty vs State of Kerala, 14 S.T.C. 489 approved.
Fazal Ali, J. (concurring).
Section 17(3) with the proviso thereto and r. 15, have given a statutory right to the assessee to prove the cor rectness of his return and the assessee was entitled to cross examine the wholesale dealers, relying on whose ac counts the Sales Tax Officer made a best judgment assess ment.
[247 E] (1) The well settled rules in regard to best judgment assessment are (i) The taxing authority must not act dis honestly or vindictively or capriciously.
He must make what he honestly believes to be a fair estimate, of the proper figures of assessment and for this purpose, he must be able to take into consideration all matters which he thinks will assist him in arriving at a fair and proper estimate.
Though it must necessarily be guess work it must be honest guess work.
[241 E] (ii) Although tax proceedings are quasi judicial and the Sales Tax Officer is not bound strictly by rules of evi dence, yet he must base his order on materials known to the assessee and after he has been given a chance to rebut the same.
[244 E] (iii) Admissibility of a document or material in evi dence is quite different from the value which the authority would attach to such material.
The tax authority can even base its conclusion on private opinion or assessment provid ed the same is fully disclosed to the assessee and he is given an opportunity to rebut the same.
[242 E] Income tax Commissioner vs Badridas Ramrai Shop, Akola (1937) 64 I.A. 102, 114, 115 and Dhakeswari Cotton Mills Ltd. vs Commissioner of Incometax, West Bengal, ; followed.
Raghubar Mandal Harihar Mandal vs State of Bihar 8 S.T.C. 770 and C. Vasantilal & Co. vs C.I.T. Bombay City 45/.T.R. 206 referred to.
Seth Gurmukh Singh vs Commissioner of Income tax Punjab, approved, 2(a) The words "opportunity of being heard" in section 17(3) are of very wide amplitude.
All that the court has.
to see is whether the assessee had been given a fair hearing.
Whether the hearing would extend to the right of demanding cross examination of witnesses or not, would depend upon the nature of the materials relied upon by the tax authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case.
[234F G] 235 The second part of the proviso confers benefit on the asses see for giving him an opportunity not only of being heard but also of proving the correctness or completeness of his return.
Secondly, r. 15 clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove.
the correctness or completeness of the same.
It also enjoins on the Sales Tax Officer that a reasonable opportunity of being heard should be given to the assessee to prove the correctness and completeness of the return.
The requirement of the second part of the proviso to section 17(3) is reiterated in r. 15.
D] In the instant case, if the assessee desired the dealers whose accounts were used against him to be cross examined to prove that his return was not incorrect or incomplete, he could not be denied this opportunity.
The dealers might have made the entries to embarrass the assessee or they might have animus or business rivalry with the assessee.
The assessee could establish the correctness of his return only if he was allowed to cross examine the dealers.
[244 H] Jayantilal Thakordas vs State of Gujarat 23 S.T.C. 11 dis tinguished.
M. Appukutty vs State of Kerala, 14 S.T.C. 489 and Muralimohan Prabhudayal vs State of Orissa, 26 S.T.C. 22 approved.
|
Appeal No. 152 of 1965.
Appeal from the judgment and order dated November 13, 1964 of the Madhya Pradesh High Court in Misc.
Petition No. 373 of 1964.
M. section Gupta, for the appellant.
222 B. R. L. Iyengar, for the respondents.
The Judgment of the Court was delivered by Ramaswami, J.
On August 7, 1963 the Regional Transport Authority, Bilaspur granted to the Punjab Sikh Regular Motor Service, (hereinafter called the appellant), renewal of a stage carriage permit for an inter regional route Saraipalli to Sarangarh in the State of Madhya Pradesh.
The permit was valid upto August 5, 1963 and by the order of renewal dated August 7, 1963 the permit was renewed for a period of three years.
On September 13, 1963 the appellant applied to the Regional Transport Authority, Raipur for renewal of the grant of countersignature on the renewed permit.
Respondent No. 2 objected to the renewal of the grant of counter signature on the ground that the application of the appellant dated September 13, 1963 was barred by time.
The Regional Transport Authority, Raipur held that the application for renewal of the grant of countersignature was not made within the time prescribed by rule 62 of the Central Provinces and Berar Motor Vehicles Rules but it took the view that the application for renewal had been filed within six weeks of the date of the passing of the order of renewal of the permit by the Regional Transport Authority, Bilaspur and therefore the application for the renewal of the grant of countersignature could not be rejected on the ground that it was time barred.
The Regional Transport Authority, Raipur accordingly granted the renewal of the counter signature on the permit by its order dated February 24, 1964.
Respondent No. 2 thereafter applied to the High Court of Madhya Pradesh under article 226 of the Constitution of India for a writ quashing the order dated February 24, 1964 passed by the Regional Transport Authority, Raipur.
The High Court took the view that an application for renewal of the grant of counter signature must be made within the period prescribed by section 58 (2) of the and the appellant having failed to apply within that period, the application of the appellant for renewal of the counter signature on the permit was barred and the Regional Transport Authority, Raipur had no jurisdiction to countersign the permit renewed by the Regional Transport Authority, Bilaspur.
The High Court accordingly quashed the order dated February 24, 1964 passed by the Regional Transport Authority, Raipur.
This appeal is brought by the appellant with a certificate granted by the High Court tinder article 1 33 (1) (c) of the Constitution.
It is advisable at this stage to refer to the material provisions of the (Act 4 of 1939) which have a bearing 22 3 on the validity of the order of the Regional Transport Authority, Raipur dated February 24, 1964.
Section 45 of the provides that 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.
By the proviso to section 45 it is enacted that where 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.
Section 47 sets out the procedure of the Regional Transport Authority in considering applications for stage carriage permits and prescribes the matters which may be taken into account by that officer ingraining or rejecting the applications for stage carriage permits.
Section 48 provides that subject to the provision of section 47,a Regional Transport Authority may, on an application made to it, grant a stage carriage permit, in accordance with the application or with such modifications as it deems fit, valid for a specified route or routes or a specified area.
Section 57 prescribes the procedure in " applying for and granting permits".
It is provided by sub section
(2) of section 57 that an application for a stage carriage permit or a public carrier 's permit shall be made not less than six weeks before the date on which it is desired that the permit shall take effect, or, if the Regional Transport Authority appoints a date for the receipt of such applications, on such date.
Section 58(1) provides that a stage carriage permit or a contract carriage permit other than a temporary permit shall be effective without renewal for such period not less than three years and more than five years, as the Regional Transport Authority may specify in the permit.
Sub section (2) enacts that a permit may be renewed on an application made and disposed of as if it were an application for a permit, provided that the application for the renewal of a permit shall be made (a) in the case of a stage carriage permit or a public carrier 's permit, not less than sixty days before the date of its expiry, and (b) in any other case, not less than thirty days before the date of, its expiry.
By sub section
(3) the Authority is, notwithstanding anything contained in the first proviso to sub section
(2), authorised to entertain an application for the renewal of a permit after the last date specified in the said proviso, if the application is made not more than fifteen days after the said last date.
Section 63 deals with inter regional and inter state permits.
The material parts of that section are "(1) Except as may be otherwise prescribed, a permit granted by the Regional Transport Authority 224 of any one region, shall not be valid in any other region, unless the permit has been countersigned, by the Regional Transport Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless countersigned by the State Transport Authority of that other State or by the Regional Transport Authority concerned : Provided. . . . . (2) A Regional Transport Authority when countersigning the permit may attach to the permit any condition which it might have imposed if it had granted the permit and may likewise vary any condition attached to the permit by the authority, by which the permit was granted.
(3) The provisions of this Chapter relating to the grant, revocation and suspension of permits shall apply to the grant, revocation and suspension of countersignatures of permits : Provided. . . . .
Section 68(1) confers authority upon the State Government to make rules for the purpose of carying into effect the provisions of Ch.
IV of the Act.
A stage carriage permit granted by a Regional Transport Authority therefore remains effective without renewal for a period of not less than three years and not more than five years as the authority may specify in the permit.
A person desiring to obtain renewal of the permit must, in the case of a stage carriage permit, make an application not less than sixty days before the date of its expiry, and the Authority has to deal with the application for the renewal as if it were an application for a permit.
The procedure for obtaining renewal is assimilated to the procedure prescribed for an application for a first permit, but in order that there is no interruption in the transport service the Legislature has provided that the application for renewal shall be made not less than sixty days before the date of its expiry, it being assumed that the authority would be able, in the interval, to publish the application, and to hear objections to the grant of renewal.
Except as may be otherwise prescribed, an interregional permit by a Regional Transport Authority in any region.
is not valid unless the permit is countersigned by the Regional Transport Authority of that other region.
The provisions of Ch.
IV relating to the grant, revocation and suspension of permits 225 apply to the grant, revocation and suspension of countersignatures of permits.
The High Court has held, in the present case, that an appli cation for renewal of counter signature has also to be made not less than sixty days before the date of its expiry and if no such application is made, the Regional Transport Authority has no power to countersign the permit, and upon that ground the High Court has quashed the order of the Regional Transport Authority, Raipur dated February 24, 1964 granting countersignature of the permit.
It was argued on behalf of the appellant that the period of limitation prescribed by section 58 of the Motor Vehicle, , Act cannot be applied to an application for countersignature of a renewed permit.
It was submitted that the question of counter signature cannot arise unless and until the permit was first renewed and therefore it was erroneous to say that an application for countersignature should be made even before the permit was renewed and within the time prescribed by section 58.
The contrary view was put forward on behalf of respondent No. 2.
It was contended that in the case of an inter regional route, the countersignature of the Regional Transport Authority concerned was essential for the validity and confirmation of the grant made by the Regional Transport Authority having jurisdiction to grant a permit for the inter regional route.
It was pointed out that under section 63 (3) of the the provisions of Ch.
IV relating to grant, revocation and suspension of permits apply to the grant, revocation and suspension of countersignatures of permits and therefore the provisions of sections 57 and 58 about the making of an application for the grant of a permit, the time within which it must be made and the procedure that must be followed, apply equally in the matter of the grant of countersignatures and that as section 58 laid down that an application for renewal of a permit must be made, in the case of a stage carriage permit, not less than sixty days before the date of its expiry, it necessarily followed that an application for countersignature of the renewed permit for inter regional route had to be made to the Regional Transport Authority concerned within sixty days before the date of the expiry of the permit.
We do not think it is necessary to express any opinion on the contentions advanced by the parties on this aspect of the case, for we are of the view that on a proper construction of the rules made by the State Government in regard to the grant of permits and countersignatures of inter regional permits the Regional Transport Authority, Raipur was not competent to renew 226 the countersignature on the permit for tile interregional route granted by the Regional Transport Authority, Bilaspur in the present case.
Under the the Central Provinces and Berar Motor Vehicles Rules, 1940 were made by the appropriate authority and it is the admitted position that these rules were at the material time in operation in the two regions Bilaspur and Raipur in the State of Madhya Pradesh with which we are concerned.
By r. 61 it is provided : "(a) Application for the renewal of a permit shall be made, in writing to the Regional Transport Authority by which the permit was issued not less than two months, in the case of a stage carriage permit or a public carrier 's permit, and not less than one month in other cases, before the expiry of the permit, and shall be accompanied by Part A of the permit.
The application shall state the period for which the renewal is desired and shall be accompanied by the fee prescribed in rule 55.
(b) The Regional Transport Authority renewing a permit shall call upon the holder to produce part B or Parts A, B thereof, as the case may be, and shall endorse Parts A and B accordingly and shall return them to the holder.
" By r. 62 cl.
(a) it is provided "Subject to the provisions of r. 63, application for the renewal of a countersignature on a permit shall be made to the Regional Transport Authority concerned and within the appropriate periods prescribed by Rule 61 and shall, subject to the provisions of sub rule (b), be accompanied by Part A of the permit.
The application shall set forth the period for which the renewal of the countersignature is required".
By r. 63 cl.
(a) it is provided : "The authority by which a permit is renewed may, unless any authority by which the permit has been countersigned (with effect not terminating before the date of expiry of the permit) has by general or special order otherwise directed, likewise renew any countersignature of the permit (by endorsement of the permit in the manner set forth in the appropriate form) and shall, in such case, intimate the renewal to such authority".
227 Rule 61 substantially incorporates the provisions of sub section
(2) of section 58 of the and the proviso thereto, and makes certain incidental provisions.
Clause (a) of r. 62 provides that the application for renewal of countersignature of a permit shall be made to the Regional Transport Authority concerned and within the appropriate period prescribed by r. 61 but the provisions of r. 62(a) are subject to the provisions of r. 63(a) which confers power upon the Authority which grants renewal of inter regional permit under the first proviso to section 45 to countersign the permit so as to make it valid for the other region covered by the route.
Therefore, even though by section 63 the power to countersign the pen nit is entrusted to the Regional Transport Authority of the region in which the remaining part of the route is situate, the effect of r. 63 is that the power to countersign the permit is vested in the Authority which grants the renewal of the permit.
The Legislature has by providing in the opening part of sub section
(1) of section 63 "except as may be otherwise prescribed" made the provision subject to the rules framed by the State Government under section 68 of the .
The provisions of r. 63, therefore, must supersede the direction contained in section 63(1) of the statute and the Regional Transport Authority, Bilaspur was competent in the present case to grant countersignature of the pen nit even in so far as it related to the Raipur region.
On behalf of the appellant attention was drawn to the expression "may" in r. 63.
But in the context and the language of the rule the word "may" though permissive in form, must be held to be obligatory.
Under r. 63 the power to grant renewal of the countersignature on the permit in the present case is conferred on the Regional Transport Authority, Bilaspur.
The exercise of such power of renewal depends not upon the discretion of the authority but upon the proof of the particular case out of which such power arises.
"Enabling words are construed as compulsory whenever the object of the, power is to effectuate a legal right" (See Julius vs Bishop of Oxford) (1).
If the Regional Transport Authority, Bilaspur had power to renew the countersignature on the permit under r. 63, it must be held that the Regional Transport Authority, Raipur had no such power under r. 62 because the latter rule is expressly made subject to the provisions of rule 63, and the power granted to the Regional Transport Authority under section 62 is taken away by the provisions of r. 63.
It follows, therefore, that the Regional Transport Authority, Raipur was not competent to renew the countersignature on the permit in the present case and the Regional Transport Autho (1) 5 A.C. 214, 244.
228 rity, Bilaspur was alone competent to renew the countersignature of the permit.
We accordingly hold that the order of the Regional Transport Authority, Raipur dated February 24, 1964 granting countersignature of the permit was illegal and ultra vires and was rightly quashed by the High Court by its order dated November 13, 1964.
We, therefore, confirm the order of the High Court, but for different reasons.
We, however, desire to make it clear that our order does not affect the validity of the permit granted to the appellant by the Regional Transport Authority, Bilaspur in so far as it relates to the route within the limits of Bilaspur region.
That is the ratio of the decision of this Court in M/s. Bundelkhand Motor Transport Company, Nowgaon vs Behari Lal Chaurasia and anr.(1) in which it was pointed out that inter regional permit when granted is valid for the region over which the authority granting the permit has jurisdiction even though it is not countersigned by the proper Regional Transport Authority with regard to the portion of the route outside that region.
We accordingly dismiss this appeal.
There will be no order as to costs.
We desire to express our thanks to Mr. Iyengar who acted as amicus curiae in this case.
Appeal dismissed.
| The Regional Transport Authority, Bilaspur, granted the appellant renewal of the stage carriage permit for an inter regional route, The appellant, thereafter, applied to the Regional Transport Authority, Raipur, for renewal of the grant of counter signature on the renewed permit, and it was granted.
In an application under article 226 by the 2nd respondent, the High Court quashed the order of the Regional Transport Authority, Raipur, on the ground that the appellant 's application for renewel of the counter signature was barred by time.
In appeal to this Court, HELD : On a proper construction of the Central Provinces and Berar Motor Vehicles Rules made by the State Government in regard to the grant of permits and counter signatures of inter regional permits, the Regional Transport Authority, Raipur, was not competent to renew the counter signature on the permit for the inter regional route granted by the Regional Transport Authority, Bilaspur, and the permit was valid only so far as it related to the route within the limits of Bilaspur region, (225 H] Even though by section 63 of the , the power to counter sign the permit is entrusted to the Regional Transport Authority of the region in which the remaining part of the route is situate, the effect of r. 63 is that the power to counter sign the permit is vested in the Authority which grants the renewal of the permit.
In the context and the language of the rule the word "may" in the rule, though permissive in form, is obligatory.
If the Regional Transport Authority, Bilaspur, had power to renew the counter signature on the permit under the rule,, it must be held that the Regional Transport Authority, Raipur, had no such power under r. 62, because, the latter rule As expressly made subject to the provisions of r. 63, and the power granted to the Regional Transport Authority under r. 62 is taken away by the provisions of r. 63.
[227 C G] M/s. Bundelkhand Motors Transport Company vs Beharilal, ; , referred to.
|
TION: Civil Appeal Nos.
2606/80, 6944/83, 3779/88 and 3780/88.
PG NO 562 From the Judgments and Orders dated 23.1.80, 26.4.83, 22.11.82 and 1.8.1984 of the Allahabad High Court in C.M. Writ No. 549/1979 C.M.W.P. No. 6942/81, C.M.W.P. No. 8383 of 1989 and C.M.W.P. No. 11203/1980 respectively.
S.N. Kacker, B.D. Aggarwal R.K. Jain, Dalip Tandon, Rajiv Dutta, K.K. Patel, K.K. Mohan, P.K. Jain, R.K. Khanna and Pankaj Kalra for the Appellants.
Manoj Swarup, Ms. Lalita Kohli, Anil Kumar Gupta, S.K. Mehta, S.M. Sarin, Dhruv Mehta, Aman Vachher and R. Jagannath Goulay for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The civil appeals as well as the special leave petitions raise a common question as to whether the provisions of the Uttar Pradesh Urban Buildings (Regulation Of Letting, Rent and Eviction) Act, Act No. 13 of 1972, (hereinafter referred to as 'the Act) are applicable to cantonments situated in the State of Uttar Pradesh.
Since the two civil appeals are already pending on the issue, we grant special leave in the special leave petitions as well and proceed to dispose of all the four matters by this common judgment.
The main judgment of the High Court under consideration is that in the case of Brij Sunder Kapoor vs Additional District Judge & Ors., (reported in 1980 All India Rent Cases 319) which answered the question in the affirmative.
The Allahabad High Court has reiterated the same view i its latter decision in Lekh Raj vs 4th Addl.
Judge, Meerut, AIR 1982 All.
265, which, we are told, is also under appeal to this Court.
It is sufficient to set out certain brief facts in the matter of Brij Sunder Kapoor, (C.A. 2606 of 1980) in order to appreciate the question of law that arises for consideration.
Jhansi is a cantonment in Uttar Pradesh.
Brij Sunder Kapoor is a tenant of premises No. 103, Sadar Bazar, Jhansi of which respondent No. 3 Bhagwan Das GUpta is the landlord.
In 1975, the landlord Bhagwan Das Gupta filed an application before the prescribed authority under section 21 of the Act praying that he needed the above premises for his personal occupation and that the same may be released to him.
The tenant contested the application.
The application was dismissed by the prescribed authority but allowed, on appeal, by the Additional District Judge.
The tenant preferred a writ petition which has been dismissed by a learned single Judge of the Allahabad High Court and hence the present appeal.
We are not concerned with the factual PG NO 563 aspects of the controversy between the parties.
The short point urged by learned counsel before us, which is common to all these appeals and which was also argued unsucessfully before the High Court, was that the Act did not apply to cantonments in Uttar Pradesh and that, therefore, the order of release made by the appellate authority under section 21 of the said Act was a nullity.
In order to appreciate the point urged by the learned counsel for the appellants, it is necessary to set out at some length the history of tenancy legislation in the State of Uttar Pradesh.
In this State, rent and eviction control legislation was initiated by the United Provinces (Temporary) Control of Rent & Eviction Ordinance promulgated on 1.10.1946.
This Ordinance was followed by U.P. Act III of 1947 which was made retrospective with effect from 1.10.1946.
Both the Act and the Ordinance applied to cantonment areas as well as other parts of the State.
Subsequently, the above Act was amended by U.P. (Amendment) Act 44 of 1948.
By this Act, cantonment areas were excluded from the purview of Act III of 1947.
This amendment was introduced perhaps as it was felt that the cantonment areas were to be governed by the Cantonments (House Accommodation) Act, 1923 and that the simultaneous application of Act III of 1947 to cantonment areas may create problems.
It appears that, subsequently, a number of representations were made by residents of cantonments for extending the provisions of Act III of 1947 to cantonment areas as well.
Perhaps because of such representations, U.P. Ordinance 5 of 1949 was promulgated on 26th September, 1949.
But this ordinance was allowed to lapse.
In the meantime the Allahabad High Court in Smt.
Ahmedi Begam vs District Magistrate, Agra, took the view that the State Legislature was incompetent to regulate accommodation lying in cantonments since that was a subject on which Parliament alone was competent to legislate, a view which was subsequently been approved by this court in Indu Bhushan Bose vs Rama Sundri Devi, [1978] I S.C.R. 443.
Thereupon, Parliament enacted the U.P. Cantonments (Control of Rent and Eviction) Act, 1952 (Act 10 of 1952).
Though this was an Act of Parliament, its operation was confined to cantonments in Uttar Pradesh.
In 1957, Parliament enacted the (Act XLVI of 1957).
Act 22 of 1972 gave it retrospective effect from 26.1.1950.
It provided for the extension, to cantonments in each State, of PG NO 564 laws relating to the control of rent and regulation of house accommodation prevalent in the particular State in respect of areas other than cantonments.
The Statement of Objects and Reasons of this Act specifically states that the Act became necessary because the power to make laws with respect to rent control and house accommodation in cantonment areas is exclusively vested in Parliament.
Section 3 of this Act originally read thus: 'The Central Government may by notification in the official gazette, extend to any cantonment with such restrictions and modifications as it thinks fit, any enactment relating to the control of rent and regulation of house accommodation which is in force on the date of notification in the State in which the cantonment is situated.
The words "on the date of the notification" in the section were omitted by section 3 of Central Act 22 of 1972 with full retrospective effect.
The promulgation of this Act created a somewhat anomalous position so far as the State of U.P. was concerned.
As we have already mentioned, Act 10 of 1952 was already in force in the cantonment areas of the State and the issue of a notification by the Central Government purporting to apply Act III of ]947 also to the cantonments in U.P. would create complications.
If Act III of 1947 had to be extended to cantonment areas in U.P. in place of Act 10 of 1952, it was necessary that the provisions of Act 10 of 1952 should be repealed by a parliamentary enactment.
This was done by enacting the U.P. Cantonments (Control of Rent and Eviction) (Repeal) Act, 1971 (Act 68 of 1971).
The object of passing the Act, as given in its long title.
was to provide for the repeal of U.P. Act 10 of 1952.
Section 2 of this Act reads as under: "On and from the date on which the United Provinces (Temporary) Control of Rent and Eviction Act, 1947 is extended by notification under section 3 of the to the cantonments in the State of Uttar Pradesh, the , Act l0 of 1952 shall stand repealed.
" It was only on April 3, 1972 that a notification was issued by the Central Government under section 3 of Act XLVI of 1957 extending the provisions of U.P. Act III of 1947 to the cantonments in the State of Uttar Pradesh.
But soon PG NO 565 after the above notification was issued U.P. Act III of 1947 itself was repealed and replaced by U.P. Act 13 of 1972, which came into force on 15th July, 1972.
This necessitated the issue of another notification under section 3 of Act XLVI of 1957 extending the provisions of Act 13 of 1972 to the cantonments in Uttar Pradesh.
This notification dated 1.9.1973, and gazetted on 29.9.1973, reads as follows: "In exercise of the powers conferred by section 3 of the , (Act 46 of 1957), and in supersession of the notification of the Government of India in the Ministry of Defence, No. S.R.O. 8, dated 3rd April, 1972, the Central Government hereby extends to all the cantonments in the State of Uttar Pradesh the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (U.P. Act XIII of 1972 as in force on the date of this notification, in the State of Uttar Pradesh with the following modifications, namely, It was in view of the above notification that respondent No. 3 filed his application under section 21 of the said Act, which has given rise to the present proceedings.
Three questions were posed by Shri S.N. Kacker who opened arguments for the appellants (but unfortunately could not complete them due to his unexpected demise) and Shri Agarwal who followed him.
These were: (i) Does Act XLVI of 1957 apply to the State of U.P. at all in view of the fact that Act 10 of 1952, which was a detailed and elaborate enactment, contained special provisions applicable to cantonments in this State? (ii) Did not the power of the Central Government under section 3 of Act XLVI of 1957 get exhausted when the notification dated 3rd April, 1972 was issued, by which the provisions of Act III of 1947 were extended to cantonments in U.P.? If yes, was not the second notification dated 1.9.1973 purporting to extend the provisions of Act 13 of 1972 to cantonments in U.P. illegal and non est? iii) Does not section 3 of Act XLVI of 1957 suffer from the vice of excessive delegation of legislative powers and PG NO 566 is it not consequently void and inoperative? Apart from these principal questions, it was pointed out by Shri Tandon (appearing for the petitioner in SLP No. 6944 of 1983) that, in his case, the landlord was trying to resort to provisions of Act 13 of 1972 as amended by Act 28 of 1976.
It was submitted that, while Act 13 of 1972 as in force on 1.9.73 was extended to U.P. cantonments by the notification dated 1.9.1973, there was no further notification applying the provisions of the Acts amending the same to the cantonments till 17.2.1982.
It was therefore contended that in any event the amended provisions would not be applicable to the cantonment areas of U.P. So far as the first contention is concerned, we do not think there is any substance in it.
It is true that Act 1() of 1952 was a detailed statute, which was applicable to cantonments in the State of U.P.
It is also true that this enactment which was a Central enactment could not be rendered inoperative by the mere issue of a notification under section 3 of Act XLVI of 1957 and that it could be repealed or made inoperative only by an Act of Parliament.
But in this case there is a parliamentary legislation which terminates the applicability of Act 10 of 1952 in Uttar Pradesh Cantonments.
This is Act 68 of 1971.
Section 2 of this Act has already been reproduced.
It enacts that Act 10 of 1952 shall stand repealed in its application to the State of U.P. on and from the date on which Act III of 1947 was extended to the cantonment areas in the State by a notification under section 3 of Act XLVI of 1957.
As we have already mentioned, a notification was issued on 3.4.1972 under section 3 of Act XLVI of 1957, extending the provisions of Act III of 1947, with certain modifications set out therein, to cantonments in the State of Uttar Pradesh.
On and from 3rd April, 1972, therefore, Act 10 of 1952 ceased to apply to cantonments in the State of Uttar Pradesh.
In view of this, there was, at least on and after that date, no obstacle in the way of Act III of 1947 being operative in the cantonments of the State of U.P. as well.
Perhaps releasing this, a contention was put forward that Act XLVI of 1957, promulgated at a time when Act 10 of 1952 was in force in U.P., should be construed as an enactment applicable to all States in India other than the State of Uttar Pradesh.
It is not possible to accept this contention for two reasons.
In the first place the language of the Act does not justify any such restriction.
Secondly, since the Act has been given retrospective effect from 26.1.1950, it should be deemed to have been in force from that date.
On that date Act 10 of 1952 was not in force in the State of U.P. and so the terms of Act 46 of 1957 would be applicable to contonments in all States including U.P.
This takes away PG NO 567 the entire basis of the argument.
Again, there might have been some difficulty If, by a notification under section 3 of this Act, the Central Government had sought to apply Act III of 1947 to cantonments in the State of Uttar Pradesh, without there being a repeal of Act 10 of 1952.
But this possible repugnancy between two legislations operating in the State of Uttar Pradesh (one by virtue of the notification under section 3 of Act 46 of 1957 and the other by virtue of the provisions of Act 10 of 1952) has been obviated by the provisions of Act 68 of 1971.
These provisions have rendered Act 10 of 1952 inoperative as and from 3.4.1972 leaving the provisions of Act III of 1947 in the field only until it was replaced by Act 13 of 1972.
One more, somewhat different, argument which seems to have been addressed before the High Court on the basis of Act 68 of 1971 is that, on the issue of the notification dated 3.4.1972, the provisions of Act III of 1947, subject to the modifications mentioned in the notification, stood bodily lifted and incorporated in Act 68 of 1971 and that the repeal thereafter, of Act III of 1947 did not have any bearing in respect of cantonments in the State of Uttar Pradesh.
In other words, the argument is that Act Ill of 1947 continues, to be in operation in the cantonment areas even now.
The appellants obviously have in mind the principles of referential legislation by incorporation outlined in Mahindra & Mahindra vs Union, and other cases.
We, agree, however, with the High Court that section 2 of Act 68 of 1971 is not an instance of legislation by incorporation.
The only purpose of 1947 to cantonment areas was already there in Act XLVI of 1957.
But there was a hurdle in the issue of a notification under section 3 of that Act in that Act 10 of 1952 was already in force in such areas.
Act 68 of 1971 merely removed this obstacle and enacted that Act 10 of 1952 would stand repealed on the date of issue of the notification under section Once such a notification was issued, Act 68 of 1971 had served Its purpose out and had no further impact.
It did not have the further effect of incorporating within itself the provisions of the extended law.
If that had been the intention, section 2 of Act 68 of 1971, as pointed out by the High Court, would have read something like this: "On and from the date of commencement of this Act, the provisions of U.P. Act III of 1947 shall be applicable to be cantonments in the State of Uttar Pradesh and Act 10 of 1952 shall stand repealed.
" PG NO 568 It will be noticed that the above argument also overlooks the effect of later notifications under section 3 which have superseded the effect of the one dated 3.4.1972.
To get over this difficulty, it is argued that section 3 empowers the Government to issue a notification thereunder only once and that, once the notification dated 3.4.1972 was issued, the power got exhausted.
The further notifications dated 1.9.1973 and 17.2.1982 are, it is said, null and void.
The argument is based on a short passage in Lachmi Narain vs Union; , This case has a relevance on the third contention also to which we shall advert later.
So far as the aspect presently under discussion is concerned, its relevance arises in this way.
In that case, section 2 of the Part C States (Laws) Act, 1950 empowered the Central Government to extend, by notification in the official gazette, to any Part C State or part of it, any enactment in a Part A State.
The Central Government, in exercise of this power, issued a notification in 1951, extending the provisions of the Bengal Finance (Sales Tax) Act, l941 to the then Part C State of Delhi with certain modifications set out in section 6.
In 1957, the Central Government issued another notification, again in purported exercise of the powers conferred by section 2, by which an additional modification of section 6 of the Bengal Act was introduced in the 1951 notification as a result of which certain exemptions available to the petitioner were withdrawn at shorter notice than was permissible under the modifications notified in I951.
The notification of 1957 was held to be invalid and ineffective on several grounds, one of which was thus stated at page 801: "The power given by section 2 exhausts itself on extension of the enactment, it cannot be exercised be repeatedly or sub sequently to such extension.
It Can be exercised only once simultaneously with the extension of the enactment.
This is one dimension of the statutory limits which circumscribe the power.
" This was elaborated further by the learned Judge, Sarkaria, J. at p. 802, contrasting a clause of the kind under consideration with a "Removal of Difficulty Clause" which permits removal of difficulties felt in the operation of an Act from time to time.
The learned Judge observed: "Firstly, the power has not been exercised contemporaneously with the extension or for the purposes of the extension of the Bengal Act to Delhi.
The power given by section 2 of the Laws Act had exhausted itself when the Bengal Act was extended, with some alterations, to Delhi by PG NO 569 Notification dated 28.4.1951.
The impugned notification has been issued on 7.12.1957, more than six and a half years after the extension.
There is nothing in the opinion of this Court rendered in Re: Delhi Laws Act (supra) to support Mr. B. Sen 's contention that the power given by section 2 could be validly exercised within one year after the extension.
What appears in the opinion of Fazal Ali J. at page 850, is merely a quotation from the report of the Committee on Minister 's Powers which considered the propriety of the legislative practice of inserting a "Removal of Difficulty Clause" in Acts of British Parliament, empowering the executive to modify the Act itself so far as necessary for origining it into operation.
This device was adversely commented upon.
While some critics conceded that this device is "partly a draftsman 's insurance policy, in case he has overlooked something" (e.g. Sir Thomas Carr, page 44 of his book "concerning English Administrative Law"), others frowned upon it, and nicknamed it as "Henry VIII Clause" after the British Monarch who was a notorious personification of absolute despotism.
It was in this perspective that the Com mittee on Minister 's Powers examined this practice and recommended: " . . first, that the adoption of such a clause ought on each occasion when it is, on the initiative of the Minister in charge of the Bill, proposed to Parliament to be justified by him upto the essential.
It can only be essential for the limited purpose of bringing an Act into operation and it should accordingly be in most precise language restricted to those purely machinery arrangements vitally requisite for that purpose; and the clause should always contain a maximum time limit of one year after which the power should lapse.
" It may be seen that the time limit of one year within which the power under a Henry VIII Clause should be exercisable, was only a recommendation, and is not an inherent attribute of such power.
In one sense, the power of extension cum modification given under section 2 of the Laws Act and the power of modification and adaptation conferred under PG NO 570 a usual 'Henry VIII Clause ' are kindred powers of fractional legislation, delegated by the legislature within narrow circumscribed limits.
But there is one significant difference between the two.
While the power under section 2 can be exercised only once when the Act is extended, that under a 'Henry VIII Clause ' can be invoked, if there is nothing to the contrary in the clause more than once, on the arising of a difficulty when the Act is operative.
That is to say, the power under such a clause can be exercised whenever a difficulty arises in the working of the Act after its enforcement, subject of course to the time limit, if any, for its exercise specified in the statute.
Thus, anything said in Re: Delhi Laws Act, (supra), in regard to the time limit for the exercise of power under a 'Henry VIII Clause ', does not hold good in the case of the power given by section 2 of the Laws Act.
Fazl Ali J., did not say anything indicating that the power in question can be exercised within one year of the extension.
On the contrary, the learned Judge expressed in unequivocal terms, at page 849: 'Once the Act became operative any defect in its provision cannot be removed until amending legislation is passed '.
" Basing himself on this passage, learned counsel contended that, once the notification dated 3rd April, 1972 was issued, the power under section 3 had got exhausted, and the section could not have been invoked by the Central Government once again to issue the notification of Ist September, 1973 extending Act 13 of 1972 to the cantonments of U.P.
It will be at once clear that there is a basic difference between the situation in Lachmi Narain (supra) and that in the present case.
In both cases, the power conferred is to extend the provisions of another Act with modifications considered necessary.
In Lachmi Narain this had been done by the 1951 notification.
The Bengal Finance (Sales Tax) Act, had been extended to Delhi with certain modifications.
The object of the 1957 notification was not to extend a Part A legislation to Delhi; it was to modify the terms of an extension notified earlier.
This was held to be impermissive in as much as all that the section permitted was an extension of the laws of a part A State to Delhi, which, ex facie, had already been done in 1951.
Here the nature of the legislation in question is totally different.
As we shall explain later, the whole purpose of PG NO 571 Act XLVI of 1947 was to ensure that the cantonment areas in a State have the same rent laws as the other areas thereof.
This when Act III of 1947 ceased to be in force in the rest of the State, no purpose would be served by its continuing in force in the cantonment areas alone.
So also when the provisions of the law in force in the State got amended, there should be a power to extend the amended law in the cantonment.
This was, obviously, the reason why Act 22 of 1972 amended section 3 of Act XLVI of 1957 to omit the words "on the date of the notification" retrospectively.
The provisions of section 3 of the Act XLVI of 1957 should, in the circumstances be construed so as to achieve this purpose and as enabling the Central Government to issue notifications from time to time and not as exhausted by a single invocation as in the case of the statute considered in the Delhi Laws Act case, (supra).
section 3 could, therefore, be invoked from time to time as occasion arise and the notifications dated 1.9.1973 and 17.2.1982 are valid and intra vires.
In such a situation, we think, the limitation suggested in the above decision will not operate.
On the other hand, the provisions of section 14 and section 21 of the General Clauses Act will apply and it will be open to the Government to extend another legislation or further legislations to cantonments in place of the one that had been repealed.
The above conclusion can also be supported on the ratio of decision in Gurcharan Singh and Others vs V.K. Kaushal, ; , also a case concerned with notifications under section 3 of Act XLVI of 1957.
In exercise of this power the Central Government issued on 2 1.11.1969 a notification extending the East Punjab Rent Restriction Act, 1949, to cantonments in the State of Punjab & Haryana Subsequently, after the amendment of section 3 of Act XLVI of 1957 by Act 22 of 1972, another notification was issued, on 24.1 1974, superseding the earlier notification and extending the East Punjab Act afresh to cantonments in the State of Punjab & Haryana with a modification of section 1(3) of the said Act with retrospective effect from 26.1 1950.
Upholding the validity of this notification and repelling an argument similar to the one now advanced before us, the Court observed: "Two points are raised on behalf of the appellants against that conclusion.
The first is that the power under section 3 of the having been exercised once, that is to say, by the notification dated November 21, 1969, the power of extension stood exhausted and could not be availed of again, and therefore the Notification dated January 24, 1974 was with our statutory sanction and invalid We are referred to PG NO 572 Lachmi Narain vs Union of India, ; That was a case where this Court held that a notification under Section 2 States (Laws) Act, 1950 having been issued in 1951 by the Central Government extending the Bengal Finance (Sales Tax) Act, 1941 to the State of Delhi, the power given by section 2 exhausted itself on the extension of the enactment and could not be exercised again to enable the issue of a fresh notification modifying the terms in which the Bengal Act was extended.
The case is clearly distinguishable.
The power under which the notification dated January 24, 1974 has been issued is a separate and distinct power from that under which the notification dated November 21, 1969 was made.
The power now exercised passed into the when it was amended in 1972.
In its nature and quality it is not identifiable with the power vested under the unamended Act.
A power conferred by statute is distinguished by the character and content of its essential components.
If one or more material components characterising the power cannot be identified with the material components of another, they are two different and distinct powers.
Although broadly the power envisaged in section 3 of the amended is a power of extension even as it was under the unamended Act, there is a vital qualitative difference between the two.
The power under the unamended Act was a limited power.
It could operate prospectively only.
There was no choice in the matter.
After amendment, the Act provided for a power which could be exercised retrospectively.
The power extended to giving retrospective effect to an enactment in force in the State in the form in which that enactment was in force on the date on which the extension was made.
It was a power whose reach and cover extended far beyond what the power under the unamended Act could achieve.
We are of the view that in issuing the notification dated January 24, 1974 and thereby extending the East Punjab Urban Rent Restriction Act to the Ambala Cantonment retrospectively with effect from January 26, 1950, the Central Government exercised a power not available to it when it issued the notification dated November 21, 1969.
The contention that the issue of the notification of January 24, PG NO 573 1974 amounted to a further exercise of power conferred by section 3 of the , under which the earlier notification was issued is without force and must be rejected.
(underlining ours) This principle will also apply in the present case for, while the notification dated 3.4.1972 was issued in exercise of the power under the unamended section 3, the one dated 1.9.1973 was issued in exercise of the new power available after the amendment of Act 22 of 1972 which came into force on 2nd June, 1972, though there is a distinction between the two cases in that the latter notification, unlike the second notification in the other case, did not purport to give any retrospective effect to the extended legislation.
It should be mentioned here that notification dated 1.9.1973 extended to the cantonment areas only the provisions of Act XIII of 1972 as they stood on that date.
It was only on 17.2.1982 that a further notification was issued superseding the notification dated 1.9.1973 by which the provisions of Act XIII of 1972 as in force in the State of Uttar Pradesh were also extended to the cantonment areas.
The purpose of this notification obviously was that, since there had been amendments to Act XIII of 1972 in 1974 and again in i976, it was necessary and desirable That the amended provisions should also be extended to the cantonment areas.
The question raised above on behalf of the appellants regarding the validity of the notification dated 1.9.1973, has to be considered also in the context of this notification dated 17.12.1982.
For the reasons discussed above, we are of the opinion that the Central Government acted within its powers in issuing the subsequent notification dated 17.2.1982 as well.
This also is not a case like the one in Lachmi Narain vs Union, [ l976] 2 SCR 785, where the purpose of the second notification was to modify without any provocation the contents of the first notification issued for the purposes of extension.
Here the subsequent notification became necessary because subsequently the enactments had amended the provisions of the Act, which had been extended previously.
Moreover.
as the original Act l3 of 1972 has already been extended, the real purpose of this notification was to extend the provisions of Act 19 of 1974 and Act 28 of 1976 also to those areas.
In our view, the provisions of sections 14 and 21 of the , clearly apply for this reason as well as for the reason given in Gurcharan Singh 's case.
The validity of the notification dated 17.2.1982 is, therefore, upheld.
PG NO 574 Shri S.K. Mehta also contended that, even if the notification of l.9.1973 is left out of account, the notification of 3.4.
1972 was itself sufficient to achieve the present purpose.
He submitted that, since Act 13 of 1972 repealed and re enacted the provisions of Act Ill of 1947, all references in Act 28 of 1971 as well as in the notification dated 3.4.1972 to Act III of 1947 and its provisions should be construed as references to Act 13 of 1972 and its corresponding provisions as amended from time to time.
He relied on section 8 of the .
In the view we have taken above, we consider it unnecessary to deal with this contention or express any opinion thereon.
Now to turn to the principal contention in the case: the contention is that Act XLVI of 1957 does not itself enact any provisions in respect of house accommodation in the cantonment areas of U.P. Section 3 of Act XLVI of 1957 purports only to empower the Central Government to legislate for such areas.
It is true that the Central Government is not given carte blanche to do whatever it likes in this respect and that its power of notification is restricted to merely extending to cantonment areas the provisions of the corresponding laws in force in the other areas of the State of Uttar Pradesh.
But this itself amounts to excessive delegation of legislative power for three reasons: (a) On the date of the enactment of Act 46 of 1957, Parliament could not predicate what type of provisions will be in operation in the other areas of the States on some future date (s) on which the Central Government may issue notifications under section 3 in respect of various States.
section 3 thus authorises the introduction, on a Government notification, of, a law to the provisions of which Parliament has had no occasion to apply its mind at all; (b) There is a further vitiating element in that the Central Government under section 3 is empowered to direct not merely that the provisions of a State enactment, which may be in force in the State on the date of the such notification, should apply to the cantonment areas in the State as well.
The amendment to section 3 by Act 22 of 1972 goes one step further to make it clear that the Central Government can make a general notification that any State enactment in force in the State would apply to cantonments as well.
This means that, on a mere notification by the Central Government, not merely the provisions of an enactment which are in force on the date of the notification but also all future enactments on this topic that may come into force from time to time in the State would automatically apply to cantonment areas as well.
Thus, even PG NO 575 the notifying authority may not have had occasion to apply its mind at all to the provisions of the law that are to be made applicable to the cantonments.
Thus, for instance, the amendments in 1976 to Act 13 of 1972 can be sought to be made applicable though, on the date of issue of the notification under section 3, the Central Government could not at all have anticipated that there would be such an amendment; and (c) The Central Government has been empowered to apply such laws, with such restrictions and modifications, as it thinks fit.
Such an unrestricted power may well result in the notification modifying the State law in material respects and enacting a law of its own for cantonment areas, which is not permissible.
Learned Counsel submitted that there is not even a broad indication in the principal statute viz. Act XLVI of 1957 as to the nature of the provisions of the enactment which it would like to be applied to cantonments.
A mandate to the Government for a blind application, at its choice, of an enactment, existing or future, to cantonment areas within a State merely because such an enactment happens to be operative in respect of other areas in the State, it is said, amounts to a complete abdication of legislative Power by Parliament which is not permissible under our Constitution.
We may at once deal with limb (c) of the above contention, a direct answer to which is furnished by the decision in Lachmi Narain 's case; , already discussed.
Referring to the judgment in the Delhi Laws Act case; , and Rajnarain Singh 's case, on the scope of expressions such as "subject to such restrictions and modification as it thinks fit", Sarkaria, J. observed: "Bearing in mind the principles and the scope and meaning of the expression 'restrictions and modifications ' explained in Delhi Laws Act, let us now have a close look at section 2.
It will be clear that the primary power bestowed by the section on the Central Government, is one of extension, that is, bringing into operation and effect, in a Union Territory, an enactment already in force in a State.
The discretion conferred by the section to make 'restrictions and modification ' in the enactment sought to be extended, is not a separate and independent power.
It is an integral constituent of the powers of extension.
It cannot be exercised apart from the power of extension.
This is PG NO 576 indubitably clear from the preposition 'with ' which immediately precedes the phrase 'such restrictions and modifications ' and conjoins it to the principal clause of the section which gives the power of extension.
According to the Shorter Oxford Dictionary, one meaning of the word 'with ' (which accords here with the context), is 'part of the same whole '.
The power given by section 2 exhausts itself on extension of the enactment; it cannot be exercised repeatedly or sub sequently to such extension.
It can be exercised only once, simultaneously with the extension of the enactment.
This is one dimension of the statutory limits which circumscribe the power.
The second is that the power cannot be used for a purpose other than that of extension.
In the exercise of this power, only such 'restrictions and modifications ' can be validly engrafted in the enactment sought to be extended, which are necessary to bring it into operation and effect in the Union Territory.
Modifications ' which are not necessary for, or ancillary and subservient to the purpose of extension, are not permissible.
And, only such 'modifications ' can be legitimately necessary for such purpose as are required to adjust, adapt and make the enactment suitable to the peculiar local conditions of the Union Territory for carrying in into operation and effect.
In the context of the section, the words 'restrictions and modifications do not cover such alterations as involve a change in any essential feature.
of the enactment or the legislative policy built into it.
This is the third dimension of the limits that circumscribe the power.
It is true that the words 'such restrictions and modifications as it thinks fit ', if construed literally and in isolation, appear to give unfettered power of amending and modifying the enactment sought to be extended.
Such a wide construction must be eschewed lest the very validity of the section becomes vulnerable on account of the vice of excessive delegation.
Moreover, such a construction would be repugnant to the context and the content of the section, read as a whole, and the statutory limits and conditions attaching to the exercise of the power.
We must, therefore, confine the scope of the words 'restrictions and modifications ' to alterations of such a character which keep the inbuilt policy, essence and substance of the enactment PG NO 577 sought to be extended, in tact, and introduce only such peripheral or insubstantial changes which are appropriate and necessary to adapt and adjust it to the local conditions of the Union Territory.
" These observations make it clear that, though apparently wide in scope, the power of the Central Government for the extension of laws is a very limited one and cannot change the basic essential structure or the material provisions of the law sought to be extended to cantonment areas.
The principal decision on which counsel for the appellants placed reliance in support of the other limbs of his contention is the decision of this court in B. Shama Rao vs The Union Territory of Pondicherry, ; In that case the legislative assembly for the Union Territory of Pondicherry passed the Pondicherry General Sales Tax Act (10 of 1965) which was published on June 30, 1965.
Section 1(2) of the Act provided that it would 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 Pondicherry Government issued a notification under section 1(2) on Ist March, 1966, appointing April 1, 1966 as the date of commencement of the Act.
It so happened that, between 30th of June 1965 when the Pondicherry Act was published and the Ist April 1966, which was the notified date for its commencement, the Madras legislature had substantially amended the Madras Act.
It was the Madras Act, as amended upto Ist April 1966, which was brought into force in Pondicherry.
When the Act came into force the petitioner was called upon to register himself as a dealer under the Act.
He filed a writ petition challenging the validity of the Act.
After the petition was filed, the Pondicherry legislature passed an amendment Act whereby section 1(2) of the principal Act was amended to read that the principal Act shall come into force on the Ist April, 1966 and also contained a validating provision in respect of all proceedings taken in between.
The majority of the Constitution Bench, which heard the matter, held (Shah and Bhargava, JJ.
dissenting) that the Act of 1965 was void and still born and could not be revived even by the amendment Act passed in 1966.
The dissenting judges did not express any view on the contention th4t the principal Act was bad for excessive delegation of powers when it was enacted and published, as they were of the view that the subsequent PG NO 578 amendment Act passed by the Pondicherry Legislature had the effect of bringing into force in Pondicherry a valid Act under which the proceedings sought to be taken against the petitioner were fully justified.
We are here concerned with the majority view on the question of abdication of legislative functions.
After referring to certain earlier decisions of the court and in particular the decision in the case of Delhi Laws Act; , , Shelat, J., speaking for the Court observed as follows: "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 legislative power in favour of the Madras legislature.
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 directs the executive to apply and implement such an Act.
But when it not only adopts such an Act but also provides that the Act applicable 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 difficult to how such a case in not of abdication or effacement in favour of another legislature at least in regard to that particular matter.
But Mr. Setalvad contended that the validity of such legislation has been accepted in Delhi Laws Act 's case ; and particularly in the matter of heading No. 4 as summarised by Bose, J. in Raj Narayan 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 including future laws would not be invalid.
So far as that conclusion goes Mr. Setalvad is right.
But as PG NO 579 already stated, in arriving at that conclusion each learned Judge adopted a different 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 objection.
On the other hand, Fazl Ali J. upheld the laws on the ground that they contained a complete and precise policy and the legislation 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 particular matter and if so the impugned legislation would be bad.
Bose J. expressed in frank language his displeasure at such legislation but accepted its validity on the ground of practice recognised ever since Burah 's ease 5 I.A. 178 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 abdication or effacement the legislature concerned in truth and in fact acts contrary to the Instrument which constituted it and the statute in question would be void and still born.
In the present case it is clear that the Pondicherry legislature not only adopted the Madras Act as it stood at the date when it passed the Principal Act but also enacted that if the Madras legislature were to amend its Act prior to the date when the Pondicherry government would issue its notification it would be the amended Act which would apply.
The legislature at that stage could not anticipate that the Madras Act would not be amended nor could it predicate what amendment or amendments would be carried out or whether they would be of a sweeping character or whether they would be suitable in Pondicherry.
In point of fact the Madras Act was amended and by reason of section 2(1) read with section 1(2) of the Principal Act it was the amended Act which was brought into operation in Pondicherry.
The result was that the Pondicherry legislature accepted the amended Act though it was not and could not be aware what the provisions of the PG NO 580 amended Act would be.
There was in these circumstances a total surrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras legislature and for that reason we must agree with Mr. Desai that the Act was void or as is often said 'still born '.
It was however argued that the Act cannot be said to be still born as it contained certain provisions independent of the Madras Act, viz., the section which provides for the Appellate Tribunal and the said Schedule.
But the core of a taxing statute is in the charging section and the provisions levying such a tax and defining persons who are liable to pay such tax.
If that core disappears the remaining provisions have no efficacy.
In our view, Act l0 of 1965 was for the reasons aforesaid void and still born.
It may appear that there is a great similarity between1 the facts in Shama Rao (supra) and in the cases before us.
In each of them, the provisions of the enactment of one legislature enact that the provisions of an enactment of another legislature should apply within the territory subject to its jurisdiction, on the issue of a Government notification and the first legislature does not know the details of the provisions of the enactment of the second legislature that will become applicable in consequence of the Government notification.
We are not, however, able to accept the contention that the ratio of Shama Rao 's case will govern the situation in the present case also.
We say this for two reasons.
In the first place, the principles regarding delegation of legislative powers have been discussed in several decisions of this Court, the leading decision being the one in the case of Delhi Laws Act; , In the last mentioned authority separate judgments were delivered by the various learned judges of this Curt and, instead of referring to each of them individually, the best course would be to adopt the summary of Vivan Bose J. at page 298 in Raj Narain Singh 's case; , That case concerned a Bihar Act which permitcertain areas by notification .
The validity of this statutory provision was upheld but the notification issued was held to be ultra vires the provision.
In the course of the discussion, the learned Judge said: "The Court (in the Delhi Laws Act case) had before it the PG NO 581 following problems.
In each case, the Central Legislature had empowered an executive authority under its legislative control to apply, at its discretion, laws to an area which was also under the legislative sway of the Centre.
The variations occur in the type of laws which the executive authority was authorised to select and in the modifications which it was empowered to make in them.
The variations were as follows: (l) Where the executive authority was permitted, at its discretion, to apply without modification (save incidental changes such as name and place), the whole of any Central Act already in existence in any part of India under the legislative sway of the Centre to the new area: This was upheld by a majority of six to one.
(2) Where the executive authority was allowed to select and apply a Provincial Act in similar circumstances: This was also upheld, but this time by a majority of five to two.
(3) where the executive authority was permitted to select future Central laws and apply them in a similar way: This was upheld by five to two.
(4) Where the authorisation was to select future Provincial laws and apply them as above.
This was also upheld by five to two.
(5) Where the authorisation was to repeal laws already in force in the area and either substitute nothing in their places or substitute other laws, Central or Provincial, with or without modification.
This was held to be ultra vires by a majority of four to three.
(6) Where the authorisation was to apply existing laws, either Central or Provincial, with alterations and modifications; and PG NO 582 (7) Where the authorisation was to apply future laws under the same conditions: The views of the various members of the Bench were not as clear cut as in the first five cases, so it will be necessary to analyse what each Judge said.
" As to categories (6) and (7) mentioned above, Bose J., after referring to the opinion of each of the other learned Judges in the Delhi Laws Act case (supra), concluded with a reference to his own observations in the earlier decision: "Bose J. contented himself at page 1121 by saying that the delegation cannot extend to the "altering in essential particulars of laws which are already in force in the area in question.
" But he added at page 1124 "My answers are, however, subject to this qualification.
The power to 'restrict and modify ' does not import the power to make essential changes.
It is confined to alterations of a minor character such as are necessary to make an Act intended for one are applicable to another and to bring it into harmony with laws already in being in the State, or to delete portions which are meant solely for another area.
To alter the essential character of an Act or to change it in material particulars is to legislate, and that, namely the power to legislate, all authorities are agreed, cannot be delegated by a Legislature include a change of policy.
" In our opinion, the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature.
Exactly what constitutes an essential feature cannot be enunciated in general terms, and there was some divergence of view about this in the former case, but this much is clear from the opinions set out above: it cannot include a change of policy" In other words, the delegation of a power to extend even future laws of another State will not be bad so long as they are laws which are already in force in the said area and so long as, in the process and under the guise of alteration and modification, an alteration of the essential character PG NO 583 of the law or a change of it in essential particulars is not permitted.
This interpretation of the Delhi Laws Act case (supra) was placed before the Bench which decided Shama Rao but, without dissenting from this approach, the learned Judges did not choose to apply it perhaps as they felt that the Pondicherry legislature, in the case before them, had completely abdicated its functions to the Madras Legislature.
There was also, it should be remembered, a substantial difference between the Madras Act to which the Pondicherry legislature had applied its mind and the Madras Act which actually became applicable by a deferment of the date of commencement.
Such a vast change, within a short time, could not at all have been in the contemplation of the Pondicherry legislature and this is perhaps what heavily weighed with the Judges.
This decision has been distinguished in the Gwalior Rayon 's case; , by Khanna J. and Mathew J. who delivered separate but concurring judgments.
Khanna J.observed: "It would appear from the above that the reason which prevailed with the majority in striking down the Pondicherry Act was the total surrender in the matter of sales tax legislation by the Pondicherry Legislature in favour of the Madras Legislature.
No such surrender is involved in the present case because of the Parliament having adopted in one particular respect the rate of local sales tax for the purpose of central sales tax.
Indeed, as mentioned earlier, the adoption of the local sales tax is in pursuance of a legislative policy induced by the desire to prevent evasion of the payment of central sales tax by discouraging inter State sales to unregistered dealers.
No such policy could be discerned in the Pondicherry Act which was struck down by this Court.
Another distinction, though not very material, is that in the Pondicherry case the provisions of the Madras Act along with the subsequent amendments were made applicable to an area which was within the Union Territory of Pondicherry and not in Madras State.
As against that, in the present case we find that the Parliament has adopted the rate of local sales tax for certain purposes of the Central Sales Tax Act only for the territory of the State for which the Legislature of that State had prescribed the rate of sales tax.
The central sales tax in respect of the territory of a State is ultimately assigned to that State under article 269 PG NO 584 of the Constitution and is imposed for the benefit of that State.
We would, therefore, hold that the appellants cannot derive much assistance from the above mentioned decision of this Court.
Mathew J. had this to say: "We think that the principle of the ruling in Shama Rao vs Pondicherry, (supra) must be confined to the facts of the case.
It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation.
At any rate, there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose.
Secondly, we think that the facts of the present case are also distinguishable from those in Shama Rao, (supra).
Parliament was faced with the problems of enacting laws relating to house accommodation in cantonments in various States.
Earlier an attempt had been made to have a separate Act for U.P. Cantonments but it was then considered that it would be better to have a uniform policy of legislation in respect of all cantonments in India.
These cantonments were located in the heart of various cities in the different States and unlike the position that prevailed in early years, had ceased to be a separate and exclusive colony for army personnel.
It was, therefore, but natural for Parliament to decide, as a matter of policy.
that there should be no difference, in the matter of housing accommodation, between persons residing in cantonment areas of a State and those residing in other parts of the State and it is this policy that was given effect to by Act XLVI of 1957.
Having decided upon this policy, it was open to Parliament to do one of two things: pass a separate enactment in respect of the cantonment areas in each State or to merely extend the statutes prevalent in other parts of the respective States by a single enactment.
The second course was opted upon but there was one difficulty.
The enactments in force in the various States may need some modifications or changes before they could be fitted to the requirements of the cantonments.
We have already explained that the expression 'restrictions and modifications ' has a very limited connotation.
If this is borne in mind, it will be clear that the nature of modifications or restrictions PG NO 585 each statute would require can only be a matter of detail of drafting, of not much significance or importance, once the general policy was clear.
It is only this matter of detail that has been delegated to the Central Government to be attended to while passing appropriate notifications in each case.
As pointed out in Sita Ram Bishambher Dayal vs State of U.P., ; in the context of a tax legislation: "In a Cabinet form of Government, the Executive is expected to reflect the views of the Legislatures.
In fact in most matters it gives the lead to the Legislature.
However much one might deplore the "New Despotism" of the Executive, the very complexity of the modern society and the demand it makes on its Government have set in motion forces which have made it absolutely necessary for the Legislatures to entrust more and more powers to the Executive.
Textbook doctrines evolved in the Nineteenth Century have become out of date.
Present position as regards delegation of legislative power may not be ideal, but in the absence of any better alternative, there is no escape from it.
The Legislatures have neither the time, nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again.
In certain matters they can only lay down the policy and guidelines in as clear a manner as possible.
" For the same reasons the scope of delegation in a measure like this should have a degree of flexibility to deal with minor variations and details of statutory adoption having regard to the situation differing from State to State.
The legislature hardly has the time to enter into this arena.
We, therefore, think that there was no infirmity in the delegation of power contained in section 3 of Act XLVI of 1957.
The further argument that, in any event, the 1976 amendments of Act 13 of 1972 will not get attracted has to be rejected on the same line of reasoning as has been indicated above.
Once it is the avowed policy of Parliament that cantonment areas in a State should be subject to the same tenancy legislation as the other areas therein, it follows that the decision involves also that future amendments in such State legislation should become effective in cantonment areas as well.
In some rare case where Parliament feels that such subsequent amendments need not apply to cantonment areas or should apply with more than the limited restrictions and modifications permitted by section 3, it is open to Parliament to legislate independently for such PG NO 586 cantonment areas.
But the decision that, in the main, such State legislation should apply is unexceptionable and cannot be said to constitute an abdication of its legislative function by Parliament.
But here the difficulty arises not so much because of the language of section 3 of Act XLVI of 1957 as on account of the language of the notification issued on Ist September, 1973.
The wording of this notification has been set out earlier.
It reads that, in supersession of the earlier notification of 3rd April, 1972, the Central Government extends to the cantonments in the State of Uttar Pradesh the "Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (U.P. Act XIII of 1972) as in force on the date of this notifications, in the State of Uttar Pradesh with the following modifications .
" It must be pointed out in this connection that this notification was issued after Act XLVI of 1957 had been amended by Act 22 of 1972 and a power had been conferred on the Central Government to issue the notification without the restriction previously contained in section 3(1) that the statute proposed to be extended should be as in force on the date of the notification.
In other words depsite the enlarged power conferred by amending Act 22 of 1972 the notification is couched in the same way as the earlier notification of 3rd April, 1972 and purports to extend to the cantonments only the provisions of Act 13 of 1972 as in force on the date of the notification, that is, as on 1.9.1973.
The restricted language of the notification, therefore, makes applicable to cantonments only the provisions of Act 13 of 1972 as they stood on 1.9.
1973 and not its subsequent amendments.
Act 13, of 1972, as initially enacted, required an application under section 21 to be made before the Prescribed Authority. "Prescribed Authority ' was defined by section 3(e) to mean: "a Magistrate of the first class, having 3 years experience as such, duly authorised by the District Magistrate to exercise, perform and discharge all or any of the powers, functions and duties of the Prescribed Authority under this Act Act 19 of 1974 amended this definition w.e.f. 20.7 1974 to mean: "an officer not less than three years experience as a Munsif Magistrate of the first class or as Executive Magistrate authorised as aforesaid by the State Government .
PG NO 587 Still later on 5.7.1976, Act 28 of 1976 substituted a new clause (e) for previous one.
Under the new clause, the definition read: "Prescribed Authority means a Civil Judicial Officer or Judicial Magistrate authorised by the District Judge to exercise, perform and discharge all or any of the powers, functions and duties of the Prescribed Authority under this Act .
As explained in the judgment of the District Judge in the case under appeal, different types of officers were contemplated under the different definitions.
Initially the Prescribed Authority had to be a Magistrate of the first class under the old Code of Criminal Procedure and had also to be a nominee of the District Magistrate.
This had to change because first class Magistrates subordinate to the District Magistrate had ceased to exist after 31.3.1974.
Thereafter there were only Executive Magistrates subordinate to the District Magistrates and Judicial Magistrates of the first and second class under the District Judges.
Therefore, the amended section gave power to the State Government to authorise Munsifs, Judicial Magistrates or Executive Magistrates to discharge duties of a Prescribed Authority.
This must have meant a very heavy load on the State Government and hence a third change was effected w.e.f. 5.7.1976.
Thereafter, a nominee and subordinate of the District Judge was to be the Prescribed Authority.
In Civil Appeal No. 6944 of 1983, to which we have made reterence earlier, the landlord had made his application under section 21 of Act XIII of 1972 before the Prescribed Authority on 20.12.1975.
It was made before Shri Khem Karan, who had been appointed as the Prescribed Authority on 11.9.1975.
However, when the definition was amended by Act 28 of 1976, Shri S.C. Srivastava was appointed as the Prescribed Authority and the application of the landlord was transferred to him and he disposed it off by his order dated 27.9.1977.
It may be mentioned that both Shri Khem Karan and Shri Srivastava were Munsifs.
While Shri Khem Karan was a Prescribed Authority appointed by the State Government under section 3(e) as amended in 1974, Shri Srivastava was a Prescribed Authority authorised by the District Judge after 5th of July, 1976.
In this state of facts the argument urged on behalf of the tenant before the High Court, in addition to the principal argument that Act 13 of 1972 was not at all applicable to cantonment areas, was that Sri Srivastava, PG NO 588 appointed in pursuance of the amendment Act 28 of 1976, was not the Prescribed Authority authorised in accordance with the provisions of the Act as they stood on Ist September, 1973, and therefore had no jurisdiction to entertain the application made by the landlord under section 21 of the Act.
Though the dates and facts of other cases were also similar, this point was taken only in this case at the earlier stages.
This argument was accepted by the learned District Judge, who set aside the order of the Prescribed Authority on 2.2.1981.
The High Court, in the writ petition filed by the tenant, did not, however, accept this argument.
The learned single Judge who heard the writ petition was of the opinion that the District Judge was in error and that the argument put forward on behalf of the tenant was not tenable.
He observed: "Section 3 of Act 22 of 1972 inter alia provided that section 3 of the Principal Act, namely, Act 46 of 1957 shall be renumbered as sub section I thereof, and in sub section I as so renumbered the words "on the date of the notification" shall be, and shall be deemed always to have been omitted.
The effect of the words "on the date of the notification" being omitted from section 3 of Act 46 of 1957 in the manner contemplated by section 3 of Act 22 of 1972 was that the aforesaid words would be deemed not to have been in existence in section 3 of the Act 46 of 1957 from the very inception.
As such section 3 of Act 46 of 1957 did not confer on the Central Government the power to issue a notification under that section to extend to any cantonment an enactment relating to the control of rent and regulation of house accommodation which was inforce "on the date of the notification" in the State in which the cantonment is situated.
The use of the words "on the date of this notification" after the words "as in force" and before the words "in the State of Uttar Pradesh" in the notification dated Ist September, 1973, were, therefore, beyond the power conferred on the Central Government by section 3 of Act 46 of 1957 and will accordingly be deemed to be not in existence in the aforesaid notification and have to be ignored." After referring lo the decision of the Supreme Court In Bajya vs Smt.
Gopikabai and another; , , the learned Judge observed: "Section 3 of Act 46 of 1957 after its amendment by Act 22 of 1972 as aforesaid on the face of it comes in the PG NO 589 latter category referred to in the decision of Bajya (supra).
Consequently, the definition of the term "Prescribed Authority" as it was subsequently amended by U.P. Act 28 of 1976 is applicable for finding out as to who is the Prescribed Authority to entertain an application under section 21 of the Act even in regard to those buildings which are situated within a cantonment area.
The view taken to the contrary by the District Judge in the impugned order suffers from a manifest error of law and deserves to be quashed.
" He, therefore, held that the application preferred by the landlord had rightly been dealt with by Sri Srivastava and therefore remanded the matter to the learned District Judge for disposing of the appeal filed before him by the tenant on its merits.
It is against the order of the learned single Judge that C.A. No. 6944 of 1983 has been preferred.
We are unable to support the line of reasoning adopted by the learned Judge to uphold the order passed by Sri Srivastava.
We have already expressed our opinion that amended section 3 of Act XLVI of 1957, on a proper construction, validly empowers the Central Government, by notification, to extend the provisions of Act 13 of 1972 to the cantonments in the State of Uttar Pradesh, not only in the form in which it stood on the date of the said notification but also along with its subsequent amendments.
But, for the Central Government to have such power is one thing and for the Central Government to exercise such power is a totally different thing.
Despite the fact that Act 22 of 1972 with full retrospective effect omitted the words "as on the date of the notification" from section 3 of Act 46 of 1957, the terms of the actual notification on 1.9.1973 purported to extend only the provisions of Act 13 of 1972 as on the date of such notification.
We are unable to agree with the learned single Judge that this restricted notification was ultra vires or travelled beyond the provisions of section 3 of Act XLVI of 1957.
What happened was that the section in the statute conferred a larger power on the Central Government but the Central Government utilised the said power in a limited manner.
That was perfectly within the scope of the power delegated to it under section 3.
We cannot uphold the view that the words "as on the date of this notification" in the notification dated Ist September, 1973 can be ignored or be deemed to have been omitted merely because those words had been omitted from the section.
Nonetheless, we are of the opinion that the conclusion reached by the learned single Judge has to be upheld.
For PG NO 590 this, there are two reasons.
The first is the effect of section 3 of Act XLVI of 1957 as amended by Act 22 of 1972.
This Act amended section 3 in more respects than one.
Apart from omitting the words "as on the date of the notification" in section 3 and re numbering section 3 as 3(1), it added to section 3 certain other sub sections so that after the amendment, section 3 read as follows: 3.
Power to extend to cantonments laws relating to control of rents and regulation of house accommodation (1) The Central Government may, by notification in the Official Gazette, extend to any cantonment with such restrictions and modifications as it thinks fit, any enactment relating to the control of rent and regulation of house accommodation which is in force in the State in which the cantonment is situated.
Provided that nothing contained in any enactment so extended shall apply to (a) any premises within the cantonment belonging to the Government; (b) any tenancy or other like relationship created by a grant from the Government in respect of premises within the cantonment taken on lease or requisitioned by the Government; or (2) The extension of any enactment under sub section (l) may be made from such earlier or future date as the Central Government may think fit: Provided that no such extension shall be made from a date earlier than (a) the commencement of such enactment, or (b) the establishment of the cantonment, or (c) the commencement of this Act, whichever is later: PG NO 591 (3) Where any enactment in force in any State relating to the control of rent and regulation of house accommodation is extended to a cantonment from a date earlier than the date on which such extension is made (hereafter referred to as the "earlier date"), such enactment, as in force on such earlier date, shall apply to such cantonment and, where any such enactment has been amended at any time after the earlier date but before the commencement of the Cantonments (Extension of Rent Control Laws) Amendment Act, 1972, such enactment, as amended shall apply to the cantonment on and from the date on which the enactment by which such amendment was made came into force.
(4) Where, before the extension to a cantonment of any enactment relating to the control of rent and regulation of house accommodation therein (hereafter referred to as the "Rent Control Act"), (i) any decree or order for the regulation of for eviction from, any house accommodation in that cantonment, or (ii) any order in the proceedings for the execution of such decree or order, or (iii) any order relating to the control of rent or other incident of such house accommodation, was made by any court, tribunal or other authority in accordance with any law for the control of rent and regulation of house accommodation for the time being in force in the State in which such cantonment is situated, such decree or order shall, on and from the date on which the Rent Control Act is extended to that cantonment, be deemed to have been made under the corresponding provisions of the Rent Control Act, as extended to that cantonment, as if the said Rent Control Act, as so extended, were in force in that cantonment, on the date on which such decree or order was made.
It has been mentioned earlier that, on 17.2.1982, the Central (Government issued a further notification under section 3 of Act 46 of 1957 in supersession of its earlier notification dated Ist September, 1973.
By this notification PG NO 592 the Central Government extended to all cantonments in the State of Uttar Pradesh provisions of Act 13 of 1972 as in force in the State of Uttar Pradesh with certain modifications.
Considering that Act 13 of 1972 had already been extended, this really meant the extension of Act 19 of 1974 and Act 28 of 1976 to cantonment areas.
If, in the light of this fact, we read section 3(4) of Act XLVI of 1957 it will be seen that the order of Sri Srivastava has to be upheld.
The provisions of Act 13 of 1972 as amended by Act 28 of 1976 have been extended to the cantonments in the State of Uttar Pradesh only with effect from 17.2.1982.
But notwithstanding this, the order passed by Sri Srivastava on 27.9.1977 was passed by an authority in accordance with the law which was, for the time being (i.e. as on 27.9.77), in force in the State of Uttar Pradesh.
Under section 3(4), it should, therefore, be deemed to have been made under the corresponding provision of the Rent Control Act (as extended by that notification i.e. as amended in 1976) as if the said amended Rent Control Act as so extended were in force in that cantonment on the date on which such order was made.
That this will be the position is clear from the decision of this court in the case of Jai Singh Jairam Tyagi etc.
vs Mamanchand Ratilal Agarwal and Ors., ; It is not necessary to refer to the decision in detail.
It is sufficient to refer to the following passage from the judgment: "Shri V.M. Tarkunde, learned counsel for the appellant urged that sub section 4 had to be read in the context of sub sections 2 and 3 and that it was to be applied only to cases where a notification issued under sub section 1 was given retrospective effect under the provisions of sub section 2.
We see no justification for confining the applicability of sub section 4 to cases where notifications are issued with retrospective effect under sub section 2, sub section 4 in terms is not as confined.
It applies to all cases of decrees or orders made before the extension of a State Legislation to a cantonment area irrespective of the question whether such extension is retrospective or not.
The essential condition to be fulfilled is that the decree or order must have been made as if the State Legislation was already in force, although, strictly speaking, it was not so in force.
In our view sub section 4 is wide enough to save all decrees and orders made by the wrong application of a State rent control and house accommodation legislation to a cantonment area, though such State Legislation could not in law have been applied to cantonment areas at the time of the PG NO 593 passing of the decrees or order.
We, therefore, hold that the decree obtained by the respondents is saved by the provisions of section 3, sub section 4 of the Cantonment (Extension of Rent Control Laws) Act of 1957, as amended by Act 22 of 1972.
" From the above decision it will be seen that sub section 4 is independent of sub sections 2 and 3 and has effect whether or not the extension of laws made to the cantonment is made retrospective.
Even though the extension of Act 22 of 1972 as amended by Act 28 of 1976 is not retrospective and will be effective only from 5.7.1976, the effect of section 3(4) of Act XLVI of 1957 is that even orders passed prior to such extension should be deemed to have been passed under the extended amended Act.
Judged by this test, the order passed by Sri Srivastava who was the Prescribed Authority after the amendment of Act 28 of 1976 will be valid.
We should also like to refer in this connection to the judgment of this Court in S.P. Jain vs Krishna Mohan Gupta and others; , In that case the landlord moved an application under section 24 C of Act 13 of 1972.
Section 24 C formed part of Chapter IV A, which had been inserted in Act 13 of 1972 only by the amendment Act 28 of 1976.
The application of the landlord was allowed no 17.8.1981 by what was then called the "Delegated Authority".
Revision application to the District Judge failed.
Thereupon the tenant filed a writ petition before the High Court and contended that since Chapter IV A of the Act had been made applicable to cantonment areas only by the notification dated 17.2.1982 that is, after the filing of the application under section 24 C by the landlord section 24 B and 24 C of the U.P. Rent Act were inapplicable.
This contention was rejected by a Bench of this Court (which included one of us).
After pointing out that on the date on which the application was filed as well as on the date on which the order was made.
the cantonment area did not come within the ambit of the Act in question and that it was only by the date on which the revisional order was passed by the Additional District Judge that the building in question came within the purview of the Act by reason of the notification dated 17.9.1982, the court observed: In view of the ratio of Jaisingh Jairam Tyagi vs Mamanchand Ratilal Agarwal; , , it must be held that the provisions of Chapter IV A of the Act would be applicable.
The amending Act was passed for the express PG NO 594 purpose of saving decrees which had already been passed.
Therefore action under section 24 C of the Act in this case was justified.
The High Court did not decide this point because it was of the opinion that the second point which we shall note presently, the High Court was in favour of the respondent.
We are, however, of the opinion that the first point urged on behalf of the respondent cannot be accepted in view of the position in law as discussed hereinbefore.
It was submitted on behalf of the respondent that section 24 B gave substantive rights to the appellant and section 24 C was the procedure for enforcing those substantive rights.
Therefore, these were not only procedural rights.
Therefore, there was no question of retrospective operation to take away vested right.
We are, however, of the opinion that it would be an exercise in futility if the application is dismissed on this ground, it can be filed again and in view of the subsequent legislation as noted hereinbefore it was bound to succeed on this point.
In exercise of our discretionary power under Article 136 of the Constitution, it would not be proper to interfere in the facts and circumstances of the case on this ground.
In the premises in view of the ratio of the decision of this Court in Jaisingh case and reason mentioned hereinbefore this contention urged on behalf of the respondent must be rejected.
" In our opinion the ratio of this case squarely applies to the facts of the case in C.A. No. 6944 of 1983.
We are therefore unable to accept any of the contentions urged on behalf of the appellants.
The appeals are, therefore, dismissed but in the circumstances we make no order as to costs.
Y. Lal Appeals dismissed.
| In this group of cases a common question of law that falls for Determination by the Court is whether the provisions of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, Act No. 13 of 1972 are applicable to cantonments situated in the State of U.P.
The High Court has answered this question in the affirmative.
Hence these appeals by tenants.
The main judgment under appeal is in the case of Brij, Sunder Kapoor vs Additional District Judge & Ors., [1980], All India Rent cases 3I9.
Brief facts of that case are therefore stated below showing how the said question arose.
It may be mentioned that the Allahabad High Court reiterated the same view later in the case of Lekh Raj vs 4th Addl.
Distt.
Judge, Meerut, AIR 1982 All 265.
Jhansi is a cantonment in Uttar Pradesh.
Brij Sunder Kapoor, the appellant is a tenant of Premises No. 103, Sadar Bazar, Jhansi of which Respondent No. 3 Bhagwan Das Gupta is the landlord.
In 1975, the landlord filed an application before the prescribed authority under Section 21 of the Act praying that he required the premises for his personal occupation and that the same be released to him.
The appellant tenant contested the application.
The application was dismissed by the prescribed authority but, on appeal by the landlord, it was allowed by the Additional District Judge.
The tenant thereupon filed a writ petition which was dismissed by a Single Judge of the High Court of Allahabad.
The appellant tenant has therefore filed this appeal.
In order to judge the legality of the point urged regarding applicability of the Act to cantonment area in PG NO 559 U.P., the Court first referred to the history of tenancy legislation in the State of U.P. where the Rent and Eviction Control Legislation was initiated by the United Provinces (Temporary) Control of Rent and Eviction Ordinance promulgated on 1.10.1946, followed by U.P. Act III of 1947 which was made retrospective w.e.f. 1.10.1946.
Both the Act and the Ordinance applied to cantonment area.
By a later Act U.P. (Amendment) Act 44 of 1948, cantonment areas were excluded from the purview of Act III of 1947 perhaps in view of Cantonments (House Accommodation) Act, 1923.
Consequent upon the receipt of various representations demanding the applicability of Act III of 1947 to cantonment area, the State promulgated Ordinance 5 of 1949, which, however, was allowed to lapse.
In the meantime the Allahabad High Court in Smt.
Ahmedi Begum vs Distt.
Magistrate, ruled that the State Legislature was in competent to regulate accommodation lying in cantonments since that was a subject in which Parliament alone was competent to legislate.
This view was later approved by this Court in Inder Bhushan Bose vs Rama Sundari Devi.
; Thereupon, Parliament enacted the U.P. Cantonments (Control of Rent and Eviction Act 1952) (Act 10 of 1952).
In 1957 Parliament enacted the cantonments (Extension of Rent Control Laws) Act, of 1972 gave it retrospective operation from 26.1.1950 which provided for extension to contonments of State law relating to control of rent and regulation of house accommodation.
As a consequence of this, Act III of 1947 became applicable to the cantonment area, even though Act 10 of 1952 was in force.
In order to avoid any complication U.P. Cantonments (Control of Rent and Eviction) Repeal Act 1971 was enacted.
A notification under Section 3 of Act 46 of 1957 extending Act III of 1947 to cantonments in U.P. was issued in 3.4.1972; but soon thereafter Act III of 1947 was repealed by U.P. Act 13 of 1972 which came into operation On 15.7.1972 which necessitated the issuance of another notification under Section 3 of Act 46 of 1957 extending the provisions of Act 13 of 1972.
Accordingly, a notification dated 1.9.1973 was issued.
It was in view of this notification that Respondent No. 3 filed his application under Section 21 of the Act, which has given rise to these proceedings.
Counsel for the appellants raised three principal contentions viz: (1) Whether Act 46 of 1957 applied at all to the State of U.P. in view of Act 10 of 1952 which contained special provisions applicable to cantonments in the State of U.P. (ii) Did not the power of the Central Government under Section 3 of Act 46 of 1957 get exhausted when the PG NO 560 notification dated 3rd April, 1972 was issued, by which provisions of Act III of 1947 were extended to cantonments in U.P.
If yes, was not the second notification dated 1.9.1973 illegal and non est on that account? (iii) Does not Section 3 of Act 46 of 1957 suffer from the vice of excessive delegation of legislative powers and is it not consequently void and inoperative? Dismissing the appeals, this Court, HELD: Once it is the avowed policy of Parliament that cantonment areas in a State should be subjected to the same tenancy legislation as the other areas therein, it follows that the decision involves also that future amendments in such State legislation should become effective in cantonment area as well.
In some rare cases where Parliament feels that such subsequent amendments need not apply to cantonment areas or should apply with more than the limited restrictions and modifications permitted by section 3, it is open to Parliament to legislate independently for such cantonment areas.
But the decision that in the main, such State legislation should apply is unexceptionable and cannot be said to constitute an abdication of its legislative function by Parliament.
[585G H; 586A] Amended section 3 of Act XLVI of 1957, on a proper construction, validly empowers the Central Government, by notification, to extend the provisions of Act 13 of 1972 to the cantonments in the State of Uttar Pradesh, not only in the form in which it stood on the date of the said notification but also along with its subsequent amendments.
[589D E] Act 10 of 1952 was a detailed statute, which was applicable to cantonments in the State of U.P. [566C] Parliamentary legislation Act 68 of 1971 terminates the applicability of Act 10 of 1952 in Uttar Pradesh cantonments.
[567B] It enacts that Act 10 of 1952 shall stand repealed in its application to the State of U.P. on and from the date on which Act III of 1947 was extended to the cantonment areas in the State by a notification under section 3 of Act XLVI of 1957.
[567E] A notification was issued on 3.4.1972 under section 3 of Act XLVI Of 1957, extending the provisions of Act III of 1947, with certain modification set out therein, to PG NO 561 cantonments in the State of Uttar Pradesh.
On and from 3rd April, 1972, therefore, Act 10 of 1952 ceased to apply to cantonments in the State of Uttar Pradesh.
[566E F] In view of this, there was, at least on and after that date, no obstacle in the way of Act III of 1947 being operative in the cantonments of the State of U.P. as well.
[566F] The provisions of Act 68 of 1971 have rendered Act 10 of 1952 inoperative as and from 3.4.1972 leaving the provisions of Act I11 of 1947 in the field only until it was replaced by Act 13 of 1972.
[567C] Notification dated 1.9.1973 extended to the cantonment areas only the provisions of Act XIII of 1972 as they stood in that date.
It was only 17.2.1982 that a further notification was issued superseding the notifi cation dated 1.9.1973 by which the provisions of Act XIII of 1972 as in force in the State of Uttar Pradesh were also extended to the cantonment areas.
The purpose of this notification obviously was that, since there had been amendments to Act XIII of 1972 in 1974 and again in 1976, it was necessary and desirable that the amended provisions should also be extended to the cantonment areas.
[573D E] Gurcharan Singh & Ors.
vs V. K. Kaushal, ; The delegation of a power to extend even future laws of another State will not be bad so long as they are laws which are already in force in the said areas and so long as, in the process and under the character of the law or a change of it in essential particulars is not permitted.
[582H;583A] Mahindra & Mahindra vs Union, ; ; Lachmi Narain vs Union, ; ; Delhi laws Act case; , ; Raj Narain Singh 's case [1955] I SCR 74; B. Shama Rao vs Union Territory of Pondicherry, ; ; Gwalior Rayon 's Case ; ; Sita Ram Bishambher Dayal vs State of U.P., ; ; Smt.
Bajya vs Smt.
Gopikabai & Another, ; ; Jai Singh Jairam Tyagi etc.
vs Mamanchand Ratilal Aggarwal & Ors., ; and S.P. Jain vs Krishna Menon Gupta
|
l Appeal No. 1803 of 1070 From the Judgment and order dated 6.8.1968 of Patna High Court in first appeal No. 444 of 1967.
D.N. Mukherjee, Ranjan Mukherjee, A.K. Ganguli & S.C. Ghosh for the appellant.
R.B. Datar and Ms. Vina Tamta for the respondents.
The Judgment of the Court was delivered by DEASI J.
Appellant, an employee of Tata Iron and Steel Company Limited (`Company ' for short) has been chasing a mirage.
to wit to recover a paltry sum of Rs 14040 being the amount of gratuity to which he was entitled for the continuous service rendered by him from December 31, 1929 till August 31, 1959 under what are styled as Retiring Gratuity Rules, 1937 (`Gratuity Rules ' for short) from the Company and in this wholly unequal fight he laid down his life before enjoying the pittance to which he was entitled after three decades of loyal service.
What a dreadful return for abject loyalty? When the appellant retired by resignation from service he was paid his provident fund dues but gratuity which he was entitled to be paid under the relevant rules was not paid to him.
When the appellant claimed payment of gratuity, the respondent turned deal 329 ears to it.
Appellant sevred a notice dated September 6, 1981 calling upon the respondent to pay the amount of gratuity being Rs. 14040 .
The Company did not respond to the notice.
Thereupon the appellant filed M.S. No. 452 of 1962 in the court of Subordinate Judge at Jamshedpur.
The respondent appeared and contested the suit inter alia contending that `in terms of the contract of service and particularly having regard to the relevant rules under which gratuity can be claimed, the same is payable on certification of satisfactory service by the head of the department, and it is payable at the absolute discretion of the Company irrespective of whether the employee has or has not performed all or any of the conditions stated in the rules and no employee howsoever otherwise eligible is entitled as of right to any payment under the rules. ' The learned trial Judge framed the issues on which parties were at variance.
The learned Judge held that the plaint does disclose a cause of action and the plaintiff was entitled to claim and recover the amount of gratuity with interest thereon.
Accordingly, the suit was decreed against the.
Company directing it to pay the amount claimed in the plaint with future interest at 6% per annum with costs.
The respondent Company preferred First Appeal No. 444 of 1963 in the High Court of Judicature at Patna.
A Division Bench of the High Court held: i) that the service conditions of the plaintiff were governed by the Works Standing orders and that it was an implied condition of service that the plaintiff could get gratuity in accordance with the Gratuity Rules; (ii) that in view of Rule 6, an employee governed by the Gratuity Rules is not entitled to claim the same as a matter of right but he merely attains the benefit of eligibility or suitability for the retiring gratuity and not the right; iii) that until and unless the Company has decided to pay the gratuity in accordance with Rule 7 or otherwise, the mere fact of the employee becoming eligible to get it under the relevant rules which can be enforced in a civil court because the matter of payment of gratuity is at the absolute discretion of the Company as provided in Rule 10, and the employee, howsoever unfortunate the position may be under the modern stage of the society is not entitled to claim it as a matter of right because even though payment of gratuity under the Gratuity Rules is an implied condition of service, 330 yet the condition is further conditioned by the provisions made in the Rules and is subject to them; iv) that such a claim may enforced before the Industrial Tribunal under the but it is not possible to hold that the law of contract or the law of master and servant which is the only law to be enforced in a civil court can justify on interpretation of the Gratuity Rules in question that the plaintiff can be granted decree for payment of gratuity on the footing that it was the unconditional or unconditioned contractual obligation of the employer to pay such a money; v) the payment of gratuity money is not a gift pure and simple, but under the relevant rules it is in the nature of an inchoate claim or interest and not a right enforceable by a suit in court, because under the contract of service, the grant of gratuity has been left to the sole discretion of the employer as the relevant rules provided that no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
Accordingly the appeal was allowed and the judgment and decree of the trial court were set aside and the plaintiff 's suit was dismissed, directing the parties to bear their costs.
Hence this appeal by the plaintiff by special leave.
At the outset it is necessary to notice the relevant rules relied upon by the respondent in support of its submission that the gratuity cannot be claimed as a matter of right and the claim to gratuity cannot be enforced in the civil court.
The Retiring Gratuity Rules came into force with effect from April 1, 1937 and at the relevant time, the rules as amended in 1948 were in operation.
Rule 5 provides for retirement of every uncovenanted employee of the Company on attaining the age of 60 years subject to the right of the company to grant extension.
This rule is a mere incorporation of S.O. 54 which provides for retirement on attaining the age of 60.
Rules 6, 7 and 10 may be extracted: "6.
(a) Subject to the conditions referred to in these rules, every permanent uncovenanted employee of the Company, whether paid on monthly, weekly or on daily basis, including those borne on the pay rolls of the Company of the Collieries and at ore Mines and Quarries, will be eligible for a retiring gratuity which shall be equal to half a month 's salary or wages for every completed year of continuous service, 331 subject to a maximum of twenty months salary or wages in all, (b) Provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) hereof, before he has served the Company for a continuous period of 15 years, a gratuity ordinarily limited to half a month 's salary or wages for each qualifying year may be paid subject, however, to a maximum of 6 months ' salary or wages in all.
(Amended vide Board Resolution No. VII dated 2nd July, 1953.) (c) The retiring gratuity will be based on the rate of the salary or wages applicable to the employee in the last month of active service or if the employee has retired while on leave, in the last month prior to the employee going on leave.
(d) In the case of an uncovenanted employee who has been transferred to another Tata concern, the retiring gratuity payable to him under Rule (4) 8 (a) hereunder will be based on the rate of the salary or wages applicable to the employee in the last month of service with the Company, (In force from 1.4.1946 as per Board Resolution dated 8.4.1948.) 7.
Notwithstanding anything contained in these Rules a gratuity shall become due and be payable and shall always have been deemed to have become due and payable only in such instalments and over such period or periods as may be fixed by the Board of Directors of the Company or subject to the direction of the Board by the Managing Agents.
Until any such instalment shall become or have become due and payable, the employee or any dependent who qualifies for payment under the Gratuity Rules shall not be eligible to receive or be paid any such instalment of the gratuity.
All retiring gratuities granted under these Rules other than special gratuity to be paid under the provisions of Rule 22 hereof shall be at the absolute discretion of the Com 332 pany irrespective of whether an employee has or has not performed all or any of the conditions herein after stated and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under these Rule.
(Amended vide Board Resolution No. v dated 25.8.1955).
" The contention of the respondent is that the plaintiff did not retire from service but he left the service of the Company by resigning his post.
This aspect to some extent agitated the mind of the High Court.
It may be dealt with first.
It is not only not in dispute, but is in fact conceded that the plaintiff did render continuous service from December 31, 1929 till August 31, 1959.
On exact computation, the plaintiff rendered service for 29 years and 8 months.
Rule 6(a) which prescribed the eligibility criterion for payment of gratuity provides that every permanent uncovenanted employee of the Company whether paid on monthly, weekly or daily basis will be eligible for retiring gratuity which shall be equal to half a month salary or wages for every completed year of continuous service subject to a maximum of 20 months salary or wages in all provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) before he has served the Company for a continuous period of 15 years he shall be paid a gratuity at the rate therein mentioned.
The expression 'retirement ' has been defined in Rule 1 (g) to mean 'the termination of service by reason of any cause other than removal by discharge due to misconduct '.
It is admitted that the plaintiff was a permanent uncovenanted employee of the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably, therefore, the plaintiff retired from service because by the letter Annexure 'B ' dated August 26, 1959, the resignation tendered by the plaintiff as per his letter dated July, 27, 1959 was accepted and he was released from his service with effect from September 1,1959.
The termination of service was thus on account of resignation of the plaintiff being accepted by the respondent.
The plaintiff has, within the meaning of the expression, thus retired from service of the respondent an he is qualified for payment of gratuity in terms of Rule 6. 333 Rule 7, in our opinion, has hardly any relevance because it enables the Company to pay gratuity by instalments.
It is Rule 10 which is material for the purpose.
It provides that payment of retiring gratuity under the Gratuity Rules, other than special gratuity to be paid under the provisions of Rule 22 which is not the case herein, shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions hereinafter stated, and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
The stand taken by the respondent to deny gratuity to the plaintiff is that gratuity payable under the rules is a matter of employer 's largesse to be distribute at the absolute discretion of the Company and cannot be claimed as a matter of right even if the concerned employees has fulfilled the eligibility criteria.
It is the interpretation of this Rule which would govern the outcome of this appeal.
It may be mentioned that the High Court which ultimately upheld the contention of the respondent has specifically held that gratuity was an implied condition of service of the plaintiff in accordance with the relevant rules.
The High Court reached this conclusion by first referring to Works Standing Orders framed by the Company which govern the conditions of service of the plaintiff.
In other words according to the High Court, the service conditions of the plaintiff were governed by the Works Standing Orders.
It is therefore necessary to determine the character of the Works Standing Orders Exh.
C framed by the Company.
This aspect was overlooked by the High Court with the consequence that the High Court found it difficult to enforce the claim of gratuity against the respondent by a decree of the court.
What then is the character of the Works Standing Orders framed by the Company ? Are they mere unenforceable rules or are they statutory in character or have a statutory flavour ? If they are statutory in character and they form part of the contract of service of every employee governed by the same, then the question would be whether its breach can be repaired or enforced by a civil suit ? The Parliament enacted the ( '1946 Act ' for short).
The long title of the Act provides that it was an act to require employers in industrial establishments formally to define conditions of employment under them.
334 The preamble of the Act provides that it is expedient to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them.
By Section 3, a duty was cast on the employer governed by the Act to submit to the Certifying Officer draft standing orders proposed by him for adoption in his industrial establishment.
After going through the procedure prescribed in the Act, the Certifying Officer has to certify the draft standing orders.
Section 8 requires the Certifying Officer to keep a copy of standing orders as finally certified under the Act in a register to be maintained for the purpose.
Sub sec.
2 of Section 13 imposes penalty on employer who does any act in contravention of the standing orders finally certified under the Act.
The act was a legislative response to the laissez fairs rule of hire and fire at sweet will.
It was an attempt at imposing a statutory contract of service between two parties unequal to negotiate, on the footing of equality.
This was vividly noticed by this Court in Western India Mntch Company Ltd. vs Workmen as under : "In the sunny days of the market economy theory people sincerely believed that the economic law of demand and supply in the labour market would settle a mutually beneficial bargain between the employer and the workmen.
Such a bargain they took it for granted, would, secure fair terms and conditions of employment to the workman.
This law they venerated as natural law.
They had an abiding faith in the verity of this law.
But the experience of the working of this law over a long period has belied their faith.
" The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that the Standing Orders certified under the 1946 Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.
Workmen of Messrs Firestone Tyre & Rubber Co. of India (P) Ltd. vs Management and Ors.
Workmen in Buckinghan and Carnatic Mills Madras vs Buckingham and Carnatic Mills and M/s Glaxo Laboratories (l) 335 Ltd. vs The Presiding Officer, Labour Court, Meerut & Ors.
The High Court recorded the finding that service conditions of the plaintiff were governed by the Works Standing Orders.
No exception has been taken to this finding.
It may at once be noted that the Works Standing Orders of the Company are Certified Standing Orders, under the 1946 Act evidenced by Certificate No. 45 dated March 18, provides that every uncovenanted employee of the Company shall retire from service on attaining the age of 60 years.
This S.O. 54 is bodily incorporated in Rule 5 of the Gratuity Rules.
Relying on S.O. 54 and the evidence recorded in the case, the High Court reached the conclusion that payment of gratuity was an implied condition of service of the plaintiff.
Rule 6(a) provides that 'subject to the conditions prescribed in the rules, every permanent uncovenanted employee of the Company will be eligible for a retiring gratuity in the manner and to the extent for a retiring gratuity in the manner and to the extent mentioned therein.
Retiring gratuity becomes payable on retirement, which means termination of service by reason of any cause other than removal by discharge due to misconduct.
On a combined reading of S.O. 54 and the Rule 5 of the Gratuity Rules the High Court rightly concluded that payment of gratuity was a condition of service but somehow the High Court qualified it by saying that it was an implied condition of service.
It is well settled by a catena of decisions, that Certified Standing Orders bind all those in employment at the time of service as well as those who are appointed thereafter. ' Agra Electricity Supply Co. Ltd. vs Sri Alladin & Ors.
Now upon a combined reading of S.O. 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory condition of service and to this limited extent the finding of the High Court has to be modified.
If payment of gratuity is thus shown to be a statutory or express condition of governing the relationship between the plaintiff and the company, it would be obligatory upon the company to pay the gratuity on retirement of the plaintiff.
If the company declines or refuses to pay or discharge its statutory obligation, could the claim be enforced by a civil suit ? The High Court was of the opinion 336 that even though payment of gratuity was a condition of service in view of the provision contained in Rule 10, the same cannot be claimed as a matter of right or its recovery cannot be enforced by a civil suit.
The High Court was constrained to observe that Rule 10 which confers absolute discretion on the Company to pay the gratuity at its sweet will is unconscionable and incompatible with the modern notions or conditions which ought to govern the relations between employer and that upon an industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules, but according to High Court, it cannot be enforced by a civil suit.
In reaching this conclusion the High Court overlooked the effect of certified Standing Orders and the inter relation between the Retiring Gratuity Rules and S.O. 54.
At this stage it would be appropriate to examine the effect of a breach of condition of service which is either statutory in character or has the statutory flavour.
When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing Orders certified under the Act.
It would appear that such conditions of service prescribed in Standing Orders get incorporated in the contract of service of each employee with his employer.
A facet of collective bargaining is that any settlement arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly certified Standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
As far as the incorporation of the results of collective bargaining into the individual contract of employment is concerned, the courts have in effect created a presumption of more or less systematic translation of the results of collective bargaining into individual contracts where these results are in practice operative and effective in controlling the terms on which employment takes place: (Labour Law Text and Materials by Paul Davies and Mark Freedland p. 233) O Kahn Freund describes collective bargaining as crystalised custom to be imported into contracts of employment on the same basis as trade custom (System of Industrial Relations in Great Britain p. 58 59).
This would be all the more true of certified Standing Orders governing conditions of service between workman and his employer.
If the employer commits a breach of the contract of employment, the same can be en 337 forced or remedied depending upon the relief sought by a civil suit.
If contract for personal service is sought to be specifically enforced by a decree of civil court, the court will have to keep in view the provisions of Sec.
14 of the which provides that contract for personal service cannot be specifically enforced.
We are not concerned with the exceptions to this rule such as the power of Industrial Tribunal to grant relief of reinstatement.
We are concerned with the jurisdiction of civil court.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
Now if the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
Plaintiff filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workman governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that plaintiff was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
In reaching this conclusion, the Court High closed the door of justice to every employee though entitled to gratuity but would not be a workman within the meaning of the to recover the same, except where a prosecution can be successfully launched for an offence under Sec.
13(2) against the employer.
One more difficulty the High Court experienced in the way of the plaintiff maintaining the suit and recovering the amount of gratuity was that under Rule 10 gratuity was payable at the absolute discretion of Company and cannot be claimed as a matter of right.
Undoubtedly, Rule 10 confers discretion on the company to pay the gratuity even if the same is earned by satisfying the conditions subject to which gratuity becomes payable.
Rule 10 provides that jail retiring gratuities granted under the rules shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions set out in the rules and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules. ' Such absolute discretion is wholly destructive of the character of gratuity as a retiral benefit.
It is satisfactorily established and the High 338 Court has so ruled that payment of gratuity was a condition of service albeit implied condition of service which part does not stand scrutiny.
1946 Act was amended specifically in 1956 by Amending Act 36 of 1956 by which power was conferred upon the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing orders.
It is not clear whether the Rule 10 which appears to have been framed in the heyday of laissez faire has been recast, modified or amended to bring the same in conformity with the modern notions of social justice and Part IV of the Constitution.
Assuming it is not done, the court while interpreting and enforcing the relevant rules will have to bear in mind the concept of gratuity.
The fundamental principle underlying gratuity is that it is a retirement benefit for long service as provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity coupled with contributory Provident Fund are well recognised retiral benefits.
These retiral benefits are now governed by various statutes such as the Employees Provident Fund and Miscellaneous Provisions Act, 1952, the .
These statutes were legislative responses to the developing notions of fair and humane conditions of work, being the promise of of the Constitution.
article 37 provides that the provisions contained in Part IV Directive Principles of State Policy, shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.
" article 41 provides that 'the State shall within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. ' article 43 obligates the State to secure, by suitable legislation to all workers, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure. . ' The State discharged its obligation by enacting these laws.
But much before the State enacted relevant legislation, the trade unions either by collective bargaining or by statutory adjudication acquired certain benefits, gratuity being one of them.
Pension and gratuity are both retiral benefits ensuring that the workman who has spent his useful span 339 of life in rendering service and who never got a living wage, which would have enabled him to save for a rainy day, should not be reduced to destitution and penury in his old age.
As a return of long service he should be assured social security to some extent in the form of either pension, gratuity or provident fund whichever retiral benefit is operative in the industrial establishment.
It must not be forgotten that it is not a gratuitous payment, it has to be earned by long and continuous service.
Can such social security measures be denuded of its efficacy and enforcement by so interpreting the relevant rules that the workman could be denied the same at the absolute discretion of the employer notwithstanding the fact that he or she has earned the same by long continuous service ? If Rule 10 is interpreted as has been done by the High Court, such would be the stark albeit unpalatable outcome.
It is therefore necessary to take a leaf out of history bearing on the question of retiral benefits like pension to which gratuity is equated.
In Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh wherein this Court observed that :" a Scheme of gratuity and a scheme of pension have much in common.
Gratuity is a lump sum payment while pension is a period payment of a stated sum.
" Undoubtedly both have to be earned by long and continuous service.
For centuries the courts swung in favour of the view that pension is either a bounty or a gratuitous payment for local service rendered depending upon the sweet will or grace of the employer not claimable as a right and therefore, no right to pension can be enforced through court.
This view held the field and a suit to recover pension was held not maintainable.
With the modern notions of social justice and social security, concept of pension underwent a radical change and it is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor can it be denied at the sweet will or fancy of the employer.
Deokinandan Prasad vs State of Bihar & Ors., State of Punjab & Anr.
vs Iqbal Singh and D.S. Nakara & Ors.
vs Union of India.
If pension which is the retiral benefit as a measure of social security can be recovered 340 through civil suit, we see no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par.
The question then is: Can the court ignore Rule 10 ? If gratuity is a retiral benefit and can be earned as a matter of right on fulfilling the conditions subject to which it is earned, any rule conferring absolute discretion not testable on reason, justice or fair play must be treated as utterly arbitrary and unreasonable and discarded.
If rules for payment of gratuity became incorporated in the Standing Orders and thereby acquired the status of statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 conferring absolute discretion on the employer to pay or not to pay the gratuity even if it is earned as utterly unreasonable and unfair.
It must be treated as ineffective and unenforceable.
It is well settled that if the Certifying Officer and the appellate authority under the 1946 Act while certifying the Standing Orders has power to adjudicate upon the fairness or reasonableness of the provisions of any standing orders, this Court in appeal under article 136 shall have the power to do the same thing when especially it is called upon to enforce the unreasonable and unfair part of the Standing Order.
It therefore follows that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion is ineffective and unenforceable.
This approach does not acquire any precedent but if one is needed the decision of this Court in Western India Match Company Ltd. case clearly rules to that effect.
In that case, the company relied on a special agreement which was to some extent in derogation of the provisions of the certified Standing Order.
The Court observed that to uphold such special agreement would mean giving a go by to the principle of three party participation, in the settlement of the terms of employment, as represented by the certified Standing Orders and therefore, the inconsistent part of special agreement is ineffective and unenforceable.
The claim to absolute discretion not to pay gratuity even when it is earned is a hangover of the laissez faire days and utterly inconsistent with the modern notions of fair industrial relations and therefore, it must be rejected as ineffective and hence unenforceable.
341 Viewed from a slightly different angle, our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is therefore violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore, also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
The High Court reversed the decree of the trial court on the sole ground that Rule 10 confers an absolute discretion on the respondent company to pay or not to pay gratuity at its sweet will.
Once Rule 10 is out of the way, the judgment of the High Court has to be reserved.
Accordingly, this appeal succeeds and will have to be allowed.
The trial court decreed the plaintiff 's suit with costs and with interest at 6% per annum.
Interest at 6% per annum has become utterly irrelevant in these days with devaluation of the rupee.
Further in our opinion, the company declined to meet its obligation on an utterly unreasonable stand and denied to the plaintiff or a period of a quarter of a century what the plaintiff was legitimately entitled without the slightest shadow of doubt.
Therefore, while allowing the appeal in order to compensate the loss suffered by the plaintiff who died before enjoying the fruits of his decree, we direct that the interest shall be paid at 15% per annum and full costs throughout.
Accordingly, this appeal is allowed and the judgment and decree of the High Court are set aside and the decree of the trial court is restored with this modification that the interest shall be paid on the principal amount of Rs. 14,040 at 15% from 1.7.1959 till payment and full costs throughout be paid to the plaintiff.
The costs plaintiff in this Court is quantified at Rs. 5,000.
The payment shall be made within a period of two months from today.
H.S.K. Appeal allowed.
| The appellant who resigned from service of the respondent company after serving for over 29 years was not paid retiring gratuity by the respondent, even when the appellant had become eligible for it under the relevant gratuity rules styled as the Retiring Gratuity Rules, 1937 (Gratuity Rules for short).
The appellant filed a suit in the Court of Subordinate Judge for recovering the amount of gratuity.
The Subordinate Judge decreed the suit.
The High Court allowed the appeal filed by the respondent.
Hence this appeal.
The respondents submitted; (1) that since the appellant did not retire from the service but left the service by resigning the post, he was not eligible for gratuity under Rule 6 of the Retiring Gratuity Rules, 1937; (2) that under Rule 10 the retiring gratuity was payable at the absolute discretion of the respondent and could not be claimed as a matter of right by the appellant even if he had become eligible for it; and (3) that claim to gratuity could not be enforced in the civil court.
Allowing the appeal ^ HELD: Rule 6(a) which prescribed the eligibility criterion for payment of retiring gratuity provides, inter alia, that every permanent uncovenanted employee of the Company, will be eligible for retiring gratuity.
The expression `retirement ' has been defined in Rule 1(g) to mean `the termination of service by reason of any cause other then removal by discharge due to misconduct '.
It is admitted that the appellant was a permanent uncovenanted employee of 326 the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably.
therefore, the appellant has within the meaning of the expression, thus retired from service of the respondent and he is qualified for payment of gratuity in terms of Rule 6.
[ 332D F] According to the High Court, the service conditions of the appellant were.
governed by the Works Standing orders of the respondent.
No exception has been taken to this finding.
These Works Standing orders were framed and certified under the Industrial Employment (Standing orders) Act, 1946.
The Act was a legislative response to the laissez faire rule of hire and fire at sweet will.
It was an attempt at imposing statutory contract of service between two parties unequal to negotiate, On the footing of equality.
The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that Standing orders certified under the Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.[333E 334G] Western India Match Company Ltd. vs Workman; [1974] I SCR 434.
Work man of Messrs Firestone Tyre & Rubber Co of India (P) Ltd. vs Management and ors; ; at 612.
Workman in Buckingham and carnatic Mills Madras vs the presiding Officer, labour Court, Meerut & Ors; [1984] 1 SCC 1.
Agra Electricity Supply co. Ltd. vs Sri Alladin & Ors;[1970] 1 SCR 806, referred to Upon a combined reading of Standing order (S.O) 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory conditions of service governing the relationship between the appellant and the respondent.
Therefore, it would be obligation upon the respondent to pay gratuity on retirement to the appellant.
If the respondent refuses to pay or discharge its statutory obligation, the claim can be enforce by a civil suit.
The High Court was of the opinion that in view of Rule 1 of the Gratuity Rules, recovery of gratuity cannot be enforced by a civil suit.
But upon an Industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules.
In reaching this conclusion the High Court overlooked the effect of the certified Standing orders and the inter relation between the Gratuity Rules and S.O 54, When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing orders certified under the.
A face of collective bargaining is that any settlement.
arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly, certified standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
If the employer commits a breach of the contract of employment the same can be enforced or remedied depending upon the 327 relief sought by a civil suit.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
If the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
[335F 337B] Labour Law Text and Materials by Paul Davies and Mark Freedland p 233 and system of Industrial Relations in Great B itain p. 58 59, referred to.
In the instant case, the appellant filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workmen governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that appellant was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
[337C D] The Court while interpreting and enforcing the relevant gratuity rules will have to bear in mind the concept of gratuity.
The fundamental principle under lying gratuity is that it is a retirement benefit for long service as a provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of the a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity which have much in common are well recognised retiral benefits as measures of social security.
It is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor it can be denied at the sweet will or fancy of the employer.
If pension can be recovered through civil suit, there is no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par [339G H; 340A] Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh; , Deokinandan Prasad vs State of Bihar & Ors.
,[1971] Supp SCR 634, State of Punjab & Anr. vs Iqbal Singh, ; , D.S. Nakara & Ors vs Union of India; , ; referred to.
If the rules for payment of gratuity become incorporated in the Standing orders and thereby acquired the status of the statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be, rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion, as utterly unreasonable, ineffective and unenforceable.
That part of Rule 10 must, therefore, be treated as ineffective and un enforceable.
[340C D] 328 The claim to absolute discretion not to pay gratuity even when it is earned is a hang over of the laissez faire days and utterly inconsistent with the modern notion of fair industrial relations and, therefore, it must be rejected as ineffective and hence unenforceable.
[340H] Western India Match Company Ltd. vs Workmen, ; referred to.
Our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is, therefore, violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
[341A C]
|
minal Appeal No. 145 of 1965.
Appeal by special leave from the judgment and order dated January 15, 1965 of the Mysore High Court in Cr.
Revision Petition 299 of 1964.
H. R. Gokhale and R. B. Datar, for the appellant.
R. Gopalakrishnan, and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Bhargava, J.
The appellant, K. M. Kanavi, was the President of the Municipal Borough of Gadag Betgeri from 11th January, 1960 to 15th March, 1963.
He was removed from the President ship on 15th March, 1963 by an Order passed by the Government of Mysore for neglect of duty and incapacity under section 21(2) of the Bombay Municipal Boroughs Act, 1925 (No. XVIII of 1925) (hereinafter referred to as "the Act") which was applicable to Gadag Betgeri, even though it was situated in the State of Mysore, because it was earlier a part of the State of Bombay.
On the next day, i.e., on 16th March, 1963, the Government passed an order superseding the Borough.
The appellant filed two writ petitions challenging these two orders of his removal and supersession of the Borough.
The order of supersession was quashed by the High Court of Mysore by its judgment dated 10th April 1963 in Writ Petition No. 492/1963 reported in The Presi dent, Gadag Betgeri Municipal Borough vs State of Mysore(1).
Thereafter, elections were held for the office of the President, because the appellant had ceased to be the President under the order of removal.
One Malashetti was elected as the President of the Borough on 22nd April, 1963.
On 25th April, 1963, the new President asked the appellant to hand over all the papers, documents and property belonging to the Municipal Administration.
On 2nd May, 1963, the appellant sent three keys and two files of papers by registered parcel to the new President.
The new President returned it on the ground that those articles had not been delivered to him in person by the appellant and be considered it unsafe to take delivery of the registered parcel.
When sending this parcel, the appellant wrote an accompanying letter in which he specifically stated that he was retaining certain papers as they were needed by him for his writ petition which was pending against his order of removal.
Thereafter, on 20th June, 1963, the State Government made an order under sub section
(2) of section 23A of the Act directing the appellant to hand over charge of all the papers (1) 823 And properties which were in his possession to the new President.
He was also asked to hand over an iron cupboard with its keys and contents which were with him.
This Government Order was served on the appellant on 9th July, 1963.
The appellant did not comply with the Order and, consequently, on 21st September, 1963, the Government of Mysore sent an order to the Divisional Commissioner directing him to take necessary action under section 23A of the Act to prosecute the appellant, since he had defied the Government Orders and had refused to hand over charge of the papers and properties of the Borough to, the newly elected President.
The Divisional Commissioner, in turn, wrote to the Deputy Commissioner on 5th October, 1963, requesting him to take immediate action under section 23A(3) of the Act to prosecute the appellant.
The Deputy Commissioner then passed an order authorising the newly elected President of the Borough to be the formal complainant in respect of this prosecution which had been ordered by the Government and to file a criminal complaint against the appellant.
This order was made by the Deputy Commissioner on 24th December, 1963.
The new President, Malashetti, thereupon filed a complaint against the appellant for an offence punishable under section 23A(3) of the Act.
The complaint itself is dated as 3rd January, 1964, but the judgment of the High Court mentions that the complaint was actually presented in Court on 8th January, 1964.
Since these dates are not very material for decision of the point on the basis of which this appeal is being decided, we have not tried to ascertain the exact date of presentation of the complaint in court.
On the basis of this complaint and the facts mentioned above, the appellant was convicted by a Magistrate for the offence under section 23A(3) of the Act and was sentenced to pay a fine of Rs. 501 , in default to suffer simple imprisonment for seven days.
The appellant filed a revision against this order of conviction in the High Court of Mysore and challenged it on three grounds.
One ground was that the complaint filed by the new President Malashetti was incompetent as it was not filed in accordance with the procedure laid down in the Act, so that the proceedings taken by the Magistrate were without jurisdiction.
The second point was that, even if it be held that the complaint was validly filed the provisions of section 23A of the Act were not attracted, as the appellant could not be held to be a retiring President and an order under section 23A(2) can only be made against a retiring President.
The third plea was taken that the complaint was barred by time.
The High Court did not accept any of these three pleas and dismissed the revision.
The appellant has, therefore, come up to this Court in appeal by special leave.
In this case, the facts, which have been enumerated above, were not disputed even during the trial of the case, and the defence 8Sup CI/68 13 824 of the appellant was confined to the three grounds mentioned above which were urged in the revision before the High Court.
To appreciate the first ground mentioned above, it is necessary to reproduce section 23A and sub section
(1) of section 200 of the Act which are as follows : "23A. (1) On the election of a new President or Vice President, the retiring President or Vice President in whose place the new President or Vice President has been elected shall hand over charge of his office to such new President or Vice President, as the case may be.
(2) If the retiring President or Vice President fails or refuses to hand over charge of his office as required under sub se ction (1) the State Government or any authority empowered by the State Government in this behalf may, by order in writing, direct the President or the Vice President, as the case may be, to forthwith hand overcharge of his office and all papers and property of the municipality, if any, in his possession as such President or Vice President, to the new President or Vice President.
(3) If the retiring President or Vice President to whom a direction has been issued under sub section (2) does not comply with such direction, he shall, on conviction, be punished with simple imprisonment for a term which may extend to one month or with fine which may extend to Rs. 500 or with both.
(1) The standing committee and, subject to the provisions of sub section (3) the Chief Officer may direct any prosecution for any public nuisance whatever and may order proceedings to be taken for the recovery of any penalties and for the punishment of any persons offending against the provisions of this Act or of any rule or by law thereunder and may order the expenses of such prosecutions or other proceedings to be paid out of the municipal fund : Provided that no prosecution for an offence under this Act or by laws framed thereunder shall be instituted except within six months next after the date of the commission of the offence or if such date is not known or the offence is a continuing one within six months next after the commission or discovery of such offence.
" Sub section
(1) of section 23A casts the duty on the retiring President to hand over charge of his office to the new President, when a_new President has been elected.
It is obvious that, when handing over 825 charge, the retiring President must hand over to his successor all the papers and property belonging to the Borough.
Sub section (2) of section 23A envisages a case where the retiring President fails or refuses to hand over charge of his office in that manner.
This sub section empowers the State Government or any authority empowered by the State Government in this behalf to make an order in writing directing the retiring President to forthwith hand over charge of his office and all papers and property of the municipality to the new President.
Sub section (3) of section 23A prescribes the punishment which can be awarded to a retiring President who is convicted for not complying with a direction issued under sub section
It is clear that, in the present case, the appellant was not liable to conviction under section 23A(3) merely because he refused to hand over complete charge to Malashetti when the latter asked him to do so by his letter dated 25th April, 1963 or even by the subsequent reminder dated, 6th May, 1963.
The failure of the appellant to hand over the property, however, led the State Government to make a direction under section 23A(2) on 20th June, 1963 and this Order of the Government was served on the appellant on 9th July, 1963.
This Order was not complied with by the appellant according to the case of the prosecution.
It was because of the failure of the appellant to comply with this Order that the complaint was filed by the new President under section 23A(3).
The complaint was, therefore, clearly for initiating a proceeding for the punishment of the appellant who had offended against the provision under sub section
(2) of section 23A of the Act.
Under section 200(1) of the Act, direction for taking such proceedings could be made either by the standing committee or by the Chief Officer.
Admittedly, Malashetty was not the Chief Officer, nor did he file the complaint under any direction made by the Standing Committee of the Borough.
It is on this ground that the plea has been put forward on behalf of the appellant that the complaints against him was incompetent and no conviction could be validly recorded against him on its basis.
The High Court rejected this plea on the ground that, in its opinion, section 200(1) of the Act is only an enabling section which gives the power to the Standing Committee and the Chief Officer to make directions for taking of proceedings of this nature and it cannot be held to be exhaustive of the authorities who could make directions for initiation of such proceedings.
The High Court took notice of the fact that in the Act, there is no provision forbidding cognizance of an offence being taken except on a complaint made under a direction of the Standing Committee or the Chief Officer, and interpreted the expression "may direct" used in section 200(1) of the Act as indicating that it was an enabling section permitting the Standing Committee and the Chief Officer to make necessary directions.
In these circumstances, the High Court con . 826 cluded that this provision could not be held as laying down that the Standing Committee and the Chief Officer were the exclusive authorities who could institute proceedings of the nature mentioned in that sub section.
On this view, the High Court further proceeded to hold that a complaint could have been filed for an offence under the Act by even a private individual, so that the complaint filed by Malashetty, who was interested in his capacity as the newly elected President, was competent and valid.
We are unable to accept the interpretation put by the High Court on section 200(1) of the Act.
It is true that there is no specific provision in the Act laying down that cognizance of an offence under the Act is not to be taken except on a complaint filed in accordance with a direction made under section 200 (1 ), but the scheme of the Act and the purpose of this provision in section 200(1) makes it clear that the legislature intended that such proceedings should only be instituted in the manner laid down in that sub section.
The word "may" was used only because the legislature could not have enacted a mandatory provision requiring the Standing Committee or the Chief Officer to make a direction for institution of proceedings in all cases.
This word was intended to give a discretion to the Standing Committee or the Chief Officer to make directions for taking proceedings only when they considered it appropriate that such a direction should be made and to avoid compelling the Standing Committee or the Chief Officer to make such directions in all cases.
The use of this word "may cannot be interpreted as laying down that, if a proceeding for punishment of any person for con travention of any of the provisions of the Act is to be instituted, it can be instituted in any manner without complying with the requirements of section 200(1) of the Act.
If the interpretation put by the High Court on this provision is accepted, it would mean that this provision was totally unnecessary, because there would be no need to confer power on the standing committee or the Chief Officer to make such directions if such directions could be made or proceedings instituted at the instance of any private individual.
We cannot accept the submission that this provision was made in the Act simply by way of abundant caution.
In fact, if the provision had been made with such an object in view, there is no reason why the power should have been expressed to be conferred on the standing committee and the Chief Officer only and not on the President of the Municipality.
We, consequently, hold that, if any proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it must be instituted in the manner laid down in section 200(1) of the Act and in that manner ,only.
This view of ours follows the principle laid down by this Court in Ballavdas Agarwalay.
Shikri J. C.Chakravarty(1).
In that case, (1) ; 827 the Court had to interpret a similar provision in section 537 of the Calcutta Municipal Act, 1923, under which it was laid down that the Commissioner may institute, defend or withdraw from legal proceedings under that Act or under any rule or bye law made thereunder.
The Court held that, though the word used was "may".
this provision must be read as requiring that the institution or withdrawal from legal proceedings under that Act must be by the Commissioners and no other authority.
The decision was given on the basis that the scheme of the Act made it clear that section was intended to confer exclusive power on the Commissioners.
The interpretation that it was a mere enabling section because of the use of the word "may" was rejected and it was hold that, if the other interpretation canvassed was accepted, the section would become clearly otiose.
That principle clearly applies to the interpretation of section 200 (1) of the Act with which we are concerned.
In Mangulal Chunilal vs Manilal Maganlal and Another(1), a similar interpretation was put on section 481 ( 1 ) of the Bombay Provincial Municipal Corporation Act, 1949, which also used the word "may" when laying down that the Commissioner may take or withdraw from proceedings against any person who is charged with any offence against this Act or.
This Court referred to the decision in Ballavdas Agarwala(2) and said : "Similarly, here it seems to us that only the authorities mentioned in section 481, read with section 69, can launch proceedings against persons charged with offences under the Act or the rules, regulations or by laws made under it." In the case before us, reliance was placed on the other side on a decision of the Bombay High Court in The State vs Manilal Jethalal(3).
That decision has already been disapproved by this Court in the case of Mangulal Chunilal(1), and need not detain us.
On this view, it must be held that the complaint in the present case, which was instituted by Malashetty, the newly elected President, without any order or direction by the standing committee or by the Chief Officer was not competent as it did not comply with the requirements of section 200(1) of the Act.
In this connection, a new point that was raised was that, whenever an Order under section 23A(2) of the Act is made and is disobeyed, only the State Government, which made the Order or the new President to whom the papers and property of the Borough have to be given under the direction made by the Government will have the knowledge that the retiring President has failed to (1) Criminal Appeal No. 59 of 1965 decided on 23 11 1967.
(2) ; (3) 828 comply with the direction and has, thus, committed an offence punishable, under section 23A(2) of the Act and, consequently, it should be held that a complaint in respect of such an offence was not intended to be covered by the provisions of section 200(1) of the Act.
On the language of section 200(1) of the Act, however, we must reject this contention, because it clearly lays down that the Standing Committee and the Chief Officer are the authorities who can order proceedings to be taken for the punishment of any person offending against the provisions of the Act, and the present prosecution of the appellant is clearly for an offence of failing to comply with a direction under section 23A(2) made punishable under section 23A(3) of the Act.
It may, no doubt, appear anomalous that the prosecution of even a retiring President in such circumstances has to be ordered by the Chief Officer, who was his subordinate at least during the time when he was working as the President.
It seems to us that this anomaly has arisen, because, when section 23A in its present form was introduced in the Act by the Bombay Act XL of 1950 and for the first time a retiring President was made liable to conviction for failing to comply with a direction made under sub section (2) of that section, the Legislature did not notice that section 200(1) of the Act would govern even such a proceeding.
The legislature left section 200(1) of the Act untouched.
That provision, as it stands at present, is clearly applicable even to a proceeding for punishment of a retiring President under section 23A(3) of the Act, so that the remedy may now lie in a suitable amendment of section 200(1) of the Act.
The conviction of the appellant on the basis of the complaint filed by the new President Malashetty, in disregard of the provisions of section 200(1) of the Act, must, therefore, be held to be invalid and set aside.
Since the appeal succeeds on this one ground, we do not con sider it necessary to discuss the other two grounds raised by the appellant for challenging his conviction.
The appeal is allowed and the conviction and sentence of the appellant are set aside R.K.P.S. Appeal allowed.
| Section 23A(3) of the Bombay Municipal Boroughs Act, 1925, makes it an offence if a retiring President to whom a direction has been issued by the State Government to hand over charge of his office does not comply with such direction and under section 200(1) the authorities who "may direct" ' any prosecution for punishment of any person offending against the provisions of the Act are the Standing Committee and the Chief Officer.
The appellant who was removed from the office of President ship refused to obey the order of the State Government directing him to hand over charge to the newly elected President.
He was prosecuted and convicted for an offence under section 23A(3), not on the direction of the Standing Committee or the Chief Officer as required by section 200(1) but on a complaint filed at the instance of the State Government by the newly elected President.
The High Court, dismissing revision application against the order of conviction, took the view that section 200(1) was only an enabling provision and it could not be held to be exhaustive of the authorities who could make directions for initiation of such proceedings.
In appeal to this Court, HELD: The conviction must be set aside.
The Scheme of the Act and the purpose of section 200(1) make it clear that if any proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it must be instituted in the manner laid down in section 200(1) of the Act and in that manner only.
The word "may" was intended to give a discretion to the Standing Committee or the Chief Officer to make directions for taking proceedings only when they considered it appropriate that such a direction should be made and to avoid compelling the Standing Committee or the Chief Officer to make such directions in all cases.
If the interpretation of the High Court were to be accepted it would mean that this provision was totally unnecessary, because, there would be no need to confer power on the Standing Committee or the Chief Officer to make such directions if such directions could be made or proceedings instituted at the instance of any private individual.
[826 C D. F] Baliavdass Agarwala vs Shri J. C. Chakravarty, ; Mangulal Chunilal vs Manilal Maganlal and Another, Criminal Appeal No. 59 of 1965 decided on 23 11 1967, followed : The State vs Manilal Jethalal, , referred to.
Section 200(1), as it stands at present, is clearly applicable even to a proceeding for punishment of a retiring President under section 23A(3) even though it might look anomalous that the prosecution in such 822 circumstances has to be ordered by the Chief Officer who was his subordinate at least during the time when he was working as the President.
The remedy lies in suitable amendment of section 200(1).
L828 E]
|
minal Appeals Nos.
153, 155 and 172 of 1967.
139 Appeals by special leave from the judgment and order dated April 3, 1967 of the Bombay High Court in.
Criminal Appeals Nos. 617, 621, 619 and 620 of 1965.
A. section R. Chari, N. H. Hingorani and K. Hingorani, for appellant No. 1 (in Cr. A. No. 153 of 1967).
N. H. Hingorani and K. Hingorani, for appellant No. 2 (in Cr. A. No. 153 of 1967).
A. section R. Chari, and N. N. Keswani, for appellant (in Cr. A. No. 155 of 1967).
W. section Barlingay and A. G. Ratnaparkhi, for the appellant (in Cr. A. No. 172 of 1967).
M. section K. Sastri and section P. Nayar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Dua, J.
The four appellants in these three appeals by special leave were tried in the court of the Special judge for Greater Bombay on a charge of conspiracy punishable under section 120 B, I.P.C. Accused No. 1 (Shiv Kumar Lokumal Bhatia) was a godown clerk; accused No. 2 (Hargun Sunderdas Godeja) was the Senior Godown Keeper and accused No. 3 (Hundraj Harchomal Mangtani) was the Godown Superintendent at the General Motors Godown at T Shed, Sewri, Bombay, belonging to the Food Department of the Government of India.
Accused No. 4 (Shankar Maruthi Phadtare) was a driver of Truck No. 2411.
The allegation against them was that all these accused during the month of July, 1963 were parties to criminal conspiracy to commit criminal breach of trust in respect of 1060 bags of red wheat which were released from the ship section section Hudson on July 7, 1963 at Bombay for storing them in the G M.2 Godown at Sewri.
In pursuance of this conspiracy, it was alleged, they had dishonestly and fraudulently misappropriated or converted to their own use 80 bags of red wheat out of 1060 bags released from the ship.
Accused Nos. 1, 2 and 3 were also charged under section 409 read with section 34, I.P.C., section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act.
1947 read with section 34, I.P.C., section 5(2) read with section 5(1) (c) of the Prevention of Corruption Act read with section 34, I.P.C. and section 477 A read with section 34, I.P.C. The learned Special Judge on a consideration of the evidence on the record held that the prosecution has succeeded in proving conspiracy on the part of all the four accused to commit 140 criminal breach of trust in respect of the 80 bags offered wheat Accused Nos. 1, 2 and 3 were also held to have gained pecuniary advantage and further to have altered the records of the T Shed.
Holding the offences to be serious in view of the general shortage of foodgrains in the country the court felt that the case called for deterrent sentences.
Under section 120 B I.P.C. all the accused were sentenced,, to rigorous imprisonment for four years.
Accused Nos. 1, 2 and 3 were in addition held guilty under section 409, I.P.C. read with section 34, I.P.C. and under section 5 (2) read with section 5 (1) (c) of the Prevention of Corruption Act read with section 34, I.P.C., under section 5(2) read with section 5(1)(d) of Prevention of Corruption Act read with section 34, I.P.C. and also under section 477 A read with section 34, I.P.C. and sentenced to rigorous imprisonment for four years on each of these four counts,.
the sentences to be concurrent.
On appeal the High Court confirmed the order of the trial court as against accused No. 4 and dismissed his appeal.
The conviction of accused No. 1 under section 5(2) read with section 5(1) (c) of the Prevention of Corruption Act read with section 34, I.P.C. was set aside.
But his conviction and sentence under section 120 B, I.P.C. and under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act read with section 34, I.P.C. as also under section 477 A read with section 34, I.P.C. was confirmed.
His conviction under section 409 read with section 34, I.P.C. was altered to one under section 409, I.P.C. but without altering the sentence.
The convictions of accused Nos. 2 and 3 under section 409, I.P.C. read with section 34, I.P.C. as also under section 5 (2) read with section 5 (1 ) (c) of the Prevention of Corruption Act read with section 34, I.P.C. were set aside but their conviction and sentence under section 120 B, I.P.C. and under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act read with section 34, I.P.C. was confirmed.
In this Court Shri Chari questioned the appellants convic tion on the broad argument, which was indeed the main plank of his challenge against the impugned order, that there was great confusion in the matter of storage of stocks of the foodgrains in the T Shed and there was complete want of regularity and considerable inefficiency in the matter of keeping the records of the arrivals and storage of the stocks with the result that it would be highly unsafe to rely on the evidence relating to the records of the stocks in the T Shed, for holding the appellants guilty of the criminal offences charged.
The learned counsel appearing on behalf of the other appellants, while generally adopting Shri Chari 's arguments, supplemented them by reference to the distinguishing features of the case against their indi vidual clients.
141 The counsel in the course of their arguments emphasised that the prosecution, in order to prove the negative, has the difficult task of affirmatively establishing by unimpeachable evidence that 80 bags which were the subject matter of the charge were in fact not received in the T Shed.
The prosecution must, said the counsel, bring the charge home to every accused person beyond reasonable doubt.
The submission as developed by all the counsel representing the appellants did seem on first impression to be attractive but on a deeper probe we consider it to be unacceptable.
It is no doubt true that the onus on the prosecution is of a negative character and also that the failure on the part of the accused to give evidence on the question as to when, where and to whom.
the controversial 80 bags were delivered at the point of unloading a fact on which the driver of the truck and those whose duty it was to receive the goods at the T Shed could give the best and the most direct information cannot under our law give rise to any presumption against them.
The criminal courts holding trial under the Code of Criminal Procedure have accordingly to bear in mind the provisions of section 342 A of the Code and to take anxious care that in appreciating the evidence on the record and the circumstances of the case, their mind is not influenced by such failure on the part of the accused.
But that does not mean that such negative onus is not capable of being discharged by appropriate circumstantial evidence.
If the circumstantial evidence which is trustworthy and which with unerring certainty establishes facts and circumstances the combination of which, on reasonable hypothesis, does not admit of any safe inference other than that of the guilt of the accused then there can hardly be any escape for him and the Court can confidently record a verdict of guilty beyond reasonable doubt.
The court would, of course, be well advised in case of circumstantial evidence to be watchful and to ensure that conjectures or suspicions do not take the place of legal proof.
The chain of evidence to sustain a conviction must be complete and admit of no reason able conclusion consistent with the innocence of the accused.
In the present case it is fully proved and is indeed ,not disputed on behalf of the accused that truck No. 2411 with the 80 bags of red wheat did leave the dock and did pass the yellow gate which is the check point where a register is kept by the Regional Director of Food.
In this Register entries are made when a truck leaves the yellow gate.
The truck in question left the yellow gate at 1 1.20 a.m. on the second trip as deposed by Parmar, (P.W.8).
And this is not disputed.
According to the accused the 80 bags in question were actually delivered at the appropriate place at the T Shed and the truck chits duly given to the truck driver in token of their receipt and indeed D.W. 1 war, 142 produced by accused No. 4 to prove the actual delivery.
The prosecution case, on the other hand, is that those bags were not, delivered at the T Shed but were misappropriated.
There is no dispute about the procedure of delivery at the T Shed of the goods brought from the dock.
This procedure in regard to the wheat brought on February 7, 1963 may briefly be stated.
The foodgrains consisting of 1060 bags of red wheat had arrived by section section Hudson at the Alexandra docks.
The trucks were loaded with the wheat bags to be taken to the T Shed, Sewri.
Four truck chits were prepared at the docks for each truck out of which two were given to the truck driver concerned.
The driver had to give the truck chits at the godown at the time of the delivery of the bags.
One such chit would be returned to him after endorsing acknowledgment of the receipt of the bags, the other chit being retained at the godown.
The one given to the driver was meant to authorise the receipt of hire charges from the food department.
At the godown, according to the general pro cedure, the driver of the trucks had to give the truck chits to one of the godown clerks there.
A batch of gangmen under a particular Mukaddam had generally to unload the goods from the truck allotted to him and no Mukaddam with his gangmen could unload the goods from a truck which was not allotted to him for the purpose.
The gangmen had, therefore, to unload the goods as instructed by the clerk and the senior godown keeper.
After unloading the bags cooly voucher was to be prepared and the daily diary maintained at the godown written: the kutcha chit was prepared by the godown keeper after the unloading and weighment of the goods.
Only 10% of the bags were as a matter of practice to be actually weighed.
The truck movement chart exhibit 10 shows the order in which the various trucks left the dock for the T Shed on July 7, 1963 as also their contents and the truck chit numbers.
Truck No. 2411 with 80 bags of red wheat figures twice in this document but it is not disputed that trip which concerns us is entered at sl.
No. 9.
Truck chit number of this trip is 69 and the truck left the dock at 11.
15 hours.
The truck at serial No. 8 (immediately preceding the trip in question) in this document is No. 2248 with 80 bags and its chit No. is 68.
This truck left the dock at 11 a.m.
The truck at sl.
No. 10 (immediately next after the one in dispute) is 1477 with 65 bags of red wheat whose truck chit No. is 72.
This truck left the dock at 11.45 hrs.
There were in all 14 trips on July 7, and indeed, this is also established by oral evidence and is not denied on behalf of the accused.
We may now turn to the tally sheet for July 7, The first thing to be noticed in this document is that it only shows the arrival of 13 trucks.
In other words accord 143 ing to this document there were only 13 trips of the trucks though the Truck Movement Order exhibit 10 clearly shows that there were 14 trips and on behalf of the accused also it was asserted that there were 14 trips.
We find in Exhibit 41 that after sl. No. 8 which relates to truck No. 2488 with its chit No. 68 and which arrived at the T Shed at 11.58 a.m there is recorded at serial No. 9 the arrival of truck No. 7866 with chit No. 70 and at sl.
No. 10 the arrival of truck No. 1477 with chit No. 72 and at sl.
No. 11 the arrival of truck No. 8769 with chit No. 71.
These three trucks are shown to have arrived at the unloading point at 1.
15 p.m.
It was explained at the bar that from 12 noon to 1 p.m. no work was done, it being lunch interval.
It has been so stated by P. section Shinde, Assistant Director, Vigilance Branch, as, P.W. 18.
Items at sl.
12 and 13 relate to trucks Nos.
2752 .and 1289 with their respective chit nos.
73 and 74.
It is thus clear that chit No. 69 is missing in this sheet.
Bapu T. Pingle produced as D.W. 1 claims to have been in truck No. 2411 as a wamer with the driver, accused No. 4, on July 7, 1963.
According to him this truck made two trips on that day between the dock and the T Shed and on the second trip the other wamer by name Yashwant had taken the truck chit from the clerk concerned after the same was duly signed.
This witness has deposed about the procedure at the godown which is the same as was suggested on behalf of the prosecution.
The man at the godown used to direct the drivers to the place of unloading the goods and, to quote his own words, "unless an entry was made in this Book (Tally Book) we were not allowed to go ahead at all.
" So, according to his evidence, unless an entry is made in the Tally Book the truck could not proceed to the unloading point to deliver the goods brought from the dock.
Exhibits 10 and 41 in our view affirmatively prove that 80 bags of red wheat carried by truck No. 241 1 on July 7, 1963 on the second trip did not reach the T Shed at all.
This finds support, even from the testimony of D.W. 1.
In view of this documentary evidence with which no fault has been found the evidence regarding irregularities in the record of stock at the T Shed loses all importance.
It may be pointed out that July 7, 1963 was a Sunday and as deposed by Parmeshwar D. Menon (P.W. 1) on that day all gates were not opened.
But this . is not all.
Though in the tally chits time of the arrival of the truck at the unloading point is given in the truck chit in question that time is not shown.
According to the evidence of Roque (P.W. 6) on the reverse of all truck chits Exts.
15 to 26 and Exts.
li A and 11 B entries are made in the handwriting of accused No. 1.
In Exhibits 15 to 26 in addition to the arrival and denarture of the trucks, progressive totals at the back of each of them is also stated, but in exhibit ll B there is no progressive total and in exhibit 11 A there is no signature of accused No. 1 144 though the progressive total is mentioned as 240.
Exhibuit 11 B, it may be pointed out, appertains to the trip by truck No. 2411 on July 7, 1963.
Shri Shinde, (P.W. 18) who was Assistant Director, Vigilance Branch at the relevant time has deposed that according to the weighment register exhibit 69 only 98 bags of S.S. Hudson were weighed and this was 10% of 980 bags.
This document bears the signatures of accused No. 1.
Exhibit 41, carbon copy of the Arrival Tally sheet which was sent to the head office for showing if there was any detention of trucks in the godown ' does not, as already noticed contain any entry in respect of the truck in question.
The reverse of exhibit 41 is not printed in the printed paper book but we have checked up from the original record that witness Shinde is right.
Non inclusion of the entry of the truck in question in exhibit 41, is in our view, very material.
In exhibit 53 the daily Arrival Tally book for July 7, 1963 the entry at sl.
No. 68 shows departure of the truck in question at 12.15 afternoon whereas in exhibit 41 it is ,shown as at 1. 15 p.m. and in exhibit 11 B at 12.15 afternoon.
This, according to P.W. 18, was designed to show that the truck was ,unloaded during the recess period which, according to evidence ,on the record, was not done.
The explanation of accused No. 1 is that on July 7, 1963 he was not feeling well though he attended the office.
He had to get chits from the warners and count the number of bags in the truck and order the labourers to unload them from the trucks.
The suggestion appears to be that due to these multifarious duties and due to his being unwell he had perforce to enter the truck chits in the tally books only when he could get time and meanwhile he had no other alternative but to put the unentered truck chits in his pocket.
According to him, it was on July 10, 1963 when he was giving his clothes to the washerman that he discovered, the solitary chit in question left by mistake in his pocket.
The explanation is far from satisfactory and we are not impressed by it.
It may in this connection be pointed out that July 7, 1963 was a Sunday and the three accused persons were specially called for receiving the grain that had arrived by the two steamers.
The amount of work to be done on that day can thus scarcely be ,considered to be excessive.
And then the fact that only one solitary truck chit relating to the 80 bags in question should happen to have remained in the pocket of accused No. 1 to be discovered only on July 10, 1963 is also not without some significance.
We agree with the High Court in holdings, this explanation to be unconvincing and that the 80 bags in question were in fact not received at the T Shed on July 7, 1963.
In 145 our opinion, the material on the record to which our attention has been invited fully supports the conclusions of the High Court.
We may appropriately repeat what has often been pointed out by this Court that under article 136 of the Constitution this Court does not normally proceed to review the evidence in criminal cases unless the trial is vitiated by some illegality or material irregularity of procedure or the trial is held in violation of rules of natural justice resulting in unfairness to the accused or the judgment or order under appeal has resulted in grave miscarriage of justice.
This Article reserves to this Court a special discretionary power to interfere in suitable cases when for special reasons it considers that interference is called for in the larger interests of justice.
As observed by this Court in Chidda Singh vs The State of Madhya Pradesh(1) this Article cannot be so construed as to confer on a party a right of appeal where none exists under the law.
We, however, undertook in this case to go through the evidence, to which our attention was invited to see whether or not the conclusions of the High Court are insupportable.
We are not persuaded to hold that in this case there is any cogent ground for interference with those conclusions.
These appeals according fail and are dismissed.
V.P.S. Appeals dismissed.
(1) Crl.
125 of 1967 decided on 12th January, 1968.
| As condition precedent to the applicability of section 10 A of the Excess Profits Tax Act, 1940, it must be proved that during the chargeable accounting period the assessee was carrying on the kind of business to which the Act applies by virtue of section 5 of the Act.
Section 2(5) of the Act states what is included in the word "business".
It is not possible to lay down a general definition which would cover all cases of business.
Business involves the fundamental idea of a continuous activity.
It connotes some real, substantial and systematic or organised course of activity with a set purpose.
Single isolated transaction may also bear the clear indicia of trade or an adventure in the nature of trade which is included in the word "buisiness" mentioned in section 2(5) of the Act.
Hence whether a particular source of income is business or not must be decided on the facts and circumstances of each case according to our ordinary conception of business.
Since 1935 the assessee firm carried on the business of manufacturing ribbons and laces and for this purpose owned buildings, leasehold rights, plant, machinery etc.
On April 7, 1940, a public limited liability company was incorporated with the object of acquiring and taking over the buildings, leasehold rights, plant, machinery etc.
, from the assessee firm.
The company purchased leasehold rights in the lands and buildings where plant, machinery etc. were installed.
The assesses firm as such ceased to manufacture ribbons and laces and was left with plant and machinery etc.
which it did not require and which ceased to be commercial asset in the hands of the firm.
The land and the buildings having been sold the assessee firm put it out of its power to use the plant, machinery etc.
In these circumstances the company took and the assessee firm granted a lease of the plant, machinery etc., at an annual rent of Rs. 40,000.
Held, that this lease of the plant, machinery etc., given by the assesses firm could not be "business" within the meaning of section 2(5) of the Excess Profits Tax Act, 1940.
953 Commissioner of Excess Profits Tax, Bombay City vs Shri Lakshmi Silk Mills Ltd. ([1952] S.C.R. 1), distinguished.
Inland Revenue Commissioner vs Broadway Car Co., Ltd. ([1946] 2 A.E.R. 609), relied upon.
Commissioner of Income tax vs Shaw Wallace & Co., ([1932] I.L.R. , referred to.
|
ON: Criminal Appeal No. 152 of 1954.
Appeal by Special Leave from the Judgment and Order dated the 20th October 1953 of the Bombay High Court in Criminal Appeal No. 652 of 1953 arising out of the Judgment and Order dated the 9th April 1953 of the Court of Presidency Magistrate.
19th Court, Bombay in Criminal Case No. 12164/P of 1949.
H.J. Umrigar and R. A. Govind for the appellant.
Porus A. Mehta and R. H. Dhebar for P. G. Gokhale for the respondent.
May 4.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave directed against the concurrent orders and judgments of the courts below convicting the appellant, under section 409, Indian Penal Code and sentencing him to rigorous imprisonment for three months and a fine of Rs. 201 or in default, further six weeks rigorous imprisonment.
, As the appellant had been convicted and sentenced for a similar offence in another case tried by the same Presidency Magistrate, 19th Court, Esplanade, Bombay, he directed the sentence in this case to run concurrently with the sentence in the other case.
The charge against the accused in the, trial court is in these terms: "The Accused is charged under section 409 of the Indian Penal Code for committing criminal breach of trust in respect of property to wit 3% Government Promissory Loan Notes 1966 68 of the face value of Rs. 50,000 and 2 1/4% Government Promissory Notes 1961 of the face value of Rs. 25,000 in or about February to May 1949 entrusted to him in his capacity as Managing Director of the Exchange Bank of 486 India and Africa Ltd, and belonging to the Cambay Hindu Merchants Co operative Bank. (Detailed charge is separately framed)".
The appellant at all material times was the Managing Director of the Exchange Bank of India and Africa Ltd., with its head office at Bombay, which hereinafter will be referred to as the Exchange Bank.
He held a power of attorney to act as the Managing Director on behalf of the Directors of the Company.
By that power the accused was invested with the authority to borrow money on behalf of the Bank.
In 1944 the Cambay Hindu Merchants Co operative Bank at Cambay, which hereinafter will be referred to as the Co operative Bank., had opened a current account with the Exchange Bank.
On instructions from the Co operative Bank, the Exchange Bank purchased in August 1946 securities worth Rs. 25,000 in its own name with money belonging to the Co operative Bank and the securities were kept with the Exchange Bank as a cover for overdraft.
In March 1948 two further lots of Government security of Rs. 25,000 each of the value of Rs. 50,000 were purchased likewise and left with the Exchange Bank for the same purpose.
On the 14th May 1948 the two banks entered into a contract evidenced by three documents to be noticed in detail hereinafter.
Shortly stated, the Exchange Bank agreed to grant the Co operative Bank credit for overdraft up to a limit of Rs. 66,150 and as a security for the overdraft the Government securities of the value of Rs. 75,000 already in the custody of the Exchange Bank was pledged to the latter.
These securities of the face value of Rs. 75,000 will hereinafter be referred to as "the securities".
But it appears that the Co operative Bank had no occasion to operate on the overdraft account until the 28th February 1949 when the crucial event happened, namely the Exchange Bank finding itself in an embarrassed financial position took a loan from the Canara Bank of one lakh of rupees by pledging the securities as also other securities with which we are not concerned in this case.
On the 24th April 1949 the Exchange Bank paid off the dues of the 487 Canara Bank by taking a fresh loan of the same amount of one lakh from Messrs Merwanji Dalal & Co. and pledging the same securities as ' had been pledged to the Canara Bank.
On the 28th April 1949 Messrs Merwanji Dalal & Co. demanded back their money by the forenoon of the day following.
As the Exchange Bank could not pay the amount as demanded, the pledgees aforesaid sold those securities including the securities belonging to the Co operative Bank, for realising their dues, on the 3rd May 1949.
In the meantime, in answer to a letter from the Co operative Bank to the Exchange Bank asking for a certificate for the securities held by the latter on behalf of the former in the overdraft account, the Exchange Bank issued the certificate dated the 1st April 1949 to the effect that at the close of business on the 31st March 1949 it held Government of India securities of the total value of Rs. 75,000 as security against the overdraft facilities granted to the Co operative Bank and that there was no overdraft against the said securities on that date.
Subsequently, on the 29th April 1949 the Co operative Bank wrote to the Exchange Bank asking the latter to hand over securities of the face value of ' Rs. 50,000 to the Central Bank.
The Central Bank also on behalf of the Co operative Bank made a similar demand and as the Exchange Bank did not comply with that requisition, the Central Bank informed the Co operative Bank by a letter dated the 3rd May 1949 that the securities had not been banded over to the Central Bank as directed by the Co operative Bank.
The Co operative Bank then wrote to the Reserve Bank for stoppage of the securities of the value of Rs. 25,000.
It became clear by then that the Exchange Bank was not in a position to return the securities to the owners, that is to say, the Co operative Bank.
In spite of the best efforts of the appellant as the Managing Director of the Exchange Bank, to stave off the crisis by borrowing money from different sources, the run on the bank became so great that the directors applied for and obtained from the Com 488 pany Judge of the Bombay High Court a moratorium of 15 days.
On the 18th May 1949 a provisional liquidator was appointed in respect of the Exchange Bank on a creditor 's application and on the ' 24th June 1949 the Official Liquidator was appointed to wind up the bank.
On the 25th June 1949 one M. N. Raijee as agent of the Official Liquidator lodged information with the police charging the appellant with breach of trust in respect of a number of securities including the securities belonging.
to the Co operative Bank.
On the 31st October 1949 a charge sheet was submitted by the police under section 409, Indian Penal Code against the appellant in respect of the securities of the face value of Rs. 75,000 belonging to the Cooperative Bank.
On the 4th April 1952 the charge as quoted above was framed against the appellant.
The delay of about two and a half years in placing the appellant on trial is attributable to the fact that at the request of the accused the trial in respect of this charge was stayed pending the disposal of the other case against him.
At the trial the prosecution examined the Manager of the Co operative Bank as P.W. 1.
He proved the transactions between that Bank and the Exchange Bank.
The second witness for the prosecution was a partner in the firm of Messrs Merwanji Bomanji Dalal during the material time.
He proved the transaction of the loan by his firm to the Exchange Bank of one lakh of rupees on the pledge of the securities belonging to the Co operative Bank, as also other securities.
He deposed to the fact that it was the appellant who finalised the transaction on behalf of the Exchange Bank.
He also proved that in default of payment by the Exchange Bank on demand by his firm, it sold the securities including the securities in question and realised the dues from the Bank from the sale proceeds of securities of the value of one lakh of rupees.
The third witness for the prosecution was ' the Chief Accountant of the Exchange Bank who functioned as such till the 2nd May 1949 when the Bank closed down.
He also had a power of attorney from the Bank to act jointly with another person 489 with a similar power of attorney.
According to this witness, the appellant as the Managing Director exercised the powers of borrowing, raising money, purchasing, selling and pledging of bonds.
, scrips and other forms of securities on behalf of the Bank and its constituents during the relevant period.
and that no one else exercised those powers.
He also testified to the fact that there was a crisis in the affairs of the Bank from about the middle of February 1949 and that there was a rush on the Bank which continued till it closed down.
He also proved the fact that during the material time the Co operative Bank had a credit balance in its favour and that there was no overdraft by that Bank from the Exchange Bank.
He proved Exhibits E, F and G which are the documents evidencing the contract between the two banks in respect of the pledge of the security.
He corroborated the previous witness that it was the appellant who negotiated and finalised the loan of one lakh of rupees from the Canara Bank and that the securities in question along with others had been pledged to the Canara Bank.
It was he who had endorsed the securities to the Canara Bank.
He stated that the Exchange Bank had submitted to the Canara Bank a declaration to the effect that the said securities belonged absolutely to the Exchange Bank.
As there was a heavy rush of depositors on the bank,the loan from the Canara Bank was taken to satisfy the demand of the depositors.
The most important witness examined on behalf of the prosecution is P.W. 4, Ganpati Venkatrao Kini.
He was an accountant in the Exchange Bank during the relevant period.
He was also working with the Official Liquidator of the Bank after its liquidation was ordered by court.
Like the previous witness, he also had a power of attorney to act only in conjunction with another per son holding a similar power.
He supports the previous witness in saying that the power of borrowing money or of purchasing, selling or pledging or repledging securities was exercised by the appellant and by no other person on all material dates.
He also corroborates the previous witness and ' states that 490 there was a crisis in the bank from about the middle of February 1949 and that there was a heavy rush on the bank from that time till it closed down.
He also proves Exs.
E, F and G and states that from the 14th May 1948 when these documents were executed between the two banks till the 2nd May 1949 when the Exchange Bank closed its doors there was no overdraft by the Co operative Bank which always had a credit balance.
He also gives the details of the transaction of the loan of one lakh between the Exchange Bank and the Canara Bank and the details of the securities pledged by way of security for that loan.
He makes the following very significant statement: "I had handed over the two securities belonging to the Cambay Co operative Bank to the accused for being handed over to the Canara Bank against the loan.
The accused actually asked me for these securities and I handed them to the accused".
To a court question as to why he did not bring it to the notice of the appellant that the securities in question belonged to the Co operative Bank and not to the Exchange Bank, his answer is in these words. "In fact, the accused himself told me to bring securities pleged by the Cambay Co operative Bank with the Exchanage Bank".
He also proves exhibit L, which is a very important document in this case and proves that it was signed by the accused.
He further states that the declaration in that document that the securities rep I resented the Exchange Bank 's investments was not correct.
He also makes detailed statements as to the different kinds of interest which the appellant had in the Exchange Bank.
He was drawing Rs. 2,500 as monthly salary as the Managing Director.
He was also drawing a salary of Rs. 1,000 from the Union Life Assurance Co. Ltd., is its Managing Director.
The Insurance Company and its branches had a current account with the Exchange Bank and had advanced to the latter six to seven lakhs of rupees as "call deposits".
The appellant was also connected with Messrs L. A, 491 Stronach Ltd., Advertising Agents, which had been given overdraft facilities by the Exchange Bank.
The appellant was also getting Rs. 2,000 per month as salary from the aforesaid Advertising Agents.
The appellant and his wife were the principal shareholders in Akhaney & Sons Ltd., who were the Secretaries and Treasurers of the Indian Overseas Airlines.
The Exchange Bank had advanced to the aforesaid Indian Overseas Airlines a loan of one crore and ten lakhs of rupees and Messrs Akhaney & Sons Ltd. aforesaid were getting a remuneration of Rs. 2,500 per month from the Indian Overseas Airlines Ltd. It would thus appear that the appellant along with his wife in one way or another was getting about Rs. 8,000 per mensem as remuneration from the different companies referred to above which were closely associated with one another from the financial point of view and that the, appellant was the chief person concerned with them and the connecting link between them.
It was naturally his interest to see that the Exchange Bank continued its existence as long as could be arranged even by borrowing large sums of money when there was already a run on the bank.
It is in the background of all these facts and circumstances that the appellant 'sacts of commission and omission had to be judged.
The other four witnesses, P.Ws. 5 to 8 are more or less formal witnesses in the sense that they have proved certain documents and letters which need not be noticed.
The evidence of P.W. 2 had to be set aside as he was not available for cross examination after charge, being out of the country.
The appellant 's defence is disclosed in a long written statement running into twenty paragraphs and seven closely typed pages submitted on the 3rd October 1952.
Shortly stated, it is to the effect that the charge framed against him is bad in law and extremely vague; that the vagueness of the charge had "considerably handicapped" his defence, that the prosecution had not been fair in that it had not exa mined the first informant, M. N. Raiji, that if he had been examined 'by the prosecution, the appellant would have shown from the records in his possession 64 492 that the Co operative Bank had not suffered any loss and that the Bank in the hands of the Liquidator had more than sufficient funds to pay the dues of the former; that the prosecution bad not been launched with the sanction of the Company Judge who was in seisin of the liquidation proceedings in respect of the Exchange Bank and that therefore the provisions of sections 179 and 237 of the Indian Companies Act had not been complied with; that the securities in question had not been entrusted to the appellant but to the Exchange Bank, ' if at all there was any entrustment, and that as a matter of fact and law, the Ex change Bank had not been entrusted with the securities, that the Exchange Bank "Court legally deal with the securities in any manner it liked", as provided in the documents, Exs.
E, F and G, between the two banks; that the sub pledging of the securities with the Canara Bank or with Messrs Merwanji Bomanji Dalal was "perfectly.
within the four corners of the law", and that the essential ingredients of an offence under section 409, Indian Penal Code had not been made out.
Grievance was also sought to be made of the fact that Inspector Milburn who had investigated the case had not been called as a. prosecution witness, with the result that the appellant had been deprived of the right of challenging the prosecution evidence with reference to the police diary.
The learned Magistrate after a very fair and full examination of the evidence in the case and the points raised by the appellant in his defence came to the conclusion that the appellant was guilty of the offence of criminal breach of trust under section 409, Indian Penal Code and passed a lenient sentence, as stated above, *in view of the, consideration that "not a pie went to the pocket of the accused", and that "the accused had not taken up any dishonest defence".
The learned Magistrate held that the charge as framed was not vague in view of the provisions of section 222, Criminal Procedure Code, with special reference to the terms of sub section (2) of that section.
On the question of the non examination of the first informant, M. N. Raiji, and of the investigating police officer, 493 the learned Magistrate observed that they were formal witnesses inasmuch as the facts of the case were not in dispute.
Furthermore, the court observed that if the accused or his lawyer who defended him at the later stage of the prosecution, had applied to the ' court for their being examined, they could have been called as witnesses and subjected to cross examination by the accused.
But no such, application had been made.
As regards want of sanction of the Company Judge, he held that section 179 of the lndian Companies Act had no application to the facts of the present case, as it was not a prosecution under the Companies Act and that therefore no such sanction as is contemplated by that section was necessary.
Dealing with the appellant 's contention that there was no entrustment within the meaning of section 405, Indian Penal Code the learned Magistrate observed that the accused held delegated powers from the Board of Directors and he held the property in trust on behalf of the Directors of the Exchange Bank.
He further held that the contract of pledge dated the 14th May 1948 between the two banks did not vest any right in the Exchange Bank absolutely to deal with the securities and that at any rate, the Exchange Bank could not deal with the securities so long as the Cooperative Bank had not taken an overdraft from the former.
In dealing with the question whether the appellant had dealt with the securities dishonestly, he held that in all the circumstances of the case there was no doubt that wrongful loss was caused to the Co operative Bank and wrongful gain not to the accused personally but to the Exchange Bank which he represented during the transactions in question.
On appeal to the Bombay High Court, a Division Bench of that court dismissed the appeal.
substantially agreeing with the findings of the trial court.
Dealing with a new point raised before the appeal court, namely, that the appellant was under a mistake of fact or law as to the indebtedness of the Cooperative Bank to the Exchange Bank or as to its powers to deal with the security, the High Court held 494 that there was no possibility of the appellant having made any mistake of fact in good faith.
The court also pointed out that the appellant himself had not raised this plea of mistake either about the facts of the case or about any doubtful question of law.
The court also pointed out the declarations made by the appellant on behalf of the Exchange Bank that the securities belonged absolutely to the bank and represented its investments statements which he knew were false.
While dealing with the appeal on the question of sentence, the High Court pointed out that there was good evidence to support the inference that the appellant had been actuated by motives of personal benefit also.
In that view of the matter the High Court maintained the conviction and the sentence passed by the trial Magistrate.
The appellant then moved the High Court for a certificate that the case was a fit one for appeal to this Court.
The cer tificate was refused by that court.
Thereafter the.
appellant moved this Court and obtained special leave to appeal.
In support of the appeal the learned counsel for the appellant has raised a number of questions of law and at the forefront of his argument contended that both in law and on a proper construction of the contract between the two banks the appellant was fully entitled to pledge the securities as long as the overdraft agreement subsisted, irrespective of whether or not there was an actual overdraft by the Co operative Bank on the date of the pledge, that is to say, on the 28th February 1949.
Examining the position with reference to the contract between the two banks, we find that Exhibits E, F and G, all dated the 14th May 1948, are parts of the same transaction and evidence the terms of the contract between them.
exhibit E is a promissory note executed by the Co operative Bank in favour of the Exchange Bank for the sum of Rs. 66,150 with interest at three per cent.
per annum with half yearly rests.
exhibit F is a letter addressed by the Cooperative Bank to the Exchange Bank enclosing exhibit E, and exhibit G is the bond pledging all marketable 495 securities and goods to the Exchange Bank in consideration of its promise to grant credit for overdraft limited to the amount aforesaid in favour of the Cooperative Bank from time to time with interest at three per cent.
per annum as aforesaid.
The significant portion of the bond is in these terms: ". . . . . and we agree and undertake that in the event of our failure to maintain the margin on the said movable property marketable securities and goods in the manner hereinafter provided or failing repayment on demand to you by us of the amount of such advance or credit with interest cost charges and expenses as aforesaid you shall be entitled, but not bound, to sell or otherwise dispose of all or any of the said movable property marketable securities and goods by public auction or private contract in such manner and upon such terms and subject to such conditions as you may think fit without any reference to us or obtaining our consent, and the proceeds of such sale or disposal shall be applied first in payment of all costs charges and expenses of and incident to such sale or disposal and the enforcement of the pledge and charge in your favour hereby created, secondly in repaying the amount of such advance or credit with interest as aforesaid and all costs charges and expenses incurred by you in relation thereto not otherwise met including loss in exchange (if any) and all other debts and monies however due to you by us and lastly in payment to us of the surplus if any thereafter remaining, declaring as it is hereby expressly provided agreed and declared that this shall be continuing security to cover the amount of any advance or credit which you have allowed to us Or may from time to time allow us with interest costs, charges and expenses and all other debts and monies due as aforesaid. . . . " Reading Exhibits E, F and G together, it is clear that the securities of the face value of Rs. 75,000 were pledged to the Exchange Bank as security for overdraft up to the limit of Rs. 66,150 for which the Cooperative Bank had given the promissory note to the Exchange Bank.
It was further stipulated that in 496 the event of the pledgor making a default in payment on demand of the amount advanced by way of overdraft with outstanding interest it may be realised by the Exchange Bank by sale of those securities and after satisfying the pledgee 's dues against the pledgor, if there was any outstanding amount the surplus of the sale proceeds shall be paid back to the pledgor.
Thus it is clear that according to the terms of the contract the Exchange Bank was not entitled, as contended on behalf of the appellant, to sell the securities even though there may not have been any outstanding dues from the Co operative Bank.
The securities were to be kept by the Exchange Bank charged with the payment of such amount as may from time to time have been advanced or be advanced under the overdraft arrangement.
But that charge was not an absolute one without reference to the state of accounts between the two banks; in other words, there would be a charge only when there was an adverse balance against the Co operative Bank.
We know that at all material times the Co operative Bank had not drawn any sum from the Exchange Bank in pursuance of the agreement referred to above.
The right of the Exchange Bank to deal with the securities under the agreement would arise only on the happening of certain events, namely, that the pledgor either had failed to maintain the proper margin or had made a default in repayment of the outstanding amount on demand by the Exchange Bank.
So long as those contingencies did not arise, and it is nobody 's case that any of those contingencies had arisen, the pledgee bank had no right to deal with the securities by way of pledge, sub pledge or assignment.
In this connection our attention was invited to the provisions of section 179 of the Indian Contract Act in support of the contention that as the securities had been agreed between the two banks to be a cover for overdraft not exceeding Rs. 66,150, up to that amount the pledgee bank bad an interest in those securities which it could have dealt with.
It was further argued that as there was nothing to show that the appellant had dealt with the securities for 497 a larger amount than that, he could not be said to have contravened the terms of the contract.
In our opinion, there is no substance in this contention.
Section 179 predicates that the pledgor has a limited interest which he can deal with and his transaction to that extent would be valid.
If the Co operative Bank had as a matter of fact operated upon the overdraft account and bad drawn any sum with in the limit aforesaid, the Exchange Bank would have an interest pro tanto in those securities and might then have been entitled to pledge or sub pledge the securities with a third party.
But so long as there was no overdraft by the pledgor, the pledgee bad no such interest as it could in its turn pledge or sub pledge to a third party.
Furthermore, it is clear from the narrative of events given above that the appellant dealt with the securities with third parties on the footing, after an express declaration had been made by him, that those securities were the absolute property of the Exchange Bank.
We are not here concerned with the question of the extent of interest acquired by such third party.
We are only concerned with determining the legal position as between the two banks the Exchange Bank being represented by its Managing Director, the appellant.
Hence there is no difficulty in holding that on the terms of the contract between the two banks the appellant was not entitled to transfer any interest in those securities and if be did so he did it in contravention of the terms of the contract.
We will now deal with the legal position, apart from the terms of the contract.
On the facts stated above the Exchange Bank had become the bailee in respect of the securities.
The securities had been delivered by the Co operative Bank to the Exchange Bank for the express purpose, as disclosed in the contract set out above, that they shall be disposed of in ,accordance with the terms contained in Exhibit G set out above.
By the very fact of the delivery of the securities to the bailee the latter became a trustee in terms of the contract, not for all purposes, but only for the, limited purpose indicated by the agreement 498 between the parties.
The pledgor has in the present case only transferred his possession of the property to the pledgee who has a special interest in the property of enforcing his charge for payment of an overdraft, if any, whereas the property continues to be owned by the pledgor.
The special interest of the pledgee comes to an end as soon as the debt for which it was pledged is discharged.
It is open to the pledgor to redeem the pledge by full payment of the amount for which the pledge had been made at any time if there is no fixed period for redemption, or at any time after the date fixed and such a right of redemption continues until the thing pledged is lawfully sold.
Hence the Co operative Bank in this case could have asked for a return of the securities at any time, because there never was any overdraft.
As the pledge had been terminated neither by redemption,, nor by a lawful sale on the happening of such contingencies as the parties contemplated in their agreement or the law allowed, the securities continued to be the property of the Co operative Bank and the Exchange Bank, or the appellant as its Managing Director., bad no right to deal with them.
It was next contended, alternatively, that assuming that the Exchange Bank had dealt with the securities in contravention of the terms of the agreement, the appellant had, as representing the bank, only committed a breach of contract, the remedy for which was a suit for damages and not a criminal prosecution.
This argument assumes that the same set of facts cannot give rise both to a civil liability and a criminal prosecution.
It is manifest that such an argument in its bald form cannot be acceptable.
If there is no mens rea, or if the other essential ingredients of an offence are lacking, the same facts may not sustain a criminal prosecution, though a civil action may lie.
We have therefore to examine whether or not there was mens rea in this case or whether the necessary element of a criminal.
offence have been made out.
It has been contended that no offence under section 409, Indian Penal Code has been brought home to the appellant for the reasons, (1) that there 499 was no entrustment, (2) that there was no mens rea, and (3) that there was no dishonesty on the part of the appellant.
For an offence under section 409, Indian Penal Code, the first essential ingredient to be proved is that.
the property was entrusted.
It has been argued that in this case there was no such entrustment as is contemplated by that section; and that the securities were pledged with the Exchange Bank by the Co operative Bank which was in the position of a debtor to the former. 'The contention is that the parties never contemplated the creation of a trust in the strict sense of the term.
But when section 405 which defines "criminal breach of trust" speaks of a person being in any manner entrusted with property, it does not contemplate the creation of a trust with all the technicalities of the law of trust.
It contemplates the creation of a relationship whereby the owner of property makes it over to another person to be retained by him until a certain contingency arises or to be disposed of by him on the happening of a certain event.
The person who transfers,, possession of the property to the second party still remains the legal owner of the property and the person in whose favour possession is so transferred has only the custody of the property to be kept or disposed of by him for the benefit of the other party, the person so put in possession only obtaining a special interest by way of a claim for money advanced or spent upon the safe keeping of the thing or such other incidental expenses as may have been incurred by him.
In the present case the Co operative Bank entrusted the Exchange Bank with the securities for the purpose of keeping them as a security for the overdrafts if and when taken by the former.
In law those securities continued to be the property of the Co operative Bank and as it never borrowed any money from the Exchange Bank, the latter had no interest in those,securities which it could transfer in any way to a third party so far as the two banks are concerned.
The entrustment was to the Exchange Bank itself But it being a non natural person, its business had to be transacted by someone who was authorised 500 to do so on its behalf The appellant held the power of attorney on behalf of the directors of the bank to transact business on behalf of the bank.
In that capacity the appellant had dominion over the securities.
Hence the appellant can be said either to have been entrusted with the property in a derivative 'sense or to have dominion over the securities as a banker , and thus in either case, the first essential condition for the application of section 409, Indian Penal Code is fulfilled.
On the question of mens rea, it has to be determined whether or not the appellant dishonestly disposed of those securities in violation of any of the terms of the agreement aforesaid.
As already indicated, the appellant did dispose of these securities in violation of the terms of the contract between the two banks.
But still the question remains whether he did so dishonestly; in other words, whether when disposing of those securities the appellant had the intention of causing wrongful gain to the Exchange Bank or wrongful loss to the Co operative Bank.
In our opinion, he intended both and, as.
a matter of fact, he caused wrongful loss to the pledgor bank and wrongful gain to the pledgee bank. 'The Exchange Bank raised money on those securities which it was not entitled to do and the Co operative Bank was deprived of those securities, even though not for all times.
It is settled law that a deprivation even for a, short period is within the meaning of the expression.
If he disposed of those securities with the intention of causing wrongful loss to the one and wrongful gain to the other, there can be no question but that the ap pellant had the necessary mens rea.
It was next argued that assuming that the essential ingredients of an offence under section 409, Indian Penal Code had been made out, the appellant may have made a mistake of fact in assuming that the Co operative Bank was indebted to the Exchange Bank or may have made a mistake of law in mistakenly believing that the Exchange Bank had the right as the pledgee to sub pledge those securities for raising money for its own purposes.
We know as a fact that 501 the Co operative Bank had not taken any overdraft from the Exchange Bank.
But it was argued that it had not been proved that the appellant had that knowledge.
The appellant in his long written statement has not tried to take shelter behind any such mistake.
He was in full control of the bank accounts and as pointed out by the courts below, it is impossible to believe that in the circumstances in which the bank had found itself and when the appellant was hard put to it to collect all the bank 's resources to stave off the severe crisis through which it was passing, the appellant would not have known the fact that the Co operative Bank did not owe his bank any money by way of overdraft.
Hence, in our opinion, there is no room for the supposition that the appellant was not aware of the true state of accounts bet ween the two banks.
But then it was argued that the appellant may have made a mistake of law in thinking that he was justified by law in dealing with those securities.
The attempt is to bring the case within one of the general exceptions contained in Chapter IV of the Indian Penal Code and set out in section 79 in these terms "Nothing is an offence which is done by any person who is justified by law, or who by reason of a mistake of fact and not by reason of a mistake of law in good faith, believes himself to be justified by law, in doing it".
In considering a matter of this kind the attitude of the accused is an important consideration.
We note that here the appellant made no attempt in the trial court to set up such a defence.
If he had ever said that he made a mistake of fact after exercising due care and caution that there was an overdraft against the Co operative Bank in favour of the Exchange Bank, he may have been able to take advantage of the exception.
But as in this case there was no mistake of fact and as the court was in a position to find that the appellant must have known that there was no such overdraft, there is no room for the application of section 79 quoted above.
The appellant cannot avail himself of the exception of section 79 simply by 502 saying that he believed that in law he was entitled to deal with the securities as the property of the Exchange Bank, as he attempted to do in his written statement.
If he had further proved that he believed in good faith that the Co operative Bank was indebted to his bank, his belief that he was justified by law in dealing with the securities as the property of the bank may have helped to bring him within the exception.
But as there was no mistake about the basic fact, the provisions of section 79, Indian Penal Code are not attracted to this case.
It now remains to deal with certain objections relating to the illegality or irregularity in the procedure followed in the trial of this case.
It was argued that this prosecution was incompetent for the reason that no sanction of the Company Judge had been obtained under section 179 of the Indian Companies Act.
The relevant portion of section 179 is as follows: "The official liquidator shall have power, with the sanction of the Court to do the following things: (a) to institute or defend any suit or prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;. . . . " In terms the section lays down the powers of the official liquidator.
Such a liquidator has to function under the directions of the court which is in charge of the liquidation proceedings.
One of his, powers is to institute prosecutions in the name and on behalf of the company under liquidation with the sanction of the court.
This section does not purport to impose any limitations on the powers of a criminal court to entertain a criminal prosecution launched in the ordinary course under the provisions of the Code of Criminal Procedure.
Where a prosecution has to be launched in the name of, or on behalf of, the company, it naturally becomes the concern of the Judge to see whether or not it was worthwhile to incur expenses on behalf of the company and therefore, the section requires the sanction of the Judge before the liquidator can undertake the prosecution or defence in the name of and on behalf of the company.
The 503 present case is not a prosecution in the name or on behalf of the company; nor is the official liquidator interested in prosecuting the case.
The prosecution was started on a charge sheet submitted by the police, though the first information report had been lodged by an official under the official liquidator.
This was not a prosecution initiated or instituted by the official liquidator.
This is not a case which can come even by analogy within the rule laid down by the Federal Court in the case of Basdeo Agarwalla vs King Emperor(1), that a prosecution launched without the previous sanction of the Government within the meaning of clause 16 of the Drugs Control Order, 1943, was completely null and void.
In that case their Lordships of the Federal Court had to consider the effect of the following words of clause 16 aforesaid: "No prosecution for any contravention of the provisions of this Order shall be instituted without the previous sanction of the Provincial Government. .".
It will be noticed that section 179 of the Companies Act does not contain any words similar in effect to those quoted above.
Where the legislature intended to place a limitation on the powers of the court to take cognisance of an offence unless certain conditions were fulfilled, like the provisions of sections 196 and 197, Criminal Procedure Code, it has used words such as these: "No court shall take cognisance There is nothing in section 179 of the Companies Act which can be construed as restricting the powers of the court to take cognisance of an offence or the powers of the police to initiate prosecution or even of a private citizen to move the machinery of the criminal courts to bring an offender like the appellant to justice.
For a prosecution for breach of trust even by a director of a company no such condition precedent as the previous sanction of any authority is contemplated by law, unless it is a prosecution in the name and on behalf of the company by the official liquidator who has to incur expenses out of the funds of the company.
Section 179 is an (1) 504 enabling provision to enable the liquidator to do certain things with the sanction of the court.
It does not control the general law of the land.
It was next contended that the charge as framed by the trial court was illegal and vague and had caused material prejudice to the appellant.
The charge as framed has already been set out.
The learned trial magistrate had stated at the end that a detailed charge was to be separately framed.
But no such charge is before us and the appeal has proceeded on the assumption that no such detailed charge was as a matter of fact framed by the trial court.
The question therefore is whether the charge, such as it is, complies with the requirements of the law.
It has been argued on behalf of the appellant that the charge is materially defective in so far as the nature of the breach of trust, the facts constituting the breach, the exact date and manner of the breach have not been set out.
The charge as framed fulfils the requirements of section 221, Criminal Procedure Code, because it has mentioned the name of the offence, namely, criminal breach of trust and specified section 409, Indian Penal Code, which impliedly gives notice to the accused of every legal condition required by law to be fulfilled in order to constitute the offence of criminal breach of trust.
It has also fulfilled the requirements of section 222(1) of the Code in so far as it has specified the securities in respect of which and the Co operative Bank against which a criminal breach of trust had been committed.
Those particulars, in our opinion, were sufficient to give the accused notice of the matter with which he was charged.
The trial court has made reference to the provisions of sub section (2) of section 222.
But it was in error in relying upon those provisions which relate to the offence of criminal breach of trust or dishonest misappropriation of money, which was not the present case.
It is true that the manner of the commission of the offence as required by section 223 of the Code has not been set out.
But that has to be set out only when the nature of the case is such that the particulars required by sections 221 and 222 had not given the accused suffi 505 cient notice of the matter with which he is charged.
In our opinion, though the charge could have been more detailed as was intended by the learned Magistrate, as framed, it gives the accused sufficient notice of the nature of the offence alleged against him.
Even assuming that there were certain omissions in the charge, they cannot be regarded as material unless in terms of section 225 of the Code it is shown by the accused that he had in fact been misled by such omission or that there had been a failure of justice as a result of such error or omission. 'The illustrations under that section show that each case has got to be judged on its own particular facts and there cannot be any general presumption that every error or omission in a charge has materially affected a trial or occasioned a failure of justice.
In this case from the long written statement filed on behalf of the appellant it is clear that he was aware of the gravamen of the charge against him and that he tried to meet it in all its bearings.
We are not therefore impressed by, the argument advanced on his behalf that the omissions in the charge are material and that the case should be tried over again on a fresh charge.
The learned Judges of the High Court constituting the Division Bench which heard the appeal have written separate but concurring judgments, but they did not notice any argument, having been advanced before them on the question of the illegality or irregularity in the charge.
That also would show that the appellant did not make it a grievance at the time of the argument of the appeal, though a ground had been taken in the memorandum of appeal that the charge as framed was vague and defective and as such bad in law.
In our opinion, this is not a case in which it can be said that the omission in the charge has materially affected the trial of the case or prejudiced the appellant in his defence or has occasioned a failure of justice.
As all the grounds raised in support of the appeal fail, it is accordingly dismissed.
| Several assignments such as the construction of major bridges, new lines, doubling of and electrification of existing lines etc.
were taken up the Engineering Department of the Indian Railways and to carry out these works, a number of temporary posts of Class I (Indian Railway Service of Engineers) and Class II engineers were created.
It was not thought possible to meet additional personnel requirements from existing sources, i.e. direct recruitment to Class I by competitive examination and promotion to class II from class III.
Instead, under a special scheme the various writ petitioners were appointed at various times between 1955 and 1964 as temporary Assistant Engineers by the Railway Board.
Everyone of them was told that the appointment, would be on a temporary basis, that the post to which they were appointed would be neither in Class I nor in Class II service though they were eligible, on completion of three year 's service, to be considered along with other temporary Assistant Engineers for absorption in Class I (Junior Scale) against vacancies ear marked from time to time for such absorption in the Indian Railway Service of Engineers cadre upto a maximum of six per year, and that in the event of their being selected in Class I Service their seniority would count from the date of the permanent appointment to Class I service.
They were required to execute service agreements "as applicable to temporary officers".
The petitioners accepted the terms offered to them and joined duty in the post to which they were appointed.
The petitioners also executed agreements in a standard form known as "Agreement for Temporary Assistant Officers of the Indian Railways".
140 Though in their orders of appointment as temporary Assistant Engineers the petitioners and others were told that six of them would be absorbed into the Indian Railway Service of Engineers Class I every year, the quota was increased to eight per year in 1957 and fifteen per year in 1961.
In 1960, the quota was fixed at 60 per cent of the actual intake of probationers from the CES etc.
examinations.
Again in 1975 the quota was increased to 25 per year.
The net result was that all but a 107 temporary Assistant Engineers were left unabsorbed by the time of the filing of the writ petitions and they too were finally absorbed in 1979 by a blanket order.
On September 17, 1965, the Railway Board decided that the temporary officers so absorbed into the Railway Service of Engineers should be given weightage in seniority "on the basis of half the total number of years of continuous service in working posts on Railways prior to their permanent absorption into Class I, subject to maximum weightage of five years.
" One of the writ petitioners, Katyani Dayal field a writ petition in the Allahabad High Court claiming promotion to the Senior scale post of District Officer.
He found his claim on Rule 133(3)(c) of the Railway Establishment Code on the basis that he was an Assistant Officer within the meaning of that expression as then defined by Rule 102(3).
The High Court allowed the writ petition and gave a direction to the Railway Administration to consider the claim of the petitioner for appointment in officiating vacancies to the post of District Officer as soon as vacancies arose, ignoring the circulars which gave preference to Class I junior scale officers of four years standing or more as against temporary Assistant Engineers.
An appeal filed by the Railway Administration under the Letters Patent was dismissed by a Division Bench of the High Court.
Though the Division Bench dismissed the appeal on August 1, 1974, the Railway Administration did not implement the judgment but instead on December 12, 1975 amended the Rule 102(3), 133(3)(c) and (f) and introduced new rule 102(17) so as to expressly exclude temporary Assistant Officers (newly defined by Rule 102 (7), from the category of Assistant Officers and thus make them ineligible for promotion to the senior scale under Rule 133(3)(c) and (f).
The petitioners, therefore, have filed these writ petitions in a representative capacity purporting to represent all temporary Assistant Engineers appointed on the recommendation of the Union Public Service Commission, claiming that, in law they could only be and were appointed to the Indian Railway Service of Engineers Class I right from the beginning and that the Railway Board was wrong in treating them as belonging to neither Class I nor Class II.
They claimed that they were appointed to temporary posts in the cadre of Indian Railway Service of Engineers Class I and that their seniority had to be reckoned on the basis of their length of continuous service, though they 141 conceded that in any given year those appointed on the basis of the results of the competitive examination might be placed above those appointed on the basis of the selection by the Union Public Service Commission.
Dismissing the petitions the Court ^ HELD: (1) articles 53, 73(1)(a) and 309, make it clear that the President, acting directly or through officers subordinate to him is free to constitute a service (with as many cadres as he chooses), to create posts without constituting a service or to create posts outside (the cadres of) the constituted service.
The President (or the person directed by him) may, or, again, if he so chooses he may not make rules regulating the recruitment and conditions of service of persons appointed to such service or posts.
He is also free to make or not to make appointments to such services or posts.
Nor is it obligatory for him to make rules of recruitment etc.
before a service may be constituted or a post created or filled.
But, if there is an Act of Parliament or a rule under the proviso to Article 309 on the matter, the executive power under Articles 53 and 73, may not be exercised in a manner inconsistent with or contrary to such Act or rule.
[162D F] B.N. Nagarajan vs State of Mysore, [1966] SCR 682 @ 686; State of Kerala vs M.K. Krishnan Nair and ors.
; , at 874; referred to.
(2) The previous existence of the Indian Railway Service of Engineers and the rules made for recruitment to that service do not bar the constitution of another service or the creation of posts outside the cadres of the Indian Railway Service of Engineers.
Though to start with there was no Presidential sanction for the creation of the posts of Temporary Assistant Officers in the various departments of Indian Railways, which were neither in Class I nor in Class II but merely in gazetted service, the matter was soon rectified by the grant of Presidential sanction for the posts in November 1956, and by the President further specifying the Railway Board as the authority competent to make appointment of such temporary Assistant Officers.
The posts of Temporary Assistant Officers were thus created and appointments made, under valid authority and outside the existing cadres of the Indian Railway Service of Engineers.
The letters of "indent", the advertisements, the letters of appointment and the agreements show that the temporary Assistant Officers appointed in this fashion after selection by the Union Public Service Commission were to be a source of recruitment to the Indian Railway Service of Engineers Class I.
If Temporary Assistant Officers were to be a source of recruitment to the Indian Railway Service of Engineers Class, no temporary Assistant Officer could possibly be under any misapprehension that he was 142 appointed to the Indian Railway Service of Engineers Class I or could claim that he was appointed to such service.
[162G H, 163G H, 164A] The petitioners cannot be considered to have been appointed under rule 130(d) of the Indian Railway Establishment Code which provides for occasional admission of other qualified persons on the recommendation of the Union Public Service Commission merely because they were selected for appointment by the Union Public Service Commission, their scale of pay was the same as that of the Class I Junior Scale Officers of the Indian Railway Service of Engineers and their duties were the same.
[164A C] (3) It is no doubt true that a cadre may consist of permanent vacancies in permanent as well as temporary posts borne on the cadre.
But it does not follow that appointments stated to be made to posts outside the very service and therefore necessarily outside the cadre must be considered to be made to temporary posts borne on the cadre merely because the posts were likely to continue indefinitely and did so continue.
[164 F G] The Annual Administrative Reports merely refer to appointments, temporary as well as permanent, made in the gazetted service by direct recruitment.
Gazetted Railway services must include both the Indian Railway Service of Engineers and the Gazetted Railway Service constituted by the temporary Assistant Officers.
Therefore, by merely taking into account the number of Temporary Assistant Officers for the purpose of calculating the total number of persons appointed to Gazetted Railway Service it cannot conceivably be said that Temporary Assistant Officers were appointed to cadre posts in the Indian Railway Service of Engineers.
Even the classified lists of Gazetted officers do not indicate that persons who were appointed as Temporary Assistant Officers were appointed to posts borne on the cadre of Indian Railway Service of Engineers.
On the other hand under the column "Date of appointment to Class" no entry is made against the names of any of the Temporary Assistant Officers who had not yet been absorbed into the Indian Railway Service of Engineers.
[165 B C, D E] If posts were initially created and sanctioned, the subsequent continuance of the posts indefinitely would not make persons appointed to the posts members of the Railway Service, namely, the Indian Railway Service of Engineers Class I. [165 F G] (4) The note below Rule 106 of the Railway Establishment Code merely states an existing fact known to all concerned, namely, that posts of Temporary Assistant Officers in gazetted railway service who were not to be classified 'either as Class I or as Class II ' had been sanctioned by the President 143 who had designated the Railway Board as the authority competent to make appointments to those posts.
With or without the note, the Temporary Assistant Officers would still not be classified either as Class I or Class II.
Their classification outside Class I and Class II was not dependant on the note but on the Presidential sanction in regard to the creation of the posts.
[166 A B] (5) Temporary Assistant Officers are not Assistant Officers within the meaning of that expression in the Indian Railway Establishment Code.
The expression "Temporary Assistant Officer", which was not previously defined in the Railway Establishment Code, was sought to be defined by new clause 17 of R.102 to mean "a Gazetted Railway Servant drawing pay on the scale applicable to junior Scale Officers but not classified either as Class I or as Class II Officers.
The expression Assistant Officer was redefined so as not to include a Temporary Assistant Officer who was not 'classified ' either as Class I or as Class II.
[166 C D] The amendments do not have any effect one way or the other on the status of the Temporary Assistant Officers.
What was always well known to the Temporary Assistant Officers and the Railway Board and what was the inevitable result of the Presidential sanction for the creation of posts which were not to be classified either as Class I or Class II, was made explicit in the Indian Railway Establishment Code also by the introduction of these amendments.
This became necessary because in the Writ Petition filed by Katyani Dayal, the Allahabad High Court, while appearing to hold that Temporary Assistant Officers belonged neither to Class I nor to Class II service, held that they came within the then existing definition of 'Assistant Officer ' so as to entitle them for promotion under r. 133 of the Indian Railway Establishment Code.
[166E G] The definition of Assistant Officer was not to be read in isolation but should have been read conjunctively with Rules 105, 106 and 108.
A reference to Rule 105 would show that for the purposes of the rules in the Indian Railway Establishment Code, Railway services were to be classified into Class I, Class II, Class III, Class IV and workshop staff.
Rule 106 specified the appointments and categories falling under the services mentioned in Rule 105.
Rule 108 required the Railway Board to fix the strength of the Railway Services, Class I and II.
There could therefore, be no question of an officer not falling within the class, category or cadres specified in rules 105, 106 and 108 claiming to be an 'Assistant Officer ' within the meaning of that expression.
A person recruited to the post of Temporary Assistant Officer not classified as Class I or Class II Officer could not claim to belong to the Class, category or cadre spe 144 cified in Rules 105, 106 and 108 and was, therefore, not an Assistant Officers within the meaning of that expression even before the 1975 amendment.
[167 D F] (6) There are and there can be no absolutes when the Court considers claims to justice on complaints of inequality.
The Marxian of a classless society, however laudable that may be, is evidently not what is sought to be achieved by articles 14 and 16 of the Constitution.
The goal is a limited one.
It is equality among comparables.
A necessary, but not necessarily cynical, implication of equality among comparables is the permissibility of reasonable classification, having nexus with the object to be achieved.
If two services started and continued dissimilarly, though they apparently discharged similar duties, they were not comparable services so as to furnish a basis for the claim to equality.
But if in the same service there were two sources of recruitment to the same service, a classification based solely on source of recruitment was not permissible.
[176 E G] State of Punjab vs Joginder Singh, [1963] Supp.
2 SCR 169, 191, 192; Roshan Lal Tandon vs Union of India, ; and Mervyn Coutindo & Ors.
vs Collector of Customs, Bombay and Ors.
, ; ; referred to.
(7) Those who were appointed to ex cadre posts outside the rules and whose tenure was therefore precarious could not claim to be treated on the same footing as those who were appointed strictly in accordance with the rules and posts borne on the cadre of the service.
[177 F G] H.S. Varma & Ors.
vs Secretary, Ministry of Shipping and Transport & Ors.
; @ 427, 428; referred to.
(8) The classification of Temporary Assistant Officers separately from the Indian Railway Service of Engineers Class I is neither discriminatory nor is violative of Articles 14 and 16 of the Constitution for the reason that it had no nexus to the object to be achieved namely efficiency of service.
[167 G H] The service comprising the Temporary Assistant Officers and the Indian Railway Service of Engineers Class I started separately and never became one.
The objects of their recruitment were different, the methods of recruitment were dissimilar and the appointing authority was not the same.
The training that was imparted was also unlike.
The very tenure of the Temporary Assistant Officers was precarious and their immediate aspiration was only to be absorbed into the Indian Railway Services of Engineers Class I.
These distinctive features marked out the Temporary Assistant Officers as a Class apart from the Indian 145 Railway Service of Engineers Class I and therefore there was no question of entitlement of equal rights with the latter.
Of course, once they were absorbed into the Indian Railway Service of Engineers they would be entitled not to be treated differently thereafter.
Their seniority would ordinarily be reckoned from the date of their absorption into the Indian Railway Service of Engineers, as promised in their letters of appointment.
No doubt these Officers merited something more than the 'long wait ' at the portals of the Indian Railway Service of Engineers.
The Railway Board however, appears to have tried to make the long wait a little less tedious by giving them weightage of half of their length of service as Temporary Assistant Officers, subject to maximum of five years [177D G] Equally important, is the fundamental qualitative difference, linked with the method of recruitment.
True, the minimum educational qualification is the same.
But, those who are recruited directly to the Indian Railway Service of Engineers Class I are subjected to stiff and competative, written and personality tests.
Only the very best can aspire to come out successful.
The Temporary Assistant Officers were not subjected either to a written or to a personality test but were selected on the basis of an interview by the Union Public Service Commission.
In addition to the minimum educational qualification, three years ' experience as a Civil Engineer was also prescribed.
Thus while brilliance was the beacon light which beckoned those aspiring to become members of the Indian Railway Service of Engineers Class I, it was replaced by experience in the case of those wanting to be Temporary Assistant Officers.
Again the appointing authority in the case of Indian Railway Service of Engineers Class I is the President while the appointing authority in the case of Temporary Assistant Officers was the Railway Board, no doubt, pursuant to the authority given by the President.
Different courses of training were prescribed for the Indian Railway Service of Engineers and the Temporary Assistant Officers.
For the Indian Railway Service of Engineers the training is an intensive and comprehensive one designed to equip them for higher posts in the Department too; while the training for Temporary Assistant Engineers was a brief six months ' training intended merely to equip them for carrying out the specific jobs.
In the matter of terms and conditions of service, while the provisions of the Indian Railway Establishment Code are fully applicable to the Indian Railway Service of Engineers Class I, those provisions are applicable to 'Temporary Assistant Officers ' to the extent there is no specific provision in their letter of appointment and agreement.
[169 C H] State of Punjab vs Joginder Singh, [1963] Supp.
2 SCR 169, @ 191, 192, Kishori Mohanlal vs Union of India, A.I.R. , Jammu & Kashmir vs Triloki Nath Khosa and Ors., ; @ 790, 792 Roshan Lal Tandon vs Union of India, ; ; Mervyn Coutindo and Ors.
vs 146 Collector of Customs, Bombay and Ors.
, ; , Mohammad Sujat Ali and Ors.
vs Union of India and Ors.
; , @ 481, S.B. Patwardhan and Ors.
vs State of Maharashtra and Ors.
; ; A. K. Subraman vs Union of India, [1975] 2 SCR 979 and M.S. Verma and Ors.
vs Secty.
Ministry of Shipping & Transport and Ors.
, ; @ 427, 428; discussed.
Observation: There is nothing 'doctrinaire ' in the principle of "equal pay for equal work" and "equal status for equal pay and equal work".
They are not goals to be scoffed at.
It may be that in the present societal context, the goals may appear to be distant.
But they are goals worthy of attainment and would be achieved in the not too distant future.
[178 A B]
|
Appeal No. 280 of 1959.
Appeal by special leave from the judgment and order dated the 22nd August, 1956, of the former Bombay High Court in Income tax Reference No. 17 of 1956.
B. Ganapathy Iyer and D. Gupta, for the Appellant.
Sanat P. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the Respondent. 1960.
November 1.
The Judgment of the Court ' was delivered by HIDAYATULLAH J. The Commissioner of Incometax, Bombay Circle II, has filed this appeal after obtaining special leave, against the judgment of the High Court of Bombay in an Income tax reference 231 under section 66(2) of the Income tax Act.
The National Syndicate, Bombay (referred to in this judgment as the respondent) was a firm consisting of three partners.
This firm acquired on January 11, 1945, a tailoring business as a going concern from one Chambal Singh for Rs. 89,321/ .
Included in this amount was the consideration paid for sewing machines (Rs. 72,000) and a motor lorry (Rs. 8,000).
The assessment concerns the year of account of the respondent, January 11, 1945 to February 28, 1946.
The business of the respondent was to prepare garments for Government departments, and during the war years, this appears to have been a profitable business.
Immediately after the respondent acquired this business, the last war came to an end, and the respondent found it difficult to continue the business.
It, therefore, closed its business in August, 1945.
Between August 16, 1945 and February 14, 1946, sewing machines were sold at a loss of Rs. 41,998.
The motor lorry was also sold on February 14,1946, at a loss of Rs. 3,700.
The respondent closed its account books on February 28, 1946, showing the two losses and writing them off.
For the assessment year, 1946.47, the respondent claimed a deduction of Rs. 45,698 under section 10(2)(vii) of the Indian Income tax Act.
The Income tax Officer disallowed this deduction, holding that the loss was of a capital nature, and that inasmuch as the business of the respondent was not carried on after August 1945 section 10(2)(vii) was not applicable.
This order of assessment was confirmed by the Appellate Assistant Commissioner, who also held that the loss represented capital loss, as the machines and the motor lorry were sold after the closure of the business.
On appeal, the Appellate Tribunal, Bombay, also confirmed the order, holding that the sales of machines and the motor lorry were made in the course of the winding up of the assessee 's business after the business had been stopped, and that, therefore, the deduction could not be claimed under section 10(2Xvii).
The respondent asked the Tribunal to refer the questions of law arising from its order, but the request was refused.
It then moved the High Court, and 232 obtained an order under section 66(2) of the Income tax Act, and the following two questions were referred: " (1) Whether the Tribunal was justified in law in holding that the Petitioner had carried on its business only till twenty eighth day of August one thousand nine hundred and forty five ? (2) Whether on the facts and circumstances of the case, the Income tax Appellate Tribunal was justified in law in not allowing the sum of Rs. 41,998 (Rupees forty one thousand nine hundred and ninety eight) on sale of machines and Rs, 3,700 (Rupees three thousand and seven hundred) on the sale of lorry as a deduction from the total income of the applicant?" The High Court answered the first question in the affirmative, holding that there was evidence on which the Tribunal could reach the conclusion that the business had, in fact, been continued only till August 28, 1945.
On the second question, the High Court was of the opinion that the business having been carried on for at least a part of the account year, section 10(2)(vii) was applicable, and that, therefore, this allowance had to be made under that clause.
The High Court, therefore, answered the question in the negative.
The High Court refused to grant a certificate to appeal to this Court, but the Commissioner of Income tax applied for, and obtained special leave, and this appeal has been filed.
Before we deal with the question whether section 10(2) (vii) of the Indian Income tax Act is applicable to the facts of this case, we may mention that during the course of the argument Mr. section P. Mehta, counsel for the respondent, sought to re open the first question.
According to him, there was no evidence on which the Tribunal or the High Court could reach the conclusion that the business of the respondent had come to a close in August 1945.
We, however, did not permit him to raise this contention, partly because, in our opinion, such a contention could not be allowed to be raised at this stage in an appeal by the Department and partly because, in our opinion, there were adequate materials for the High Court to have based its conclusion.
Inasmuch as we were in agreement 233 with the High Court on the question of the applicability of section 10(2)(vii), we also felt that no useful purpose would be served in examining the matter to find out whether the business had, in fact, closed on August 28, 1945 or had continued till the end of the account year.
We are really concerned in this appeal with the interpretation of section 10(2)(vii) and its applicability to the facts of the case.
It may be assumed for the purposes of this case that the business did, in fact, close down on August 28,1945, even though some in comings and outgoings were taking place for the rest of the year and the books of account were not finally closed till February 28, 1946.
The Commissioner contends that an allowance could only be claimed if the sale of machines etc., took place when the business was being continued and not if the business had come to a close.
The respondent, on the other hand, submits that section 10(2)(vii) would be applicable in a case where the business continued for a part of the account year, even though the sale of the machinery, plant etc., took place after the closure of the business during the course of the account year.
Section 10(2)(vii) reads as follows: " 10(2).
Such profits or gains shall be computed after making the following allowances, namely: (vii) in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value: Provided that such amount is actually written off in the books of the assessee:".
The Commissioner emphasises the word " such " in the clause, and states that this takes us back to cl.
(iv) where the words " used for the purposes of the business occur.
It is, therefore, contended that if the business itself comes to an end before the sale takes place, the sale is not during the continuance of the 30 234 business but is during the course of the winding up ,of the business, and the condition precedent to the application of section 10 is that the business must be is carried on " by the person claiming the benefit of sub section
Reference in this context is made to the first sub section of section 10, where it is provided that the tax 'shall be payable by an assessee under the head " Pro. fits and gains of business. . in respect of the profits or gains of any business, etc., ' carried on by him '.
" The Department relies upon a decision of this Court reported in The Liquidators of Pursa Limited vs Commissioner of Income tax, Bihar (1).
The respondent also relies upon the same ruling, and contends that it supports the case set up by it.
The respondent also relies on a recent decision of the Madras High Court in Commissioner of Income tax vs Express Newspapers Ltd. (2).
These two cases were decided under the second proviso to section 10(2)(vii) before its amendment in 1949.
The second proviso reads: " Provided further that where the amount for which any such building, machinery or plant is sold whether during the continuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place.
" The words underlined above were inserted by section 11 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949.
In both the cases, the business had admittedly closed down before the sales took place, and it was held, applying the proviso as it was before the amendment of 1949, that such receipts were not taxable.
The amendment now renders these cases obsolete.
Reliance is, however, placed on certain observations in these oases, and it is contended that the same reasoning must be applied to a case of loss as to a case of profits.
We shall, therefore, refer briefly to them.
In The Liquidators of Pursa Limited vs Commissioner of Income tax, Bihar (1), the year of, assessment 235 was 1945 46, which corresponded to the accounting year, October 1, 1943 to September 30, 1944.
Pursa Limited were manufacturers of sugar, and sold the business on August 9, 1943, including buildings, machinery and plant but excluding manufactured sugar worth about Rs. 6,00,000.
This sugar was sold till June, 1944; but throughout the accounting period, the machinery, plant or buildings were not used.
Pursa Limited went into voluntary liquidation on June 20, 1945.
In the sale of the buildings, machinery and plant there was an excess, such as is described in the second proviso, and that amount of excess was sought to be taxed.
This was negatived by this Court on two grounds.
They were (a): " If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect of them and the second proviso also does not come into operation "; and (b) " that the intention of the company was to discontinue its business and the sale of the machinery and plant was a step in the process of winding up of its business.
The sale of the machinery and plant was not an operation in furtherance of the business carried on by the Company but was a realisation of its assets in the process of gradual winding up of its business which eventually culminated in the voluntary liquidation of the Company".
Counsel differ as to the ratio of the case.
The Commissioner contends that the ratio is that no sale, whether at a loss, or at a profit can be said to fall within, respectively, cl.
(vii) or the second proviso, if it takes place after the closure of business and during the process of winding up, while the respondent contends that the real ratio was that during the account year the machinery and plant were not at all used.
No doubt, this Court did give two reasons for its decision, but the primary consideration was the second ratio quoted above.
This is clear from the following passage towards the end of the judgment: " Even if the sale of the stock of sugar be regarded as carrying on of business by the Company and not a realisation of its assets with a view to winding up, the 236 machinery or plant not being used during the accounting period at all and in any event not having had any connection with the carrying on of that limited business during the accounting year, section 10(2)(vii) can have no application to the sale of any machinery or plant." Learned Counsel for the respondent relies upon the passage last quoted, and urges that where the buildings, machinery or plant have been used for a part of the accounting period, the ruling cannot apply, and draws attention to the words " at all " used twice in the judgment.
He argues that if the machinery or plant had been used for a part of the accounting year, the result would have been different.
It is not possible to say how the case would have been decided in the changed circumstances, but it is obvious that the case is distinguishable on more than one ground.
The proviso is in a language different from cl.
(vii), as a fiction is introduced and such ' profits ' are taxed to take back what had been given away for depreciation which did not really take place.
But more of it later.
Express Newspapers Ltd. case (1) is also distinguishable.
In that case, the Free Press of India (Madras) Ltd. resolved on August 31, 1946, to transfer the right of printing and publishing its daily newspapers to Express Newspapers Ltd. They rented out their machinery, etc., to the new Company, which took possession on September 1, 1946.
The year of account ended on December 31, 1946.
The Free Press went into voluntary liquidation on October 31, 1946 and on November 1, 1946, its building, machinery and plant were sold to the new Company at a price which exceeded the written down value by Rs. 6,08,666 made up of Rs. 2,14,090 being the excess of the original cost price over the written down value, and Rs. 3,94,576 being the excess over the original cost price.
One question, among others, was whether the second proviso to section 10 (2)(vii).
applied.
The Madras High Court ob.
served : (1) 237 ". in the present case the sale of the machinery took place during the year of account, and it was used by Free Press Company for at least a part of the year.
This would be sufficient to attract liability.
The learned counsel for the assessee is on a firmer ground when he contended that the sale being made in the process of winding up of the company section 10(2)(vii) will not apply.
The second proviso to section 10(2)(vii) would be invoked only where the sale was one made in the course of business carried on by the predecessor.
Where the sale is a closing down sale, that profit could not be brought to tax.
In Liquidators of Pursa Ltd. V. Commissioner of Income tax (1), the Supreme Court held that where in a case the sale of machinery and plant was a step in the process of winding up of its business, the intention of the company having been to discontinue the business, such sale was not an operation in furtherance of the business carried on by the company, but was only a realisation of its assets in the process of gradual winding up of its business which eventually terminated in the voluntary liquidation of the company, and provision of section 10(2)(vii) would not apply.
In the present case, the formation of the new company was to take over the business of the old company.
The lease of the machinery, the transfer of the right to carry on the business of publishing newspapers, and the ultimate sale of the machinery were part of the same scheme for winding up the Free Press Company.
The sale of machinery was undoubtedly a closing down sale and the profit earned therein could not come in for assessment under section 10(2)(vii).
" These two cases deal with the second proviso to section 10(2Xvii).
Clause (vii) deals with loss and the second proviso, with profits; but the proviso is not an exact counterpart of the clause.
The proviso enacts a fiction which the main clause does not enact.
The reason for the introduction of the fiction in the proviso appears to be this: Loss in business may take place in various ways.
If the business requires more to run it than it produces, there is loss.
Loss in (1) ; 238 business may also take place if the equipment with which business is done is lost, destroyed, or depreciates or suffers in value.
The law takes note of the loss, and, provided it has been computed and brought into the books of the business and written off, it can be claimed as a deduction.
Profit in business, on the other hand, primarily, means profit earned in the business.
But if an allowance had been claimed as depreciation and had been allowed, and if the sale of the building, machinery or plant on which depreciation allowance was claimed in the past, shows that there was, in fact, no depreciation but an accretion in value, the law deems that a profit has been made.
The fiction thus converts that which may not be strictly profit of the business in a narrow sense, into a profit for purposes of assessment.
Formerly, it was a matter of doubt whether even this accretion could be deemed a profit when the business had closed down; but now, the legislature has amended the law by saying that this fictional profit must be brought to tax irrespective of the fact that the sale took place " during the continuance of the business or after the cessation thereof" But it is to be noticed that no such amendment was made in cl.
(vii) to exclude loss over buildings, machinery or plant after the clospre of the business.
It is thus clear that the principles which govern the proviso cannot be used to govern the main clause, because profit or loss arise in different ways in business.
The two rulings do not, therefore, apply to the facts here.
We must thus restrict ourselves to the scheme of the Indian Income tax Act and the clause in question.
The scheme of the Income tax Act, as was pointed out by Lord Porter in Indian Iron & Steel Co. Ltd. vs Commissioner of Income tax, Bengal (1), is that income.
tax is assessed and paid in the next succeeding year upon the results of the year before.
It is the income of the previous year which is brought to tax in the succeeding year, which is called the year of assessment.
For the purpose of assessment, the Indian Income Tax Act divides the sources of income, profits (1) , 336. 239 and gains into six heads in section 6.
The fourth head is " Profits and gains of business, profession or vocation ".
Sections 7, 8, 9, 10, 12, 12A and 12B lay down ' the rules of computation under the different heads.
Profits and gains of business are dealt with in section 10.
The first subjection of that section provides: " The tax shall be payable by an assessee under,, the head I Profits and gains of business. ' in respect of the profit or gains of any business. carried on by him." In Commissioner of Income tax vs Shaw Wallace & Co., Ltd. (1), it was pointed out by the Judicial Committee that the words " carried on by him " were " an essential constituent of that which is to produce the taxable income; it is to be the profit earned by a process of production ".
It was further pointed out that " business " had been defined in the Income tax Act to " include any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture ", and that it involved " a fundamental idea of the continuous exercise of an activity.
" It was, however, pointed out that the source was not necessarily one which was expected to be continuously productive, but one whose object was the production of a definite return, excluding anything in the nature of a mere windfall, and that 'capital ' in most cases was hardly more than an element in the process of production.
We agree with this analysis of the Income tax Act, and indeed, these observations were also applied in the Pursa Limited case (2), to which we have already referred.
It thus follows that capital may, in the process of production, depreciate, get used up or lost.
The Income tax Act, while taxing income, profits or gains, takes note of, and makes allowance for such eventualities.
If the profits or gains of a business for a particular year are to be taxed, they must be computed for the whole year taking into account losses incurred during the same year.
Now, the first condition precedent appears to be that the business must have been (1) (1932) L.R. 59 I.A. 206.
(2) ; 240 " carried on by the assessee ".
This is to be found in the first sub section of section 10.
The second condition is that the building, machinery or plant must have been " used for the purposes of the business ".
This is to be found in of.
(iv) of the second sub section of section 10.
The third condition is that the sale etc., should have taken place during the year of account.
This follows from the nature of the tax which is assessed and levied on the profits of the working of the previous year.
The fourth condition is that the loss should have been brought into the books of the assessee and written off.
This is provided by the first proviso.
There is no other condition to be found expressly in the section or in the Act.
It is nowhere stated that the business of the assessee should have been carried on for the whole year, or that the machinery or plant should have been used for the whole of the accounting period.
There are no words which would show that, if the assessee works only for a part of the year and then sells out, the loss that he incurs is not a business loss, or that he must pay tax on the small profit that he might have made, and bear the lose in addition.
We have shown above that the case of profit referred to in the second proviso stands on a different footing altogether, since profit and loss arise in different ways.
The law has thus treated the two subjects differently, and the legislature has amended the proviso but not the clause.
In view of what we have said above, we are of opinion that the judgment of the High Court was correct in all the circumstances of this case, and this appeal must be dismissed with costs.
Appeal dismissed.
| The National Syndicate, a Bombay firm, acquired on January 11, 1945, a tailoring business as a going concern for Rs. 89,321 which included the consideration paid for sewing machines and a motor lorry.
Soon after the purchase the respondent found it difficult to continue the business, therefore closed its business in August, 1945.
Between August 16, 1945, and February 14, 1946, sewing machines and the motor lorry were sold at a loss.
The respondent closed its account books on February 28, 1946, showing the two losses and writing them off.
For the assessment year 1946 47, the.
respondent claimed a deduction under section 10(2)(Vii) of the Indian Income Tax Act.
The Appellate Tribunal held that the sales of machines and the motor lorry were made in the course of the winding up of the assessee 's business after the business had been stopped and that, therefore, the deduction could not be claimed under section 10(2)(Vii).
Respondent moved the High Court and obtained an order under section 66(2) of the Income Tax Act, and the following two questions were referred : " (1) Whether the Tribunal was justified in law in holding that the petitioner had carried on its business only till twenty eight day of August, One Thousand Nine Hundred and Forty Five ? (2) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in law in not allowing the sum of Rs. 41,998 (Rupees forty one thousand nine hundred and ninety eight) on sale of machines and Rs. 3,700 (Rupees three thousand and seven hundred) on the sale of lorry as a deduction from the total income of the applicant ?" The High Court answered the first question in the affirma tive, and the second question in the negative.
The Commissioner of Income tax questioned the finding of the High Court and came up in appeal by special leave and con tended that an allowance could only be claimed if sale of machines, etc.
took place when the business was being continued and not if the business had come to a close.
The respondent on the other hand submitted that section 10(2)(Vii) would be applicable 230 in a case where the business continued for a part of the account year, even though the sale of machinery, plant, etc.
took place after the closure of the business during the course of the account year.
Held, that if the profits or gains of a business for a particular year are to be taxed, they must be computed for the whole year taking into account losses incurred during the same year, provided that the business had been " carried on by the assessee " ; the building, machinery or plant had been " used for the purpose of the business "; the sale etc.
had taken place during the year of account, and the loss had been brought into the books of the assessee and written off.
There is no other condition to be found expressly in the section or in the Act.
It is nowhere stated that the business of the assessee should have been carried on for the whole year, or that the machinery or plant should have been used for the whole of the accounting period.
There are no words which would show that, if the assessee worked only for a part of the year and then sold out, the loss that he incurred was not a business loss, or that he must pay tax on the small profit that he might have made, and bear the loss in addition.
The Liquidators of Pursa Limited vs Commissioner of Income Tax, Bihar, ; , Commissioner of Income tax vs Express Newspapers Ltd. , distinguished.
Indian Iron & Steel Co., Ltd. vs Commissioner of Incometax, Bengal, , Commissioner of Income tax vs Shaw Wallace & Co., Ltd., (1932) L.R. 59 I.A. 206, referred to.
|
l Appeal No. 16 of 1970.
Appeal by special leave from the judgment and order dated May 22, 1969 of the Allahabad High Court in Civil Misc.
Writ No. 588 of 1966.
582 Jagadish Swarup, Solicitor General, R. N. Sachthey, and B. D. Sharma, for the appellants.
G. C. Sharma and P. K. Mukherjee, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Jawahar Lal Rastogi hereinafter called 'the assessee is a Hindu Undivided Family which carries on the business of money lending at Lucknow and is also interested as a partner in different firms engaged in the business of manufacturing barbed wire, pharmaceuticals, etc.
On September 14, 1964, the Income tax Officer, Award, called upon the assesee to furnish within 10 days certain information with regard to its income and assets.
On September 17, 1964 the Income tax Officer submitted to the Commissioner of Income tax a report requesting that he be authorised to enter and search the premises of, the assessee.
The Commissioner by his order dated September 19, 1964, authorised entry and search after recording reasons for his belief that it was necessary to carry out the search.
On September 21 and 22, 1964, the premises of the assessee were searched and a large number of documents were seized and were taken away to the Income tax Officer.
The Income tax Officer also prepared inventories of the ornaments and other goods kept in the premises searched.
After the seizure of the books of account and other documents the case was fixed for hearing before the Income tax Officer on several occasions, but no substantial step was taken.
In May 1966 the assessee filed a writ petition in the High Court of Allahabad challenging the validity of the search made by the Department contending that it "was illegal and in excess of the power conferred by section 132 of the Income tax Act, 1961" and prayed that the documents seized may be ordered to be released.
The High Court of Allahabad considered the evidence appearing from the affidavits filed and observed that in the present case the assessee had established the following "points" : (1) The Income tax Officer was apparently interested in investigating transactions prior to 1953.
On September 14, 1964, the assessee was directed to furnish statements relating to four years ending on March 31, 1960, yet the Commissioner of Income tax issued letters of authorisation permitting Income tax Officer to seize documents relevant to nine assessment years; (2)The raid was ordered and organised before the expiry of the period of the notice; (3)More than 300 books and registers were seized during the raid and the Income tax.
Officers carried away thousands of promissory notes.
Some of the documents seized appear to be 583 irrelevant for assessment purposes and some of them were public documents.
(4)There is reason to believe that all or almost all the documents found on the premises were seized and carried away by the Income tax Officers; (5)Marks of identification were.
not placed on the documents inspite of the direction contained in the letters of authorisation; and (6)The documents seized during the raid were detained by the Income tax Officers for 19 months before, the petition was filed.
In the view of the High Court the circumstances of the case indicated that the Commissioner of Income tax and the Income tax Officers acted beyond "the legitimate scope of section 132 of the Act and there was force in the complaint of the assesse that the Allahabad High Court in Seth Brothers ' Case(1) was overtituted abuse of power conferred on Income tax authorities by section 132 of the Act".
In reaching its conclusion, the High .Court relied upon the judgment of the Allahabad High Court in Seth Brothers vs Commissioner of Income tax(1).
In this appeal filed by the Commissioner of Income tax with special leave, the Solicitor General contends that the decision of the Allahabad High Court in Seth Brothers ' Case(1) was overruled by this Court in Income tax Officer, Special Investigation Circle "B", Meerut vs Seth Brothers & Ors.(2) and on , that account the judgment under appeal is liable to be set aside.
In Seth Brothers ' case (2) this Court examined the scheme of section 132 in some detail and observed "The condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for,.
or relevant to, any proceeding under the Act may be found.
If the Officer has reason to believe that any books of account or other documents would be useful for, or relevant to, any proceedings under.
the Act, he is authorised by law to seize those books of account or other documents, and to place marks of identification therein, to make extracts or.
copies, therefrom and also to make a note or an, inventory of any articles or other things found in the course of the search.
Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be (1) 584 exercised strictly in accordance with the law and only for the purposes for which the law authorises it to be exercised. . .
If the conditions for exercise of the power are not satisfied the proceeding liable to be quashed. . .
The Act and the.
Rules do not require that the warrant of authorisation should specify the particulars of documents and books of account : a general authonsation to search for and seize documents and books of account relevant to or useful for any proceeding complies with the requirement of the Act and the Rules.
It is for the officer making the search to exercise his judgment and seize or not to seize any documents or books of account.
The aggrieved party may undoubtedly move a competent court for an order releasing the documents seized.
In such a proceeding the Officer who has made the search will b e called upon to prove how the documents seized are likely to be 'useful for or relevant to a proceeding under the Act.
1 If he is unable to do so, the court may order that those document$ be released.
But the circumstance ;hat a large number of documents seized is not a ground for holding that all documents seized are irrelevant or the action of the officer is mala fide.
" It must, however, be stated that the findings that the action of the Commissioner of Income tax and the Income tax Officer amounted to "indiscriminate search" and was beyond the "legitimate scope of section 132" depends upon the evidence in each case and no general rule can be laid down in that behalf.
In the present case the High Court has noticed two important circumstances: (1) that where as the notice dated September 14, 1964, required the assessee to furnish statements rela ting to the four assessment years ending on March 31, 1960, the Commissioner of Income tax authorised search for a period ,of nine assessment years even before the period fixed by the notice had expired; and (2) that contrary to the plain terms ,of section 132(8) the Income tax Officer retained with him the books of account for a period exceeding 180 days.
Under section 132(2) as in force on the date on which the search and seizure took place stood as follows : "The books of account or other documents seized under sub section (1) shall not be retained by the Inspecting Assistant Commissioner or the Income tax 585 Officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained : Provided. . .
By the Finance Act of 1965, sub section
(2) was re eracted as sub s (8) with the modification that for the words "Inspecting Assistant Commissioner or the Income tax Officer" the words "authorised officer" be substituted.
In the present case the premises of the assessee were searched on September 21 and 22, 1964, and the documents were retained till May 1966, i.e. for a period, of 19 months.
Our attention has not been invited to any order of the authorities recording reasons for retaining the documents seized after the expiry of 180 days, nor is there any approval of the Commissioner for retaining such documents.
The retention of the documents without complying with the requirements of the statute after expiry of the period of 180 days would be plainly contrary to law.
The Solicitor General said that it *as not urged before the High Court that because the authorised officer did not record reasons and the Commissioner did not approve retention of the documents after 180 days, the revenue, authorities were bound to release the documents.
Counsel submitted that failure to produce evidence on a matter not put in issue may not be regarded as a ground in support of an order releasing documents.
But the High Court has found that the documents seized during the raid were detained by the authorised officer for 19 months before the application was filed.
If it was the case of the Department that retention of the documents after the expiry of 180 days was supported by good and adequate reasons recorded by the Income tax Officer and the.
approval of the Commissioner as required by the Act was obtained, such record of reasons and approval would have been tendered in evidence.
It cannot be said that the attention of the parties was not directed to the circumstance that the Income tax Officer had failed to comply with the requirements of the Act.
The order recorded by the High Court must be sustained on the ground that the documents taken possession of were re tained without authority of law for a period exceeding 180 days contrary to the terms of section 132(8) as amended by the Income tax (Amendment) Act, 1965.
The appeal therefore fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| Article 254(2) of the Constitution is, in substance, a reproduction of section 107(2) of the Government of India Act, 1935, the concluding portion whereof is incorporated in a proviso with further additions.
The principle embodied therein is that when there is legislation covering the same ground both by the Centre and by the State, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
Section 7 of the Essential Supplies (Temporary Powers) Act, 1946, was amended in 1948 and 1949 and thereafter by Act LII of 1950.
Held, that Act LII of 1950 is a legislation in respect of the same matter as Bombay Act (XXX VI of 1947) within the meaning of article 254(2) of the Constitution and therefore section 2 of Bombay Act XXXVI of 1947 cannot prevail as against section 7 of the Essential Supplies (Temporary Powers) Act as amended by Act LII of 1950.
It is a well settled rule of construction that if a later statute again describes an off once created by a previous one and imposes a different punishment or varies the procedure, the earlier statute is repealed by the later statute.
Attorniey Geneeral for Ontario vs Attorney General for the Dominion , Smith vs Benabo [1937] 1.
K.B. 518, and Michell vs Brown (I El. & El. 267, 274) referred to.
|
Appeal No. 4541 of 1991.
From the Judgment and Order dated 6.8.1991 of the Punjab and Haryana High Court in C.W.P. No. 2415 of 1991.
Dr. Anand Prakash, Mrs. Veena Birbal and Raj Birbal for the Appellants.
D.R. Sehgal, S.K. Bagga and Mrs. S.K. Bagga for the Respond ents.
The Judgment of the Court was delivered by VERMA, J.
The respondent, Jagjit Singh Mehta, is em ployed at present in the Bank of India as an officer in Junior Management Grade Scale 1 and posted in a Branch Office of the Bank in District Giridih in the State of Bihar.
The respondent was earlier employed in the clerical cadre of the Bank and was posted at Chandigarh.
According to the policy contained in Annexure B read with notice dated March 28, 1988 (Annexure C), on promotion from the clerical cadre to the Officers ' Grade, the respondent had to indicate his preparedness for posting anywhere in India according to the availability of vacancies.
The respondent readily indi cated his preparedness to be posted anywhere in India by Annexure D dated April 19, 1988 when the respondent was posted as a Clerk at Chandigarh prior to his promotion as an Officer.
After getting the promotion as an officer and being posted in Bihar on the above basis, the petitioner filed Civil Writ Petition No. 2415 of 1991 in the High Court of Punjab and Haryana for a direction to the Bank to transfer him from the Bihar Zone to the Chandigarh Zone on the ground that his wife is employed as a Senior Accountant at Chandi garh.
The writ petition has been allowed by a Division Bench (M.R Agnihotri & D.S.Mehra, JJ,) of the High Court by a cryptic order dated 6.8.1991 which reads as under : "After hearing the learned counsel for the parties, we allow this petition and direct the respondents by issuing a writ of mandamus commanding the Bank of India to transfer the peti 495 tioner and post him somewhere near Chandigarh as his wife is posted as a Clerk in the office of the Advocate General, Punjab, Chandigarh.
This shall be done within a period of two months.
No costs.
" The petitioner Bank of India is aggrieved by the above order of the High Court.
Special leave is granted.
In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such a transfer in the policy (Annexure B) read with notice dated March 28, 1988 (Annexure C), it is difficult to sustain the High Court 's order.
However, learned counsel for the respondent placed reliance on para 4 (vi) of a Memorandum dated April 3, 1986 (AnnexureH) of the Government of India containing guidelines for posting of husband and wife at one station which are meant to be fol lowed also by all the Public Sector Undertakings.
Learned counsel urged that according to the statutory provisions contained in the and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the Bank is bound to follow the guidelines and directions issued by the Cen tral Government in this behalf.
There can be no doubt that ordinarily and as far as practicable the husband and wife who are both employed should be posted at the same station even if their employers be different.
The desirability of such a course is obvious.
However, this does not mean that their place of posting should invariably be one of their choice, even though their preference may be taken into account while making the deci sion in accordance with the administrative needs.
In the case of All India Services, the hardship resulting from the two being posted at different stations may be unavoidable at times particularly when they belong to different services and one of them cannot be transferred to the place of the other 's posting.
While choosing the career and a particular service, the couple have to bear in mind this factor and be prepared to face such a hardship if the administrative needs and transfer policy do not permit the posting of both at one place without sacrifice of the requirements of the adminis tration and needs of other employees.
In such a case the couple have to make their choice at the threshold between career prospects and family life.
After giving preference to the career prospects by accepting such a promotion or any appointment in an All India Service with the incident of transfer to any place in India, subordinating the need of the couple living together at one 496 station, they cannot as of right claim to be relieved of the ordinary incidents of All India Service and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
In addition, in the present case, the respondent voluntarily gave an undertaking that he was.
prepared to be posted at any place in India and on that basis got promotion from the clerical cadre to the Officers ' grade and thereafter he seeks to be relieved of that necessary incident of All India Service on the ground that his wife has to remain at Chandigarh.
No doubt the guidelines require the two spouses to be posted at one place as far as practicable, but that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible.
The only thing required is that the departmental authorities should consid er this aspect along with the exigencies of administration and enable the two spouses to live together at one station if it is possible without any detriment to the administra tive needs and the claim of other employees.
The High Court was in error in overlooking all the relevant aspects as well as the absence of any legal fight in the respondent to claim the relief which the High Court has granted as a matter of course.
The High Court 's order must, therefore, be set aside.
Consequently, the appeal is allowed, the impugned order of the High Court is set aside and the respondent 's writ petition is dismissed.
No costs.
P. Appeal allowed.
| The A.P. Engineering Subordinate Service Rules were amended in 1972 by way of Government order.
It provided that supervisors who acquired B.E./A.M.I.E. degree while in service would be entitled to count 50 % of the services rendered as Supervisors prior to acquiring the said qualification subject to a maximum of four years.
However, this was subject to certain conditions, the Chief among them was that they should be considered to have been placed below the last of the Junior Engineer of the year, after giving such weightage.
Order dated 10.6.76 required that the Supervisors who acquire the degree qualification while in service would be appointed, as Junior Engineers with immediate effect.
The abovesaid order was amended on 8.11.76 giving benefit of the weightage to only those who acquired the degree qualification prior to 28.2.72.
In 1977, by another order of the State Government, the post of Junior Engineer was made Gazetted post.
In separate petition before the Andhra Pradesh Administrative Tribunal, the Supervisors upgraded as Junior Engineers including those who acquired the degree qualification after 28.2.72, as well as the State of A.P. agitated the issue regarding inter se seniority between the upgraded Junior Engineers and the direct recruit Junior Engineers.
The Tribunal heard all the matters together and gave a finding that there was no bar to the retrospective regularisation 296 of the directly recruited Engineers from the dates of their initial appointments.
The Tribunal also upheld the action of the Government in giving the benefit of the notional date of appointment to the upgraded Junior Engineers and the benefit of the date of regularisation of their services from the dates of their notional appointments subject to maintenance of order or ranking given by the Public Service Commission.
The Tribunal also ordered that the ranking given by the Public Service Commission in respect of directly recruited Junior Engineers his to be maintained and each of them would be entitled to count has seniority from the date on which his service has been regularised or from the date of regularisation of the service of the person immediately below in the order of ranking given by the Public Service Commission, whichever was earlier.
In respect of upgraded Junior Engineers who acquired degree qualification after 28.2.1972, the Tribunal gave a specific direction that their seniority has to be fixed on the basis of specific notional date of appointment given to them by interspersing their names among regular Junior Engineers as arranged in chronological order of dates from which such regular Junior Engineers are entitled to count their seniority.
Aggrieved against the Tribunal 's order, the State Government and the supervisors upgraded as Junior Engineers, preferred the present appeals.
On behalf of the State, it was contended that the direction of the tribunal particularly interspersing was not workable, since the upgraded Junior Engineers have put in long years of service and were discharging the same duties as the directly recruited Junior Engineers and this factor should be taken into account in fixing the notional date of appointment and inter se seniority.
On behalf of the upgraded Junior Engineers, it was contended that in G.O. Ms No.559 it is specifically laid down that Supervisors who have acquired graduate qualification may be appointed as Junior Engineers after 28.2.75 and the weightage of four years should be reckoned from the date of acquiring the degree qualification i.e.28.2.72 or thereafter; and their seniority should not be fixed from the date of the order of appointment.
On the order hand, the direct recruit Junior Engineers contended that the upgraded Junior Engineers can under no 297 circumstances be treated as seniors to the directly recruited Junior Engineers for the appointment of Junior Engineers was suspended for some time and in view of the exigencies the degree holders were appointed on temporary basis and they have served for a number of years; the Government decided to make regular appointments and accordingly a Special Qualifying Test was held in which they qualified and they were given the appointments; and a seniority list strictly on the basis of performance in the test and on merit was prepared by the Public Service Commission and a retrospective effect was given.
It was further contended that so far as the upgraded Junior Engineers are concerned all the relevant G.O.Ms.
make it clear that the crucial date has to be reckoned on the basis of the actual date of appointment and not on the date of acquiring the degree.
Disposing of the matters, this court, HELD: 1.1.
The weightage of four years in respect of upgraded Junior Engineers as provided in G.O.Ms.
No.559 has to be reckoned from the date of appointment and not the date of their acquiring the degree qualification.
On the basis of that notional date, their inter se seniority has to be fixed.
[311 B C] 1.2.G.O.
Ms. No. 559 makes it abundantly clear that the appointments of the upgraded Junior Engineers who acquired the graduate qualification while in service, would be prospective only and that they would be entitled to the weightage of four years of service rendered before the appointment.
It does not anywhere indicate that the weightage should be from the date of acquiring the degree qualification.
It is only after acquiring such degree qualification that a Supervisor is appointed as Junior Engineer and having regard to the service rendered by him, the Government, as a policy, decided to give weightage of four years for the purpose of considering the eligibility for promotion as Assistant Engineer.
[308 C D] 2.1.The regularisation of the degree holders Junior Engineers who passed the Special Qualifying Test by giving restrospective effect cannot be held to be illegal, and their seniority among themselves shall be subject to the order of ranking given by the Public Service Commission on the basis of the Special Qualifying Test.
[311 D] 2.2.
The degree holders were appointed temporarily because of a ban and later the Government again, as a policy decision, decided 298 to make regular appointments by direct recruitment but enabled the degree holders who were in temporary service to appear in a Special Qualifying Test.
Here again, as a matter of policy, the Government decided to give some weightage to the service rendered by them before the appointment by selection.
Thus, the Governement, in fixing the seniority for the purpose of future promotion of the appointees both the upgraded Junior Engineers as well as those selected by the Public Service Commission in the Special Qualifying Test has taken into account the past service rendered by them.
[308 E F] 3.
In the case of upgraded Junior Engineers weightage of four years service was given and in the other case two years, weightage was given.
As a matter of policy, the Government gave weightage to both the categories discharging the same duties.
The upgraded Junior Engineers who having got the benefit of four years` service, therefore, cannot say that similar weightage should not be given to the direct recruits who, prior to the selection, were working on temporary basis.
B, F] Devi Prasad and Ors.
vs Government of Andhra Pradesh and Ors.
, AIR 1980 SC 1185, relied on.
M. Nirmala and Ors.
vs State of Andhra Pradesh and Ors.
; , ; Ashok Gulati and Ors.
vs B.S.Jain and Ors., [1986] Sup.
SCC 597; Direct Recruit Class II Engineering Officers Association vs State of Maharashtra and Ors.
, ; ; Masood Akhtar Khan and Ors.
vs State of Madhya Pradesh and Ors., , referred to.
The Tribunal has rightly pointed out that under Rule 23 A of the A.P State and Subordinate Service Rules, 1962 if a person having been appointed temporarily under Rule 10 to a post borne on the cadre is subsequently appointed in the service in accordance with the rules, he shall commence his probation from such subsequent date or the earlier date as the appointing authority may determine.
The Tribunal was also right in holding that there was no bar to the retrospective regularisation of the service of the direct recruit Junior Engineers.
[308 G H; 309 A] 5.
In the light of this Judgment, the State Government shall prepare a common seniority list of the degree holder Junior Engineers and the upgraded Junior Engineers and that list shall be the 299 basis for all the subsequent promotions.
Any promotion already given shall be reviewed and readjusted in accordance with the said seniority list.
[311 D E] 6.
Since this litigation has been pending for about two decades, it is high time a finality has to be reached by resolving the controversies and in this context the approval of the Public Service Commission in respect of these appointments need not be sought, if the Government has not already obtained the approval of the Public Service Commission.
[311 A B]
|
Appeal No. 2227 of 1966.
689 Appeal from the judgment and decree dated December 10, 1963 of the Kerala High Court in Appeal Suit No. 1094 of 1959.
section V. Gupta and Lily Thomas, for the appellants.
Rameshwar Nath, for respondent No. 2.
Sardar Bahadur, Vishnu Bahadur Saharya and Yougindra Khushalani, for respondent No. 3.
The Judgment of the Court was delivered by Hegde, J.
The question for decision in this appeal by certificate is short but important and that question is what are the principles governing the assessment of damages under sections 1A and 2 of the (Act XIII of 1855) (to be hereinafter referred to as the Act) ? One Krishnamoorthy son of plaintiffs 1 and 2 aged about 8 years was hit by a bus owned by the 1st defendant (who died during the pendency of this suit) and driven by the second defendant on February 26, 1956.
As a result of that accident Krishnamoorthy sustained very severe injuries.
He became unconscious almost immediately after the accident and died in the hospital on the early morning of February 28, 1956.
Krishnamoorthy was the eldest son of plaintiffs 1 and 2.
Both the courts have come to the conclusion that he was a bright boy and was at the top of his class in his school.
At the time of his death he was in Standard III.
His parents are affluent.
They could have afforded to give him good education.
Hence there was a bright future for him.
The plaintiffs claimed a sum of Rs. '30,000 as damages under sections IA and 2 of the Act.
The District Judge computed the damages under sections IA and 2 at Rs. 5,000.
In appeal the High Court determined the damages under section 1A at Rs. 5,000 and under section 2 at Rs. 1,000.
Aggrieved by that decision, the plaintiffs have brought this appeal.
We shall first read section 1A and 2 for the purpose of ascertaining the principles governing the assessment of the damages under those sections.
Section IA reads : "Whenever the death of a person shall be caused by wrongful act, neglect or default and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, the party who would have been liable it death had not ensued shall be liable to an action or suit for damages notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony or other crime.
Every such action or suit shall be for benefit of the wife, husband, parent and child, if any, of the person 690 whose death shall have been so caused, and shall be brought by and in the name of the executor, administrator or representative of the person deceased;" Section 2 reads thus : "Provided always that not more than one action or suit shall be brought for, and in respect of the same subject matter of complaint.
Provided that, in any such action or suit, the executor, administrator or representative of the deceased may insert a claim for and recover any pecuniary loss to the estate of the deceased occasioned by such wrongful act, neglect or default, which sum, when recovered, shall be deemed part of the assets of the estate of the deceased.
" The rights under the two provisions are quite distinct and independent.
Under the former section the damages are made payable to one or the other relations enumerated therein whereas the latter section provides for the recoupment of any pecuniary loss to the estate of the deceased occasioned by the wrongful act complained of.
Sometimes, the beneficiaries under the two provisions may be the same.
Section IA is in substance a reproduction of the English Fatal Accidents Acts 9 and 10 Vict.
93 known as the Lord Campbell 's Acts.
Section 2 corresponds to one of the provisions in the English Law Reform (Miscellaneous Provisions) Act, 1934.
The scope of section 1 of the Campbell 's Acts was considered by the House of Lords in Davies and Anr.
vs Powell Dufferyn Associated Collieries Ltd.(1), Dealing with the mode of asse ssment of damages under that section Lord Russel of Killowen observed "The general rule which has always prevailed in regard to the assessment of damages under the is well settled, namely, that any benefit accruing to a dependant by reason of the relevant death must be taken into account.
Under those Acts the balance of loss and gain to a dependant by the death must be ascertained, the position of each dependant being considered separately.
" Lord Wright stated the law on the point thus "The general nature of the remedy under the Fatal Accidents general Acts has often been explained.
These Acts provided a new "cause of action and did not merely regulate or enlarge an old one", as Lord Summer observed in Admiralty Commissioners vs section section (1) 691 America(1).
The claim is, in the words of Bowen L.J., in The Vera Cruz (No. 2)(2) for injuriously affecting the family of the deceased.
It is not a claim which the deceased could have pursued in his own life time, because it is for damages suffered not by himself, but by his family after his death.
The Act of 1846, section 2 provides that the action is to be for the benefit of the wife or other member of the family, and the jury (or judge) are to give such damages as may be thought proportioned to the injury resulting to such parties from the death.
The damages are to be based on the reasonable expectation of pecuniary benefit or benefit reducible, to money value.
In assessing the damages all circumstances which may be legitimately pleaded in diminution of the damages must be considered : Grand Trunk Ry.
Co. of Canada vs Jennings(4).
The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing, on the one hand, the loss to him of the future pecuniary benefit, and, on the other, any pecuniary advantage which from whatever source comes to him by reason of the death.
" In ascertaining pecuniary loss caused to the relations mentioned in section IA, it must be borne in mind that these damages are not to be given as solatium but are to be given with reference to a pecuniary loss.
The damages should be calculated with reference to a r easonable expectation of pecuniary benefit from the continuance of the life of the deceased see Franklin vs The South East Railway Company (4 In that case Pollock, C.B. observed : "We do not say that it was necessary that actual benefit should have been derived, a reasonable expectation is enough and such reasonable expectation might well exist, though from the father, not being in need, the son had never done anything for him.
On the other hand a jury certainly ought not to make a guess in the matter, but ought to be satisfied that there has been a loss of sensible and appreciable pecuniary benefit, which might have been reasonably expected from the continuance of the life." In Taff Vale Railway Company vs Jenkins(5), the Judicial Committee observed that it is not a condition precedent to the maintenance of an action under the Fatal Accidents Act, 1846, (1) ,52 (3) 13 Appeal Cases.800, 804.
(4) 157, English Reports 3 H & N.T. 448.
(5) (2) , 101: 692 that the deceased should have been actually earning money or money 's worth or contributing to the support of the plaintiff at or before the date of the death provided that the plaintiff had a reasonable expectation of pecuniary benefit from the continuance of the life.
Therein Lord Atkinson stated the law thus : "I think it has been well established by authority that all that is necessary is that a reasonable expectation of pecuniary benefit should be entertained by the person who sues.
It is quite true that the existence of this expectation is an inference of fact there must be a basis of fact from which the inference can reasonably be drawn; but I wish to express my emphatic dissent from the proposition that it is necessary that two of the facts without which the inference cannot be drawn are, first, that the deceased earned money in the past, and second, that he or she contributed to the support of the plaintiff.
These are, no doubt, pregnant pieces of evidence, but they are only pieces of evidence; and the necessary inference can I think be dr awn from circumstances other than and different from them." in an action under the Act, it is not sufficient for the plaintiff to prove that he lost by the death of the deceased a mere speculative possibility of pecuniary benefit.
In order to succeed, it is necessary for him to show that he has lost a reasonable proba bility of pecuniary advantage.
In Barnett vs Cohen and ors.(1), McCardie J. speaking for the Court quoted with approval the following observations of Lord Haldane in his judgment in Taff Vale Ry.
Co. vs Jenkins(2) : " "The basis is not what has been called solatium, that is to say, damages given for injured feelings or on the ground of sentiment, but damages based on compensation for a pecuniary loss.
But then loss may be prospective, and it is quite clear that prospective loss may be taken into account.
It has been said that this is qualified by the proposition that the child must be shown to have been earning something before any damages can be assessed.
I know of no foundation in principle for that proposition either in the statute or in any doctrine of law which is applicable; nor do I think it is really established by the authorities when you examine them. . .
I have already indicated that in my view the real question is that which Willes, J. defines in one of the cases quoted to us, Dalton vs South (1) (2) 693 Eastern Rv. Co.(1) 'Aye or No, was there a reasonable expectation of pecuniary advantage ?" Proceeding further the learned judge referred to the observations of Pollock, C. B. in Taff Vale Ry.
Co. vs Jenkins(2) : " "It appears to me that it was intended by the Act to give compensation for damage sustained, and not to enable persons to sue in respect of some imaginary damage, and so punish those who are guilty of negligence by making them pay costs." " Dealing with the facts of the case before him McCardie, J. observed : "In the present action the plaintiff has not satisfied me that he had a reasonable expectation of pecuniary benefit.
Ms child was under four years old.
The boy was subject to all risks.
of illness, disease, accident and death.
His education and upkeep would have been a substantial burden to the plaintiff for many years if he had lived.
He might or might not have turned out a useful young man.
He would have earned nothing till about sixteen years of age.
He might never have aided his father at all.
He might have proved a mere expense.
I cannot adequately speculate one way or the other.
In any event he would scarcely have been expected to contribute to the father 's income, for the plaintiff even now possesses 1,0001, a year by his business and may increase it further, nor could the son have been expected to aid in domestic service.
The whole matter is beset with doubts, contingencies and uncertainties.
Equally uncertain, too, is the life of the plaintiff himself in view of his poor health.
He might or might not have survived his son.
That is a point for consideration, for, as was pointed out by Bray J., when sitting in the Court of Appeal in Price vs Glynea and Castle Coal Co.(3): "Where a claim is made under Lord Campbell 's Acts, as it is here, it is not only a question of the expectation of the life of the claimant".
Upon the facts of this case the plaintiff has not proved damage either actual or prospective.
His claim is pressed to extinction by the weight or ht or multiplied contingencies.
The action therefore fails.
" The mode of assessment of damages is not free from doubt.
It is beset with certain difficulties.
It depends on many impon derables.
The English courts have formulated certain basis for (1) ; (2) (3) , 198.
694 calculating damages under Lord Campbell 's Acts.
The rules ascertained by the English courts are set out in Winfield on Torts 7th Edn.
at pp.
135 and 136 as follows : "The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some ex tent may depend on the regularity of his employment.
Then there is an estimate of how much was required or expended for his own personal and living expenses.
The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a number of years ' purchase.
That sum, however, has to be taxed down by having regard to the uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt".
The number of years ' purchase is left flud, from twelve to fifteen has been quite a common multiple in the case of a healthy man, and the number should not be materially reduced by reason of the hazardous nature of the occupation of the deceased man.
These principles are, however, only appropriate where the deceased was the bread winner of the family.
Obviously they cannot be applied, for example, where the claim is in respect of a mere expectation of pecuniary benefit from the deceased or where the decased 's contribution to the family was in kind and not in cash.
In truth, each case must depend upon its own facts.
In Dolbey vs Godwin(1), the plaintiff was the widowed mother of the deceased, an unmarried man 29 years of age, and he had contributed substantially to her upkeep.
The Court of Appeal held that it would be wrong to assess the damages on the same basis as if the plaintiff were the widow of the deceased, principally on the ground that it was likely that he would have married in due course and that then his contributions to his mother would have been reduced.
" The mode and manner of ascertainment of damages in fatal accidents cases came up for consideration in Nance vs British Columbia Electric Rly.
Co. Ltd.(2).
In that case Viscount Simon, formulated the following tests for ascertaining the damages : (1) First estimate what was the deceased man 's expectation of life if he had not been killed when he was; and (2) What sums during those years, he would have probably applied to the support of the dependant.
In fixing the expectation of life of the deceased regard must be had not only to his age and bodily (1) , 1103.
(2) 695 health but premature termination of his life by a later accident.
In estimating future provision for his dependant the amounts he usually applied in this way before his death are obviously relevant, and often the best evidence available though not conclusive, since if he had survived, his means might have expanded or shrunk, and his liberality might have grown or wilted.
After making the calculations on the basis of the two tests, his Lordship observed that deduction must further be made for the benefit accruing to the dependant from the acceleration of his interest in his estate and further allowance must be made for the possibility that the dependant himself might have died before he died.
In Gobald Motor Service Ltd. and anr.
vs R. M. K. Veluswami and ors.(1), this Court held that the actual extent of the pecuniary loss to the aggrieved party may depend on a data which cannot be ascertained accurately but must necessarily be an estimate, or even partly a conjecture.
Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever sources come to them by reason of the death, that is, +the balance of loss and gain to a dependant by the death must be ascertained.
Therein it was further observed that where the courts below have on relevant material placed before them ascertained the amount of damages under the head of pecuniary loss to the dependants of the deceased, such findings cannot be disturbed, in second appeal except for compelling reasons.
The law on the point arising for decision may be summed up thus : Compulsory damages under section IA of the Act for worngful death must be limited strictly to the pecuniary loss to the beneficiaries and that under section 2, the measure of damages is the economic loss sustained by the estate.
There can be no exact uniform rule for measuring the value of the human life and the measure of damages cannot be arrived at by precise mathematical calculations but the amount recoverable depends on the particular facts and circumstances of each case.
The life expectancy of the deceased or of the beneficiaries whichever is shorter is an important factor.
Since the elements which go to make up the value of the life of the deceased to the designated beneficiaries are necessarily personal to each case, in the very nature of things, there can be no exact or uniform rule for measuring the value of human life.
In assessing damages, the court must exclude all considerations of matter which rest in speculation or fancy though conjecture to some extent is inevitable.
As a general rule parents are entitled to recover the present cash value of the prospective service of the deceased minor child.
In addition they may receive (1) ; 696 compensation for loss of pecuniary benefits reasonably to be expected after the child attains majority.
In the matter of ascertainment of damages, the appellate court should be slow in disturbing the findings reached by the courts below, if they have taken all the relevant facts into consideration.
Now applying the above rules to the facts of the present case, it is seen that the deceased child was only 8 years old at the time of his death.
How he would have turned out in life later is at best a guess.
But there was a reasonable probability of his becoming a successful man in life as he was a bright boy in the school and his parents could have afforded him a good education.
It is not likely that he would have given any financial assistance to his parents till he was at least 20 years old.
As seen from the evidence on record, his father was a substantial person.
He was in business and his business was a prosperous one.
As things stood he needed no assistance from his son.
There is no material on record to find out as to how old were the parents of the deceased at the time of his death.
Nor is there any evidence about their state of health.
On the basis of the evidence on record, we are unable to come to the conclusion that the damages ordered by the High Court are inadequate.
In the result this appeal fails and the same is dismissed.
But in the circumstances of the case we make no order as to costs.
G.C. Appeal dismissed.
| The appellants filed a suit claiming a sum of Rs. 30,000 as damages under sections 1A and 2 of the for the death of their son aged 8 years.
The boy had stood first in Standard III and his future was claimed to be bright.
The trial court computed the damages under sections 1A and 2 at Rs. 5,000.
In appeal the High Court determined the damages under section 1A at Rs. 5,000 and under section 2 at Rs. 1,000.
In appeal by certificate before this Court.
HELD : Compulsory damages under section IA of the Act for wrongful death must be limited strictly to the pecuniary loss to the beneficiaries and under section 2 the measure of damages is the economic loss sustained by the estate.
There can be no exact uniform rule for measuring the value of human life and the measure of damages cannot be arrived at by precise mathematical calculations but the amount recoverable depends on the particular facts and circumstances of each case.
The life expectancy of the deceased or of the beneficiaries whichever is shorter is an important factor, Since the elements which go to make up the value of the life of the deceased to ' the designated beneficiaries are necessarily personal to each case in the very nature of things, there can be no exact or uniform rule for measuring the value of human life.
In assessing the damages the court must exclude all considerations of matter which rest in speculations or fancy though conjecture to some extent is inevitable.
As a general rule parents are entitled to recover the present cash value of the prospec tive service of the deceased minor child.
In addition they may receive compensation for loss of pecuniary benefits reasonably to be expected after the child attains majority.
In the matter of ascertainment of damages, the appellate court should be slow in disturbing the findings reached by the courts below, if they have taken all the relevant facts into consideration.
[695 F 696 A] Davies and Anr.
vs Powell Dufleryn Associated Collieries Ltd. , Franklin vs South East Railway Company, ; H. & N. 448, Taff Vale Railway Company vs Jenkins, , Bartlett V. Cohen & Ors. , Nance vs British Columbia Electric Rly.
Co. Ltd. and Gobald Motor Service Ltd. & Anr.
vs R.M.K. Veluswami & Ors.
; , applied.
(ii) In the present case although the deceased was a bright child, it was uncertain how much assistance he would have given after growing up to his parents.
The father was a prosperous business man and hardly needed assistance.
There was no material on record as to the age of the parents and their state of health.
On the basis of the evidence on record it could not be said that the damages ordered by the High Court were inadequate.
[696 C]
|
Appeal No. 649 of 1967.
411 Appeal by special leave from the order dated May 4, 1966 of the Calcutta High Court in Income tax Reference No. 114 of 1965.
Jagadish Swarup, Solicitor General, Ram Panjwani, R. N. Sachthey and B. D. Sharma, for the appellant.
C. K. Daphtary, B. P. Maheshwari and K. R. Khaitan, for the respondent.
The Judgment of the Court was delivered by Shah, C.J.
Burlop Dealers Ltd. hereinafter referred to as 'the assessee is a limited company.
For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing in the relevant year of account Rs. 1,75,875/ as profit in a joint venture from H. Manory Ltd. and claimed that Rs. 87,937/ being half the profit earned from H. Manory Ltd. was paid to Ratiram Tansukhrai under a partnership agreement.
The assessee stated that on June 5, 1948, it 'had entered into an agreement with H. Manory Ltd. to do business in plywood chests and in consideration of financing the business the assessee was to receive 50% of the profits of the business.
The assessee claimed that it had entered into an agreement on October 7, 1948, with Ratiram Tansukhrai for financing the transactions of H. Manory Ltd. in the joint venture, and had agreed to pay to Ratiram Tansukhrai 50% of the profit earned by it from the business with H. Manory Ltd. The Income tax Officer accepted the return filed by the assessee and included in computing the total income for the assessment year 1949 50 Rs. 87,937/ only as the profit earned on the joint venture with H. Manory Ltd. In the assessment year 195051 the assessee field a return also accompanied by a profit and loss account disclosing a total profit of Rs. 1,62,155/in the relevant account ear received from H. Manory Ltd., and claimed that it had transferred Rs. 81,077/ to the account of Ratiram Tansukhrai as his share.
The Income tax Officer on examination of the transactions brought the entire amount of Rs. 1,62,155/ to tax holding that the alleged agreement of October 1948 between the assessee and Ratiram Tansukhrai had merely been "got up as a device to reduce the profits, received from H. Manory Ltd.".
This order was confirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
The Tribunal then stated a case under section 66(1) of the Income tax Act to the High Court of Calcutta.
The High Court agreed with the view of the Tribunal and answered the question against the assessee.
412 In the meanwhile on May 13, 1955, the Income tax Officer issued a notice under section 34 to the assessee for the assessment year 1949 50 to re open the assessment and to assess the amount of Rs. 87,937/ allowed in the assessment of income tax as paid to Ratiram Tansukhrai.
The assessee filed a return which did not include the amount paid to Ratiram Tansukhrai.
The Income tax Officer re assessed the income under section 34(1) (a) and added Rs. 87,937/ to the income returned by the assessee in the assessment year 1949 50.
The Appellate Assistant Commissioner held that the Income tax Officer was entitled to take action under section 34(1) (a) of the Income tax Act 1922 after the ,amendment in 1948, and to re open the assessment if income had been under assessed owing to the failure cf the assessee to disclose fully and truly all material facts necessary for the assessment.
He confirmed the order observing that the assessee had misled the Income tax Officer into believing that there was a genuine arrangement with Ratiram Tansukhrai and had stated in the profit and loss account that the amount paid to Ratiram Tansukhrai was the share of the latter in the partnership, whereas no much share was payable to Ratiram Tansukhrai.
In appeal against the order of the Appellate Assistant Com missioner the Income tax Appellate Tribunal held that the assessee had produced all the relevant accounts and documents necessary for completing the assessment, and the assessee was under no obligation to inform the Income tax Officer about the true nature of the transactions.
The tribunal on that view reversed the order of the Appellate Assistant Commissioner and directed that the amount of Rs. 87,937/ be excluded from the total income of the assessee for the year 1949 50.
An application under section 66(1) of the Indian Income tax Act for stating a case to the High Court was rejected by the Tribunal.
A petition to the High Court of Calcutta under section 66(2) for ,directing the Tribunal to submit a statement of the case was also ,rejected.
The Commissioner has appealed to this Court.
Section 34(1) of the Indian Income tax Act, 1922, as it stood in the assessment year 1949 50 provided: "If (a) the Income tax Officer has reason to elieve that by reason of the omission or failure on the part of an assessee to make a return of income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains 413 chargeable to income tax have escaped assessement for that year, or have been under assessed.
(b) notwithstanding that there has.
been no omission or failure as mentioned in clause (a) on the part of the assessee, the income tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to Income tax have escaped assessment for any year, or have been under assessed.
he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, a notice 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" The Income tax Officer had in consequence of information in his possession that the agreement with Ratiram Tansukhrai was a sham transaction reason to believe, that income chargeable to tax had escaped assessment.
Such a case would appropriately fall under section 34(1)(b).
But the period prescribed for serving a notice under section 34(1) (b) had elapsed.
Under section 34 (1 )(a) the Income tax Officer had authority to serve a notice when he had reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year, income chargeable to tax had escaped assessment.
As observed by this Court in Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta and another(1).
"The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year".
It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment.
What facts 'are material and necessary for assessment will differ from case to case.
In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion.
From the primary facts (1) 41 ; , 200. 414 in his possession whether on disclosure by the assessee, or discovered by him on the basis of the facts disclose, or otherwise, the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable".
We are of the view that under section 34(1) (a) if the assessee has disclosed primary facts relevant to the assessment, he is under no ,obligation to instruct the Income tax Officer about the inference which the Income tax Officer may raise from those facts.
The terms of the Explanation to section 34(1) also do not impose a more onerous obligation.
Mere production of the books of account or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure within the meaning of section 34(1), but where on the evidence and the materials produced the Income tax Officer could 'have reached a conclusion other than one which he has reached, a proceeding under section 34(1) (a) will not lie merely on the ground that the Income tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material facts could be discovered : it was under no obligation to inform the Income tax Officer about the possible inferences which may be raised against him.
It was for the Income tax Officer to raise such an inference and if he did not do so the income which has escaped assessment cannot be brought to lay under section 34(1) (a).
The appeal fails and is dismissed with costs.
K.B.N. Appeal dismissed.
| The respondent who was the karta of his Hindu undivided family entered into partnership with one D to carry on the business of manufacturing and selling pharmaceutical products etc.
On July 27, 1946 the partnership was dissolved.
The assets of the firm which included goodwill, machinery, furniture etc. were valued on the date of dissolution at Rs. 2,50,000 and the respondent was paid the sum of Rs. 1,25,000 in lieu of his share and the business together with the goodwill was taken over by D.
The question in income tax proceedings was whether the transaction was one of sale liable to capital gains tax under section 12B(1) of the Income tax Act.
The assessing and appellate authorities held against the respondent.
The High Court in reference, however, held in his favour.
The revenue appealed.
HELD : There was no clause in the partnership agreement providing for the method of dissolution of the firm or for winding up of its affairs.
In the course of dissolution the assets of the firm may be valued and the assets divided between the partners according to their respective shares by allotting the individual assets or paying money value equivalent thereof.
This is a recognised method of making up the accounts of the dissolved firm.
In that case the receipt of money by a partner is nothing but a receipt of his share in the distributed assets of the firm.
The respondent received the money value of his share in the assets of the firm; he did not agree to sell, exchange on transfer his share in the assets of the firm.
Payment of the amount agreed to be paid to the respondent under the arrangement of his share was therefore not consequence of any sale, exchange or transfer of assets.
[408 C E] James Anderson vs Commissioner of Income tax, Bombay City, and Commissioner of Income tax, Madhya Pradesh and Nagpur & Bhandara vs Dewas Cine Corporation, 68 I.T.R. 240, distinguished.
|
ivil Appeal Nos. 1461 to 1468 of 1974.
From the Judgment and order dated the 14th April, 1974 of the Disciplinary Committee of the Bar Council of India New Delhi in D.C. Appeals Nos 15 to 19 and 21, 22 and 25 of 1973.
50 V. section Desai, Vimal Dave, Miss Kailahs Mehta for the Appellants.
Respondents appeared in person in CAs.
1461 and 1467 1468.
Sakuddin F. Bootwala and Mrs. Urmila Sirur for Respondents in CAs.
1462 1464 V. N. Ganpule for Respondent in C.A. 1465.
D. V. Patel and Mrs. K. Hingorani for the Bar Council of India.
section K. Sinha for the Bihar State Bar Council.
The Judgment of the Court was delivered by KRISHNA IYER, J.
These appeals have filled us as much with deep sorrow as with pained surprise.
I he story of the alleged 'profession misconduct ' and the insensitivity of the disciplinary authority to aberrant professional conduct have been the source of our distress, as we will presently explain, after unfurling the factual canvas first.
The first chapter of the litigation in this Court related of the standing, of the State Bar Council to appal to this Court, under s.38 of the advocates Act, 1961 (the Act, for short) against appeallate decision of the Disciplinary Tribunal appointed by the Bar Council of India.
This Court upheld the competence to appeal, thus leading us to the present stage of disposing of the eight cases on merits.
The epileptic episodes what other epithet can adequately express tile solicitation circus dramatised by the witnesses as practised by the panel of advocate respondents before us? make us blush in the narration.
For, after all do we not all together belong" to the 'inner republic of bencher and bar '? The putative delinquents are lawyers practising in the criminal courts in Bombay City.
Their profession ordains a high level of ethics as much in the means as in the ends.
Justice cannot be attained without the stream being pellucid throughout its course and that is of great public concern, not merely professional care.
Briefly expressed, these practitioners, according to testimony; recorded by the State Disciplinary Tribunal, positioned themselves at the entrance to the Magistrates Courts, watchful of the arrival of potential litigants.
At sight, they rushed towards the clients ill an ugly scrimmage to snatch the briefs, to lay claim to the engagements even by physical fight, to undercut fees, and by this unedifying exhibition, sometimes carried even into the Bar Library, solicited and secured work for themselves.
If these charges were true, any member of the Bar with elementary ethics in his bosom would be outraged at his brethren 's conduct and yet, in reversal of the State Disciplinary Committee 's finding, the appellate Tribunal at the national level appears to have entered a verdict, based on a three point formula, that this conduct, even if true, was after all an attempt to solicit practice and did not cross the borderline of misconduct? The Bar Council of the State OF Maharashtra (the appellant before us) and the Bar Council of India which is a party respondent, have expressed consternation at this view of the law of professional misconduct and we share this alarm Were this view right, it is difficult to call the legal profession noble.
Were this 51 understanding of deviant behaviour sound, there is little to distinguish between railway porters and legal practitioners although we do not mean to hurt the former and have mentioned a past practice, to drive home our present point? We do not wish to dilate further on the evidence in so far as it concerns each of the respondent advocates in view of certain developments which we will presently notice.
There are eight cases but we are relieved from dissecting the evidence against most of them for reasons which we will hopefully and shortly state.
The Bar Council of Maharashtra, by its resolution No. 29 dated August 8, 1964 considered the complaint received from the High Court against one Kelawala and 15 other Advocates among whom are those charged with professional misconduct and covered by the present appeals, under s.35(1) of the Act, and presumably having reason to believe that the professional misconduct alleged required a further probe referred the case to its disciplinary committee.
This procedure is in due compliance with s.35(1) of ' the Act and, although the respondent in C.A. 1467/74 (A. K. Doshi) has contended that the resolution of the Bar Council does not ex facie disclose that it had reason to believe that the advocates involved were guilty of professional misconduct, we see no merit in it The requirement of 'reason to believe ' cannot be converted into a formalised procedural road block, it being essentially a barrier against frivolous enquiries.
It is implicit in the resolution of the Bar Council, when it says that it has considered the complaint and decided to refer the matter to the disciplinary committee, that it had reason to believe, as prescribed by the statute Such blanket reference to the disciplinary body, so far as we are concerned, related to the respondent in C.A. 1461/74 (Dhabolkar), C.A. 1462/74 (Bhagtani), C.A. 1463/74 (Talati), C.A. 1464/74 (Kelawala), C.A. 1465/74 (Dixit), C.A. 1466/74 (Mandalia), C.A. 1467/74 (Doshi) and C.A. 1468/74 (Raisinghani).
All the cases were tried together as a unified proceeding and disposed of by a common judgment by the Disciplinary Committee, a methodology conducive to confusion and prejudice as we will explain later in this judgment.
The respondents in the various appeals before us were found guilty 'of conduct which seriously lowers the reputation of the Bar in the eyes of the public ' and they were suspended from practising as Advocates for a period of three years.
Appeals were carried to the Bar Council of India and" in accordance with the statutory provision, they were referred to the Disciplinary Committee appointed by it under section 37(2) of the Act.
The Appellate Disciplinary Committee heard the appeals and absolved them of professional misconduct.
Aggrieved by this verdict of reversal, the Bar Council of Maharashtra has appealed to this Court.
The initial hurdle of locus standi has been surmounted as stated earlier, we have been addressed arguments on the merits by Shri V. section Desai on behalf of the appellant.
He has canvassed the correctness of the finding of fact in each case although with varying degrees of diffidence, but turned his forensic fusillade on the somewhat startling concept of professional misconduct adopted by that disciplinary Tribunal 52 We will proceed to deal with each appeal separately so far as the factual foundation for the charges is concerned but discuss the legal question later as it affects not merely the advocates ranged as respondents but the Bar in India and the public in the country.
The profound regret of these cases lies not only in the appellate disciplinary tribunal 's subversive view of the law of professional conduct that attempted solicitation by snatching briefs and catching clients is or no ethical moment, or contravention of the relevant provisions, but also in the naive innocence of fair and speedy procedure displayed by the State Disciplinary Tribunal in clubbing together various charges levelled against 16 advocates in one common trial, mixing up the evidence against many, recording omnibus testimony slipshodly, not maintaining a record of each day 's proceedings, examining witnesses in the absence of some respondents, taking eight years to finish a trial involving depositions of four witnesses and the crowning piece, omission to consider the evidence against each alleged delinquent individually in the semi penal proceedings.
True, a statutory tribunal may ordinarily regulate its procedure without too much rigidity, subject to ' the rules of natural justice, but large scale disregard of well known norm of fair process makes us wonder whether some at least of the respondents have not been handicapped and whether justice may not be a casualty if the tribunal is not alerted about its processual responsibilities.
We have some observations to make about the Tribunals at the State and at the appellate levels in the further stages of this judgment.
However, we find it convenient to dispose of the appeals on the evidence, on the assumption that if, in fact, there have been snatching and fighting and like solicitation exercises indulged in by any of the respondents, such conduct is in gross breach of professional behaviour and invites punishment.
A case by case disposal is desirable and so we begin with Dabholkar (respondent in C.A. 1461/74) who appeared in person to plead in defence.
The evidence against him is far from satisfactory and suffers from generalised imputation of misconduct against a group of guilty lawyers.
To dissect and pick out is an erroneous process, except where individualised activities are clearly deposed to.
Moreover, the only witness who implicates him swears: 'I have not seen him actually snatching away the papers.
I did not hear the talk Mr. Dabholkar had with the persons '.
Moreover, he was a senior public prosecutor.
We also record the fact that he expressed distress as the arguments moved on.
Apart from the weak and mixed evidence against him, there is the circumstance that he is around 68 years old.
With a ring of truth he submitted that he was too old to continue his practice in the profession and had resolved to retire into the sequestered vale of life.
He frankly admitted that even apart from the evidence, if there were any sins of the past, he would not Pursue the path of professional impropriety hereafter having decided virtually to step out of the Bar.
except for a limited Purpose.
He had just four cases left with him which he desired to complete.
having received fees.
He further represented that he did not intend to accent any new briefs or appear in any Court except to the little extent that the Bombay Paints & Allied Products.
53 Limited (Chembur, Bombay), a large company which occasionally A engaged him in small cases chose to brief him.
We are inclined to take him at his word, particularly because he has put himself out of harm 's way by a clear assurance about his future plans.
On the evidence, we exonerate him from professional misconduct and otherwise we record him solemn statement to the Court.
Shri Bhagthani, respondent in C.A. 1462/74, has not engaged counsel, nor appeared in person, but as we examined the evidence, assisted by Shri Desai, we found precious little against him.
That extinguishes the charge.
No need, therefore, arises for punishing him or reversing the appellate Tribunal 's acquittal.
The respondent in C.A. 1463/74 is Talati.
He has been found 'not guilty ' in appeal but, as we perused the evidence, it became fairly clear that some acts of misconduct had been made out, although the evidence suffered from omnibus implication.
His counsel, Mr. Zakuriddin F. Bootwala, however made a submission which has moved us into showing some consideration for this respondent.
Shri Zaki represented that his client had stood the vexatious misfortune of a long, protracted, litigation before the two tribunals and a later round in this Court when the question of locus standi of the State Bar Council was gone into.
He was in poor circumstances and had suffered considerably on this score.
Further, he has given an undertaking expressing unqualified regret for his deviant behaviour and has prayed for the clemency of the Court, promising to turn a new leaf of proper professional conduct, if he were permitted to practice.
Taking note of the compassionate conspectus of circumstances attendant on his case and in view of the tender of unconditional regret which expiates, in part, his guilt, we allow the appeal, but reduce the period of suspension inflicted by way of punishment by the Maharashtra Tribunal from three years to a period upto December 31 this year (1975) .
In short, we find him guilty and reluctantly restore the verdict of the original tribunal, but reduce the punishment to suspension from practice, as aforesaid.
The respondent in C.A. 1464/74 is Kelawala.
His counsel, Mr. Zaki, submitted that this practitioner had become purblind and was ready to give an undertaking to the Court that he would no longer practice in the profession.
While there is some evidence against him, an overall view of the testimony, does not persuade us to take a serious view of the case against him.
Moreover, being old and near blind and having undertaken to withdraw from the profession for ever, it is but fair that he spends the evening years left to him without the stigma of gross misconduct.
In this view, we do not disturb the finding of the Disciplinary Committee of the Bar Council of India hut record the undertaking filed by Shri Zaki that his client Kelawala will not practice the profession of law any longer.
H The respondent in C.A. 1465/74 is Dixit for whom Shri Gannule appeared.
Shri Desai, for the appellant, took us through the evidence 54 against this lawyer but fairly agreed that the evidence was, by any standard, inadequate to bring home the guilty of misconduct.
We readily hold him rightly absolved from professional misconduct.
The respondent in C.A. 1466/74 is Mandalia.
He did not appear in person or through counsel.
The reason is fairly obvious.
The evidence is so little that it is not possible nor proper to pick out with precision and assurance any particular 'soliciting ' act to infer guilt.
Shri Desai, for the appellant, was fair enough to accede to this position.
His exculpation cannot, therefore, be interfered with.
The only contesting respondent is Doshi C.A. 1467/74.
He contests his guilt and pursues his plea with righteous persistence and challenges the evidence and its credibility projecting his grievance about processual improprieties.
We will consider both these facts of his legitimate criticism despite his cantankerous arguments which we have heard with forbearance, remembering that a party arguing his own case may, perhaps, not be able to discipline himself to observe the minimal decorum that advocacy in Court obligates.
The respondent displayed, as the proceedings in this Court ran on, his art of irritating interruptions, his exercises in popping up and down heedless of the Court 's admonition, and his skill in remaining references to what was not on record.
The fine art of advocacy suffers mayhem when irrelevant men indelicately brush with it.
The State Tribunal 's records reveal that Shri Doshi had not spared their patience or sense of pertinence.
Having said all this, we are bound to examine the evidence against him fairly.
Such a scrutiny shows that the best witness Shri Shertukde, the President of the Bar Association and otherwise a respected Member of the Bar, has not involved him in any malpractice.
Even Shri Pathare, the only one to rope him in, merely gives omnibus testimony ambivalent in places and unspecific about some, including Doshi.
There is little else brought home with clarity against loquacious Doshi.
To convict him out of the vague; lips of Pathare may perhaps be a credulous folly.
The grouping of a number of advocates in a sort of mass trial has prejudiced Shri Doshi, a consequence which could and should have been avoided.
He had other grievances of denial of fair opportunity which`we could not verify for want of a daily diary or order sheet.
We are satisfied by a perusal of the record that this respondent has had an impressive background of social service.
commendable testimonials of his legal skills from competent persons and some law practice in various Courts and consultancy work for social welfare institutions which are apt to dissuade him from the disreputable bouts in the 'pathological ' area of the Esplanade Police Courts in Bombay.
Even assuming that this overzealous gentleman had exceeded the strict bounds of propriety, we are not satisfied that the charge of professional misconduct, as laid has been brought home to him.
What we have observed about his conduct in this Court must serve as a sufficient admonition to wean him away from improper conduct.
We do not interfere with the exculpation secured by him before the appellate Tribunal hopeful that he will canalize his professional energies in a more disciplined way to be useful to himself and.
more 55 importantly, to his unsolicited ' clientele.
After all, even a sinner has A a future and given better court manners and less turbulent bellicosity, Shri Doshi appears to have a fair professional weather ahead in the City.
We hold him unblemished so far as the vice of solicitation is concerned, but caution him to refine himself in advocacy.
Shri Raisinghani is tho respondent in C.A. 1468/74.
Shri V. section Desai took us though the evidence against him and although he is 65 years old, the evidence shows that he has physically fought two rival advocates in the course of snatching the briefs from clients, entering the Esplanade criminal courts.
One of these fights resulted in his trousers being torn and the other assault by him was on Mr. Mandalia one of the respondents in these appeals.
Shri Mandalia had filed a complaint against Raisinghani but in the criminal court they lived down their earlier skirmish and compounded the case.
Be that as it may, we find that Shri Raisinghani is not merely an old man but a refugee from Pakistan who, leaving his properties there has migrated to Ahmedabad with his family.
Apparently he is in penurious environs and stay in the refugee colony in Bombay, incidentally attending to his claims to the properties left behind in Pakistan and acquiring some evacuee property in lieu of what he has lost.
Staying in Kalyan Refugee Camp this lawyer, afflicted with distress and dotage, is also attending the Magistrate 's Court to make a living.
This commiserative social milieu may not absolve him of the misconduct which, we are satisfied, the testimony in the case, has established.
Even so, Shree Raisinghani has appeared in person and has given an undertaking expressing remorse, praying to be shown clemency and assuring that, economic pressure notwithstanding, he will not go anywhere near professional pollution in the last years of his practice at the Bar.
We are inclined to take a sympathetic view of his septuagenarian situation, record his apology and assurance, restore the verdict of guilt by the State Disciplinary Committee but reduce the punitive part of it to a period of suspension until December 31, this year (1975).
Now to the legal issue bearing on canons of professional conduct.
The rule of law cannot be built on the ruins of democracy, for where law ends tyranny begins.
If such be the keynote thought for the very survival of our Republic, the integral bond between the lawyer and the public is unbreakable.
And the vital role of the lawyer depends upon his probity and professional life style.
Be it remembered that the central function of the legal profession is to promote the administration of justice.
If the practice of law is thus a public utility of great implications and a monopoly is statutorily granted by the nation, it obligates the lawyer to observe scrupulously those norms which make him worthy of the confidence of the community in him as a vehicle of justice social justice.
The Bar cannot behave with doubtful scruples or strive to thrive on litigation.
Canons of conduct cannot be crystalised into rigid rules but felt by the collective conscience of the practitioners as right: "It must be a conscience alive to the proprieties and the improprieties incident to the discharge of a sacred public L 1276 SCI/75 56 trust.
lt must be a conscience governed by the rejection of self interest and selfish ambition.
It must be a conscience propelled by a consuming desire to play a leading role in the fair and impartial administration of Justice, to the end that public confidence may be kept undiminished at all times in the belief that we shall always seek truth and justice in the 13 preservation of the rule of law.
It must be a conscience not shaped by rigid rules of doubtful validity, but answerable only to a moral code which would drive irresponsible judges from the profession.
Without such a conscience, there should be no judge(1) and, we, may add, no lawyer.
Such is the high standard set for professional conduct as expounded by courts in this country and elsewhere.
These background observations will serve to size up the grave misapprehension of the law of professional ethics by the tribunal appoint ed by the Bar Council of India.
The disciplinary body, acquitting everyone on non violation of bounds of propriety argued.
"Rule 36 (of the Bar Council of India on Standards of Professional Conduct and Etiquette) is as follows: An Advocate shall not solicit work or advertise either directly, or indirectly whether by circular, advertisements, touts, personal communications, interviews not warranted by personal relations, furnishing newspaper comments or procuring his photograph to be published in connection with cases in which he has been engaged or concerned. " .
Hence in order to be amendable to disciplinary jurisdiction, the Advocates must have (1) solicited work (2) from a particular person (3) with respect to a case.
Unless all the three elements are satisfied, it cannot be said that an Advocate has acted beyond the standard of professional conduct and etiquette.
It has been stated that the conduct of the Advocate concerned did not conform to the highest standards of the legal profession.
It is not that every body must conform to the highest standards of the legal profession.
It is enough if an Advocate conforms to the standards of professional con duct and etiquette as referred to in the rules".
* * * * "He (witness Mantri) says further that 7 Advocates who are personally present today I have seen each of them standing either on the first floor, near the lift or on the first floor either near the lift or in the lobbies of the (1) Hastings, Hon.
John section, "Judicial Ethics as it Relates to Participation in Money Making Activities" Conference on Judicial Ethics, p. 8, The School of Law, University of Chicago (1964).
57 Esplanade Court and trying to solicit work from the persons A coming to the Esplanade Court.
This mere attempt to solicit is nothing." "In order to be within the mischief of rule 36, not merely canvassing is enough, but canvassing must be for a case With the person who had not till then engaged a lawyer.
There is nothing to show either of these things: none of the persons who might have been subjected to these solicitations as they are stated, have been examined to prove the case.
Hence this evidence does not establish anything within rule 36.".
All that is necessary for us to see is whether the three items referred to have been complied with and we find that they have not been complied with because we do not know what was the nature of the communication, we do not know in connection with which case the solicitation took place and with whom the conversation took place.
Hence Mr. Shertukade 's evidence is not sufficient for the purpose of taking any disciplinary action under rule 36.
* * * * * "Mr. Krishnarao V. Pathumdi is the first witness in this case (case of Raisinghani).
He says: "I had seen Kelawala, Mr. Baria; Mr. Raisinghani, Mr. Bhagtani approaching the people visiting the Court and soliciting work from them".
This we have already slated is far below the requirement required to be proved under rule 36.
He says that he had seen Mr. Raisinghani approaching people and soliciting work.
He did not ascertain the names of the persons who approached because it was not his business.
But as stated above, is evidence does not establish the three elements required to be proved under rule 36 because we do not know what was the personal communication between him and the persons solicited.
We do not know whether it related to a case or not." .
Then the next witness is Mr. Sitaram Gajanan Shertukade.
In cross examination by Mr. Rai singhani he says: "I have seen Mr. Raisinghani accosting people.
I have seen Mr. Raisinghani snatching the papers from the hands of the litigating public.
I have seen this more than 10 times.
The litigating public from whom the papers were snatched did not say anything that there was a fight between Mr. Raisinghani and other lawyer over the papers which were snatched.
I did not contact those persons from whom the papers were snatched nor talked to them so he was not concerned with this Therefore his evidence cannot be sufficient (Emphasis, ours) 58 We may, illustratively, quote an excerpt from the evidence of the Bar Association President and one time Bar Council Member Shri Shertukade to show the injury to the profile of the profession the curious view of the disciplinary tribunal has inflicted: "I have seen Mr. Raisinghani accosting people.
I have seen Mr. Raisinghani snatching the papers from the hands of litigating public.
I have seen this more than 10 times There was a fight between Mr. Rasinghani and Mr. Baria.
made oral complaint to the C.P.M.
I do not remember who was present at that time.
In that fight Mr. Raisinghani s pant was torn.
There was assault by Mr. Raisinghani on Mr. Mandalia and I had advised Mr. Mandalia to file a complaint against Mr. Raisinghani.
Mr. Mandalia did file a case against Mr. Raisinghani but it was compounded.
" How can a disciplinary authority, aware of its accountability to the Indian Bar, functioning as the stern monitor holding the punitive mace to preserve professional purity and promote public commitment and appreciative of what is disgraceful, dishonourable and unbecoming judged by the standards of conduct set for this noble calling and deviations damaging to its public image, find its way to hold such horrendous misbehaviour as snatching, catching, fighting, and under cutting as not outraging the canons of conduct without exposing itself to the charge of dereliction of public duty on the trisection of r. 36 and blind to the 'law for lawyers '? It has been universally understood, wherever there is an organised bar assisting in administering justice, that an attorney solicitor, barrister or advocate will be suspended or disbarred for soliciting legal business.
And the 'snatching ' species of solicitation are more revolting than ambulance chasing ', advertising and the like.
If the learned profession is not a money making trade or a scramble for porterage but a branch of the administration of justice, the view of the appellate disciplinary tribunal is indefensible and deleterious.
We, as a legal fraternity, must and shall live up to the second and live down the first.
by observance of high standards and dedication to the dynamic rule of law in a developing country.
It is unfortunate that the Maharashtra tribunal has slurred over vital procedural guidelines.
Professional misconduct prescribed by section 35 of the Act has to be understood in the setting of a calling to which Lincoln, Gandhi, Lenin and a galaxy of great men belonged.
The high moral tone and the considerable public service the bar is associated with and its key role in the developmental and dispute processing activities and, above all, in the building up of a just society and constitutional order.
has earned for it a monopoly to practise law and an autonomy to regulate its own internal discipline.
This heavy public trust should not be forfeited by legalising or licensing fights for briefs affrays in the rush towards clients, undercutting and wrangling among members.
Indeed, we were scandalized when one of the respondents cited a decision under the Suppression of Immoral Traffic Act to prove 59 what is 'soliciting '.
The odious attempt to equate by implication the standards for the two professions was given up after we severely frowned on it.
But the disciplinary tribunal 's view that an attempt to solicit did not matter, that professional misconduct rested solely on r. 36 of the rules framed under section 49(c) and that r. 36 was made up of three components, shows how an orientation course in canons of conduct and etiquette in the socio ethical setting of the lawyer, the public and professional responsibility may be an educative asset to disciplinary tribunals and Bar Councils which appoint tribunals and regulate professional conduct by rules.
Cicero called the law 'a noble profession ', but Frederick the Great described lawyers as 'leeches '.
We agree that r. 36, fairly construed, sets out wholesome rules of professional conduct although the canons of ethics existed even prior to r. 36 and the dissection of the said rule; the way it has been done by the disciplinary tribunal, disfigures it.
It is also clear that r. 36 is not the only nidus of professional ethics.
Indeed, the State tribunal has, from a processual angle, fallen far short of norms like proper numbering of witnesses and exhibits, indexing and avoidance of mixing up of all cases together, default in examination of the respondents consideration, separately, of the circumstances of each delinquent for convicting and sentencing purposes.
More attention to the specificity in recording evidence against each deviant instead of testimonial clubbing together of all the respondents, would have made the proceedings clearer fairer and in keeping with court methodology, without over judicialised formalities.
Indeed the consolidation of 16 cases and trying them all jointly although the charges were different episodes, were obviously violative of fair trial.
And 8 years for an enquiry so simple and brief: We express the hope that improvement of this branch of law relating to disciplinary proceedings will receive better attention from the Bar Council and the tribunal members.
What prophylactic prescription can ensure fundamentally fair hearing or due process better than by choosing persons of sense and sensibility familiar with the basics of trial procedure and conscientious about avoidance of prejudice and delay ? Rules may regulate, but men apply them.
Both are important.
The appellate disciplinary tribunal was wholly wrong in applying r. 36 which was promulgated only in 1965 while the alleged misconduct took place earlier.
What this tribunal forgot was that the legal profession in India has been with us even before the British and coming to decades of this century, the provisions of r. 35 of the section 10 of the Bar Councils Act and other enactments regulating the conduct of legal practitioners have not turned on the splitting up of the text of any rule but on the broad canons of ethics and high tone of behaviour well established by case law and long accepted by the soul of the bar.
Professional ethics were born with the organised bar, even as moral norms arose with civilised society.
The exercise in discovering the 'three elements ' of r. 36 was as unserviceable as it was as supererogatory.
60 The ruling in In the matter of 'P ' an Advocate(1); In re: Shri M. Advocate of Supreme Court of India(2); In the matter of an Advocate(3); Govt.
Pleader vs Siddick(4) were cited before us and no judge, nor lawyer will be in doubt, even without study of case law, that snatching briefs by standing at the door of the court house and in fighting for this purpose is too dishonourable, disgraceful and unbecoming to be approved even for other professions.
Imagine two or three medical men manhandling a patient to claim him as a client The law has suffered at the hands of the appellate tribunal.
Lest there should be lingering doubts we hold that the canons of ethics and propriety for the legal profession totally taboo conduct by way of soliciting, advertising, scrambling and other obnoxious practices, subtle or clumsy, for betterment of legal business.
Law is no trade, briefs no merchandise and so the leaven of commercial competition or procurement should not vulgarise the legal profession.
Canon 27 of Professional Ethics of the American Bar Association states: "It is unprofessional to solicit professional employment by circulars, advertisements, through touters or by personal communications or interviews not warranted by personal relations.
" We wish to put beyond cavil the new call to the lawyer in the economic order.
In the days ahead, legal aid to the poor and the weak, public interest litigation and other rule of law responsibilities will demand a whole new range of responses from the bar or organised social groups with lawyer members.
Indeed, the hope of democracy is the dynamism of the new frontiersmen of the law in this developing area and what we have observed against solicitation and alleged profit ' making vices are distant from such free service to the community in the Jural sector as part of the profession 's tryst with the People of India.
It is a misfortune that a disciplinary body of a dimensionally great and growing public utility profession has lost its vision, blinkered by r. 36 (as misconstrued and trisected by it).
For the practice of Law with expanding activist horizons, professional ethics cannot be contain ed in a Bar Council rule nor in traditional cant in the books but in new canons of conscience which will command the members of the calling of justice to obey.
rules of morality and utility, clear in the crystallized case law and concrete when tested on the qualms of high norms (1) (1964)1 section C. R. 697.
(2) ; (3) I. L. R. (4) 61 simple enough in given situations, though involved when expressed in a single sentence.
We but touch upon this call to the calling of law, as more is not necessary in the facts of these cases.
The law has thus been set right, the delinquents identified and dealt with, based on individualised deserts and the appeals are disposed of in the trust that standards and sanctions befitting the national Bar will be maintained in such dignified and deterrent a manner that public confidence in this arm of the justice system is neither shaken nor shocked.
Parties will bear their costs throughout.
| The petitioners were found guilty of murder by the court and sentenced to death, Their petition to the President of India for commuting the death sentence was rejected, Thereupon, they filed a writ petition in the High Court to quash the order of the President on the ground that he had not taken into account two factors, namely, (1) the offences were 'political '; and (2) the prevailing trends against death sentence.
The High Court dismissed the petition, Dismissing the petition for special leave to this Court.
^ HELD: (1) Assuming that the offences are political offences, under the Indian Penal Code, murder is murder and judges cannot re write, the law whatever their views on death sentence, as citizens, may be, and interfere where they have no jurisdiction, [75 B C; 77 H], (2) All power however majestic the dignitary wielding it may be, shall be exercised in good faith with intelligent and informed care and honestly for the public weal.
But, when the Constitution has empowered the nation 's highest Executive as the repository of the clemency power, the Court cannot intervene and judicial review is excluded by implication.
Since, the contention, in this case, that equality is denied in the matter of sentence because some get the benefit of clemency while others do not, has no foundation.
nor is there any trace of despotism involved, it is not necessary to examine in whom the remedy lies if arbitrary exercise of public power is definitely established a particular case.
[76 E H].
The rejection, however, of one clemency petition does not exhaust the power of the President or the Governor.
Therefore, the petitioners may urge the circumstances pressed before this Court for clemency again before the President.] [77 D E].
|
Civil Appeals Nos. 334, 335 and 338 of 1965.
Appeals by Special Leave from the judgment and orders dated January 1, 1963, November 7, 1962 and November 4, 1963 of the Madras High Court in Tax Case No. 170 of 1961 Civil Revision Petition No. 105 of 1961 and Tax Case No. 153 of 1963 respectively.
Bishan Narain and A. V. Rangam, for the appellants (in C.As.
Nos. 334 and 335 of 1965).
A.V. Rangam, for the appellant (in C.A. No. 338/1965).
K.R. Chaudhuri, for the respondent (in C.
A. No 334/1965).
N. D. Karkhanis, O.C. Mathur, J.B. Dadachanji and Ravinder Narain,for the respondents (in C.As.
Nos. 335 and 338/1965).
The Judgment of the Court was delivered by Shah, J.
This is a group of appeals filed by the State of Madras against orders passed by the High Court of Judicature at Madras which raises the following common question as to applicability of concessional rate of sales tax to transactions of inter State sale and taxable under the : "When a purchasing dealer in one State furnishes in Form 'C ' prescribed under the Central Sales Tax (Registration & Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form 'B ' prescribed under r. 5(1) of the Central Sales Tax (Registration & Turnover) Rules, 1957, and that the goods are intended for resale, or for use in manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale, and that, declaration is produced by the selling dealer, is it open to the Sales Tax authority under the Central Sales ax Act to deny to the selling dealer the benefit of concessional rates under section 8(1) of the . 200 on the view that the certificate in Form 'C ' mentions more purposes than one for which the goods are intended to be used, or that the goods are incapable of being used for the purpose for which they are declared to be purchased, or that the goods are applied for some other purpose not mentioned in the certi ficate in Form 'C '?" We may briefly set out the facts which give rise to two out of the appeals: Civil Appeals Nos. 334 & 335 of 1965.
Civil Appeal No. 334 of 1965.
M/s Radio & Electricals Ltd., respondents in this appeal on business in the State of Madras in electrical equipment and are registered as dealers under the .
The Bombay State Electricity Board, Saurashtra Division, which is engaged in the production of electric energy purchased transformers and other goods of the total value of Rs. 1,42,020/ from M/s. Radio & Electricals Ltd. and the latter claimed in proceeding for assessment for Central sales tax for the year 1957 58 that they were liable to pay tax at the rate of 1 per cent on the turnover under section 8(1) of the .
The Deputy Commercial Tax Officer rejected the claim on the ground that the Bombay State Electricity Board was not a dealer engaged in selling goods and merely because they held a registration certificate, the goods sold to the Board could not be admitted to the concessional rate of tax under section 8(1) of the Act.
The Appeal late Assistant Commissioner of Commercial Taxes confirmed the order on the ground that transformers and other goods purchased by the Electricity Board for use in the production of electrical energy were not intended, to be used in the manufacture of goods for sale within the meaning of section 8(3) (b) of the Central Sales Tax, ' Act, because electricity was not at the material time "goods" within the meaning of the Act.
The order passed by the Appellate Assistant Commissioner was confirmed by the Sales Tax Appellate Tribunal, Madras.
The High Court, following an earlier judgment in Deputy Commissioner of Commercial Taxes, Madras Division, vs Manohar Brothers(1) modified the order holding that if the selling dealer within the State produces a certificate in Form 'C ' setting out one or more of the purposes in section 8(3)(b) of the Act, and if the Sales Tax authorities on behalf of the State do not deny that the purchasing dealer is a registered dealer, the selling dealer will not be denied the concessional rate of tax under the Act, even if it transpires that the purchasing dealer has utilised the goods for purposes other than those mentioned in the certificate of registration.
The High Court then held that out of the certificates in Form 'C ' produced by the selling dealer, certificates in respect of a turnover of Rs. 42,080/ set out the purpose as "manufacture of electrical energy" and since this was not one of the purposes mentioned in section 8(3)(b) of the Act as it stood at the relevant time, the Sales Tax authority was right in denying the benefit of the rate under section 8 (1) to the assessee, but with regard to a turnover of (1) 13 S.T.C. 686.
201 Rs. 47,340/ the Sales Tax authority was bound to accept the certificates in Form 'C ' produced by the assessee even though the certificates contained all the purposes mentioned in the prescribed form, and no purpose was struck out.
The facts which give rise to Civil Appeal No. 335 are these; M/s Stanes Motors (South India) Ltd. respondents in this appeal are dealers in automobiles, tractors and spare parts.
For the year 1957 58 they claimed benefit of concessional rates under section 8(1) on a turnover of Rs. 1,38,572/12/ resulting from sale of tractors supplied to certain "tea factories" in the State of Kerala.
The purchasing dealers who were four "tea factories" registered as dealers under the Act delivered to the respondents certificates in Form 'C ' declaring that the tractors purchased by them were in.
tended for use in the manufacture of tea for sale.
In the view of the Tax Officer benefit of the concessional rate could not be claimed in respect of those sales, since the tractors were not for resale and the tractors "were not directly relatable to the manufacturing process".
In appeal, the order passed by the Tax Officer was confirmed by the Appellate Assistant Commissioner.
He held that the tractors which were used for transporting tea leaves from the plantations to the factories cannot be said to be used in the manufacture of goods for sale.
In appeal to the Sales Tax Appellate Tribunal, it was held that the respondents were entitled to the concessional rate in respect of sales to two out of the four factories, which held certificates of registration in Form 'B ' specifying "machinery" as one of the items under section 8(3)(b).
The High Court of Madras confirmed the order passed by the Tribunal in exercise of its revisional jurisdiction.
Counsel for the State of Madras contends that the Commercial Tax Officer is invested with authority under the Act to scrutinise the transactions in respect of which the claim to concessional rate of tax is made, and he is competent to ascertain not only whether the certificate in Form 'C ' is genuine, but whether the certificate is valid in law, whether the purchasing dealer holds a valid certificate of registration in Form 'B ', whether the goods specified in the purchasing dealer 's certificate can be used for the purpose mentioned in the certificate in Form 'C ', and whether the goods were applied for the purpose for which they were purchased.
Counsel also submitted that a certificate in Form 'C ' which specifies more purposes than one for which the goods are intended to be used by the purchasing dealer is invalid.
We may in the first instance set out the relevant Provisions of the Act and the Rules.
The 74 of 1956 was enacted by the Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter.
State trade or commerce or outside a State or in the course of import into or export from India.
By Ch.
11 principles for determining when a sale or purchase of goods takes place in the course of 202 inter State trade or commerce or outside a State or in the course of import or export are enacted.
Chapter III deals with inter State sales tax.
By section 6 liability is imposed upon every dealer to pay tax under the Act on all sales effected by him in the course of interState trade or commerce during any year.
Section 7 provides for registration of dealers.
Section 8, as originally enacted, provided: "(1) Every dealer who, in the course of inter State trade or commerce sells to a registered dealer goods of the description referred to in sub section (3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover: Provided that, if under, the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub section (1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be.
(2). . . . (3) The goods referred to in sub section (1) (a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him; and (b) in any other case, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified.
Explanation .
(4) The provisions of sub section (1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered, dealer to whom the goods are sold, containing the prescribed particulars con a prescribed form obtained from the prescribed authority.
(5) (With effect from October 1, 1958, by Act 31 of 1958, section 8 was extensively amended, but we are, in these appeals, not concerned with the statute as amended).
203 Section 10 provides for penalties.
The section at the material time provided: "If any person (a) fails to get himself registered as required by section 7; or (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration , or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) of sub section (3) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; (e) has in his possession any form prescribed for the purpose of sub section (4) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; he shall be punishable with simple imprisonment.
Section 14 deals with declared goods in respect of which by section 8(1) read with section 8(3)(a) the concessional rate of tax applies when the goods are purchased as being intended for resale.
Reading section 8(1) with section 8(3)(b), it is clear that the Legislature intended to grant the benefit of concessional rates of tax under the Act to registered dealers, provided that the goods sold were of the class or classes specified in the certificate of registration of the purchasing dealer and the goods were intended to be used for resale by him or, for use in the manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale.
In exercise of the power under section 13 the Central Government made rules called "The Central Sales Tax (Registration & Turnover) Rules, 1957".
Rules 3 to 8 provide for registration and issue of certificate of registration.
Rule 5(1) provides that when the notified authority is satisfied, after making such enquiry as it thinks necessary, that the particulars contained in the application are correct and complete, it shall register the dealer and grant him a certificate of registration in Form 'B ' and also a copy of such certificate for every place of business within the State other than the principal place of business mentioned therein.
The material part of Form 'B ' is as follows: This is to certify that. . . .whose principal place of business within the State of. . . is situated at . . . . 204 has been registered as a dealer under section 7(1)/7(2) of the .
The business is: wholly mainly partly partly partly The class(es) of goods specified for the purpose of sub section (1) of section 8 of the said Act is /are as follows and the sales of these goods in the course of inter State trade to the dealer shall be taxable at the rate specified in that subsection subject to the provisions of sub section (4) of the said section: (a) For resale, (b) For use in manufacture, (c) For use in the execution of contracts.
The dealer 's year for the purpose of accounts runs from. . day of . . to the . .It. . . " Rules 9 & 10 deal with cancellation of registration, and Rules 1 1 & 12 deal with determination of turnover.
By r. 12 the declaration referred to in sub section
(3) of section 8 of the Act has to be in Form 'C ' consisting of three sections a counterfoil, a duplicate and the original.
The duplicate section of the Form (which in terms is identical with the original section) is as follows: "Form 'C ' Form of Declaration (See rule 12).
(to be used at the time of making purchases from out of State sellers).
Name of issuing State. . . . .
Issued to holder of Registration Certificate No. .
Serial No. . . To . . . . . . (Seller) . . .
Certified that the goods **Ordered for in our purchase order No. dt. *Purchased from you as per bill/cash memostated below.
Supplied under your chalan No. . .dated. . are for **resale **use in manufacture of goods for sale/use in the execution of contracts/packing of goods for resale.
205 and are. covered by my/ our registration certificate No. .dated issued under the .
(Name of the purchasing dealer in full).
. . . . . (Signature and status of the person sigming the declaration).
*Particulars of Bill/Cash Memo Dated. .No. .Amount. **Strike out whichever is not applicable.
(Note To be retained by the selling dealer)".
The Scheme of the Rule read with the Act is that the pur chasing dealer as well as the selling dealer must register themselves under the .
If declared goods are specified in the certificate of registration of the purchasing dealer and if it be certified that the goods are intended for resale by him, the sale is subject to concessional rate of tax under section 8(1).
In respect of sales of other classes of goods specified in the certificate of registration of the purchasing dealer, if the goods are purchased either for resale by him, or for use in manufacture of goods for sale, or for use in the execution of contracts, the concessional rate of tax is available, provided the selling dealer obtains from the purchasing dealer the declaration in the prescribed form duly filled in and signed by the latter containing the particulars that the goods are ordered, purchased or supplied under a certain specific order, bill or cash memo or chalan, for all or any of the purposes mentioned and that the goods are covered by the registration certificate of the purchaser described therein and issued under the Act.
If the certificate is defective in that it does not set out all the details, or that it contains false particulars about the order, bill, cash memo or chalan, or about the number and date of the registration certificate and specifications of goods covered by the certificate of the purchasing dealer, the transaction will not be admitted to concessional rates.
Now in certain certificates in Form 'C ' furnished by the purchasing dealer in this group of appeals all the alternatives in the printed form were retained, and in others one or more but not all the alternatives were retained.
Counsel for the State of Madras urged that a certificate in Form 'C ' is defective unless it specifies, only one purpose for which the goods purchased are intended to be used.
But that contention is not borne out by the Act and the Rules.
Goods may be sold to a purchasing dealer under a, single order, bill, cash memo or chalan, one part to be used for resale, another to be used in the execution of contracts, and the rest ill manufacture of goods for sale, but it is not enacted that separate certificates should be issued each relating to the quantity intended to be used for a specified purpose.
A purchasing dealer may again be carrying on business as a, manufacturer, as a building, installation or repair contractor, and as a dealer in goods, and if he purchases goods specified in his certificate, but without making up his 206 mind about the precise purpose for which the goods will be used, provided it is one of the purposes, he will still be complying with the statutory requirements if he declared in Form 'C ' that the goods are purchased for more than one purpose.
The Act and the Rules do not impose an obligation upon the purchasing dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration he is entitled to purchase goods of the classes mentioned in section 8(3)(b) for more purposes than one.
When the purchasing dealer furnishes a certificate in Form 'C ' without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be used for all or any of the purposes, and the certificate complies with the requirements of the Act and the Rules.
The Sales Tax authority is, of course, competent to scrutinise the certificate to find out whether the certificate is genuine.
He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the registration certificate of the purchasing dealer, make an enquiry about the contents of the certificate of registration of the purchasing dealer.
But it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by him for any of the purposes mentioned by him in Form 'C ', or that the goods purchased have in fact not been used for the purpose declared in the certificate.
The authority issuing the certificate under r. 5(1), as expressly stated in the rule, has, before issuing a registration certificate, to be satisfied after making such enquiry as it thinks necessary that the particulars contained in the application are correct and complete.
The enquiry would obviously be made in the light of the nature of the business and goods which are likely to be needed either for resale, or for use in the manufacture of goods for sale, or for use in the execution of contracts.
Satisfaction which is contemplated by r. 5 is objective, and may be arrived at upon a quasijudicial enquiry.
This Court has in several cases had occasion to consider the legality of orders of the notified authority refusing to grant certificates of registration in Form 'B ' in respect of cer tain classes of goods which it was claimed by the tax payer were necessary for the purpose of his business and were therefore requested to be specified in the certificate of registration: e.g. Indian Copper Corporation Ltd. vs Commissioner of Commercial Taxes, Bihar & Others(1) and J. K. Cotton Spinning & Weaving Co. Ltd., vs The Sales Tax Officer, Kanpur & Another(1).
On the plain words used in section 7 and the Rules, it is contemplated that the certificate of registration may only be issued after an objective satisfaction by the notified authority that the specified goods are likely to be needed for the purpose of the business of the registered dealer, and that satisfaction is open to challenge in an appropriate proceeding before the High Court and even before this Court.
Correctness or (1) S.T.O. 259.
(2) , 16 S.T.C. 563.
207 propriety of satisfaction of the notified authority in issuing the certificate in Form 'B ' that the goods are likely to be required for the purpose of the business would not however be again open to challenge before another taxing authority in proceedings for assessment of tax.
If therefore goods are specified in the certificate of registration in Form 'B ' it is not open, when a claim is made in respect of the purchases of those goods for the application of concessional rate of tax, to the Sales Tax Officer to deny to the selling dealer of those goods the benefit on the ground that the goods specified cannot be used by the purchasing dealer for the purpose of his busi ness.
It is open to the Tax Officer to ascertain whether the goods in respect of which a claim for concessional rate is made are specified in the certificate of registration, but if the class of goods is included in the certificate of registration in Form 'B ' he cannot say that the class of goods should not have been specified.
The Act, seeks to impose tax on transactions, amongst others, of sale and purchase in inter State trade and commerce.
Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on the consumers of goods because it enters into the price paid by them.
Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has, in respect of sales of declared goods which have special importance in inter State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter State trade or commerce.
Indisputably the seller can have in these transactions no control over the purchaser.
He has to rely upon the representations made to him.
He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificates but his duty extends no further.
If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules.
and the representation is recorded in the certificate in Form 'C ' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used.
If the purchasing dealer misapplies the goods he incurs a penalty under section 10.
That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer.
The selling dealer is under the Act authorised to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form 'C '.
He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C '.
There is nothing in the Act or the Rules 208 that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer.
Counsel for the appellant contended that the view expressed by the High Court in the judgments under appeal was in any case erroneous, because they held that a 'C ' Form certificate produced by the selling dealer is conclusive of the right to the concessional rate of tax, and that no enquiry whatever may be made by the assessing authority.
He invited our attention to the following passage from the judgment which is under appeal in Civil Appeal No. 335 of 1965: " We are of the opinion that whether or not the goods were in fact used for the stated purposes or even usable for such a purpose, so long as the purchasing dealer has furnished the required declaration to the selling dealer, the selling dealer becomes under law entitled to the benefit of section 8(1) of the Act.
It is no function of the selling dealer to enter into a judicial examination of whether the goods are in fact used or usable for the manufacture or processing of goods for sale by the purchasing dealer.
The purchasing dealer declares that they are required for such a purpose and are further so specified in his form of registration granted by the sales tax authorities.
It is not the function of the selling dealer to enquire whether the requirement of the purchasing dealer is bona fide or even is or is not within the certificate.
of registration of that dealer.
" It is implicit in the context in which these observations occur that if the purchasing dealer holds a valid certificate specifying the goods which are to be purchased, and furnishes the required declaration to the selling dealer, the selling dealer becomes on production of the certificate entitled to the benefit of section 8(1).
It is of course open to the sales tax authority to satisfy himself that the goods which are purchased by the purchasing dealer under certificate in Form 'C ' are specified in the purchasing dealer 's certificate in Form 'B '.
Observation of the High Court that the selling dealer may not enquire whether the requirement is not within the certificate of re gistration of the purchasing dealer is not accurate.
But whether the goods specified in the registration certificate in From 'B ' can be used for the purpose is not for the selling dealer to determine.
That is a matter which has already been determined by the notified authority issuing the certificate of registration.
Appeal No. 334 therefore fails and is dismissed with costs.
In Appeals Nos. 335 & 338 the respondent is the same assessee, and common questions for different periods are raised.
These appeals also fail and are dismissed with costs.
One hearing fee.
Appeals dismissed.
| The appellants were released on bail by the High Court under section 426 Cr.
P.C., pending disposal of their appeal in the High Court.
On an application by the State that the appellants were misusing their liberty and committing acts of violence, the bail was cancelled by the High Court in the exercise of its inherent powers under section 561 A, Cr. P. Code.
On the question whether the High Court had such power, HELD: The inherent power of the High Court under section 561 A, Ct.
P.C., can be exercised either for giving effect to any order under the Criminal Procedure Code or to prevent abuse of the process of a court or otherwise to secure the ends of justice; but such power cannot be invoked in respect of any matter covered by a specific provision or inconsistent with any specific provision of the Criminal Procedure Code.
Under sections 497 and 498, Cr.
P.C., the Legislature has made express provision for the cancellation of bail in certain cases, but there is no express provision when an appellant is released on bail under s, 426 Cr.
The omission must be due to inadvertence and cannot be regarded as deliberate, otherwise the subsequent conduct of the appellant, however reprehensible it may be, will not justify the High Court in canceling the order of bail.
Since the allegations against the appellant prima facie indicate abuse of the Process of the Court, section 561 A is attracted to the case and the High Court was entitled to cancel the bail.
[481 F H; 482 D, F] Lala Jairam Das vs King Emperor, L.R. 72 I.A. 120, explained.
|
Civil Appeal No. 481 of 1973.
From the Judgment and order dated the 9th February 1973 of the Mysore High Court at Bangalore in W.P. No. 1922 of 1970.
H. B. Datar and K. N. Bhat, for the appellant.
section section Javali and B. P. Singh, for the respondents Nos. 1, 3 13 The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by special leave is directed against the judgment of the Mysore High Court (now High Court of Karnataka) of February 9" 1973, rejecting the appellant 's writ petition under article 226 of the Constitution by which the orders of the State Transport Appellate Tribunal and the Mysore Revenue Appellate Tribunal had been challenged.
189 Briefly the facts are as follows : The appellant was granted a stage carriage permit under section 48 of the (briefly the Act) for the route Devenagere to Shimoga via Honnali by the Regional Transport Authority, Shimoga, by its order dated May 3/4, 1963.
Some of the respondents preferred appeals against the said order to the State Transport Appellate Tribunal and obtained stay of the order The appeals were, however, dismissed on September 27, 1963.
Again, some of the respondents preferred further appeals to the Mysore Revenue Appellate Tribunal against the order of the State Transport Appellate Tribunal.
This time also the appeals met with the same fate and were dismissed on February 27, 1967.
It appears, however, that c no order of stay was granted by the Mysore Revenue Appellate Tribunal.
On April 25, 1967, the Secretary to the Regional Transport Authority, Shimoga, called upon the appellant to produce the relevant documents and the certificate of registration for making necessary entry in the permit.
The appellant produced the same on April 26, 1967, and the permit was issued on the same day.
Against the order of the issue of the permit, respondents 4 to 13 preferred appeals to the State Transport Appellate Tribunal on the ground that the Secretary to the Regional Transport Authority, Shimoga, had no jurisdiction to issue a permit under rule 119 of the Mysore Motor Vehicles Rules, 1963 (briefly the Rules) after a lapse of such a long time from the date of the grant of the permit.
It was contended that the issue of the permit was made beyond the prescribed period of limitation under rule 119.
It may be mentioned that at the time of the grant of the permit the Mysore Motor Vehicles Rules, 1945 (old Rules) were in force and rule 151 of the old Rules was replaced by rule 119 with effect from July 1, 1963.
It was contended by the appellant before the appellate authorities that there was no period of limitation under rule 151 of the old Rules, which was applicable to his case, for the issue of a permit.
The appeals of the respondents were allowed by the State Transport Appellate Tribunal by majority on January 29, 1969.
The District Judge Member, however, dissented.
An appeal filed by the appellant to the Revenue Appellate Tribunal against the order of the State Transport Appellate Tribunal was dismissed which led to the unsuccessful writ application in the High Court and hence this appeal.
The point that arises for consideration is whether any appeal lay under section 64 of the Act to the State Transport Appellate Tribunal against the issue of a permit in pursuance of an earlier resolution of the Regional Transport Authority granting the permit.
It is only necessary to read section 64(1) (a) which is material for the purpose of this appeal: 64(11 (a): "Any person aggrieved by the refusal of the State or a Regional Transport Authority to grant a permit, or by any condition attached to a permit granted to him may within the prescribed time and in the prescribed man 190 ner, appeal to the State Transport Appellate Tribunal constituted under sub section (2), who shall, after giving such person and the original authority an opportunity of being heard, give a decision thereon which shall be final".
We are not required to consider the other clauses of section 64(1) which are admittedly not relevant.
Section 64 has to be read with rule 178 of the Rules which prescribes the procedure for appeal to the various authorities Appeal is a creature of the statute.
There is no dispute that section 64 of the Act is the only section creating rights of appeal against the grant of permit and other matters with which we are not concerned here.
There is no appeal provided for under section 64 against an order issuing a permit in pursuance of the order granting the permit.
Issuance of the permit is only a ministerial act necessarily following the grant of the permit.
The appeals before the State Transport Appellate Tribunal and the further appeal to the Mysore Revenue Appellate Tribunal are, therefore, not competent under section 64 of the Act and both the Tribunals had no jurisdiction to entertain the appeals and to interfere with the order of the Regional Transport Authority granting the permit which had already been affirmed in appeal by the State Transport Appellate Tribunal and further in second appeal by the Mysore Revenue Appellate Tribunal.
There was, therefore, a clear error of jurisdiction on the part of both the Tribunals in interfering with the grant of the permit to the appellant.
The High Court was, therefore, not right in dismissing the writ application of the appellant which ought to have been allowed.
Although arguments were addressed by counsel with regard to old rule 151 and rule 119 of the Mysore Motor Vehicles Rules, 1963 we do not feel called upon to pronounce upon the legal effect of these rules in this appeal.
In the result the appeal is allowed.
The order of the High Court is set aside and necessarily the order of the State Transport Appellate.
Tribunal of January 29, 1969 and the order of the Mysore Revenue Appellate Tribunal of May 8, 1970, also fall.
The order granting the permit to the appellant stands restored There will be no order as to costs .
V.P.S. Appeal allowed.
| Section 2(v) of the defines an "undertaking" as an undertaking which is engaged in the production, supply, distribution or control of goods of any description or the provision of service of any kind.
Section 22 provides for the establishment of new under takings.
It says that no person or authority, other than government, shall, after the commencement of this Act.
establish any new undertaking which, when established would become an inter connected undertaking of an undertaking to which clause (a) of section 20 apples, except under, and in accordance with the previous permission of the Central Government, Sub section (2) of the section provides for an application for that purpose to the Central Government.
Section 23(4) lays down that if an undertaking to which Part A of Ch.
Ill applies proposes to acquire by purchase, take over or otherwise the whole or part of an undertaking which will or may result either (a) in the creation of an undertaking to which Part A would apply; or (b) in the undertaking becoming an inter connected undertaking of an undertaking to which Part A applies, it shall, before giving any effect to its proposals, make an application in writing to the Central Government in the prescribed form of its intention to make such acquisition.
stating therein information regarding its inter connection with other undertakings the scheme of finance with regard to the proposed acquisition and such other information as may be prescribed.
The appellant is a public limited company and is a subsidiary of United Breweries Ltd. and other companies interconnected with it.
The appellant 's undertaking consists of a sugar factory and a distillery for manufacture of liquor at Rosa, Shahjahanpnr and another distillery at Asansol.
The appellant 's sugar factory at Rosa had been facing difficulties for some years on account of inadequate supply of sugarcane and to ensure regular and adequate supply of sugarcane, the appellant proposed to float a company with a share capital of` Rs. 50 lakhs for the purpose of taking over the sugar unit of the appellant and for working it as an undertaking of the company to be formed.
The proposal was that the appellant would be entitled to an allotment of 100 percent shares in the new company and a further sum of Rs. 15,77,093/ as consideration for transfer of the sugar unit.
The appellant applied to the respondent for permission under section 372 of the Companies Act to acquire the 100 per cent shares of the new company upon its incorporation.
The appellant was told by the Central Government in its letter dated 5 1 1972 that sections 22 and 23 of the , would prima facie be attracted and that the appellant should file a separate application Under the relevant section.
The appellant filed an application dated 5 5 1972 purporting to be under section 23(4) of The Act.
The new company proposed to be set up by the appellant was incorporated on June, 15.
1973 under the name of Shahjahanpur Sugar Private Limited.
By order dated July 2, 1973.
the Central Government, in the Department of Company Affairs rejected the appellant 's application under section 372(4) of the Companies Act for investing Rs.50 lakhs in the equity share of the Capital of Shahjahanpur Sugar Private Limited.
By another order dated 30 6 1973, the central Government.
in the Department of company Affairs also rejected the appellant 's application under section 23(4) of the Act.
This appeal is against the order dated 30 6 1973 under section SS of the Act.
It was contended for the appellant that.
(i) in order that an enterprise may became an 'undertaking ' within the definition of the word 'undertaking ' in section 2(v) of the Act it is necessary that the enterprise must he engaged in produc 380 tion, supply, distribution or control of goods of any description or the provision Or service of any kind and that when the appellant proposed to form the new company for taking over the sugar unit of the appellant in consideration of 100 per cent shares in the new company, that company had not acquired the sugar unit of the appellant nor was it engaged in the production, supply, distribution or control of goods, etc.
as an enterprise of Shahjahanpur Sugar Privato Limited and so There was no proposal to acquire by purchase, take over or otherwise of the whole or part of any undertaking within the the meaning of section 23(4).
and (ii) in any event the proposal to acquire 100 per cent shares in Shahjahanpur Sugar Private Limited by the appellant would not involve a proposal to acquire an undertaking to be owned or even owned by Shahjahanpur Sugar Private Limited, as the acquisition of 100 per cent shares would only vest in the appellant, the right to control and manage the affairs of Shahjahanpur Sugar Private Limited.
Accepting the contentions and allowing the appeal, ^ HELD: (Per Ray C.J. and Mathew 1.) (i) The Sugar unit of the appellant was no doubt engaged in production of goods.
, when the proposal was made and was, therefore an undertaking but it was only an undertaking of the appellant.
as the sugar unit had not been transferred and had not become an enterprise of Shahjahanpur Sugar Private Limited.
The sugar unit did not become an undertaking of Shahjahanpur Sugar Private Limited ac it was not and could not be engaged in the production of goods, etc., on its behalf before it was transferred to it.
Sub section (4) of section 23 is confined to the case of a proposal to acquire an undertaking by purchase, take over or otherwise but, to become an undertaking, it must presently be engaged in the production of goods, etc.
The mere fact that the Memorandum of Association of Shahjahanpur Sugar Private Limited contained an object clause which provided for production of sugar would not necessarily mean that the company would go into production and thus become the owner of an undertaking as defined in s.2(v) of the Act.
Even if the phrase 'engaged in business ' in the definition conveys thc idea of ' embarking on it, it is not correct to say that Shahjahanpur Sugar Private Limited had embarked on the business of production of sugar merely because its memorandum of association provided that the object of the company was to produce sugar.
[387B C, E F] The Union of India vs Tata Engineering and Locomotive Co. Ltd., [1972] 74 Bombay Law Reporter, 1 and In re Canara Bank Ltd., A.I.R. referred to.
(ii) It is well settled that a company has seperate legal personality apart from its shareholders and it is only the company as a juristic person that could 1 own the undertaking.
Beyond obtaining control and the right of management of Shahjahanpur Sugar Private Limited, the purchase of 100 per cent shares had not the effect of an acquisition of the undertaking owned by it.
[388F G Per Krishna Iyer.
J. (concurring) (1) An `undertaking is defined as an undertaking. which itself disclosed the difficulty felt by the draftsmen in delineating the precise content.
Obviously, a dynamic economic concept cannot be , imprisoned into ineffectualness by a static strict construction.
`Is engaged in production ', in the context takes in not merely projects which have been completed and ,one into production but also blue prints.
It is descriptive of the series of ' steps culminating in production.
One is engaged in an undertaking of production of certain goods when he seriously set about the job of getting every thing essential lo enable production.
Economists, administrators and industrialists understand the expression in that sense and often times projects in immediate prospect are legitimately set down as undertakings engaged In the particular line.
Not the tense used but the integration of the steps is what is decisive.
What will materialse as a productive enterprise in futureo can be regarded currently as as undertaing, in the industrial sense.
[391F H] Massachusetts B & Insurance Co. vs U.S. ; , 138, and Gymkhana Club, [1968] 1 S.C.R. 742 referred to.
381 (2) Sections 22 and 23 (4), when placed in juxtaposition suggest that the appellant 's operation is to establish a new undertaking (out of its old sugar unit, though) which, in view of the share holding, will inevitably become an inter connected undertaking of Carew & Co. (the original undertaking, i.e. the appellant).
Not so much to acquire an existing undertaking as to establish, by a concealed expansionist objective, a new undertaking with sugar manufacture is the core of the operation.
Therefore, it is not section 23(4) that magnetizes the appellant 's proposal but, prima facie, Sec. 22.
[395EF] Per Fazal Ali, J. (Concurring) The object of the Act appears to be to pre vent concentration of wealth in the hands of a few and to curb monopolistic tendencies or expansionist industrial endeavours.
This objective is sought to be achieved by placing three tier curb on industrial activities to which the Act applies, namely: (1) By providing that if it is proposed to substantially expand the activities of a Company by issue of fresh capital or.
by installation of new machinery, then notice to the Central Government and its approval must be taken under section 21 of the Act.
(2) In the case of establishment of a new Company by insisting on the previous permission of the Central Government under section 22 of the Act.
(3) In the case of acquisition of an existing Company by another Company by requiring the sanction of the Central Government to be taken by such Company under section 23 of the Act.
The present case may fall within the second category.
[1398 H, 399AB]
|
Appeal No.232 of 1960.
Appeal from the Judgment and Order dated October 6, 1958, of the Bombay High Court in Income Tax Reference No. 10 of 1958.
R. J. Kolah, Dwaraka Das, section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra for the Appellants.
Hardyal Hardy and D. Gupta for the Respondent.
November 29.
The Judgment of J. L. Kapur and J. C. Shah, JJ., was delivered by Kapur, J. M. Hidayatullah, J., delivered a separate Judgment.
KAPUR, J. This is an appeal pursuant to a certificate of the High Court of Bombay against the judgment and order of that Court in Income tax Reference No. 10 of 1958, answering the question referred to it against the assesses whose legal representatives are 744 the appellants before, us, the respondent being the Commissioner of Income tax.
The facts which have given rise to the appeal are that the late Mr. Annantrai P. Pattani, hereinafter called the assessee was, by Hazur Order dated December 10, 1937, appointed the Chief Dewan of Bhavnagar State.
On January 15, 1948, the Maharaja of Bhavnagar introduced responsible Government in his State and appointed the assessee as the Chairman of the Bhavnagar Durbar Bank but he received no salary for that post.
On the same date by another Hazur Order the Maharaja granted a monthly pension of Rs. 2,000 to the assessee.
The order was in the following terms: "He looked after us well in our childhood and rendered valuable services sincerely and with single minded loyalty to us and our State during extremely difficult period of the last war and thereafter, which has enhanced the prestige and prosperity of the State and given the State and the people a place of pride in India.
In appreciation of this, it is (hereby) decided to grant him a monthly pension of Rs. 2,000 two thousand which is the monthly salary he is drawing at present.
Date 22 1 1948.
" On May 31, 1950, the Maharaja directed Messrs. Premchand Roychand & Sons, Bombay, with whom he had an account "to pay by cheque to Mr. A.P. Pattani Rs. 5 lacs out of the amount lying to the credit of my account with you." This sum was paid to the assessee on June 12, 1950.
It is stated that the accountant of the Maharaja asked for instructions as to how that amount of Rs. 5 lacs was to be adjusted in the accounts and on December 27, 1950, the Maharaja made the following order: "In consideration of Shri Annantrai P. Pattani the Ex Diwan of our Bhavnagar State having rendered loyal and meritorious services Rs. 5,00,000 (Rupees Five Lacs) are given to him as gift.
Therefore, it is ordered that the said amount should be debited to our Personal Expense Account." On March 1, 1948, Bhavnagar State was merged in the United States of Saurashtra and the Maharaja ceased to be the ruler of the said State as from that 745 date.
The assessability of this sum of Rs. 5 lacs was raised in the course of the assessment proceedings for the assessment year 1951 52 and at the request of the ' assessee which is stated to be oral the Maharaja wrote on March 10, 1953, the following: "I confirm that in June 1950, 1 gave you a sum of rupees five lacs (Rs. 5,00,000) which wag a gift as a token of my affection and regard for you and your family.
This amount was paid to you by Premchand Roychand & Sons according to my letter of 31st May, 1950, from moneys in my account with them.
" On these facts the Income tax Officer held that Rs. 5,00,000 received on June 12, 1950, was liable to income tax under section 7(1) read with explanation (2) of that section as it stood before the amendment by the Finance Act, 1955.
The assessee took an appeal to the Appellate Assistant Commissioner which was dismissed.
Against that order an appeal was taken to the Income tax Appellate Tribunal but the Tribunal also dismissed the appeal.
The Tribunal held that looking to the circumstances they would attach more importance to the "contemporaneous document, i.e., the order of the 27th December, 1950"; which clearly mentioned why the sum of Rs. 5,00,000 was paid to the assessee.
The Tribunal was not inclined to "believe in the contents of that letter and would leave the matter at that.
" The reference is to the letter of the Maharaja dated March 10, 1953.
The Tribunal further held that there was no distinction between the Maha raja and the State and "assuming for a moment that this view of ours is not found to be correct, still it is clear from the Huzur Order No. 13 dated 22 1 1948 (vide para 2 above) that the assessee rendered services not only to the State, if it is distinct from the Maharaja but to the Maharaja as well; for that Huzur Order clearly refers to assessee rendering "valuable services sincerely and conscientiously to us and our State".
We would, therefore, hold that the amount of Rs. 5 lacs is a taxable receipt falling under Section 7(1) read with Explanation 2.
" At the instance of the assessee the following question of law was referred to the High Court: 746 "Whether the sum of Rs. 5 lacs has been properly ,brought to tax in the hands of the assessee for the assessment year 1951 52?" and a further question as to the applicability of section 4(3) (vii) of the Income tax Act was not referred on the ground that it did not arise out of the order of the Tribunal.
The High Court, on the findings given by the Tribunal came to the conclusion that section 7(1) explanation (2) of the Income tax Act applied.
It held that it was not possible to regard the receipt of this sum of money by the assessee as a windfall nor as a personal gift of the nature of a testimonial; that the gift was not made in appreciation of the personality or character of the assessee nor was it symbolical of its appreciation of his personal qualities; that the consideration for the gift was in terms stated to be past services and therefore it could not be treated as a mere gift by an employer to an employee when the Court did not know what motivated the making of that gift.
On the facts of the case the High Court reached the conclusion, though with some reluctance, that the case fell within the ambit of section 7(1), Explanation (2).
The High Court also held that this sum could not be exempted from tax on the ground that it was merely a casual or nonrecurring receipt because once connection with the employment was established there was no question of considering the recurring or the casual nature of the receipt.
During the pendency of the proceedings in the High Court the assessee died and his heirs and legal representatives were brought on the record and hence they are the appellants.
It was argued on behalf of the appellants that the facts showed that the sum paid cannot fall within section 7(1), Explanation (2), of the Income tax Act.
By Hazur Order dated January 22, 1948, the Maharaja had compensated the assessee for valuable services rendered and single minded loyalty to the Maharaja and to his State during the difficult period of the war and thereafter, which had added to the prestige and prosperity of the State and in appreciation of that the 747 Maharaja had granted to the assessee a monthly pension of Rs. 2,000, which was paid to the assessee even after the merger and of the establishment of the United States of Saurashtra from out of the public revenue.
At the time when Rs. 5,00,000 were paid, the State of Bhavnagar as such had ceased to exist.
The Maharaja was no longer a Ruling Chief but was the Governor of the State of Madras.
The order by which Messrs. Premchand Roychand & Sons, Bombay, were directed to pay the sum of Rs. 5,00,000 out of the account of the Maharaja does not mention any reason for payment.
When as is alleged an accountant of the Maharaja asked as to how that amount of Rs. 5,00,000 was to be adjusted in the accounts, the Maharaja wrote on December 27, 1950, what is described as an order and directed that the sum should be debited to his Personal Expense Account.
It also stated, why it is not clear, that that sum was to be given to the assessee in consideration of the assessee 's loyal and meritorious services as a gift.
When asked later to clarify the reasons for making this gift the Maharaja made it clear that the gift was as a token of affection and regard for the assessee and his family and that the amount was paid by Messrs. Premchand Roychand & Sons from out of the private monies of the Maharaja with that firm.
The Income tax Appellate Tribunal took into account the two documents the first of which has been described as an order of December 27, 1950, which was treated as a "contemporaneous document" and the other the letter of March 10, 1953, which was about two years later.
The Tribunal did not accept the correctness of what was stated in the letter but attached a great deal of importance to the document of December 27, 1950, which the Tribunal thought was a con temporaneous document.
It appears to us that the Tribunal was in error in treating the document of December 27, 1950, as a contemporaneous document and because of this erroneous approach the finding that it has given cannot be treated as a finding of fact which should bind the court in its decision.
It is obvious that the reason why the 748 Tribunal attached all this importance to the document of December 27, 1950, was that it was contemporaneous.
It would be difficult to accept that a document written six months after the fact of payment could be termed as contemporaneous document particularly when the object of that document was only to instruct an accountant as to how he should make a particular entry.
The letter which was written by the Maharaja on March 10, 1953, was rejected because of the circumstances of the case one of which was the contemporaneous document.
It does not appear to us that the Tribunal gave sufficient or any consideration to the fact that the Maharaja had already passed an order of a liberal and almost generous grant of a pension of Rs. 2,000 per mensem which was in lieu of the services rendered by the assessee both to the State as well as to the Maharaja and his family and that pension was ordered before the merger of the State and when the employment of the assessee as the Dewan terminated.
According to what was stated in the letter of the Maharaja dated March 10, 1953, the sum of Rs. 5,00,000 was given as a gift in token of Maharaja 's affection and regard for the assessee and the assessee 's family.
There is no reason shown why the Maharaja should have aided and abetted the assessee in escaping income tax.
The only reason stated by the Tribunal is based on a wrong assumption as to the nature of the document of December 27, 1950.
The payment of Rs. 5,00,000 was sought to be brought within the purview of section 7(1) of the Act read with explanation (2).
This section at the relevant time provided: section 7(1) "The tax shall be payable by an assessee under the head "Salaries" in respect of any salary or wages, any annuity, pension or gratuity and any fees, commissions, perquisites or profits in lieu of, or in addition to, any salary or wages, which are due to him from; whether paid or not or are paid by or on behalf of. . . any private employer. . . . .
Explanation 2: A payment due to or received by 749 an assessee from an employer or former employer or from a provident or other fund, is to the extent to, which it does not consist of contributions by the ', assessee or interest on such contributions a profit received in lieu of salary for the purpose of this subsection, unless the payment is made solely as compensation for loss of employment and not by way of remuneration for past services;. . . .
Counsel for the appellants contended that the payment did not fall within this section because it was a gift made on account of personal qualifications and was a testimonial unconnected with any service rendered.
The submission was that the assessee had already been compensated for his services to the Maharaja personally and the State and this sum of Rs. 5 lacs was a gift in token of affection and regard and not as a payment in consideration of the services already rendered to the State or the Maharaja or both.
It will not be inappropriate to mention that in the document dated December 27, 1950, it is stated that Rs. 5,00,000 was paid to the assessee as ex Dewan of Bhavnagar State in consideration of his having rendered loyal and meritorious services to Bhavnagar State.
There is no mention in the document of December, 1950, of any services rendered to the Maharaja and it does not seem to have been considered by the Tribunal as to why the Maharaja should make out of his personal account the gift of such a large amount for something which was not done for the Maharaja specifically, particularly when the services to the State and to the Maharaja and his family had already been well compensated.
This lends support to the submission of the appellants that the amount was paid merely as a gift in token of Maharaja 's affection and regard for the assessee.
Mr. Kolah for the appellants relied on several cases in support of his contention that the amount was not liable to tax under section 7.
In Beynon vs Thorpe (1) the assessee resigned his position as a Managing Director of the Company; did no work for the company; did (1) 95 750 not attend any Board meetings and received no remuneration as a Director of the Company.
It was, however, a custom of the company to give to its retiring employees voluntary pension or allowance and the company voted a pension of pound 5,000 a year to the assessee but this resolution was rescinded and by another resolution pound 5,000 was voted to the assessee" not as or because he is a Director but as a personal gift".
The assessee was assessed under Schedule 'E ' in respect of both the pension and the final payment but these assessments were discharged on appeal by the Special Commissioners who decided that the allowances were gifts of personal nature only.
It was hold that the payments were not income assessable to income tax in the hands of the assessee.
Rowlatt, J., said at p. 14: "Now the question is whether this ceases to be a mere gift because what has led to it is a past employment, an employment which has ceased.
It has been made abundantly clear by the Court in Scotland in Duncan 's case(1) that this sort of sums received by a person cannot possibly be put as receipts from his office or in respect of his office or employment, and they said in terms of that kind in a case like this that these emoluments cannot be taxed under Schedule 'E ', and I am bound to say I think that goes a very long way to conclude this case.
But it is said that nevertheless they are in respect of the employment.
Well, it seems to me that is a complete fallacy.
It is nothing but a gift moved by the remembrance of past services already efficiently remunerated as services in themselves; it is merely a gift moved by that sort of gratitude or that sort of moral obligation if you please: it is merely a gift of that kind.
In this ease it happens to be very large; in many cases it is very small, but in all the cases it seems to me, whether it is large gift like this or whether it is a small gift to a humble servant they are exactly on the same footing as gifts which are made to a child or gifts which are made to any other person whom the giver thinks he ought to supply with funds for one reason or another; and as the (1) 751 Lord President in Scotland points out it is only a matter of history that the feeling between the parties which has generated the gift arises out of an employment."
Mr. Kolah also relied on Reed vs Seymour (1).
In that case a committee of a Cricket Club granted a benefit match to a professional cricketer in their service.
Out of the profits of the benefit match the beneficiary, who was the assessee purchased a farm and assessment was made on him under Schedule 'E ' in respect of the proceeds of the benefit match but this was discharged by the General Commissioner on appeal.
This sum was held to be in the nature of a personal gift and not assessable *to income tax.
Viscount Cave in his speech posed the question which Rowlatt, J., put, i.e., "is it in the end a personal gift or is it remuneration"; if the latter it is subject to tax, if the former it is not.
In that case the test applied by Viscount Cave was that the terms of the assessee 's employment did not en title him to a benefit; the purpose for which the amount was paid was to express gratitude of the employers and of the cricket loving public for what he had done and in their appreciation of his personal qualities.
It was also stated that if the benefit had taken place after Seymour 's retirement no one would have sought to tax the proceeds as his income and the circumstance that it was given before but in contemplation of, retirement does not alter its quality and the whole sum was a testimonial and not a perquisite and therefore it was not a remuneration for services but a personal gift.
Counsel also relied on Moorehouse vs Dooland (2).
In that case a cricket professional was employed under a contract in which it was provided that collections shall be made for any meritorious performance by him in accordance with the rules for the time being of the employing Cricket League Club.
The assessee played twenty matches and on eleven occasions collections were made on his behalf under the rules of the Club and a total sum of pound 48 15s was collected.
This was sought to be taxed as fees, wages perquisites or profits (1) [1927] XI T.C. 625.(2) 752 arising from his employment.
It was held that (1) the test of liability to tax on voluntary payments from the standpoint of the person who receives it was that it accrued to him by virtue of his office or employment, i.e., byway of remuneration of his services; (2) that if the assessee 's contract of employment entitled him to receive voluntary payments and (3) that the payment was of a periodic and recurring character.
On the other hand if a voluntary payment was made in circumstances which showed that it was given by way of a present or a testimonial on grounds personal to the recipient, the proper conclusion was that the payment was not profit accruing to the recipient by virtue of his office or employment but a gift to him as an individual paid and received by reason of his personal needs or by reason of his personal qualities.
Applying these principles the proceeds were by the terms of the contract of employment received by way of remuneration and were liable to tax.
In that case the payment was treated as being subject to tax because it was substantially in respect of services and accrued to the assessee by reason of his office.
It is quite clear that had the gift been as a testimonial or a contribution for specific performance peculiarly due to the personal qualities of the recipient, it would have been treated as a mere present.
The next case relied upon was David Mitchell vs Commissioner of Income tax (1) where the test laid was whether the payment was made in appreciation of .the personality and character of the assessee or in appreciation of the professional services rendered by him in order to give him an extra profit over and above the share of profit he might get from the firm for the services rendered.
Counsel for the respondent argued that the gift made by the Maharaja was not in respect of personal qualities of the recipient but was relatable to his office although made by an ex employer and was therefore taxable; that the gift was voluntary is clear but it is not quite clear how the amount can be said to be relatable to the office held by the recipient.
Even (1) 753 according to the case of the respondent the amount was paid about two years after the assessee had ceased to be an employee of the Maharaja or the State and immediately on his ceasing to be the Dewan of Bhavnagar State, the Maharaja had granted him a pension from out of the public funds for his services to the State as Dewan and for services rendered to the Maharaja and his family a handsome and a generous monthly pension of Rs. 2,000 per mensem.
Apart from the fact that the Tribunal relied upon a document which was not contemporaneous, it seems to have overlooked the fact that there was a gap of two years before the amount of Rs. 5,00,000 was paid by the Maharaja out of his personal funds.
Counsel for the respondent relied upon a judgment of this Court in P. Krishna Xenon vs The Commissioner of Income tax, Mysore, Travancore Cochin and Coorg, Bangalore (1).
In that case the assessee was a teacher who taught his disciples Vedanta philosophy without any motive or intention of making any profit.
One of the disciples made gifts of money to him on several occasions and it was contended by the assessee that he was not liable to tax on the amounts received from his disciple as he was not carrying on any vocation.
But it was held that in teaching Vedanta philosophy the assessee was carrying on a vocation and that the payments made by the disciple were received by the recipient from his vocation.
It was also held that if the voluntary payments had been made for reasons purely personal to the donee and not connected with his office or vocation, they would not be taxable but if they were made because of the office they would be taxable.
The question was not what the donor thought he was doing but why the donee received it.
The first thing to notice about that case is that those gifts were not made by the disciple as a gift to mark his esteem and affection for his preceptor but as was stated by the disciple in his affidavit he had paid those amounts because he had obtained the benefit of the teachings by the preceptor on Vedanta.
It was found in that case and the disciple admitted (1) [1959] Supp. 1 S.C.R. 133. 754 that he had received benefit from the teaching of his preceptor and that the gifts that he had made, even though as a mark of esteem and affection, were the result of teaching imparted by the preceptor and because the amounts were paid to the preceptor as preceptor and the imparting of the teaching was the causa causans of the making of the gift,; it was not merely causa sine qua non.
The payments were repeated and came with some regularity as the disciple visited the preceptor for receiving instructions.
It was in these circumstances that this court held the payments to the preceptor as payments because of the imparting of the teaching and therefore they were income arising from the vocation of the recipient as a teacher of Vedanta philosophy.
In our opinion the sum of Rs. 5,00,000 was not paid to the assessee in token of appreciation for the services rendered as a Dewan of Bhavnagar State but as a personal gift for the personal qualities of the assessee and as a token of personal esteem.
The appeal is therefore allowed and the order of the High Court set aside and the reference is answered against the Commissioner of Income tax.
The appellants will have their costs throughout.
HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Kapur, J.
I regret very much my inability to agree that the appeal should be allowed and the order of the High Court set aside.
In my opinion, the High Court had correctly answered the question referred to it.
The facts of the case have been stated in detail in the judgment of my learned brother, and I need not repeat them but refer only to some of them briefly.
On June 12, 1950, a sum of Rs. 5 lakhs was given by the Maharaja of Bhavnagar to the predecessor of the appellants, who was an ex Dewan of the State.
This was paid by Messrs. Premchand Roychand & Sons, Bombay, with whom the Maharaja had an account.
There is no contemporaneous record to show why this payment was made; but it appears that when the accountant of the Maharaja enquired how the amount 755 was to be entered in the books of account, the Maharaja issued an order on December 27, 1950, to the following effect: "In consideration of Shri Annantrai P. Pattani the Ex Diwan of our Bhavnagar State having rendered loyal and meritorious services Rs. 5,00,000 (Rupees Five lacs) are given to him as gift.Therefore, it is ordered that the said amount should be debited to our Personal Expense Account."
After the assessment proceedings had commenced in this case, the original assessee produced a letter written by the Maharaja on March 10, 1953, as follows: "I confirm that in June, 1950, I gave you a sum of rupees five lacs (Rs. 5,00,000) which was a gift as a token of my affection and regard for you and your family.This amount was paid to you by Premchand Roychand & Sons according to my letter of 31st May, 1950, from moneys in my account with them."
The question in this case was whether section 7(1) of the Income tax Act read with Explanation 2 to that section as it stood prior to the amendment in 1955, applied to this payment.
That section, so far as it is material, is as follows: "7(1).The tax shall be payable by an assessee under the head 'Salaries ' in respect of any salary or wages, any annuity, pension or gratuity and any fees, commissions, perquisites or profits in lieu of, or in addition to, any salary or wages, which are allowed to him by or are due to him, whether paid or not, from, or are paid by or on behalf of any private employer;. . . . .
Explanation 2. A payment due to or received by an assessee from an employer or former employer or from a provident or other fund, is to the extent to which it does not consist of contributions by the assessee or interest on such contributions a profit received in lieu of salary for the purpose of this subsection, unless the payment is made solely as compensation for loss of employment and not by way of remuneration for past services;. . .".
To determine whether the second Explanation applies 756 to the facts in this case, it has to be found if this pay ment was received by the assessee from a former employer by way of remuneration for past services.
The Tribunal did not accept the letter of the Maharaja, and observed as follows: "In support of the latter view Mr. Tricumdas strongly relied upon the letter dated 10 3 1953 addressed by the Maharaja to the assessee, vide para 2 above.
We have already indicated the circumstances in which that letter came to be written and would merely observe that we find it difficult to bring ourselves to believe in (sic) the contents of that letter and would leave the matter at that.
" This, in my opinion, is a finding upon the evidentiary value of the letter of the Maharaja, and though the order of the Tribunal is worded mellifluously, the Tribunal 's decision is quite clearly that it was not per suaded to accept it.
Indeed, of the two documents, greater worth has to be attached to one which was issued before the controversy started and was written not to the assessee but to the Maharaja 's accountant who enquired how the account was to be adjusted.
The use of the word 'contemporaneous ' to describe the order to the accountant meant no more than this that it was earlier in time and very soon after the amount was given.
The Tribunal did not rely on any extra neous evidence in reaching its conclusion, but on something which had proceeded from the Maharaja himself.
The motive of the Maharaja may be irrelevant, because what has to be seen is not why the payment was made but for what the assessee had received it.
The Maharaja no doubt had been generous in fixing the pension at Rs. 2,000 per month.
But the payment of such a large sum was not just bounty but to reward the past services, which judged from the scale of the pension had not adequately been paid for in the past.
In this connection, the words of the Maharaja himself (and what better evidence can there be?) were that the amount was paid "in consideration of Shri Annantrai P. Pattani the Ex Dewan of our Bhavnagar State having rendered loyal and meritorious services Rs. 5,00,000 are given to him as gift".
757 The word gift ' does not alter the nature of the payment.
The Maharaja indeed made a gift, as he had stated over again; but this order quite clearly disclosees that it was by way of remuneration for past services.
The case, therefore, falls within the ruling of the a Supreme Court reported in P. Krishna Menon vs The Commissioner of Income tax, Mysore, Travancore Cochin and Coorg, Bangalore (1), and is indistinguishable from it.
In the earlier case of this Court, the person who gave the money did not even mention any past services; but this Court found that because the recipient had taught him Vedanta philosophy, the payment was really in the nature of remuneration for past services.
The facts in P. Krishna Menon 's case (1) were that the assessee was teaching his disciples Vedanta philosophy without any motive or intention of making a profit out of such activity.
One J. H. Levy who used to go to Travancore from England at intervals attended his teachings.
Levy had an account with Lloyd 's Bank at Bombay, and on December 31, 1944, Levy transferred the entire amount of Rs. 2,41,103 11 3 to the credit of an account which Levy got the assessee to open in his ' own name.
Levy made further remittances and by August 19, 1951, had paid about Rs. 4,50,000.
It was held by this Court that the assessee was carrying on a vocation.
In deciding the question whether the amounts were assessable to tax, this Court observed as follows: ". it seems to us that the present case is too plain to require any authority.
The only point is, whether the moneys were received by the appellant by virtue of his vocation.
Mr. Sastri contended that the facts showed that the payments were purely personal gifts.
He drew our attention to the affidavit of Levy where it is stated 'all sums of money paid into his account by me have been gifts to mark my esteem and affection for him and for no other reason '.
But Levy also there said, 'I have had the benefit of his teachings on Vedanta '.
It is important to remember however that the point is not what the donor (1) [1959] Supp.1 S.C.R. 133.96 758 thought he was doing but why the donee received it".
Sarkar, J., then referred to the dictum of Collins, M. R., in Herbert vs Mc Quade (1), which may be quoted here: "Now that judgment, whether or not the particular facts justified it, is certainly an affirmation of a principle of law that a payment may be liable to income tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it.
That seems to me to be the test; and if we once get to this that the money has come to or accrued to, a person by virtue of his office it seems to me that the liability to income tax is not negatived merely by reason of the fact that there was no legal obligation on the part of the persons who contributed the money to pay it." The learned Judge also referred to the observations of Rowlatt, J., in Reed vs Seymour (2) and of Viscount Cave, L. C., in Seymour vs Reed (3), and observed that the real question was, is the payment in the nature of a personal gift or is it a remuneration?, and quoted as the reply the words of the Lord Chancellor "If the latter, it is subject to the tax; if the former, it is not." Sarkar, J., also referred to the observations of Lord Ashbourne in Blakiston vs Cooper (4), which were: "It was suggested that the offerings were made as personal gifts to the Vicar as marks of esteem and respect.
Such reasons no doubt played their part in obtaining and increasing the amount of the offerings, but I cannot doubt that they were given to the vicar as vicar and that they formed part of the profits accruing by reason of his office.", and concluded as follows: "We have no doubt in this case that the imparting (1) (3) (2) (4) [1909] A.C. 104.
759 of the teaching was the causa causans of the making of the gift; it was not merely a causa sine qua non.
The payments were repeated and came with the same regularity as Levy 's visits to the appellant for receiving instructions in Vedanta.
We do not feel impressed by Mr. Sastri 's contention that the first payment of Rs. 2,41,103 11 3 was too large a sum to be paid as consideration.
In any case, we are not concerned in this case with that payment.
We are concerned with payments which are of much smaller amounts and as to which it has not been said that they were too large to be a consideration for the teaching.
And one must not forget that these are cases of voluntary payments and the question of the appraisement of the value of the teaching received in terms of money is not very material.
If the first payment was too big to have been paid for the teaching received, it was too big to have been given purely by way of gift.
" In my opinion, the case of this Court concludes the matter, and the Tribunal was within its rights in accepting one piece of evidence in preference to another, and the finding on the evidentiary value of the letter of the Maharaja was a matter essentially for the Tribunal to decide finally.
I thus agree with the High Court in the answer which it gave, in agreement on facts with the Tribunal, and the reasons for which the answer was given.
I would, therefore, dismiss the appeal with costs.
BY COURT: In view of the majority judgment of the Court, the appeal is allowed with costs throughout.
Appeal allowed.
| A who was the Dewan of the State of Bhavnagar before responsible government was introduced in the State, was granted a monthly pension of Rs. 2,000 by the Maharaja of the State by an order dated January 15, 1948.
On March 1, 1948 the State of Bhavnagar was merged in the United States of Saurashtra and the Maharajah ceased to be the Ruler of the State.
Subsequently on May 31, 1950, the Maharaja directed his banker in Bombay to pay A a sum of Rs. 5 lakhs out of the amount lying to his credit and when he was asked for instructions as to how that sum was to be entered in the books of account he passed an order on December 27, 1950, to the effect that in consideration of A having rendered loyal and meritorious services the said sum was given to him as a gift and that the amount should be debited to his personal expense account.
The liability of the above sum for income tax was raised during the course of the assessment proceedings of A for the year 1951 52, and the assessee produced a letter dated March 10, 1953, written by the Maharajah at the request of the former, as follows: "I confirm that in June 1950, I gave you a sum of Rs. 5 lakhs which was a gift as a token of my affection and regard for you and your family. .
The Income tax Officer held that the amount was liable to income tax under section 7(1), read with explanation (2), of the Indian Income tax Act, 1922.
The Appellate Tribunal took into account the two documents dated December 27, 1950, and March 10, 1953, written by the Maharajah and considered that the first which clearly mentioned why the said sum was paid to the assessee, was more reliable for the reason that it was contemporaneous, than the second which was written more than 2 years later and the correctness of which they were not inclined to accept.
The Tribunal agreed with the Income tax Officer that the amount was a taxable receipt.
Held, (per Kapur and Shah, JJ.; Hidayatullah, J., dissenting), that on the facts of the case the sum of Rs. 5 lakhs was given to the assessee not as a payment in consideration of the services already rendered by him as the Dewan of the State, but merely as a gift in token of the Maharajah 's affection and regard for the assessee, and, therefore, was not liable to be assessed to tax 743 under section 7(1), explanation (2), of the Indian Income tax Act,1922.
The Tribunal was in error in treating the document dated December 27, 1950, 'as a contemporaneous document while as a matter of fact it was written six months after the fact of payment, and because of this erroneous approach as a result of which the second letter had been rejected, the finding given by the Tribunal could not be treated as binding on the Court.
P. Krishna Menon vs The Commissioner of Income tax, Mysore, Travancore Cochin and Coorg, Bangalore, [1959] Supp. 1 S.C.R. 133, distinguished.
Per Hidayatullah, J.
The use of the word "contemporaneous" to describe the order to the banker meant no more than this that it was earlier in time and very soon after the amount was given.
The word "gift" did not alter the nature of pay ment; the Maharaja indeed made a gift, as he had stated over again, but the order disclosed that it was by way of remuneration for past services.
The Tribunal was within its rights in accepting one piece of evidence in preference to another, and the finding on the evidentiary value of the letter of the Maharaja was a matter essentially for the Tribunal to decide finally.
The decision in P. Krishna Menon vs The Commissioner of Income tax, Mysore, Travancore Cochin and Coorg, Bangalore, [1959] Supp. 11 S.C.R. 133, was applicable and concluded the present case.
|
ivil Appeal No. 55A of 1987.
From the Judgment and Order dated 8.10.
1985 of the Allahabad High Court in Civil Misc.
No. 2278 of 1981.
S.N. Kacker, R.N. Sharma, J.K Jain and N.N. Sharma for the Appellant.
Gopal Singh and L.R. Singh for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
The question failing for consideration in this appeal by special leave is whether the High Court has erred in law in quashing the order of eviction passed against the respondent by the Judge, Small Cause Court as confirmed by the Additional District Judge and remitting the suit to the trial court for fresh consideration in the event of the trial court allowing an application by the appellant under Order I Rule 10 Civil Procedure Code for correcting the name of the plaintiff in the plaint.
The background of events to this Appeal may briefly be stated.
The appellant Bal Niketan Nursery School is a recog nised institution under the U.P. Basic Education Act, 1972, and is run and managed by a Society, "Smt.
Chandramukhi Ram Saran Shiksha Samiti", registered under the Societies Regis tration Act.
Dr. Om Prakash is the Manager of the appellant school and also the Secretary of the registered Society mentioned above.
On 10.3.1977 the Society purchased a plot of the land adjoining the school together with four super structures (Khaprails) standing thereon in the name of the appellant school through its Manager Om Prakash Gupta.
The super structures were in 514 the occupation of four tenants.
The entire rental income derived from the tenants is being utilised for the purpose of running the school.
Under the U.P. Urban Building Regula tion of Letting, Rent and Eviction Act, 1972 (for short the Rent Act) the provisions of the Act would not apply to a property owned by a recognised educational institution if the whole of the income from the property is utilised for the purposes of the institution.
Section 2(1)(b) which provides for the exemption is in the following terms: "Nothing in this Act shall apply to any building belonging to or vested in a recognised institution, the whole of the income from which is utilised for the purpose of such institution.
" As the appellant was in dire need of additional area for the growing needs of the school and as the property acquired by the school attracted the 'Exemption Clause ' in the Rent Act, the Manager of the school issued notices of termination of tenancy to the tenants on 30.5.
1977 under Section 106 of the Transfer of Property Act and demanded surrender of possession.
As the tenants failed to surrender possession, the appellant filed separate suits against the four tenants for ejectment and payment of arrears of rent.
The suits were filed in the name of the appellant school through its Manag er Dr. Om Prakash.
The Cause Title of the plaintiff in the plaint was given as under: "BaI Niketan Nursery School, Near Ganj Gurhatti, Moradabad through Dr. Om Prakash, Manager of the School.
" All the four tenants including the respondent herein raised only two defences in the suit, namely, that the appellant school is not a recognised educational institution so as to be entitled to the benefit of Section 2(1)(b) of the Rent Act and secondly, that the notice of termination of tenancy was not a valid notice because it had not been issued by an institution having juristic status.
The Small Cause Court consolidated all the four suits and held a joint trial and rejected both the contentions of the tenants and decreed the suits in favour of the school.
The tenants preferred revisions against the judgment to the District Judge and the learned Judge confirmed the judgment and decree of the Small Cause Court and dismissed all the revisions.
515 Thereafter the tenants filed writ petitions under Arti cles 226/227 of the Constitution before the High Court ,of Allahabad.
Before the High Court it was contended for the first time that the appellant school was not a juristic person and was not, therefore, entitled to file the suits through its Manager and as such the judgments of the Small Cause Court and the District Judge were ineffective and the decrees unenforceable.
The counter argument of the school was that as a recognised institution under the U.P. Basic Education Act, 1972 it has juristic status and furthermore it is the registered owner of the suit property, having obtained the sale deed in its own name and over and above all these the suit had been instituted by Dr. Om Prakash who was not only the Manager of the school but also the Secre tary of the Registered Society and as such, the suits were fully maintainable under law and consequently the judgments and decrees of the Small Cause Court and the District Judge were perfectly valid and enforceable.
Besides putting forth such contentions, the appellant school, by way of abundant caution also filed a petition under Order 1 Rule 10 Civil Procedure Code for amending the plaint by correcting the name of the plaintiff into Smt.
Chandramukhi Ram Saran Shiksha Samiti by Secretary Om Prakash in place of the name of the Bal Niketan Nursery School by Manager Dr. Om Prakash.
The High Court declined to uphold the contentions of the appellant school as in its view Clause (14) of the Constitu tion of the Registered Society contained a specific provi sion to the following effect.
"All the legal proceedings by the Society and against the Society will be done either by the Manager or by the Secretary or by a person authorised by them" and as such, the appellant school was not a juristic person and only the registered society.had the authority and competence to file the suits.
The High Court, therefore, held that the suits filed by the appellant school were not maintainable and consequently the judgments and decrees passed by the Small Cause Court and the District Judge were liable to the set aside and accordingly quashed them in three suits alone since the 4th suit (SCC Case No. 259/1977) had been compromised after the filing of the Writ Petition.
In so far as the application under Order 1 Rule 10 is con cerned, the High Court observed that the proper course for the appellant school was to move the Small Cause Court for getting the description of the plaintiff corrected and then pursue the proceedings for eviction.
The High Court also gave directions to the Small Cause Court as to how the suits were to be dealt with after amendment of the plaint in the following terms: 516 "It is made clear that in case the Judge Small Cause Court exercises the powers under Order 1 Rule 10, C.P.C. by correcting the description of the plaintiff, i.e. by getting the juristic person the Society substituted as plaintiff in the suit the defendant would be entitled to file additional written statement and the parties shall be afforded opportunity to lead fresh evidence in the case.
" Aggrieved by the judgment of the High Court the appel lant school has preferred this appeal by special leave.
Mr. Kacker, learned counsel for the appellant advanced five contentions set out below to impugn the judgment of the High Court.
The contentions are as follows: (1) The appellant school being a recognised institution under the U.P. Basic Education Act, 1972 is a legal entity and is, therefore, entitled to file the suits in its own name.
(2) Besides, the suit property has been purchased in the name of the appellant school and as the owner of the property the appellant is by itself entitled under law to file suits for seeking ejectment of the tenants.
(3) Consequent upon the purchase of the land and super structures and the vesting of possession in it, the appellant became the landlord of the tenants and the entire rental income is being used for running the school.
Therefore, in its capacity as the landlord of the tenants the appellant school is entitled to file the suits for ejectment notwithstanding clause 14 of the Constitution of the Registered Society.
(4) Even if it is viewed that the Registered Society is alone entitled to file the suit Dr. Om Prakash who is competent to file the suit on behalf of the Registered Society has filed the suits on behalf of the school and as such the Society is fully represented by Dr. Om Prakash and thereby Clause (14) of the Constitution of the Soceity stands satisfied.
(5) Even if a hyper technical view is to prevail requiring the suits to be filed only in the name of the Registered Society through its Secretary/Manager, the High Court should have allowed the petition under Order 1 Rule 10 C.P.C. and disposed of the Writ Petitions on merits instead of quashing the concurrent findings of 517 the courts below and remitting the suits to the Small Cause Court for fresh disposal after dealing with the petition under Order 1 Rule 10 C.P.C. Learned counsel for the respondent refuted the conten tions of Mr. Kacker and strenuously argued that the appel lant is not a recognised school but even if it is treated as a recognised institution under the U.P. Basic Education Act and even if the sale deed pertaining to the land and super structures has been obtained in the name of the school, it is only the Registered Society which can lawfully institute suits on behalf of the school or defend actions against it and that Clause (14) of the Constitution of the Society has overriding effect, and hence the suits filed by the appel lant school are not maintainable.
Having given our careful consideration to the arguments of the learned counsel and the view taken by the High Court we are of the opinion that the High Court was in error in sustaining the belated objection taken by the tenants re garding the competence of the appellant to file the suits and quashing the decrees for eviction passed against the tenants and remanding the suits to the Small Cause Court for fresh disposal after first considering whether the suits had been instituted in the name of the wrong plaintiff due to a bona fide mistake and whether the mistake calls for rectifi cation by allowing the petition filed under Order 1 Rule 10 C.P.C.
The reasons which have prompted us to come to this conclusion are manifold and may be enunciated in the follow ing paragraphs.
Under the U.P. Basic Education Act, the appellant school has been granted recognition as a recognised institution and by reason of such recognition the school is conferred cer tain rights and obliged to perform certain duties.
One of the rights flowing from the recognition granted to the school is an exemption from the provisions of the Rent Act.
Consequently, the appellant school has acquired rights by reason of the statutory recognition given to it under the U.P. Basic Education Act and to that extent the appellant school stands clothed with legal status.
It is not, there fore, a non entity in the eye of law.
Viewed from that perspective the appellant is entitled to file the suits through its Manager to seek the eviction of the tenants occupying the superstructures.
Of course, the learned coun sel for the respondent tried to contend that certain pro ceedings have been initiated for impugning the recognition granted to the appellant school under the U.P. Basic Educa tion Act and as such the appellant 's status as a recognised institution cannot be taken for granted.
We cannot counte nance this argument 518 because any proceedings instituted to impugn the recognition of the school subsequent to the filing of the suits cannot affect the status of the school at the time the suits were filed.
Furthermore, the respondent has not produced any material to show that the recognition granted to the school has been subsequently withdrawn.
Secondly, apart from the legal status acquired by the school as a recognised institution, it is admittedly the registered owner of the suit property even though the pur chase price may have been provided by the society.
It is not in dispute that the sale deed pertaining to the land and the super structures has been obtained in the name of the school.
Even as a benami owner of the property, the appel lant is entitled in law to preserve and protect it and to institute actions in that behalf so long as they do not conflict with the rights of the society.
As a corollary to this proposition it follows that the appellant constitutes the landlord of the tenants after the property was purchased in its name and rents from the tenants became to be collect ed.
Once a jural relationship of landlord and tenants was formed between the appellant and the tenants by operation of law the appellant 's right to initiate actions against the tenants for recovery of arrears of rent or recovery of possession of the leased property cannot be questioned or disputed.
Even if we are to close our eyes to the right of the appellant to file suits against the tenants in its capacity as a recognised institution or as the ostensible owner of the property or as the landlord of the tenants and are to judge the status of the appellant solely with reference to Clause (14) of the Constitution of the Society it may be noticed that Dr. Om Prakash is not only the Manager of the School but also the Secretary of the Registered Society.
The suits against the tenants have admittedly been filed by Dr. Om Prakash and even as per Clause (14) of the Constitution of the Society he is competent to file suits on behalf of the Society.
The school as well as the Registered Society, being institutions, they can file suits or defend suits only through a competent office bearer managing the affairs of the school or the Registered Society.
Inasmuch as the suits have been instituted by Dr. Om Prakash albeit as Manager of the school he has not ceased to be the Secretary of the Society and it can, therefore, will be taken that the suits have not been instituted by an incompetent person who is not empowered under the Constitution of the Society to file suits on behalf of the Society.
There is, therefore, no merit in the belated objection raised by the tenants that the suits are not maintainable in view of Clause (14) of the Constitution of the Society.
The suits, even if not insti tuted in the name of the Registered Society, are neverthe less competent actions 519 because they have been filed by Dr. Om Prakash who is compe tent to file suits on behalf of the Society also for recov ering possession of the leased property to the school.
The last and final ground which needs setting out in some detail is that even if a rigid view is taken and it is to be held that the suits have not been instituted in the name of the proper person viz. the Society, the High Court should have seen that Order 1 Rule 10 has been expressly provided in the Civil Procedure Code to meet with such situations so that the rendering of justice is not hampered.
The Rule provides that if a suit has been instituted in the name of a wrong person as plaintiff or if there is a doubt as to whether the suit has been instituted in the name of the right plaintiff the court may, at any stage of the suit, if it is satisfied that the suit has been instituted due to a bona fide mistake and that is necessary for the determina tion of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the court thinks just.
The scope and effect of Order 1 Rule 10 has been considered in numerous cases and there is a plethora of decisions laying down the ratio that if the court is satisfied that a bona fide mistake has occurred in the filing of the suit in the name of the wrong person then the court should set right matters in exercise of its powers under Order 1 Rule 10 and promote the cause of justice.
The courts have gone so far as to hold that even if the suit had been instituted in the name of a person who had no competence to file the suit, the courts should set right matters by ordering the addition or substitution of the proper plaintiff for ensuring the due dispensation of jus tice.
We may only refer to a few decisions in this behalf.
In Hughes vs The Pump House Hotel Company Limited (No. 2), [1902] 2 Kings Bench 485) a dispute was raised regarding the competence of the plaintiff to file a suit because doubts were cast as to whether the plaintiff had made an absolute assignment of his claim against the defendants, or only an assignment by way of charge.
Thereupon an applica tion was made under Order XVI Rule 2 (corresponding to Order 1 Rule 10 CPC) for substitution of another person as plain tiff.
The application was allowed and that was upheld by the Court of Appeal and it was pointed out that the fact that the original plaintiff had no cause of action would not take away the jurisdiction of the court to order the substitution of another person as plaintiff.
In Krishna Bai vs The Collector and Government Agent, Tanjore & Others, (ILR 30 Madras 419) when it was found that a suit for ejectment of a defendant had been brought by the Collector and 520 Government Agent due to a bona fide mistake instead of the beneficiaries of the estate, the court allowed an applica tion for substitution of the correct plaintiff and it was further held that the fact that the Collector had no right to institute the suit would not stand in the way of the court ordering the substitution of the correct plaintiff.
In Sitla Bux Singh vs Mahabir Prasad, (AIR 1936 Oudh 275) it was held that where a person prohibited from dealing in actionable claim under Section 136 Transfer of Property Act obtained an assignment of a bond through a bona fide mistake and instituted a suit on the basis of the same, the provisions of Order 1 Rule 10 would apply and the assignor can be substituted in place of the assignee as plaintiff and allowed to continue the suit.
In Dinanath Kumar vs Nishi Kanta Kumar and Others, (A.I.R. 1952 Calcutta 102) the court allowed an application under Order 1 Rule 10 CPC and permitted a person who claimed that he was the real owner of the property and the original plaintiff was only a benamidar to be added as plaintiff in order to avoid multiplicity of proceedings and that he was a necessary party to the proceedings.
In Laxmikumar Srinivas Das vs Krishnaram Baldev Bank, Lashkar and another, (A.I.R. 1954 M.B. 156) it was held that the words "where a suit has been instituted in the name of the wrong person as plaintiff" must be construed to include those suits which the instituted by persons who had no right to do so and that the fact that the person instituting the suit had no cause of action would not take away the court 's jurisdiction to order substitution of another as plaintiff.
In Karri Somalu vs Thimmalapalli Venkataswamy and oth ers, it was held that the expression "wrong person" in Order 1 Rule 10 cannot be confined merely to a person wrongly described but would also extend to include a person whose name ought not to have figures as plaintiff for want of right to file the suit and that the object of the Rule is to save suits instituted honestly although in the name of the wrong person as plaintiff and to ensure that honest plaintiffs do not suffer.
In Udit Narain Singh Malpaharia vs Additional Member Board of Revenue, Bihar and another; , it was held that in proceedings for a writ of certiorari it is not only the Tribunal or Authority whose order is sought to be quashed but also the parties in whose favour the said order is issued who are necessary parties and 521 that it is in the discretion of the court to add or implead proper parties for completely settling all the questions that may be involved in the controversy either suo motu or on the application of a party to the writ or on application filed at the instance of such proper party.
In Murari Mohan Deo vs Secretary to Government of India, ; the dismissal of a petition under Article 226 of the Constitution by the Judicial Commissioner was challenged by the appellant therein.
The Judicial Commis sioner found that the appellant who was a forester in the employment of Tripura Government had been wrongly removed from service by an order of compulsory retirement but never theless refused to grant relief to the appellant because he had failed to implead the Government of India which was a necessary party to the proceedings.
This Court disapproved the dismissal of the writ petition on the technical ground and observed as follows: "Respondent 1 is shown to be the Secretary to the Government of India, Ministry of Home Affairs.
If there was technical error in the draftsmanship of the petition by a lawyer, a Forester a Class IV low grade servant should not have been made to suffer.
An oral request to correct the description of the first respondent would have satisfied the procedural requirement.
By raising and accepting such a contention, after a lapse of six years, the law is brought into ridicule.
The court could have conveniently read the cause title as Government of India which means Union of India through the Secretary, Ministry of Home Affairs instead of the description set out in the writ petition and this very petition would be competent by any standard.
The contention is all the more objectionable for the additional reason that the appointing authority of the appellant, the Chief Commis sioner of the Government of Tripura as well the Chief Forest Officer who passed the impugned order were impleaded and they represented the administration of Tripura Government as well as the concerned officers.
Therefore, not only the petition as drawn up was competent but no bone of contention could be taken about its incompetence." Having regard to this settled position of law the High Court ought not to have sustained the objection raised by the tenants regarding the competency of the appellant to file the suits and quashed the orders of eviction concur rently passed by the Small Cause Court and 522 the Appellate Judge and remitted the suits for fresh consid eration with directions to consider the merits of the appli cation under Order 1 Rule 10 CPC but should have itself allowed the petition and added the Registered Society repre sented by its Secretary Dr. Om Prakash who is already on record, also as a party and disposed of the writ petitions on their merits.
We, therefore, allow the appeal and remit the matter to the High Court for disposal on merits after allowing the application filed under Order 1 Rule 10 CPC by the appellant and ordering Smt.
Chandramukhi Ram Saran Shiksha Samiti through its Secretary Dr. Om Prakash to be also added as a plaintiff in the suits so as to make it clear that Dr. Om Prakash is representing not only the appellant 's school but also the Registered Society and dispose of the writ peti tions on merits after the formal amendments have been car ried out in the pleadings.
The parties are directed to bear their respective costs.
N.P.V. Appeal allowed.
| Section 2(1)(b) of the U.P. Urban Building Regulation of Letting, Rent and Eviction Act, 1972 lays down that "nothing in this Act shall apply to any building belonging to or Vested in a recognised institution, the whole of the income from which is utilised for the purpose of such institution.
" The manager of the appellant school, a recognised insti tution under the U.P. Basic Education Act, 1972, run and managed by a Registered Society issued notice of termination of tenancy to the four tenants of the super structures (Khaprails) purchased by it, under Section 106 of the Trans fer of Property Act and demanded surrender of possession.
As the tenants failed to surrender possession, he filed sepa rate suits against the four tenants for ejectment and pay ment of arrears of rent.
The respondent and the other ten ants contended that the school was not a recognised educa tional institution entitled to the benefit of Section 2(1)(b) of the U.P. Urban Building Regulation of Letting, Rent and Eviction Act, 1972 and that the notice of termina tion of tenancy was not valid.
The trial court rejected the contentions of the tenants and decreed the suits in favour of the school.
The revisional court confirmed the judgment and decree of the trial court and dismissed all the revision petitions.
511 In the writ petitions before the High Court, it was contended for the first time that the appellant school was not a juristic person and was not, therefore, entitled to file the suits through its manager.
It was submitted on behalf of the school that as a recognised institution under the U.P. Basic Education Act, 1972, it has juristic status, that the suit had been instituted by a person who was not only the manager of the school but also the secretary of the Registered Society and as such the suits were fully main tainable under law.
The appellant school, also filed a petition under Order 1 Rule 10 of Code of Civil Procedure for amending the plaint by correcting the name of the plain tiff into the name of the Society by its secretary in place of the name of the school by its manager.
The High Court held that in view of the specific provi sion in Clause (14) of the Constitution of the Registered Society to the effect that "all the legal proceedings by the Society and against the Society will be done either by the Manager or by the Secretary or by a person authorised by them", the appellant school was not a juristic person and only the Registered Society had the authority and competence to file the suits and that the suits filed by the appellant school were not maintainable.
It quashed the judgments and decrees passed by the courts below in three suits since the fourth suit had been compromised after the filing of the writ petition.
Insofar as the application under Order 1 Rule 10 was concerned the High Court held that the proper course for the appellant school was to move the trial court for getting the description of the appellant corrected and then pursue the proceedings for eviction.
Allowing the appeal by special leave, this Court, HELD: 1.
It is well settled that if the court is satis fied that a bona fide mistake has occurred in the filing of the suits in the name of the wrong person, then the court should set right matters in exercise of its powers under Order 1 Rule 10 and promote the cause of justice.
The Courts have also held that even if the suit had been instituted in the name of a person who had no competence to file the suit, the courts should set right matters by ordering the addition or substitution of the proper plaintiff for ensuring the due dispensation of justice.
[519D E] 2.1 By reason of recognition granted under U.P. Basic Education Act, 1972, the appellant school stands clothed with legal status, and is not a non entity in the eye of law.
[517G] 512 2.2 Any proceedings instituted to impugn the recognition of the school subsequent to the filing of the suits cannot affect the status of the school at the time the suits were filed.
[518A] 2.3 The appellant constitutes the landlord of the ten ants after the property was purchased in its name and rents from the tenants came to be collected.
Once a jural rela tionship between landlord and tenants was formed between the appellant and the tenants by operation of law, the appel lant 's right to initiate actions against the tenants for recovery of arrears of rent or recovery of possession of the leased property cannot be questioned or disputed.
[518C D] 2.4 Even if the status of the appellant is to be judged solely with reference to clause (14) of the Constitution of the Society, the person who filed the suits is not only the manager of the school but also the Secretary of the Society and even as per this clause he is competent to file suits on behalf of the Society.
The suits, even if not instituted in the name of Registered Society, are nevertheless competent actions because they have been filed by the Manager of the school who is competent to file suits on behalf of the Society also for recovering possession of the leased proper ty.
[518E H; 519A] 2.5 The appellant is, therefore, entitled to file the suits through its Manager to seek the eviction of the ten ants occupying the superstructure.
[517] 3.
The High Court was in error in sustaining the belated objection.
taken by the tenants regarding the competence of the appellant to file the suits and quashing the decrees for eviction passed against the tenants and remanding the suits to the trial court for fresh disposal, after first consider ing whether the suits had been instituted in the name of the wrong plaintiff due to a bona fide mistake and whether the mistake called for rectification by allowing the petition filed under Order 1 Rule 10 Code of Civil Procedure.
[517D E] 4.
Appeal allowed and the matter remitted to the High Court for disposal on merits after allowing the application filed under Order 1 Rule 10 Code of Civil Procedure by the appellant and ordering the Society through its Secretary to be also added as a plaintiff in the suits so as to make it clear that the person who has filed the suits is represent ing not only the appellant school but also the Registered Society.
[522A B] Hughes vs The Pump House Hotel Company Limited (No. 2), 513 [1902] 2 Kings Bench 485; Krishna Bai vs The Collector and Government Agent, Tanjore & Others, ILR 30 Madras 419; Sitla Bux Singh vs Mahabir Prasad, AIR 1936 Oudh 275; Dinanath Kumar vs Nishi Kanta Kumar and Others, A.I.R. 1952 Calcutta 102; Laxmi Kumar Srinivas Das vs Krishnaram Baldev Bank, Lashkar and another, A.I.R. 1954 M.B. 156; Karri Somalu vs Thimmalapalli Venkataswamy and others, ; Udit Narain Singh Malpaharia vs Additional Member Board of Revenue, Bihar and another; , and Murari Mohan Deb vs Secretary to Government of India, ; , referred to.
|
ivil Appeal Nos.896 to 899 of 1988 and Civil Appeal No. 3352 of 1988.
From the Judgment and Order dated 2.9.1987 of the Delhi High Court in C.W.P. No. 2131,2082 of 1984 respectively.
PG NO 257 G. Ramaswami, Additional Solicitor General, R.K. Jain, P.P. Rao, M.S. Gujaral, section Rangarajan, A.K. Sanghi, Mrs. Madhu Kapur, Arun Kr.
Vijayesh Roy, Sanjay Kr.
Kaul, Sardar Bahadur, V.B. Saharaya, R.K. Khanna, Vishnu Mathur, Ashok Aggarwal, R.N. Keswani and R.S. Sodhi for the appearing parties.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
These four Civil Appeals by Special Leave and the Special Leave Petition arise out of and are directed against the common Judgment dated 2.9.1987, of the High Court of Delhi in C.W.P. No. 2132 and C.W.P. No. 2082 of 1984 in which the principal controversy was whether the Rules prescribing different conditions of eligibility for Diploma Holders and Graduates for promotion from the cadre of Junior Engineers to that of Assistant Engineers and from the cadre of Assistant Engineers to that of Executive Engineers in the Public Works Department of the Delhi Development Authority (DDA) is violative of Articles 14 and 16 of the Constitution and would, therefore, require to be declared void.
The High Court, in the writ petitions filed by the Diploma Holders, has held that such differential treatment of Diploma Holders and Graduates by the prescription of different standards of service experience for purposes of eligibility for promotion to the higher cadres is unconstitutional.
The D.D.A. which is the appellant in Civil Appeals No.898 of 1988 and No. 899 of 1988 assails the correctness of the view taken by the High Court.
Civil Appeals No. 896 of 1988 and 897 of 1988 are by the Graduate Engineers who were respondents before the High Court and who are, similarly, aggrieved by the decision under appeal SLP 6181 of 1988 is by the DDA Graduate Engineers Association" which seeks to espouse the cause of the Graduate Engineers.
We grant Special Leave in SLP.
All the five appeals are heard and disposed of by this common judgment.
PG NO 258 C.A.899 of of 1988 and SLP 6181 arise out of C.W.P. 2132 of of of 1988 arise out of C.W.P. 2082 of 1984.
The D.D.A. by its resolution No. 574 dated 13.11.1963 adopted, pro tanto, the rules of the Central Public Works Department (CPWD) in regard to the mode of recruitment both by direct recruitment and by promotion to the posts of Asst.
Engineers.
The rules, so adopted, in substance, stipulate and provide that 50% of the posts be filled by direct recruitment or by deputation and that the other 50% be filled up by promotion from the cadre of Junior Engineers.
The cadre of Junior Engineers itself comprises of both Graduates in Engineering and Diploma Holders in Engineering.
The two categories of officers in the cadre of Junior Engineers were provided with promotional opportunities to the post of Asst.
Engineers in the equal ratio (50%:50%) of the promotional posts.
Half of it, i.e., 25% was to be filled up by promotion of Graduate Engineers with three years ' service experience as Junior Engineers; the other 25% to be filled up from Diploma Holder Junior Engineers who were diploma holders who had 8 years ' service experience as Junior Engineers.
By resolution No. 105 dated 16.6.1971 the DDA similarly adopted the relevant rules in the CPWD in the matter of recruitment to the posts of Executive Engineers.
The Executive Engineers ' post in the DDA thus became purely promotional and Graduate Asst.
Engineers with 8 years ' service experience and diploma Asst.
Engineers with 10 years ' service experience were eligible for promotion.
No inter se quota between the two class of officers was prescribed.
The following table delineates the effect and purport of the rules adopted under resolution No. 574 dated 13.11.1963 and No. 105 dated 16.6.1971.
The table also indicates the mode of initial recruitment to the cadre of Junior Engineers: PG NO 259 EXECUTIVE ENGINEERS [By promotion] Asst.
Engrs. ' Asst.
Engrs. ' [Degree] + [Diploma] 8 years +10 years service service ASSISTANT ENGINEERS Graduates and Dimploma holders 50%by promotion 50%.By Direct recruitment 25% 25% Jr. Enger.
[Degree] [Diploma] +3 yrs.
+ 8 years service service JUNIOR ENGINEERS [Sectional Officers] Direct recruitment Graduates in Diploma Engineering holders [No prior [with 2 experience years Prescribed] experience In the years 1984 the Diploma Holder in the cadre of Junior Engineers and in he cadre of Asst.
Engineers sought to assail, by means of two writ petitions presented to the Delhi High Court, the Constitutional validity of the prescriptions made by the rules in the matter of requirement of differential service experiences between the Graduates and Diploma Holders for promotion to the higher cadres viz. of Asst.
Engineers and Executive Engineers respectively.
They also assailed the promotions of Graduate Engineers to the higher cadres made on the strength of the Rules.
2132 of 1984 pertained to the resolution No. 574 dated 13.11.1963 adopting the relevant CPWD Rules prescribing 3 years ' and 8 years ' service experience for Graduates and Diploma Holders respectively and the discrimination thus brought about between them.
CWP No. 2082 of 1984 pertained to the contitutionality of the analogous provisions in the rules adopted by resolution No. 105 dated 16.6.1971.
PG NO 260 The High Court heard these two petitions together and by its common judgment dated 2.9.1987 upheld the challenge and declared the different standards of service experience prescribed for Degree Holders and Diploma Holders in respect of both the cadres as violative of Articles 14 and 16 of the Constitution.
The principal question that arises in these appeals is whether, where, as here, recruitment to a particular cadre of posts is made, from two different sources, different conditions, based on the differences in educational qualifications, can be prescribed conditioning the eligibility for further promotion to a higher cadre in service.
The High Court, by the judgment now under appeal, has held that such prescription of differential standards based even on the differences in technical, educational qualifications is violative of Article 14 and 16 of the Constitution.
In reaching such conclusions as it did on the point, the High Court placed reliance on the pronouncement of this Court in Mohammad Shujat Ali vs UOI and Others,[1975] 1 SCR 449, H. C. Sharma and Ors.
vs Municipal Corporation of Delhi and Ors., ; and Punjab State Electricity Board,Patiala, and Anr.
vs Ravinder Kumar Sharma & Ors.
,[1986] 4 SCC 617 and T.R: Kapur and Others vs State of Haryana and Others, ; The High Court distinguished the decision of this (Court in State of Jammu & Kashmir vs Triloki Nath Khosa & Ors., l1974] 1 SCR 771.
The High Court drew a distinction between the situation where diploma holders were wholly excluded from eligibility for promotion to the higher cadre and the situation where, while they were considered eligible for promotion, however, were subjected to more onerous and less advantageous conditions for such promotion.
The High Court distinguished Triloki Nath Khosa 's case observing: "7.
This was a case where diploma holders were found completely ineligible for promotion to the higher post for lack of essential educational qualification but the considerations may vary if they are found eligible for promotion to the higher post but still certain conditions are laid as distinct from degree holders before they become eligible for promotion.
The question then would arise whether such distinction can be justified and is based on any rationality or not . " PG NO 261 Answering this point in favour of the "Diploma Holders" the High Court held: ".
The moment the diploma holders and degree holders are considered to constitute one class for purposes of promotion there cannot be any differentiation between the two vis a vis the qualification for promotion.
It could be that for reasons of efficiency in administration the authorities may lay down that diploma holders are not at all eligible for promotion to the higher post and such a bar can be upheld in view of the ratio laid down in the case of Triloki Nath Khosa but after the authorities considered them eligible for promotion there could be no rationale in their making any distinction between the degree holders and diploma holders for granting promotion to them to the higher post. " (Emphasis Supplied) The point of distinction, as apprehended by the High Court, is that in the present case a Diploma, ipso facto, qualifies for promotion.
The real question is whether this assumption is correct and whether the relevant Rules determine the eligibility for promotion on the basis of a Diploma, or for that matter even a Degree, Or whether the eligibility for promotion is determined not with reference merely to the educational attainments but on the basis of educational qualifications plus a measure of service experience, stipulated differently for Graduates and Diploma Holders.
Learned counsel for the appellants, contended that the view that commended itself to the High Court is demonstrably erroneous and is opposed to principles which, by now, should be considered well settled.
They submitted that the High Court fell into an obvious error in its view that in Shujat Ali 's case ( ; , this Court had stuck down the service rule impugned in that case.
Learned Counsel submitted that the fundamental distinction between the two sets of cases, one of which Triloki Nath Khosa 's case is represents, and the other typified by Shujat Ali 's case, was lost sight of by the High Court and the error pervading the judgment is the result of overlooking this essential distinction between the two sets of cases.
It was contended for the appellants that the present case was not one in which the Diploma Holders proprio vigore, and without more, were held eligible for promotion.
If the effect and intent of the rules were such as to treat PG NO 262 Diploma as equivalent to a Degree for purposes of further promotion then, the view of the High Court that having considered both class of officers equally eligible for promotion on the mere strength of their educational qualifications, any further discrimination brought about by subjecting the Diploma Holders alone to a more onerous and less advantageous stipulation for such promotion would violate, the constitutional pledge of equality might have some qualification.
But in the present case, counsel contended, that is not the position.
The educational qualification of a Diploma in engineering was not treated as equivalent to a Degree for purposes of determining eligibility.
Nor the Degree itself was determinative of eligibility for promotion.
The eligibility for promotion is, it is urged, based on a combination of factors which vary according as the basic educational qualification of the two classes of engineers; that this distinction was germane to the requirements of higher technical and academic quality for the higher posts which involved expertise in structural design etc.
Learned counsel submitted that even where recruitment to a particular cadre was made from different sources, resulting in the formation of single a homogeneous cadre, it was not impermissible to make a further classification amongst the members of such a cadre for purposes of further promotion based on the higher educational qualification of the candidates.
Learned counsel for the respondent diploma holders, while seeking to support the judgment of the High Court urged that this Court had, more than once, cautioned against undue accent, in the matter of promotional opportunities, on academic qualification alone which might lead to elitist preferences and tend to obscure the egalitarian principle and social justice.
It was, therefore, contended that the effect of the distinction, in the ultimate analysis, is really an imperceptible extension or magnification of insubstantial factors sub verting the precious guarantee of equality.
Sri Gujral, learned Senior Counsel, sought to impart to the situation a dimension of social justice and made an impassioned plea that to discriminate between Diploma Holders and Graduates who belong to the same cadre and hold inter changeable posts, both in the present cadre and in the prospective promotional posts, on the mere lack of some higher academic attainment is to place a high premium on those social and economic ills of the society which rendered the further academic pursuits for the economically disadvantaged difficult.
A large number of authorities were cited on either side.
We by first examine the cases relied upon by the High Court in support of its conclusion.
The inherent distinction PG NO 263 between a person with a Degree and one who is merely a Diploma Holder is much too obvious.
But the question that falls for consideration, in the context such as the present one, is whether the differences have a reasonable relation to the nature of the office to which the promotion is contemplated.
The idea of equality in the matter of promotion can be predicated only when the candidates for promotion are drawn from the same source.
If the differences in the qualification has a reasonable relation to the nature of duties and responsibilities, that go with and are attendant upon the promotional post, the more advantageous treatment of those who possess higher technical qualifications can be legitimised on the doctrine of classification.
There may, conceivably, be cases where the differences in the educational qualifications may not be sufficient to give any preferential treatment to one class of candidates as against another.
Whether the classification is reasonable or not must, therefore, necessarily depend upon facts of each case and the circumstances obtaining at the relevant time.
When the state makes a classification between two sources, unless the vice of the classification is writ large on the face of it, the person assailing the classification must show that it is unreasonable and violative of Article 14.
A wooden equality as between all classes of employees irrespective of all distinctions or qualifications, or job requirements is neither constitutionally compelled nor practically meaningful.
This Court in Central Railway vs
A.V.R. Siddhanti; , at 214 observed: ".
A wooden equality as between all classes of employees regardless of qualifications, kind of jobs, nature of responsibility and performance of the employees is not intended, nor is it practicable if the administration is to run.
Indeed, the maintenance of such a 'classless and undiscerning 'equality ' where, in reality, glaring inequalities and intelligible differentia exist, will deprive the guarantee of its practical content.
Broad classification based on reason, executive pragmatism and experience having a direct relation with the achievement of efficiency in administration, is permissible .
In T. Devadasan vs The Union of India,[1964]4 SCR 680 at 689 & 690 this Court observed: ".
What is meant by equality in this Article is, equality amongst equals.
It does not provide for an absolute equality of treatment to all persons in utter disregard PG NO 264 in every conceivable circumstance of the differences such as age, sex, education and so on and so forth as may be found amongst people in general.
Indeed, while the aim of this Article is to ensure that invidious distinction or arbitrary discrimination shall not be made by the State between a citizen and a citizen who answer the same description and the differences which may obtain between them are of no relevance for the purpose of applying a particular law reasonable classification is permissible.
It does not mean anything more.
But then the process of classification is in itself productive of inequality and in that sense antithetical of equality.
The process would be constitutionally valid if it recognises a pre existing inequality and acts in aid of amelioration of the effects of such pre existent inequality.
But the process cannot in itself generate or aggravate the inequality.
The process cannot merely blow up or magnify in substantial or microscopic differences on merely meretricious or plausible dif ferences.
The over emphasis on the doctrine of classification or any anxious and sustained attempts to discover some basis for classification may gradually and imperceptibly deprive the article of its precious content and end in replacing Doctrine of equality by the doctrine of classification.
The presumption of good faith in and of constitutionality of a classification cannot be pushed "to the point of predicating some possible or hypothetical but undisclosed and unknown reason for a classification rendering the precious guarantee of equality "a mere rope of sand".
"To overdo classification is to undo equality".
The idea of similarity or dissimilarity of situations of persons, to justify classification, cannot rest on merely differentia which may, by themselves be rational or logical, but depends on whether the differences are relevant to the goals sought to be reached by the law which seeks to classify.
The justification of the classification must needs, therefore, to be sought beyond the classification.
All marks of distinction do not necessarily justify classification irrespective of the relevance or nexus to objects sought to be achieved by the law imposing the classification.
In Mohd. Sujat Ali 's case the validity of a prescription of the rules of the State of Andhra Pradesh treating Graduate Engineers, on the one hand, and engineers with diploma or equivalent qualification, on the other, differently for purposes of promotion arose for consideration.
Strictly speaking, the High Court was not right in its under standing of the actual result of the PG NO 265 ease.
The High Court, in para 8 of the judgment observed: "The Supreme Court had then struck down this rule as violative of fundamental rights enshrined in Articles 14 and 16 of the Constitution of India. " But it is to be noticed that the writ petitions were ultimately dismissed by this Court.
There are, of course, certain observations which caution against too readily resorting to the expedience of classification.
After referring to Triloki Nath Khosa 's ease it was observed: ". .But from these decisions it cannot be laid down as an invariable rule that whenever any classification is made on the basis of variant educational qualification.
, such classification must be held to be valid irrespective of the nature and purpose of the classification or the quality and extent of the differences in the educational qualifications.
It must be remembered that "life has relations not capable always of division into inflexible compartments".
The moulds expand and shrink.
The test of reasonable classification has to be applied in each ease on its peculiar facts and circumstances . . " (Emphasis Supplied) This echoes what Vivian Bose, J. had earlier said in Bidi ,Supply Co. vs Union of lndia ; "Article 14 sets out, to my mind, an attitude of mind,a way of life.
rather than a precise rule of law . ". .In a given case that it falls this side of the line or that and because of that decisions on the same point will vary as conditions vary, one conclusion in one part of the country and another somewhere else; one decision today and another tomorrow when the basis of society has altered and the structure of current social thinking is different.
It is not the law that alters but the changing conditions of the times and Article t4 narrows down to a question of fact which must be determined by the highest Judges in the land as each ease arises. ." Shujat Ali 's ease itself recognised the permissibility and validity of such classification if the nature of the PG NO 266 functions and duties attached to the promotional posts are such as to justify the classification in the interest of efficiency in public service; but, where both graduates and non graduates were regarded as equally fit and eligible for promotion,the denial of promotion to a person otherwise eligible and due for promotion on the basis of a quota was not justified.
On this point it was observed by this Court in Shujat Ali 's case: ". .But where graduates and non graduates are both regarded as fit and, therefore, eligible for promotion,it is difficult to see how, consistently, with the claim for equal opportunity, any differentiation can be made between them by laying down a quota of promotion for each and giving preferential treatment to graduates over non graduates in the matter of fixation of such quota.
The result of fixation of quota of promotion for each of the two categories of supervisors would be that when a vacancy, arises in the post of Asst.
Engineer, which, according to the quota is reserved for graduate supervisors, a non graduate supervisor cannot be promoted to that vacancy, even if he is senior to all other graduate supervisors and more suitable than they.
His opportunity for promotion would be limited only to vacancies available for non graduate supervisors.
That would clearly amount to denial of equal opportunity to him In the present appeals before us, the Graduates and Diploma Holders were not treated equal in the mattes of eligibility for promotion.
What is, therefore, assailed is not the aspect of the mere fixation of a quota as between the Diploma Holders and the Graduates in the promotional posts, but the very prescription of different standards or conditions of eligibility.
In Shujat Ali 's case the infirmity of the differential treatment stemmed from the fundamental basis that, at that point, both Graduates and Diploma holders were equally eligible but the Rule operated to deny promotion to a Diploma holder on the basis of a quota.
The observations in that case pertained to a stage which arose after the equality of eligibility for promotion between the two classes of persons had been recognised.
But in the present appeals the different prescriptions for conditioning eligibility are themselves questioned which need to be decided on the basis whether the discrimination contemplated and brought about in the matter of promotional opportunities between graduates and non graduates, based on the differences in the quality of their technical qualifications, were relatable to, and justified on the PG NO 267 basis of, the requirements of the promotional posts.
It is relevant to mention here that the different standards and Conditions for eligibility were prescribed with a view to injecting a higher technical quality in the promotions cadre based on the recommendations of a committee, called "Vaish Committee", constituted for the purpose.
H.C. Sharma 's and Punjab State Electricity Board 's cases were also matters where Graduates and Diploma holders were merged into and formed part of a homogenious cadre with equal eligibility for promotion and what fell for consideration was the validity of the further prescription of quotas between them.
Here again, no question of the validity of the different standards prescribed for the very eligibility for promotion fell for consideration.
The present cases, however, are those where, havig regard to the requirements of the promotional posts, different conditions of eligibility for promotion on the differences based on the educational qualifications and service experience were prescribed.
In State of Mysore vs Narasinga Rao,[1968] 1 SCR 40 1 higher educational qualifications were considered relevant for fixation of higher pay scales.
In Union of India vs Mrs. S.B. Kohli, the requirement of a post graduate specialisation in the particular discipline was considered not irrelevant and a classification based on such specialisation was upheld.
Triloki Nath Khosa 's case is more directly in point.
There, Graduate Engineers and Diploma Holders were in a common cadre of Asst.
Engineers.
But for purposes of further promotion to the higher cadre of Executive Engineers only the Graduate were held eligible.
Diploma Holders were barred for promotion.
Repelling the challenge to this provision made by the Diploma Holders, this Court said: "The classification of Assistant Engineers into Degree holders and Diploma holders could not be held to rest on any unreal or unreasonable basis.
The classification was made with a view to achieving administrative efficiency in the Engineering services.
If this be the object, the classification is clearly correlated to it for higher educational qualifications are at least presumption evidence of a higher mental equipment." "Classification on the basis of educational qualifictions made with a view to achieving administrative PG NO 268 efficiency cannot be said to rest on any fortuitous circumstances and one has always to bear in mind the facts and circumstances of the case in order to judge the validity of a classification." "Though persons appointed directly and by promotion were integrated into a common class of Assistant Engineers, they could, for purposes of promotion to then cadre of Executive Engineers, be classified on the basis of educational qualifications the rule providing that graduates shall be eligible for such promotion to the exclusion of diploma holders does not violate Articles 14 and 16 of the Constitution and must be upheld.
" (Emphasis Supplied) In Triloki Nath 's case diploma holders were not considered eligible for promotion to the higher post.
Here, in the present case, the possession of a diploma, by itself and without more, does not confer eligibility.
Diploma, for purposes of promotion, is not considered equivalent to the degree.
This is the point of distinction in the situations in the two cases.
If Diploma Holders of course on the justification of the job requirements and in the interest of maintaining a certain quality of technical expertise in the cadre could validly be excluded from the eligibility for promotion to the higher cadre, it does not necessarily follow as an inevitable corollary that the choice of the recruitment policy is limited only two choices, namely either to consider them "eligible" or "not eligible".
State, consistent with the requirements of the promotional posts and in the interest of the efficiency of the service, is not precluded from conferring eligibility on Diploma Holders conditioning it by other requirements which may, as here, include certain quantum of service experience.
In the present case, eligibility determination was made by a cumulative criterion of a certain educational qualification plus a particular quantum of service experience.
It cannot, in our opinion, be said, as postulated by the High Court, that the choice of the State was either to recognise Diploma Holders as "eligible" for promotion or wholly exclude them as "not eligible".
If the educational qualification by itself was recognised as conferring eligibility for promotion, then, the super imposition of further conditions such as a particular period of service, selectively, on the Diploma Holders alone to their disadvantage might become discriminatory.
This does not prevent the State from formulating a policy which prescribes as an essential part of the conditions for the vary eligibility that the candidate must have a particular qualification plus a stipulated quantum of service PG NO 269 experience.
It is stated that on the basis of the "Vaish Committee" report, the authorities considered the infusion of higher academic and technical quality in the personnel requirements in the relevant cadres of Engineering Services necessary.
These are essentially matters of policy.
Unless the provision is shown to be arbitrary, capricious, or to bring about grossly unfair results, judicial policy should be one of judicial restraint.
The prescriptions may be somewhat cumbersome or produce some hardship in their application in some individual cases; but they can not be struck down as unreasonable, capricious or arbitrary.
The High Court, in our opinion, was not justified in striking down the Rules as violative of Articles 14 and 16.
Accordingly, all the Appeals are allowed, the Judgment of the High Court dated 2.9.1987 set aside and the Civil Writ Petitions No. 2 132 of 1984 and 2082 of 1984 in the High Court dismissed.
However, the parties are left to bear and pay their costs, both here and below.
A.P.J .
Appeals allowed.
| The Rules of the Central Public Works Department (CPWD) adopted by the Delhi Development Authority (DDA) stipulate and provide that 50% of the posts of Assistant Engineers in DDA be filed up by promotion from the cadre of Junior Engineers comprising of both Graduates in Engineering and Diploma Holders in Engineering in the equal ratio (50%:50%) of the promotional posts.
Half of it, i.e. 25% were to be filled up by promotion of Graduate Junior Engineers with three years ' service experience as Junior Engineers; the other 25% to be filled up from Diploma Holder.
Junior Engineers.
who had X years service experience as Junior Engineers.
The Rules further provide that the Executive Engineers ' post in DDA were purely promotional and Graduate Assistant Engineers with 8 years ' service experience and Diploma Holder Assistant Engineers with 10 years ' service experience were eligible for promotion.
No inter se quota between the two class of officers; was prescribed.
The Diploma Holders in the Cadres of .junior Engineers and Assistant Engineers filed separate writ petitions in the High Court assailing the constitutional validity of the prescriptions made by the rules in the matter of requirement of differential service experiences between the Graduates and the Diploma Holders for promotion to the higher caders of Assistant Engineers and Executive Engineers respectively.
They also assailed the promotion of Graduate Engineers to the higher cadres made on the strength of the Rules.
PG NO 253 PG NO 254 The High Court allowed the writ petitions and declared the different standards of service experience prescribed for Degree Holders and Diploma Holders in respect of both the cadres as violative of Articles 1 1 and 16 of the Constitution.
In the appeal to this Court, on behalf of appellants it was contended; (l) that the view taken by the High Court is demonstrably erroneous and opposed to well settled principles; (2) that the High Court took an erroneous view that in Shujat Ali 's case ; this Court struck down the service rule impugned in that case; (3) that the fundamental distinction between Triloki Nath Khosa 's, case ; and Shujat Ali 's case was lost sight of by the High Court;(4) that the present case was not one in which the Diploma Holders, proprio vigore and without more, were held eligible for promotion.
The educational qualification of a Diploma in engineering was not treated as equivalent to a Degree for purposes of determining eligibility.
Nor the Degree itself was determinative of eligibility for promotion.
The eligibility of promotion is based on a combination of factors which vary according to the basic educational qualification of the two classes of engineers; (5) that this distinction was germane to the requirements of higher technical and academic quality for the higher posts which involved expertise in structural design.
and (6) that even where recruitment to a particular cadre was made from different sources,resulting in the formation of a single homogeneous cadre it was not impermissible to make a further classification amongst the members of such a cadre for purposes of further promotion based on the higher educational qualification of the candidates.
On behalf of the respondent Diploma Holders it was contended(1) that this Court had, more than once.
cautioned against undue accent, in the matter of promotional opportunities, on academic qualification alone which might lead to elitist perferences and tend to obscure the egalitarian principle and social justice; (2) that the effect of the distinction is really an imperceptible extension or magnification of insubstantial factors subverting the precious guarantee of equality and(3) that to discriminate between Diploma Holders and Graduates who belong to the same cadre and hold inter changeable posts, both in the present cadre and in the prospective promotional posts, on the mere lack of some higher academic attainment is to place a high premium on these social and economic pursuits for the economically disadvantaged difficult.
Allowing the Appeals, PG NO 255 HELD: l.
The inherent distinction between a person with a Degree and one who is merely a Diploma Holder is much too obvious.
But the question for consideration, in the present context, is whether the differences have a reasonable relation to the nature of the office to which the promotion is contemplated.
The idea of equality in the matter of promotion can be predicated only when the candidates for promotion are drawn from the same source.
If the differences in the qualification has a reasonable relation to the nature of duties and responsibilities.
that go with and are attendant upon the promotional post, the more advantageous treatment of those who possess higher technical qualifications can be legitimised on the doctrine of classification.
There may,conceivably, be cases where the differences in the educational qualifications may not be sufficient to give any preferential treatment to one class of candidates as against another.
Whether the classification is reasonable or not must, therefore, necessarily depend upon facts of each case and the circumstances obtaining at the relevant time.
When the State makes a classification between two sources, unless the vice of the classification is writ large on the face of it, the person assailing the classification must show that it is unreasonable and violative of Article 14.
[263A C ] 2.
A wooden equality as between all classes of employees irrespective of all distinction or qualifications, or job requirements is neither constitutionally compelled nor practically meaningful.
[263D] The process of classification is in itself productive of inequality and in that sense antithetical of equality.
The process would be constitutionally valid if it recognises a pre existing inequality and acts in aid of amelioration of the effects of such pre existent inequality.
The the process cannot merely blow up or magnify in substantial or microscopic differences on merely meretricious or plausible.
The over emphasis on the doctrine of classification or any anxious and sustained attempts to discover some basis for classification may gradually and imperceptibly deprive the article of its precious content and end in re placing doctrine of equality by the doctrine of the classification.[264C D] 4.
The presumption of good faith in and of constitutionality of a classification cannot be pushed to the point of predicating some possible or hypothetical but undisclosed and unknown reason for a classification rendering the precious guarantee of equality "a mere rope of sand".
[264E] PG NO 256 Central Railway vs A.V.R. sidhanti; , at 214 and T.Devadasan V. The Union of India, [1964] 4 SCR at 689 & 690 followed.
5."To overdo classification is to undo equality".
The idea of similarity or dissimilarity of situations of persons to justify classification, cannot rest on merely differentia which may, by themselves rational or logical, but depends on whether the differences are relevant to the goals sought to be reached by the law which seeks to classify.
The justification of the classification must, therefore, be sought beyond the classification.
All marks of distinction do not necessarily justify classification irrespective of the relevance or nexus to objects sought to be achieved by the law imposing the classification.
[264F G] State of Jammu & Kashmir vs Triloki Nath Khosa & Ors.,[1974] I SCR 771; Bidi Suppy Co.v.
Union of India; , , relied no; Mohammad shujat Ali vs UOI and others, [1975]1 SCR 449; H.C. Sharma and Ors.
vs Municipal Corporation of Delhi and Ors., [1983]3 SCR 372 and Punjab State Electricity Board, Patiala, and Anr.v.
Ravinder Kumar Sharma & Ors.
,[1986] 4 SCC 617 distinguished; State of Mysore vs Narasinga Rao, ; and Union of India vs Mrs. S.B. Kohli, [1973]3 SCR 117, referred to.
In the present case, the possession of a diploma.
by itself and without more, does not confer eligibility.
Diploma, for purposes of promotion, is not considered equivalent to the degree.
[268d] 7.If the educational qualification by itself was recognised as confering eligibility for promotion, then the super imposition of further conditions such as a particular period of service, selectively, on the Diploma Holders alone to their disadvantage might become discriminatory.
This does not prevent the State from formulating a policy which prescribes as an essential part of the conditions for the very eligibility that the candidate must have a particular qualification plus a stipulated quantum of service experience.[268G H;269A]
|
Appeal No. 289 of 1959.
Appeal from the judgment and decree dated December 16, 1955, of the Madras High Court in Appeal No. 231 of 1954.
N. C. Chatterjee, K.N. Bajagopala Sastri, V.S. Venkata Raman and T. K. Sundara Raman, for the Appellants Nos. 2 to 6.
A. V. Vishwantha Sastri, R. Ganapathy Iyer 442 section Gopalaratnam and G. Gopalkrishnan, for respondent No. 1.
T. section Venkataraman, for respondent No. 2 1962.
April 26.
The Judgment of the Court was delivered by SUBBA RAO, J.
This appeal on a certificate is preferred against the judgment and decree of the High Court of Judicature at Madras confirming those of the Subordinate Judge, Madurai, in a suit for a declaration that the adoption of the 2nd defendant by the 1st defendant was invalid.
The following genealogy will be helpful to appreciate the facts and the contentions of the parties Rengatha | __________________________ | | Dhanappa Kulandaivelu (Sr.) | | _______________________ Dhanappa | | | Renganatha Subramania Kulandaivelu (Jr.) | | Shanmugha Chandarashekhara(Pl.) widow Guruvammal | | | Kanniappa (P2) Anni (D 1) | | (died Feb. to P 5 adopted D 2) | Renganatha Dhanappa(D11) Sankaralinga(D19) Balaguruswami(D4) Palaniandava(D 20) D5 to D10 Shanmughasundara(D12)D 21and D 22 Avadaiappa (D 14) D 15 to D IS 443 Shanmugha, Subramania and Kulandaivelu (Jr.) became divided in 1878 and since the division each of the three.
branches of the family was living separately.
Kulandaivelu (Jr.) died in the year 1912 possessed of considerable property described in the plaint schedule leaving him surviving his widow, Guruvammal Anni, who is the 1st defendant as his sole heir.
In 1951, Guruvammal Anni, with a view to adopt the 2nd defendant to her deceased husband, wrote letters to her husband 's sapindas who were majors i.e., plantiffs 1 and 2, and defendants 5, 11, 12, 14, 19 and 20, seeking their con sent to her adopting the 2nd defendant.
The said sapindas, except defendants 12 and 14, refused to give their consent for the reasons mentioned in their replies.
Defendant 12 did not receive the letter, but the 14th defendant gave his consent to the adoption.
On May 25, 1951, Guruvammal Anni adopted Kuandaivelu (Jr.), the 2nd defendant as a son to her late husband.
On May 30, 1951, she executed exhibit A 1, the adoption deed, and registered the same on June 12, 1951.
Chandarasekhara, the son of Subramania, and his son, Kanniappa, and three minor grandsons filed O. S, No. 156 of 1951 in the Court of the Subordinate Judge, Madurai, for a declaration that the adoption of the 2nd defendant by the 1st defendant was invalid, void and of no effect.
Defendant 3, is the natural father of defendant 2; defendants 4 to 21 are the other sapindas of 1st defendant 's husband, being the descendants of Renganatha.
The particulars of their relationship to Kulandaivelu will be seen from the aforesaid genealogy.
It was, inter alia, alleged in the plaint that the adoption made by the 1st defendant of the 2nd defendant without the consent of the sapindas was bad and that the consent given by the 14th defendant was purchased and therefore would not validate it.
Defendants 1, 2 and 3 filed written statements supporting the adoption; they pleaded that the nearer sapindas 444 improperly refused to give the consent, the adoption made on the basis of the consent given by the 14th defendant was valid.
The learned Subordinate Judge, on a consideration of the evidence and the relevant law on the subject, came to the conclusion that the 12th defendant, though received the notice seeking his consent, returned the same, that the other sapindas, excluding defendant 14, improperly refused to give their consent to the adoption and that, therefore, the adoption made with the consent of defendant 14 was valid in law.
The Subordinate Judge also rejected the contention of the plantiffs that the 14th defendant, having regard to his disbelief in the religious efficacy of adoption and the Hindu rituals,,was disqualified from giving his consent.
In the result, he dismissed the suit.
On appeal a division Bench of the Madras High Court, agreeing with the view of the learned Subordinate Judge, came to the conclusion that the sapindas were actuated by improper motives in refusing to give their consent.
The second contention directed against the consent given by defendant 14 does not appear to have been seriously pressed before the High Court.
In the result the High Court dismissed the appeal with costs.
It may be mentioned that the 1st defendant, Guruvammal Anni died pending the suit and that the 1st plaintiff died after the appeal was disposed of by the High Court.
The other plaintiffs have preferred to present appeal against the judgment of the High Court.
The main question raised in this appeal in whether the refusal of the sapindas, other than defendant 14, to give consent to the adoption of the 2nd defendant by the last defendant was improper and, therefore, could be disregarded.
Before we consider the legal aspects of the question raised, we shall briefly state the relevant facts, either admitted or concurrently found b 445 the courts, below.
Kulandaivelu, the last male holder, died on January 29, 1912, possessed of extensive, property.
His widow, Guruvammal Anni, ,Was managing the said property through power of attorney agents.
rho 1st defendant is the 3rd defendant 's father 's mother 's sister 's daughter 'section The 3rd defendant was also helping the 1st defendant in respect of certain transactions during the management of her properties by one of her power of attorney agents.
The 3rd defendant and his wife were living with the 1st defendant; and the second defendant was born in 1930 in the house of Guruvammal Anni.
She was very much attached to him and as he grow up she also performed pujas in company with him.
The 2nd defendant studied in the District Board High School, Sholavandan taking Sanskrit as his second language and was studying for B. A. (Hons.) degree in 1951 when he was adopted. ' In 1951 Guruvammal Anni was about 67 years old and wanted to take a boy in adoption who would not only discharge religious duties to her husband as his son and preserve the continuance of her husband 's lineage, but would also be of great solace and help to her during the remaining years of her life.
With that object, she issued notices to the sapindas of her husband intimating them of her intention to adopt the 2nd defendant, who, according to her, had all the necessary qualifications to fulfil the role of an adopted son.
The boy proposed to be adopted by her was young healthy, educated, religious minded and devoted to her, having been born in her house and brought up by her.
In April 1951, the 1st defendant sent letters Ex.
A 1 to the 1st plaintiff, Ex.
A 10 to the 2nd plaintiff, exhibit
A 15 to the 4th defendant and a similar one to the 5th defendant, Ex A 18 to the 11th defendant, exhibit B 3 to the 12th defendant.
exhibit B 52 to the 14th defendant, exhibit
A.21 to the 19th defendant, and exhibit
A 25 to the 20th 446 defendant, seeking for their consent to her adopting the 2nd defendant.
As already stated, all the said persons excepting defendants 12 and 14, replied refusing to give their consent to the proposed adoption; the 12th defendant received the letter but returned it unopened, and the 14th defendant gave his consent.
exhibit A 3 is the reply sent by the lot plaintiff.
He has given various reasons for refusing to give his consent to the proposed adoption.
As much of the argument turned upon the contents of this letter, we would briefly give the said reasons.
They are: (1) the 1st defendant did not think fit to take a boy in adoption for many years though her husband died 38 years ago and that four years ago there was some talk about it, but, at the instance of the 1st plaintiff and other agnates, she, gave up the idea of making an adoption stating that she would not think of adopting a boy to her husband; (2) the present attempt to take a boy in adoption was at the instance of the 3rd defendant who was exercising considerable influence over her to take a boy in adoption aged about 20 years and who was not an agnate was opposed to the uniform and invariable custom prevailing in the community; and (4) there were eligible boys among his grandsons under the age of 7 years and among his cousin 's great grandsons under the age of 18 years and the parents of the said boys had no objection to give any one of them in adoption.
He summarized,his objections in the following words: "I do strongly object to the adoption of Kulandaivelu,your agent 's son; not only for the reason that he is aged and ineligible, but also for the reasons that he is not agnate and the proposed adoption is prompted by corrupt and selfish decision on the part of your agent.
The proposed adoption has behind it the motive of defeating the legitimate reversionary 447 interest of your husband 's agnates and is absolutely wanting in good faith.
" exhibit A 12 is the reply of the 2nd plaintiff, i.e., the son of the 1st plaintiff.
He has practically repeated the objections found in his father 's letter; while the father stated in his letter that there were eligible boys for adoption among his grandsons and great grandsons of his cousin, the 2nd plaintiff only referred to his sons; he says in his letter: "Moreover if you really desire to take a boy in adoption I have got sons who are less than seven years old and who are fit for being taken in adoption.
I have no objection whatever to give in adoption anyone of the aforesaid boys whom you like.
A 16 in the reply given by the 4th defendant.
He has eligible boys, who are the great grandsons of the cousin of the 1st plaintiff and who can be given in adoption; these are some of the boys ,mentioned by the 1st plaintiff in his letter.
He sets up the case that the 1st defendant 's husband had adopted one Sankarlinga Mudaliar even when he was alive '.
He refuses to give the consent on the ground that there was already an adoption.
exhibit B 5 is the reply given by the 5th defendant and be only adopts the reasons given by his father, the 4th defendant.
Ex A 1 9 is the reply given by the 11th defendant, who is the father of the 14th defendant.
His reply is on the same lines as given by the 1st plaintiff.
B 4 is the reply given by the 14th defendant; he gives his wholehearted consent to the adoption.
He has four eligible sons, defendants 15 to 18, who could be given in adoption.
exhibit
A 22 is the reply of the 19th defendant and exhibit
A 26 that of his son, the 20th defendant.
The 19th defendant stated that he has grandsons aged less than 8 years and that the parents of the said boys have no objection to give any one of them in adoption.
The 20th defendant offers one 448 of his sons to be taken in adoption by the 1st defend ant.
The position that emerges from the aforesaid replies is this: (1) the 1st plaintiff suggested that any one of his grandsons or his cousin 'section great grandsons might be taken in adoption; (2) the 2nd plaintiff, the 19th defendant, the 16th defendant and the 20th defendant offered their sons or grandsons, as the case may be, for adoption; (3) the 14th defendant, the son of the 11th defendant gave his consent to the adoption; (4) to 12th defendant, who has only one son, though he received the notice did not reply; and (5) the 4th and the 5th defendants set up another adoption by the last male holder.
In short, the elderly members of the branch of Danappa, except defendants, 4, 5, 12 and 14, objected to the adoption mainly on the ground that the proposed boy was not a sapinda and that they were willing to give one of their sons or grandsons, as the case may be, in adoption.
The other grounds given by them are similar to those given by the 1st plaintiff.
The said grounds indicate that they were anxious that the widow should not take the boy in adoption but should leave the properties to the reversioners.
The other reasons given, namely, the alleged influence of the 3rd defendant over the widow, the custom against adoption of a person other than an agnate and the ineligibility of the boy, were all found by both the courts below to be untenable.
The replies disclose a concerted action on the part of the sapindas to prevent the widow from taking the 2nd defendant in adoption.
They had nothing to say against the qualifications of the boy, for, as we have already noticed, he was in every way the most suitable boy from the standpoint of the widow.
The only objection, therefor(,, was that the boy was not an agnate and that there were eligible boys among the agnates.
The question, therefore, in this case is whether the refusal to give consent to the 449 adoption by the widow of a boy,, highly qualified in every way, on the simple ground that be was not an agnate and the other agnates were available for adoption would be an improper refusal by the sapindas so as to entitle the widow to ignore their refusal and take the boy in adoption with the Consent of the remoter sapinda.
Mr. N.C. Chatterjee, learned counsel fore the appellants, contends that the refusal of the sapindas to give consent, in the circumstances of the present case, was proper for two reasons, namely, (1)according to Hindu shastras a widow has to take only a sapinda in adoption in preference to one outside that class, and (2) the 1st plaintiff did not refuse but gave consent on Condition that one or other of his grandsons or great grandsons of his cousin should be taken in adoption and the said condition is sanctioned by Hindu law.
Mr. Vishwanatha Sastri, learned counsel for the respondents, on the other hand, contends that the refusal by the agnates to give consent for the adoption was improper, for, they, being the guardians and protectors of the widow, were in a fiduciary relationship with the widow and that they ,should have exercised their discretion objectively, and reasonably from the standpoint of the advisability of taking the 2nd defendant in adoption in the last male holder 's branch and that in the present case the agnates refused to give consent from selfish motives in order to protect their reversionary interest, and therefore the adoption made with the consent of the remoter sapinda was valid.
The main question that arises in this appeal is whether the refusal by the nearer sapindas to give consent to the adoption as learned counsel for the respondents described it, or the giving of the consent subject to a condition as learned counsel for the appellant calls it, is improper, with the 450 result the adoption made by the 1st defendant of the 2nd defendant with the consent of the remoter reversioner was valid under the Hindu law.
Before we notice the relevent case law and textual authority on the subject, it would be convenient to clear the ground.
This appeal arises out of an adoption made in the Dravida country and this case is governed by the school of Hindu law applicable to that part of the country.
Further we are not concerned here with an adoption in a Hindu joint family but only with one in a divided family.
We must, therefore, steer clear of the ramifications of the doctrine of consent in its impact on an adoption made by a widow in a joint Hindu family.
It is not disputed that in a case where the last male holder is a divided member of the family, his widow can make an adoption with the consent of a remoter sapinda if a nearer sapinda or sapindas improperly refused to give consent to the adoption.
It is also common case that an adoption of a boy by a widow outside the class of sapindas is valid.
This controversy centres round the question whether in the present case the conditional consent given by some of the sapindas and the refusal by the others to give consent to the adoption were proper.
This question depends for its solution on the answer we give to the following interrelated questions : (1) What is the source and the content of the power of the widow to adopt a boy ? (2) What is the object of adoption ? (3) Why ' is the condition of consent of the sapindas for an adoption required under the Hindu law for its validity ? (4) What is the scope of the power of the sapindas to give consent to an adoption by a widow and the manner of its exercise ?; and (5) What are the relevant circumstances a sapinda has to bear in mind in exercising his power to give consent to an adoption ? 451 It is common place that a widow adopts a boy to her husband and that nobody except a widow can make an adoption to her husband.
The reason is that Hindu law recognizes her not merely as an agent of her husband but, to use the felicitous Hindu metaphor, as his surviving half : see Brihaspati XXV, II and Yagnavalkya I, 156.
In Sarkar Sastri 's Hindu Law.
8th edn., pp. 161 162, it is, stated that though according to the commentaries, the widow adopts in her own right, the modern view is that she acts merely as a delegate or repre sentative of her husband, that is to say, she is only an instrument through whom the husband is supposed to act.
Mulla in his book "Principles of Hindu Law" stated that she acts as a delegate of her husband.
The Judicial Committee in Balusu Guralingaswami vs Balusu Ramlakshmamma (1) pointed out that if the consent of the husband 's kinsmen has been obtained, the widow 's power to adopt is co extensive with that of her husband.
It is, therefore, clear that a Hindu widow in making an adoption exercises a power which she alone can exercise, though her competency is conditioned by other limitations which we shall consider at a later stage.
Whether she was authorised by her husband to take a boy in adoption or whether she obtained the assent of the sapindas, her discretion to make an adoption, or not to make it, is absolute and uncontrolled.
She is not bound to make an adoption and she cannot be compelled to do so.
But if she chooses to take a boy in adoption there is an essential distinction between the scope of the authority given by her husband and that of the assent given by the sapindas.
As the widow acts only as a delegate or representative of her husband, her discretion in making an adoption is strictly conditioned by the terms of the authority conferred (1) Mad. 398, 408. 452 on her.
But in the absence of any specific authorisation by her husband, her power to take a boy in adoption is coterminus with that of her husband, subject only to the assent of the sapindas.
To put it differently, the power to adopt is that of the widow as the representative of her husband and the requirement of assent of the sapindas is only a protection against the misuse of it.
It is not, therefore, right to equate the authority of a husband with the assent of the sapindas.
If this distinction is borne in mind, it will be clear that in essence the adoption is an act of the widow and the role of the sapindas is only that of advisers.
The next question is, what is the object of adoption ? It would be unnecessary and even be pedantic if we attempted to consider the old Hindu law texts at this very late stage in the evolution of Hindu law on the subject, for the law on this aspect had been fully and adequately considered by the Judicial Committee from time to time.
It would be sufficient if we noticed a few of the leading decisions on the subject.
Sir James W. Colvile, speaking for the Judicial Committee, in The Collector of Madurai vs Moottoo Ramalinga Sathupathy (1) observed: "The power to adopt when not actually given by the husband can only be exercised when a foundation for it is laid in the otherwise neglected observance of religious duty, as understood by Hindoos".
The Judicial Committee again speaking through Sir James W. Colvile in Sir Raghunadha vs Sri Brozo Kishore (2) restated the principle with some modification thus : "It may be the duty of a Court of Justice administering the Hindu law to consider the (1) , 442.
(2) 18761 L.R. 3 I.A., 154, 193.
453 religious duty of adopting a son as the essen tial foundation of the law of adoption; and the effect of an adoption upon the devolution of property as a mere legal consequence".
But he hastened to add : "But it is impossible not to see that there are grave social objections to making the succession of property and it may be in the case of collateral succession, as in the present instance, the rights of parties in actual possession dependent on the caprice of a woman subject to all the pernicious influences which interested advisers are too apt in India to exert over women possessed of, or capable of exercising dominion over, property".
This caution given by the Judicial Committee is relied upon to emphasize the point that right to property of the last male holder is a dominant consideration in the matter of taking a boy in adoption.
But, if the passage was read along with that preceding it, it would be obvious that the Judicial Committee emphasized the performance of a religious duty as an essential foundation of the law of adoption, though it did not fail to notice that the devolution of Property was a legal consequence.
In Raja Vellanki Venkata Krishna Row vs Venkata, Rama Lakshmi Narsayya (1), the Judicial Committee through Sir James W. Colvile reiterated the principle that adoption was made by a widow only in a bona fide performance of a religious duty.
In Veera Basavaraju vs Balasurya Prasada Rao (2), Mr. Ameer Ali, delivering the judgment on behalf of the Board, appeared to strike a new note and lay more emphasis on property rights.
The Board gave as one of its reasons why the consent of divided brothers was required, namely.
that they (1) (1876) L.R. I.A. 1, 14.
(2) , 273. had an interest in the protection of the inheritance.
The Judicial Committee observed : "lt is true that in the judgment of this Board in the Ramnad case (1) some expressions are used which might imply that the question of reversionary interest forms only a secondary consideration in determining what sapindas ' assent is primarily requisite, but the remarks that follow as to the right of co parceners in an undivided family to consider the expediency of introducing a new co parcener, coupled with the observations of the Board in the subsequent case (4), show clearly that, rights to property cannot be left out of con sideration in the determination of the question".
It may be said with some justification that till this stage the Judicial Committee had not clearly disclosed its mind, but was wavering between two positions, namely, whether religious duty was the sole object of adoption or whether proprietary interests had an equal or a subordinate place with or to that of a religious object.
But in Amurendra Mansingh vs Sanatan Singh (2) the Judicial Committee reconsidered its earlier decisions, resurveyed the entire law on the subject and veered round to the view that the validity of an adoption was to be determined by spiritual rather than temporal considerations.
Sir George Lowndes observed : ". it is clear that the foundation of Brahminical doctrine of adoption is the duty which every Hindu owes to his ancestors to provide for the continuance of the line and the solemnization of the necessary rites. . . "It can, they think, hardly be doubted that in this doctrine the devolution of property, though recognized as the inherent right (1) (1868) 12 M.I.A. 397.
(2) (1933) L.R. 60 I.A. 242, 248.
455 of son, is altogether a secondary considera tion. . . . "Having regard to this well established doctrine as to the religious efficacy of sonship, their Lordships feel that great caution should be observed in shutting the door upon any authorized adoption by the widow of a sonless man. . .
Nor do the authoritative texts appear to limit the exercise of the power by any considerations of property.
" This decision is, therefore, a clear pronouncement by the highest judicial authority of the time that the substitution of a son of the deceased for spiritual reasons is the essence of adoption and the consequent devolution of property is mere accessory to it.
Whatever ambiguity there may have still remained it was dispelled by a later decision of the Privy Council in Ghanta China Ramasuabbayya v, Moparthi Chenchuramayya (1), wherein Sir Madhavan Nair, delivering the judgment on behalf of the Board, after a resurvey of the textual authorities and the earlier decisions, observed at p. 170: "Under the Hindu law it is the "taking of a son" as a Substitute for the failure of male issue.
Its object is two fold: (1) to secure the performance of the funeral rites of the person to whom the adoption is made; and (2)to preserve the continuance of his lineage.
" Adverting to observation of Mr. Ameer Ali in Veera Benavaraju vs Balasurya Prasada Rao (2 ), he proceeded to state at p. 175: "The utmost that could be said in favour of the appellants is the statement in the judgment that right to property cannot be left out of consideration in the determination of the question", while the spiritual (1) (1947) L.R. 74 I.A. 162.
(2) (1918)L.R.451.A265,275.
456 welfare of the deceased also is referred to in the course of the judgment.
That the above regular view of adoption cannot any longer be maintained appears to be clear from the judgment of the Board ' in Amarendra Mansingh v, Sanatan Singh (1) Reverting to the object of adoption, he remarked at P. 179: Their lordships do not desire to labour this point, as in their view the following opinion of the Board, delivered by Sir George Lowndes in Amarendra 's case (1) should be considered to have settled the question finally so far as the Board is concerned.
" It may, therefore, safely be held that the validity of an adoption has to be judged be spiritual rather than temporal considerations and that devolution of property is only of secondary importance.
The next question is, why does the Hindu law insist upon the assent of the sapindas as a prerequisite for the validity of an adoption made by a widow ? A basis for the doctrine of consent may be discovered in the well known text of vasishtas: "Let not a woman give or accept a son except with the assent of her Lord." The following two texts of Yagnavalkya in Chapter 1, verse 85 and in Chapter 2, verse 130 are also ordinarily relied upon sustain the said doctrine: "Let her father protect a maiden; her husband a married woman; sons in old ega; if none of these, other gnatis (Kinsmen).
She is not fit for independence. "He whom his father or mother gives in adoption it; Dattaka (a son given)." (1) (1933) L. R. 60 1. A. 242, 248. 457 A brief summary of the evolution of the law by ,subsequent commentators by the process of interpretation of the said two texts is found in the judgment of a division Bench of the Madras High Court in Sundara Rama Rao vs Satyanarayanamurti (1).
It was pointed out therein bow Devanna Bhatta reconciled the two seemingly contradictory positions by laying down that a Hindu widow could give her son in adoption if she be authorized by an independent male, how by parity of reasoning the said principle was extended to a widow taking a boy in adoption, how the same view was expressed by Nandapanditha, how Vidyaranyaswami in his Dattaka Mimamsa recognized the validity of an adoption by a widow with the permission of the father, etc., and how the later commentators relying upon the word ,etc." evolved a thesis that the word "father" in the text was only illustrative, and gradually extended it to other kinsmen.
The said doctrine is mainly founded on the state of perpetual tutelage assigned to women by Hindu law expressed so tersely and clearly in the well known text of Yagnavalkya in Chapter 1, verse 85, quoted above.
The leading decision, which may be described as classic on the subject, is what is popularly known as the Ramnad case (2).
Sir James W., Colvile, who has made a real contribution to the development of this aspect of Hindu law, observed at p. 439: "But they (the opinions of Pandits) show a considerable concurrence of opinion, to the effect that, where the authority of her Hus band is wanting, a Widow may adopt a Son with the assent of his kindred in the Dravida Country.
" The reason for the rule is clearly stated at p. 442 thus: "The assent of kinsmen seems to be required by reason of the presumed incapacity (1) I.L.R. 1950 &W. 461.
(2) (1868) 12 M.I.A. 397, 442.
458 of women for independence, rather than the necessity of procuring the consent of all these whose possible and reversionary interest in the estate would be defeated by the adoption.
The nature and effect of the consent is stated thus: "All that can be said is, that there should be such evidence of the assent of kinsmen as suffices to show, that the act is done by the Widow in the proper and bona fied performance of a religious duty, and neither capriciously nor from a corrupt motive." The same principle has been affirmed and restated by the Judicial Committee in subsequent decisions: See Raja Vellanki Venkata Krishna Row vs Venkata Rama Lakshmi Narsayya (1), Veera Basayaraju vs Balasurya Prasada Rao (2) Sri Krishnayya Rao vs Surya Rao Bahadur Garu (3) and Ghanta China Ramasubbayya vs Moparthi Chenchuramayya (4).
It will be seen that the reason for the rule is not the possible deprivation of the proprietary interests of the reversioners but the state of perpetual tutelage of women, and the consent of kinsmen was considered to be an assurance that it was a bona fide performance of a religious duty and a sufficient guarantee against any capricious action by the widow in taking a boy in adoption.
The next question, which is very important for the present inquiry, is, what is the scope and content of the power of consent the Hindu law places in the hands of the kinsmen? and why does the Hindu law confer the said power on the kinsmen? In the Ramnad Case(5) the judicial Committee described the father of the husband as the natural guardian of (1) (1876) L.R. 4 I.A. 1, 14.(2) (1918) L.R. 45 I.A. 265, 273.
(3) (1917) L.R. 74 I.A. 162.
(5) (1868) 12M.I.A. 397, 442.
459 the widow and her venerable protector.
In Raja Vellanki Venkata Krishna Rao vs Venkata Rama Lakshmi Narsayya (1), the Judicial Committee described the sapindas as the family council; in Venkamma vs Subramaniam 2 ) as the natural advisers of the widow; in Veera Bagaydraju vs Balasurya Prasada Rao( 3) as her natural guardians and protectors of her interest; in Sri Krishnayya Rao vs Surya Rao Bahadur Garu (4) as family council, natural guardians and protectors of her interest; and in Ghanta China Ramasubbauya vs Moparthi Chenchuramayya (5) as the widow 's guardians and competent advisers.
Whatever phraseology may have been used in the various decisions, it is manifest that all of them are only consistent with their exercising fiduciary power having regard to the object for which the said power was conferred on them.
The scope of the exercise of the power depends (1) on the nature of the power, and (2) on the object for which it is exercised.
The nature of the power being fiduciary in character, it is implicit in it that it shall not be exercised so as to further the personal interests of the sapindas.
The law does not countenance a conflict between duty and interest, and if there is any such conflict the duty is always made to prevail over the interest.
It would be a negation of the fiduciary duty, were we to hold that a sapinda could refuse to give his consent on the ground that the members of his branch or those of his brother 's would be deprived of their inheritance.
If that was the object of the refusal, it could not make any difference in the legal results, howsoever the intention was camouflaged.
Suppose a sapinda gives his consent on the condition that a member of his branch only should be adopted.
In effect and substance be introduced 2,0.3 (1) (1876) L. R. 4 I.A. 1, 14.
(3) I.A. 265, 273.
(2) (1906) L. R. 34 I.A. 22.
(4) (1935)69M.L.J.3488 (5) (1947) L.R. 74 I.A. 162.
460 his personal interest in the matter of his assent, with a view to secure the properties to his branch.
It would only be a matter of degree should he extend the choice of the widow to the divided branches of his family comprehending a large group of sapindas, for even ' in that case the sapinda seeks to inforce his choice on the widow on extraneous considerations.
In giving or withholding his consent in his capacity as guardian or the protector of the widow, the sapinda should form an honest and independent judgment on the advisability or otherwise of the proposed adoption with reference to the widow 's branch of the family: see Sri Krishnayya Rao vs Surya Rao Bahadur Garu (1).
Sapinda should bring to bear an impartial and judicial mind on the problem presented to him and should not be served by extraneous and irrelevant considerations.
He shall ask himself two questions, viz., (i) whether the proposed adoption would achieve the object for which it was intended, and (ii) whether the boy selected was duly qualified.
We have already noticed that the object of the adoption is two fold: (1) to secure the performance of the funeral rites of the person to whom the adoption is made, and (2) to preserve the continuance of his lineage.
The sapinda should first answer the question whether the proposed adoption would achieve the said purpose.
If the Widow"s power to take a boy in adoption was not exhausted, there would hardly be all occasion when a sapinda could object to the widow taking a boy in adoption, for every valid adoption would invariably be in discharge of a religious duty.
But is also permissi ble for a sapinda to take objection in the matter of selection of the boy on the ground that he is not duly qualified for being adopted; he may rely upon any mandatory prohibitory rules laid down by shastras and recognised by courts in regard to the selection of a particular boy.
He may object on (1) 461 the ground that the boy belongs to a different caste or that he is married for such an adoption would be invalid.
He may also object on the ground that the boy is an idiot that he is suffering from an incurable disease, that he is notoriously in bad character, for in such cases he would not be suitable to continue the line.
Such and similar other objections are relevant to the question of the advisability of the adoption with reference to the widow 's branch of the family.
In this context an argument is raised to the effect that a sapinda is equally entitled to object to an adoption on the ground that the boy proposed to be adopted is not a sapinda.
In a modified form, it is further contended that even if there is no legal prohibition against a non sapinda being taken in adoption by a widow, the sapinda whose consent is asked for can legitimately relay upon the recommendatory texts of shastras in objecting to an adoption.
or imposing a condition on the proposed adoption.
This raises the question whether under the 'Hindu law there is any prohibition against a widow taking a non sapinda in adoption in preference to a sapinda.
In Kane 's "History of Dharmasastra", Vol. 111, it is pointed out that Dattaka Mimamsa and Dattaka Chandrika quote passages of Saunaka and Sakala to the effect that a man should refer a sapinda or a sagotra to one who is not a sapinda or of the same gotra.
The following order is recommended: the full brother 's son, then a sagotra gapinda, then a sapinda though not of the same gotra, then one not a sapinda though of the same gotra, then one who is neither a sapinda nor a sagotra.
But the learned author opines that the said order is purely recommendatory and an adoption in breach of it is quite valid.
In Mayne 's Hindu Law, it is stated : "According to the Dattaka Mimamsa and the Dattakh Chandrika, in the first place, the nearest male sapinda should be selected, if 462 suitable in other respects, and, if possible, a brother 's son, as he is already, in contemplation of law, a son to his uncle.
If no such near sapinda is available, then one who is more remote; or in default of any such, then one who is of a family which follow the same spiritual guide, or, in the case of Sudras, any member of the caste.
The learned author is also of the opinion that these precepts are merely recommendatory and that the adoption of a stranger is valid, even though near relatives, otherwise suitable, are in existence.
It is suggested that this rule of reference is not applicable to sudras and that in their case any member of the caste can be adopted and that among the members of the caste no references are indicated.
In Sarkar Sastri 's "Hindu Law of Adoption" the relevant passage of Saunaka is translated thus at p. 309: "Amongst Brahmins; the affiliation of a son should be made from amongst sapindas; or on failure of them a on sapinda (may be affiliated); but any other should not be affiliated; amongst Kahatriyas, one from their own tribe, or one whose gotra is the same as that of the adopters guru or preceptor (may be affiliated) : amongst Vaisyas, from amongst those of the Vaisya tribe: amongst Sudras, from amongst those of the Sudra tribe : amongst all classes, from amongst their respective classes, not from others.
" This passage lends support to the suggestion made by learned counsel for the respondents that amongst Sudras no preferential treatment is meted out to a sapinda in the matter of adoption.
Be it as it may, for the purpose of this case, we shall assume that according to the commentators a sapinda may have to be referred to a non sapiuda in the matter of 463 adoption.
The effect of the a said rules was considered by the Judicial Committee as early as 1878 in Srimati Uma Devi vs Gokoolani Das Vahapatra wherein Sir James W. Colvile observed: "Sir Thomas Strange, after recapitulating the rules which ought to guide the discretion of the adopter, including the authorities on which the Plaintiff relies, says; " 'But the result of all the authorities upon this point is, that the selection is finally a matter of conscience and discretion with the adopter, not of absolute prescription, rendering invalid an adoption of one not being precisely in him who upon spiritual considerations ought to have been referred.
" Then the Judicial Committee quoted Sir William Macnaghten in this regard: the relevant part of the passage reads: " . . the validity of an adoption actually made does not rest on the rigid observance of that rule; of selection, the choice of him to be adopted being a matter of discretion." The Judicial Committee concluded its decision thus at p. 54: "Their Lordships feel that it would be highly objectionable on any but the strongest grounds to subject the natives of India in this matter to a rule more stringent than that enunciated by such text writers as Sir William Macnaghten and Sir Thomas Strange.
Their.
treatises have long been treated as of high authority by the Courts of India, and to over rule the propositions in question might disturb many titles.
" It may, therefore, be taken that as early as 1878 the Judicial Committee treated the said rules as (1) (1878) L.R. 5 I.A. 40,52.53.
464 more moral injunction on the conscience of a pious Hindu, and that the selection is finally a matter of his discretion.
If those injunctions were disobeyed and not followed in 1878 and adoption were made ignoring them, it would be unrealistic to rely upon them in the case of adoptions made in recent years.
The choice of the boy is with the widow: it is a matter of her conscience and it is left to her discretion.
The sapindaship is not a legal qualification nor the nonsapindaship a legal dis qualification either.
An orthodox lady may give some heed to the religious texts which have fallen into desuetude, but she need not do so.
It is open to her to select any qualified boy from a large circle.
It would be open to a sapinda to say that the boy selected by her is not qualified from physical, moral or religious stand point.
But it would be incongrous to hold that a sapinda in giviing his advice should enforce the rule of preference which has no legal sanction behind it.
This approach would have the effect of enforcing a rule of preferenco which has fallen in desuetude by an indirect process: what was a moral injunction on the conscience of the adopter in the olden days would now be made a legal injunction by a circuitous method.
If this be allowed, a sapinda in the guise of a moral injunction could deprive a widow of her right to take a qualified boy of her own choice in adoption and thus securing the inheritance for himself, if she does not adopt an unwanted boy or preserving the estate for a close relative of his, if she does.
We should therefore hold that a sapinda has no right to refuse to give his consent or impose a condition on ground that the widow should take a sapinda in preference to a non sapinda in adoption.
Such a condition would in the modern context be entirely extraneous to the question of the selection of a boy by a widow for adoption to her husband 's branch of the family.
465 In this context two judgments of the Madras High Court on which strong reliance is placed by learned counsel for the appellants may be noticed.
The first is a judgment of a division Bench in Subrahmanyan vs Venkamma (1), wherein the learned Judges held that the adoption made by a widow was invalid because she did not apply for the consent of one of the two sapindas of equal degree on the ground that such an application would have been in vain.
Bhashyam Ayyangar, T., speaking for the division Bench, made the following observation at p. 63 7: "But, assuming, as the first defendant says, that some five years before the adoption the plaintiff wanted her to take One of his sons in adoption, there is nothing improper in a sapinda proposing to give his assent to the widow adopting his own son. if such son be th e nearest sapinda, and refusing to give his assent to her adopting a stranger or a distant sapinda, if there be no reasonable objection to the adoption of his own son. . " These observations are in the nature of obiter, for these were not necessary for disposing of that appeal in view of the fact that no consent of the said sapinda was asked for Be it as it may, the observations of Bhashyam Ayyangar, J., deserve the highest respect, for his erudition in Hindu law is unquestioned But these observations were made in the year 1903 at a time when the scope of the power of sapindas ' consent had not become crystallised.
As we have already pointed out, the doctrine of fiduciary relationship was gradually evolved by later decisions.
The recommendatory character of the preferential right of a sapinda to be adopted was emphasised as early as 1875; and even that moral force gradually ceased to have any persussive effect on an adopter as time passed by.
In (1) Mad.
466 the modern conditions it would not be proper to allow the old texts to be used by a sapinda to force his son or nephew on an unwilling widow.
In Amarendia 's case (1) it was finally decided that spiritual reasons are the essence of adoption and that devolution of property is only a consequence of it, and therefore the preferential claim of a sapinda to be adopted ceased to have any validity.
With greatest respect to the learned Judge, We must hold that the said observations have no Longer any relevance in the context of a modern adoption.
The next decision, which is an unreported one, is in Alluri Venkata Narasimharaju vs Alluri Bangarraju (2).
In that case, a widow made an adoption with the consent of a coparcener of her deceased husband: two other coparceners who were asked for permission refused to give the same.
The said coparceners suggested that each of them had sons and that they were prepared to give one of their sons in adoption.
This offer was not acceptable to the widow.
They subsequently intimated their desire to give their own sons in adoption, but the widow refused.
Having regard to that fact and other circumstances of the case, the learned Judges said that the refusal was proper.
The learned Judges had not considered the question from the standpoint of the fiduciary power of sapindas, but they were influenced mostly by the intransigent conduct of the widow in taking a boy in adoption without considering their proposal with a view to prevent the induction of an outsider into the joint family.
That was a case of an adoption by a widow to a deceased member of a coparcenary and it may be that different consideration might arise in such a situation on which we do not propose to express any opinion.
Adverting to that judgment, Satyanarayana Rao, J., observed in Sundara Rama Rao v, Satyanarayanamurti (3): (1) (1933) L. R. 60 I.A. 242.
(2) A p p Is Noos 95 & 226 of 1944 (decided on 15.7.1946) 1.L.R. 1950 Mad 461.
467 "No general rule can, therefore, be laid down that in all cases and under all circumstances the refusal of a sapinda to give his assent to the adoption on the ground that the widow refused to accept the boy of his own in adoption as a proper refusal.
The question has to be considered on the facts of each case.
" Another division Bench of the Madras High Court consisting of Rajamannar, C.J., and Balakrishna Ayyar, J., in Venkatarayudu vs Sashamma (1), held that refusal by a sapinda to give his assent to the proposed adoption by a widow, of a boy, on the ground that the boy was not a Sapinda or sagotra or a gnati, was not proper.
It is true in that case the sapinda did not offer his son or make any suggestion that a sapinda or sagotra was available for adoption.
The learned Chief Justice, speaking for the Court, observed: "As Mayne (Hindu law, tenth Edition) remarks at pages 221 and 222 it is very difficult to conceive of a case, where a refusal by a sapinda can be upheld as proper.
,The practical result of the authorities therefore appears to be that a sapinda 's refusal to an adoption can seldom be justified".
It may be that in a case where the sapinda refused his consent to the adoption of a boy on the ground that the boy was disqualified, say, on the ground of leprosy or idiocy, the refusal would be proper.
In this case, we have no hesitation in holding that the refusal by the plaintiffs on the ground that the proposed boy was not a sapinda or sagotra or a gnati was no t proper.
" The division Bench did not follow the observation of Bhashyma Ayyangar, J. Another division Bench of the Madras High Court, consisting of Satyanara.
yana Rao and Viswanatha Sastri, JJ, noticed the (1) A. 1.
R. 746.
468 observations of Bhasyham Ayyangar J., in Sundara Rama Rao vs Satyanrayanamurti (1).
Therein Viswanatha Sastri, J., observed: "With the greatest deference to that great Judge, it seems to me to be questionable whe ther refusal to consent by a sapinda to an adoption by the widow except 'on condition that his son should be adopted is a valid or proper refusal.
" In the present case, the High Court followed and accepted the said observations, and we also agree with them.
We, therefore, hold that the observations of Bhashyam Ayyangar, J., are only in the nature of obiter and that they have rightly been treated as such in later decisions.
That apart, as we have pointed out, the said observations are opposed to the principle of fiduciary power which has now been accepted.
The result of the foregoing discussion may be summarized thus: The power of a sapinda to give his Consent to an adoption by a widow is a fiduciary power.
It is implicit in the said power that he must exercise it objectively and honestly and give his opinion on the advisability or otherwise of the proposed adoption in 'and with reference to the widow 's branch of the family.
As the object of adoption by a widow is two fold, namely, (1) to secure the reference of the funeral rites of the person to whom the adoption is made as well as to offer spindas to that person and his ancestors, and (2) to preserve the continuance of his lineage, he must address himself to ascertain whether the proposed adoption promotes the said two objects.
It is true that temporal consideration, through secondary in importance, cannot be eschewed completely but those considerations must necessarily be only those connected with that branch of the widow 's family.
(1) I.L.R. 469 The sapinda may consider whether the proposed ' adoption is in the interest of the wellbeing of the widow or conducive to the better management of her husband 's estate.
But considerations such as the protection of the sapindas ' inheritance would be extraneous, for they pertain to the self interest of the sapinda rather than the wellbeing of the widow and her branch of the family.
The sapindas, as guardians and protectors of the widow, can object to the adoption, if the boy is legally disqualified to be adopted or if he is mentally defective or otherwise unsuitable for adoption.
It is not possible to lay down any inflexible rule or standard for the guidance of the sapinda.
The Court which is called upon to consider the propriety or otherwise of a sapinda 's refusal to consent to the adoption has to take into consideration all the aforesaid relevant facts and such others and to come to its decision on the facts of each case.
Bearing the said principles in mind, let us now scrutinize the persons given by the different sapinda is refusing to consent to the proposed adoption with a view to ascertain whether their refusal was proper or not.
At an earlier stage of the judgment we have given the reasons given by each one of the sapindas who were approached by the widow for their assent.
The 1st plaintiff is the only sapinda who made a general suggest that the widow could make an adoption from one of his grandsons or his cousin 's great grandsons.
But a scrutiny of his reply discloses that he also looked at the problem presented to him from a personal and selfish angle.
His reply reveals a biased mind.
He has expressed surprise that the widow should have thought fit to take a boy in adoption, for earlier, according to him, she gave up the idea of making an adoption at the request of the 1st plaintiff and other ' agnatem and also stated that 470 when she decided to make the adoption she would select a suitable boy from those of his first cousin.
This clearly shows that he was more concerned with the reversioners ' inheritance to the estate of the last male holder rather than with the religious benefit that would accrue to him.
He then questions the widow 's motive, which again is an irrelevant consideration.
He then relies upon the custom prevailing in their community whereunder an agnate alone could be taken in adoption, but no attempt has been made to establish the said custom: therefore, it may be taken that a false reason is given.
As regards the boy proposed to be adopted, he vaguely states that he is aged and ineligible for adoption.
Finally, he declares that he has no objection to the widow making an adoption, provided one of his grandsons or the great grandsons of his cousin is taken in adoption.
It will be seen that except the vague generalities he cannot point out any particular disqualification attached to the boy either on religious or secular grounds: nor can be say that by adopting him the interests of the widow or of the branch of her family would be adversely affected.
The entire reply discloses a closed and biased mind against the widow taking a boy in adoption; and the proposal made to her to take one of the sapindas is only made with full consciousness on his part that it would be refused.
On a consideration of the entire letter, we have no hesitation in holding that the 1st plaintiff improperly refused to give his assent to the adoption.
The refusal by defendants 4 and 5 was obviously improper, for they set up an adoption alleged to have been made by Kulandaivelu, the last male holder, before his death.
Defendant 12 did not care to reply: he had only son and was, presumably, not willing to give his only son in adoption or take sides.
Defendant 11 in his reply offered one of his grandsons or of his brother 's i.e., the only son of 471 defendant 12 and the sons of defendant 14.
For the reason already stated, 12 would not give his son in adoption, and defendant 14 had given hit; consent to the adoption.
Therefore, 11 's grandsons were not available for adoption.
This leaves only the replies of the 2nd plaintiff and defendants 19 and 20 for consideration.
2nd plaintiff wanted his ,son to be adopted, and defendant 19, and his son defendant 20, wanted the sons to be adopted.
These three sapindas were clearly actuated by self interest.
The replies given by the sapindas appear to us to be a part of their concerted action to prevent the widow from taking a boy in adoption.
The sapindas either singly or collectively did not bring to bear their impartial mind on the request made to them, but they either refused to give their consent or gave it subject to an improper condition with a view to advance their self interest.
They did not consider the advisability or otherwise of the proposed adoption in and with reference to the widow 's branch of the family.
We, therefore. hold that their refusal was improper and that the widow rightly ignored it.
The next question is whether defendant 14 was legally competent to give his consent to the question.
It is contended that defendant 14 was a member of the Dravida Munnetra Kazhagam, having no faith in Hinduism and Hindu scriptures and practice and therefore he was incompetent to give his advise on the question of adoption, which is a religious act.
Learned counsel for the respondents contends that the certificate issued by the High Court is confined only to one question, namely, whether the refusal by the spinda 's to give their consent to the adoption was improper on the facts found and, therefore, it is not open to the appellants to raise any other question before us.
Reliance 472 is placed upon Order XVI, r. 4 and Order XVIII, r. 3(2) of the Supreme Court Rules.
Under Order XVI, r. 4.
"Where a party desires to appeal on grounds which can be raised only with the leave of the Court, the petition of appeal shall be accompanied by a separate petition indicating the grounds so proposed to be raised and praying for leave to appeal on those grounds and the Petition shall, unless the Court otherwise directs, be heard at the same time as the appeal.
" Under Order XVIII, r. 3 (2), the case lodged by a party ,,shall not travel beyond the limits of the certificate or the special leave, as the case may be, and of such additional grounds, if any, as the Court may allow to be urged on application made for the purpose.
" These two provisions do not proprio vigore lay down that the High Court can issue a limited certificate; but they assume that under certain circumstances it can do so.
Under article 133, of the Constitution, under which the High Court gave the certificate, does not empower the High Court to limit certificate to any particular point.
If the decree of the High Court is one of affirmance the High Court certifies that the appeal involves a substantial question of law; and it has been the practice of some of the High Courts to state the substantial question of law in the certificate issued.
Once the certificate is issued and the appeal is properly presented ' before this Court, the entire appeal will be before it.
The assumption underlying the said rules of the Supreme Court may appropriately refer to a certificate issued by a High Court under article 132 of the Constitution, whereunder the High Court certified that the case involves a substantial question of law as to the interpretation of the Constitution: and where such a certificate is given. any party in the case may appeal to the Supreme Court on the ground that any 473 such question as aforesaid has been wrongly, decided and, with the leave of the Supreme Court, on any other ground.
" But we are not concerned here with a certificate issued under article 132 of the Constitution.
We, therefore, bold that the entire appeal is before us But it does not follow from the said legal position that we should allow the appellants to raise that plea before us, if they had failed to do so before the High Court.
The points argued before the High Court are recorded by the learned Judges thus Mr. Venkatasubramania Ayyar learned counsel for the plantiffs appellants, did not address arguments to us to displace the ' findings of the trial Judge on the additional issues though he made it clear that he was not abandoning those any of his clients ' conten tions embodied in those issues.
He however confined his arguments before us to Issues 1, 2 and 3." From this statement it appears that though this point was not argued before the High Court, it was not abandoned.
We shall, therefore, deal with the same.
The contention is that defendant 14 is a member of the Dravida Munnetra Kazhagam, having no faith in Hinduism and Hindu scriptures and practice and, therefore, he is incompetent to give consent to the adoption, which is a religious act.
Under the Hindu law a sapinda has power to give consent to a proposed adoption by a widow.
Defendant 14 is admittedly a sapinda and, there.
fore, he can ordinarily give his consent to the adoption, unless it has been established that he is mentally or otherwise unfit to give his consent.
It is not suggested that he is not intellectually competent to give an unbiased advice on the advisability of taking a boy in adoption in the widows branch 474 of the family.
But it is said that he has no belief in Hindu scriptures and, therefore, he cannot give consent to an adoption which is a religious act.
The, act of giving consent is not a religious act; it is, the act of a guardian or protector of a widow, who is authorised to advise the widow, who is presumed to be incompetent to form an independent opinion.
His non belief in Hindu scriptures cannot in an way detract from his capacity to perform the said act.
That apart, defendant 14 in his evidence clearly says that he had considered the qualifications of the proposed boy for adoption and gave his consent.
His reasons are : " 'Defendant 2 had faith in God just like Defendant 1.
He used to go to the temples and give charities.
He had good physical build.
He was in a position to take over the management of Defendant 's estate immediately.
In view of these facts I considered him to be fit for adoption.
He was then reading in B. A. class".
These reasons clearly disclose that he applied his mind to the crucial question and gave his consent after satisfying himself about the advisability of taking the boy in adoption.
But it is suggested to him in the cross examination that he had no faith in God, but be denies it and says : "I believe that there is a God but I do not believe in the meaningless religious rites and ceremonies".
To further question, he answers : "I have no faith in taking a boy in adoption.
Nor do I believe that a Pierson has, "atma" and that it should get salvation after death.
Nor do I believe that there is an thing called "hell" or "paradise".
Nor do I believe that a person leaving no son will go to hell".
475 The fact that he does not believe in such thing does not make him any the less a Hindu.
The non belief in rituals or even ' in some dogmas does not ipso facto remove him from the fold of Hinduism.
He was born a Hindu and continues to be one till he takes to another religion.
But what is necessary is, being a Hindu, whether he was in a position to appreciate the question referred to him and give suitable answer to it.
After going through his evidence, we have no doubt that this defendant had applied his mind to the question before him.
Whatever may be his personal predilections or views on Hindu religion and its rituals, he is a Hindu and he discharged his duty as a guardian of the widow in the matter of giving his consent.
In the circumstances of the case, his consent was sufficient to validate the adoption.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellants, the nearer sapindas of the husband of the 2nd respondent who had adopted the 1st respondent, the son of her agent, filed a suit for a declaration that the adoption was invalid on the ground that they had properly refused their consent and that the remote sapinda who had given his consent was disqualified from so doing as he did not believe in the Hindu scriptures.
The appellants who had been asked for their consent had refused it on the ground that the 1st respondent was not an agnate and that among their grand children or children there were eligible boys whom their parents were willing to give in adoption.
The trial court at Madurai as well as the High Court of Madras dismissed the suit, holding that the nearer sapindas had improperly refused their consent and that in the circumstances the adoption with the content of the remote sapinda was valid.
On appeal by a certificate under article 133 (1)(c).
Held, that the power of Hindu widow to adopt is coextensive with that of her husband and when her discretion is not limited by her husband it is absolute and is only subject to the assent of the sapindas.
Balusu Gurulingaswami vs Balusu Ramalakshmamma Mad.398, referred to.
The validity of an adoption has to be judged by spiritual rather than temporal considerations and that devolution of property is only.
of secondary importance.
The Collector of Madras vs Mootoo Ramalinga Sethupathy (1868) 12 M.I.A. 397, Sri Raghunadha vs Shri Brozo Kishore.
(1876) K.R. 3.
I.A. 154, Raja Vellanki Venkata Krishna Row vs Venkata Rama Lakshmi Narasayya, (1876) L.R. 4, I.A 1, Veera Basavaraju vs Balasurya Prasada Rao, (1918), L.R. 4, I.A. 265, Amarendra Mansingh vs Sanatan Singh, (1933) L.R. 60, I.A. 242 and Ghanta China Ramasubbayya vs Mooparthi Chanchuramayya, (1947) L.R. 74, I.A. 162, referred to.
441 Held, further, that consent of sapindas was an assurance of the bonafide performance of a religious duty and the guarantee against capricious action by a widow in taking a boy in adoption and not the possible deprivation of proprietory interests of the reversioners.
Sri Krishnayya Rao vs
Surya Rao Bahadur Garu; , referred to.
The sapindas who are in a fiduciary relation to the widow should exercise their power objectively and without being actuated by their own self interest and that the rules regarding taking only a sapinda in adoption were only recommendatory and the fact that the widow wishes to adopt a non sapinda is no proper ground for withholding consent by a sapindas.
Sundara Rama Rao vs Satynarayanamurti I.L.R , Venkamma vs Subramaniam, (1906) L.R. 34 I.A. 22, Srimati Uma Devi vs Gokoolanund Das Mahabata, (1876) L.R. 5 I.A. 40, Alluri Venkata Naratimbaraju, vs Alluri Bangarraju vs C. A. No. 226 of 1944 dated 25 7 46 by the Madras High Court and Venkatayudu vs Seshamma , referred to.
Observations of Bhashyam Ayyangar, J. in Subrahamanyam vs Venkamma Mad. 127 held to be obiter and not approved.
The refusal of consent by the appellants was improper.
Order XVI r. 4 and Or.
XVIII r. 3 (2) of the Supreme Court do not by themselves enable the High Court to limit the certificate under article 133 of the Constitution to certain grounds and upon this grant of such a certificate the whole appeal was before this Court and all questions urged before the High Court were open.
The consent given by the remote sapinda on a proper appreciation of the relevant facts and despite has non belief in rituals, he still being a Hindu, was valid.
|
Appeals Nos. 94 to 97 of 1960.
Appeals from the judgment and order dated March 15, 1956, of the ' Allahabad High Court in First Appeals Nos.
172, 364, and 379 of 1954.
Veda Vyasa, R. K. Garg, D. P. Singh, Shiv Shastri and K. K. Jain, for the appellant (in C. As.
Nos. 94 96/60) and respondent No. 2 (in C. A. No. 97 of 1960).
Rameshwar Nath, section N. Andley and P. L. Vohra, for the appellant (in C. A. No. 97/60) respondent No. 2 (in C. A. No. 94/60) and respondent No. 1 (in C. As .
Nos. 95 and 96/60).
K. L. Gossain and Sohan Lal Pandhi for respondent No. 1 (in C. As.
94 and 97/60) respondent No. 2 (in C. A. No. 95 of 60) and respondent No. 4 (in C. A. No. 96/60).
Harbans Singh, for respondent No. 3 (in C. A. No. 94/60).
J. P. Agarwal, for respondent No. 4 (in C. A. No. 94160) respondents No. section 3 and 4 (in C. A. No. 95/60) respondents Nos.
I and 3 (in C. A. No. 96/60) and respondents Nos. 3 and 4 (in C. A. No. 97/60).
318 1962.
December 17.
The relevant facts are briefly as follows : The plaintiff Kundanlal and the defendants 1 to 5 Banarsi Das, Kanshi Ram, Kundan Lal, Munnalal, Devi Chand and Sheo Prasad are brothers and formed a joint Hindu Family, till the year 1936.
Amongst other properties the family owned a sugar mill at Bijnor in Uttar Pradesh called "Sheo Prasad Banarsi das Sugar Mills".
After the disruption of the family the brothers decided to carry on the business of the said sugar mill as partners instead of as members of a joint Hindu Family.
The partnership was to be at will and each of the brothers was to share all the profits and losses equally.
The mill was to be managed by one of the brothers who was to be designated as the managing partner and the agreement arrived at amongst the brothers provided that for the year 1936 37, which began on September 1,1936, the first defendant Banarsi Das, who is the appellant in Civil Appeals 94 to 96 of 1960, was to be the managing partner.
The agreement provided that for subsequent years the person unanimously nominated by the brothers was to be the managing partner and till such unanimous nomination was made, the person functioning as managing partner in the previous year must continue.
For the years 1941 44, Kundanlal was the managing partner.
On May 13,1944, Sheo Prasad defendant No. 5 now deceased, instituted a suit in the court of the Sub ordinate judge, First Class, Lahore, for dissolution of partnership and rendition of accounts against Kundanlal and joined the other brothers as defendants to the suit, In the course of that 319 suit the court, by its order dated August 3,1944, appointed one Mr. P.C.Mahajan, Pleader, as Receiver but as the parties were dissatisfied with the order the matter was taken up to the High Court in revision where they came to terms.
In pursuance of the agreement between the parties the High Court appointed Kanshiram as Receiver in place of Mr. Mahajan as from April 5,1945.
In the meanwhile, the District Magistrate, Bijnor took over the mill under the Defence of India Rules and appointed Kundanlal and his son to work the mill as agents of the U. P. Government for the year 1944 45.
This lease was renewed by the Government for the year 1945 46.
On August 28,1956, the parties, except Devi Chand, made an application to the Court at Lahore praying that the Receiver be ordered to execute a lease in favour of Banarsidas for a period of five years.
It may be mentioned that this application was made at the suggestion of the District Magistrate; Bijnor.
The Subordinate Judge made an order in terms of the application.
In September 1946, Banarsidas obtained possession of the mill.
It may be mentioned that Sheo Prasad had in the meanwhile applied to the court for distribution amongst the erstwhile partners of an amount of Rs. 8,10,000/(out of the total of Rs. 8,30,000/ ) which was lying with the Receiver and suggested that the amount which fell due to Kundanlal and Banarsidas should be withheld because they had to render accounts.
However, the aforesaid amount lying with the receiver was distributed amongst all the brothers and Devichand acknowledged receipt on November 14, 1946.
On October II, 1947, the Lahore suit was dismissed for default, the parties having migrated to India consequent on the partition of the country.
On November 8,1947, Sheo Prasad instituted a suit before the court of Civil judge, Bijnor against his brothers for a permanent injunction restraining Banarsidas from acting as Receiver.
The suit, how 320 ever, was dismissed on March 3,1948.
On July 16, 1948, Sheo Prasad transferred his 1/6th share to Banarsidas and since then Banarsidas has been getting the profits both in respect of his own share as well as in respect of that of Sheo Prasad.
On October 7,1948, the suit out of which these appeals arise was instituted by Kundanlal against all his brothers claiming the reliefs set out in para 29 of the plaint.
The reliefs are as follows : "(a) That it may be declared that the partner ship of the Shiv Prasad Banarsi Das Sugar Mills, Bijnor between the parties was dissolved on 13th May, 1944 and if in opinion of the court the partnership is still in existence, the court may be pleased to dissolve it.
Valued at Rs. 5000.
(b) That an account be taken from defendants I and 2 or any of them and decree be passed in favour of the plaintiff for the amount that may be found to be due to the plaintiff on account of his share in the assets and profits and sums of money in their possession.
Valued at Rs. 500.
(c) That a pendete lite interim Receiver may be appointed for the Seth Shiva Prasad Banarsi Das Sugar Mills, Bijnor.
(d) Any other relief which the plaintiff may be entitled against any or either of the defendants as the court may deem fit to grant.
(e) Costs may be awarded to the plaintiff.
" On July 30, 1949 , Banarsidas filed his written statement but none of the other dependents put in an 321 appearance.
On Decemberl8,1950, an application which had been made for the appointment of a Receiver was dismissed on the ground that kanshi Ram who had been appointed as Receiver by the Lahore High Court continued to be the Receiver.
It may be mentioned that during the pendency of this suit the appellant Banarsidas entered into an agreement with Devchand and Kanshi Ram whereunder he took over all their rights and interests in the said mill for a period of five years commencing from July 1, 1951.
On February 19,1951, he made an application to the court for directing Kanshi Ram to give a lease of the mill to him for a period of five years commencing from July 1, 1951.
It may be mentioned that under an earlier arrangement Banarsidas had obtained a lease for a similar term which was due to expire on June 30, 1951.
On April 26 1951, one Mr. Mathur was appointed Receiver by the court and in july 1 951, he granted a lease for five years to Kundanlal on certain terms which would be settled by the court.
It may be appropriate to mention here that, issues in the suit instituted by Kundanlal were framed on December 7, 1951, and one of the important issues was whether the lease dated September 12, 1946, granted to Banarsidas was void ab initio or wits voidable and in either case what was its effect.
On April 2, 1954, the advocate appearing for Kundanlal stated that he did not wish to press this issue and that the only question left was of taking accounts.
In view of this concession by the plaintiff, the Court decreed the suit in the following terms: "1.
The suit is decreed for declaration that the section B. Sugar Mills, Bijnor, stood dissolved with effect from 13th May, 1944.
The plaintiff 's share is declared to be 1/6th; of defendant No. 1 Seth Banarsi Das as 1/3rd and of defendants 2 to 4 1/6th each.
322 2.
Seth Kanshi Ram is held liable to render accounts to the plaintiff and other defendants in respect of joint stores and lubricants in Exhibits I and 7. 3.
Shri P. N. Mathur shall continue to be the receiver till further orders.
And it is ordered that Shri Kashi Nath who is appointed Commissioner for the purpose of winding up the affairs of the Mills, in this case, shall prepare accounts of the credits, properties and effects and stocks now belonging to the said mills and then submit the report to the court.
After the report has been submitted and objections heard and decided, the court would fix a date for the sale of the assets of the Mills.
The Commissioner shall receive instructions from the court from time to time.
Three appeals were preferred before the High Court against this decision.
One was by Kanshi Ram, another by Banarsidas and the third was by Munnalal.
It may be mentioned here that the suit has been decreed ex parte against both Kanshi Ram and Munna Lal.
It may also be mentioned that even in the appeals the winding up of the partnership business and the appointment of Mr. Kashi Nath as Commissioner for this purpose was not challenged by any party to the appeals.
These appeals were heard together and were disposed of by a common judgment by the High Court on March 15, 1958.
The High Court, in effect, dismissed the appeals of Banarsidas and Munnalal but granted partially the appeal of Kanshi Ram.
As a result of the High Court 's decision, Kundanlal 's suit stood decreed for declaration that the partnership 323 should be dissolved with effect from May 13, 1944, and that the six brothers had shares in the partnership as found by the trial court.
But the suit stood dismissed with regard to other reliefs.
As there were three appeals before the High Court, the appellant Banarsidas has preferred three separate appeals for complying with the requirements of the law.
Before the High Court the stand taken by the parties was this : Devichand and Munnalal wanted that the winding up order should be set aside while Kundanlal wanted that it should be upheld but that he should not be asked to render any accounts.
Kanshi Ram contended that the suit was barred by time and that at any rate he should not be called upon to account.
The appellant Banarsidas wanted that the winding up order should be maintained and also wanted that accounts should be rendered both by Kundanlal and Kanshi Ram.
The ground on which the High Court dismissed the suit was that the suit for accounts was barred by article 106 of the Limitation Act.
It was, however, contended before the High Court on behalf of the plaintiff that although a suit for accounts and share of profits may be barred by time, the suit in so far as it related to the distribution of the assets of the dissolved firm was not barred by limitation as such a suit falls outside article 106 of the Limitation Act.
This contention was also rejected by the High Court and it held that not only the claim for accounts and share for profits was time barred but also the claim for distribution of the assets of the dissolved firm was time barred.
The High Court was alive to the fact that the plea of limitation was not taken by any of the defendants in the trial court but was of the opinion that the plaint itself disclosed that the Suit was barred by time and, therefore, it was the duty of the court under section 3 of the Limitation Act to dismiss it.
It was then contented before the High Court on behalf of the plaintiff that as in none of the appeals preferred 324 before it the appellants had questioned that portion of the decree which granted the plaintiff the relief of a share in the assets of the partnership and therefore it ought not to be interfered with.
The High Court, however, resorted to O. 41, r. 33 of the Code of Civil Procedure and held that under this provision, it was competent to it to disallow the claim decreed by the trial court.
Upon this view, the High Court allowed Kanshi Ram 's appeal, but lost sight of the fact that same order had to be made with regard to the moneys lying in the court.
In his appeal, it was contended by Banarsidas that that portion of the decree which declared the partnership to have been dissolved on May 13, 1944, should be set aside.
But the High Court refused to permit him to urge this point in as much as he had admitted in his written statement that the partnership was dissolved on May 13,1944.
The High Court also said that the decree which had been passed against Banarsidas in so far as this relief is concerned was a consent decree and that an appeal therefrom is barred by s.96, sub section
(3), of the Code of Civil Procedure.
Upon this view, the High Court dismissed his appeal.
Dealing with Munnalal 's case, the High Court observed that the only relief sought by him was that Banarsidas should be asked to render accounts for the year 1944 1945, and that as it had already held, while dealing with Kanshi Ram 's appeal that this claim was barred by time, his appeal should also be dismissed.
Banarsidas has come up in appeal against the judgments and decrees of the High Court in all the three appeals and his appeals are Civil Appeals Nos.
94 to 96 of 1960.
Kundanlal has preferred an appeal from the judgment and decree of the High Court in Kanshi Ram 's appeal, which is numbered 325 Civil Appeal No. 97 of 1960.
This judgment governs all these appeal.
The points raised by Mr. Veda Vyasa on behalf of Banarsidas are these : (1) Under the Partnership Act, the partners are entitled to have the business of the partnership wound up even though a suit for accounts is barred under article 106 of the Limitation Act.
(2) Kanshi Ram having been appointed a Receiver by the Court stood in a fiduciary relationship to the other partners and the assets which were in his possession must be deemed to have been held by him for the benefit of all the partners.
Therefore, independently of any other consideration, he was bound to render accounts.
(3) The question of ' limitation was not raised in the plaint or the grounds of appeal before the High Court and as it is a mixed question of fact and law, it should not have been made this foundation of the decision of the High Court.
If it was thought necessary to allow the point to be raised in view of the provisions of section 3 of the Limitation Act, the courts should at least have followed the provisions of O. 41, r. 25, Code of Civil Procedure, and framed an issue on the point and remitted it for a finding to the trial court.
(4) The Court was wrong in holding that limitation for the suit commenced on May 13, 1944.
(5) The High Court was wrong in resorting to the provisions of O.41, r.33, of the code of Civil Procedure.
Before we consider the points raised by Mr. Veda Vyasa, we would like to point Out that at 326 the commencement of the argument, Mr. Veda Vyasa made an offer that if all the parties agreed, Banarsidas was prepared to waive his claim for accounts against Kundanlal and Kanshi Ram provided that the decree of the trial court was restored in other respects.
While the learned counsel appearing for those two Parties were willing to accept the offer, two others were not, and, therefore, we must proceed to decide the appeals on their merits.
The most important point to be considered is whether the suit was barred by limitation.
If the appellants in these appeals succeed on this point, the first, second and fifth points will really not arise for consideration.
In the plaint in the present suit, the plaintiff Kundanlal alleged in para 10 that the partnership being at will it stood dissolved on May 13, 1944, when Sheo Prasad filed suit No 105 of 1944 in the court of the Sub Judge, Lahore.
No doubt, as pointed out by the High Court, Banarsidas has admitted this fact in his written statement at no less than three places.
The admission, however, would bind him only in so far as facts are concerned but not in so far as it relates to a question of law.
It is an admitted fact that the partnership was at will.
Even so, Mr. Veda Vyasa points out, the mere filing of a suit for dissolution of such a partnership does not amount to a notice for dissolution of the partnership.
In this connection, he relies upon 68, Corpus Juris Secundum, P. 929.
There the law is stated thus : The mere fact that a party goes to court asking for dissolution does not operate as notice of dissolution.
, He then points out that under O.20, r. 15, of the Code of Civil Procedure, a partnership would stand dissolved as from the date stated in the decree, and that as the Lahore suit was dismissed in default arid no decree was ever passed therein it would be incorrect even to say that the partnership at all stood dissolved because of the institution of the suit.
On the other hand, it was contended on behalf of some 327 of the respondents that the partnership being one at will, it must be deemed to have been dissolved from the date on which the suit for dissolution was instituted and in this connection reference was made to the provisions of sub section
(1) of section 43 of the Partnership Act which reads thus : "(1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
" The argument seems to be based on the analogy of suits for partition of joint Hindu family property, with regard to which it is settled law that if all the parties are majors, the institution of a suit for partition will result in the severance of the joint status of the members of the family.
The analogy however cannot apply, because, the rights of the partners of a firm to the property of the firm are of a different character from those of the members of a joint Hindu family.
While the members of a joint Hindu family hold an undivided interest in the family property, the partners of a firm hold interest only as tenants in common.
Now as a result of the institution of a suit for partition, normally the joint status is deemed to be severed, but then, from that time onwards they hold the property as tenants in common i.e., their rights would thenceforth be somewhat similar to those of partners of ' a firm.
In a partnership at will, if one of the partners seeks its desolution, what he wants is that the firm should be wound tip, that be should be given his individual share in the assets of the firm (or may be that he should be discharged from any liability with respect to the business of the firm apart from what may be found to be due from him after taking accounts) and that the firm should no longer exist.
He can call for the dissolution of the firm by giving a notice as provided in sub section
(1) of section 43 i.e., without the intervention of 328 the court, but if he does not choose to do that and wants to go to the court for effecting the dissolution of the firm, lie will, no doubt, be bound by the procedure laid down in 0.20, r. of the Code of Civil Procedure, which reads thus: "Where a suit is for the dissolution of a partnership or the taking of partnership accounts, the Court, before passing a final decree, may pass a preliminary decree declaring the proportionate share of the parties, fixing the day on which the partnership shall stand dissolved or be deemed to have been dissolved, and directing such accounts to be taken, and other acts to be done, as it thinks fit.
" This rule makes the position clear.
No doubt, this rule is of general application, that is, to partnerships at will as well as those other than at will; but there are no limitations in this provision confining its operation only to partnerships other than those at will.
Sub section
(1) of section 43 of the Partnership Act does not say what will be the date from which the firm will be deemed to be dissolved.
For ascertaining that, we have to go to sub section
(2) which reads thus : "The firm is dissolved as from the date men tioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
" Now, it will be clear that this provision contemplates the mentioning of a date from which the firm would stand dissolved.
Mentioning of such a date would be entirely foreign Lo a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within the expression "notice" used in the Sub Section.
It would follow therefore that the date of service of a summons accompanied by a copy of a plaint in the suit for dissolution of 329 partnership cannot be regarded as the date of dissolution of partnership and section 43 is of no assistance.
Even assuming, however, that the term "notice" in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice.
It would follow, therefore, that a partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants.
Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served.
Now, if the High Court wanted to give the benefit of the provisions of section 43 to any of the parties defendants before it , it should have borne in mind the full implications of those provisions.
We have no material on record for ascertaing the date on which the last summons was served in this case.
Since that date is not known or could have been known by the High Court, it was in error in holding that the suit was barred by time.
The High Court has overlooked the fact that even upon the argument addressed before it on behalf of Kanshi Rain, the question of limitation was not one purely of law but was a mixed question of fact and law and, therefore, it was not proper for it to allow it to be raised for the first time in argument.
We are satisfied that what the High Court has done has caused prejudice to some of the parties to the suit and on that ground alone, we would be justified in setting aside its decision.
If the High Court felt overwhelmed by the provisions of section 3 of the limitation Act, it should at least have given an opportunity to the parties which supported the 330 decree of the trial court to meet the plea of limitation by amending their pleadings.
After allowing the pleadings to be amended, the High Court should have framed an issue and remitted it for a finding to the trial Court.
Instead of doing so, it has chosen to treat the pleading of one of the defendants as conclusive not only on the question of fact but also on the question of law and dismissed the suit.
It is quite possible that had an opportunity been given to the defendants, they could have established, in addition to proving the dates on which the summonses were served, that the suit was not barred by time because of acknowledgment in the course of the discussion, the High Court had said that it was not suggested before it by anyone that the claim was not barred by reason of acknowledgments.
Apparently, no such argument was advanceb before it on behalf of the plaintiff and the defendant Banarsidas because the counsel were apparently taken by surprise and had no opportunity to obtain instructions on this aspect of the case.
We are clearly of opinion that the High Court was in error in allowing the plea of limitation to be raised before it particularly by defendants who had not even filed a written statement in the case.
We do not think that this was a fit case for permitting an entirely new point to be raised by a non contesting party to the suit.
In view of our decision on this point, it would follow that the High Court 's decision must be set aside and that of the trial court restored.
We may, however, mention that some of the parties including the appellant Banarsidas and the plaintiff respondent, Kundenlal as well as the defendant respondent Kanshi Ram were agreeable to certain variations in the decree.
But as there were other parties besides them to whom these variations are not acceptable, we are bound to decide the appeals on merits.
For the aforesaid reasons, we allow the appeals of Banarsidas and Kundanlal and restore the decree of the trial 331 court, but make no order as to costs.
Along with the appeals, we heard two Civil Miscellaneous Petitions, Nos.
1482 of 1962 and 1534 of 1962.
The first is to the effect that the lease granted by this Court during the pendency of these appeals should be terminated early.
It is said that the reason why the term of five years was fixed was that this Court was seized with the litigation and it was expected to last for five years.
But as it happens, it has terminated within about a year and a half and therefore there is no reason for the lease to continue.
Apart from the fact that it would not be in the interest of the parties to determine the lease before its expiry we doubt whether we can legally do SO.
We, therefore, reject this application.
As regards the other application, it is agreed between parties that it should be considered by the Receiver when the assets are distributed.
We may also mention that during arguments it was stated before us on behalf of Banarsidas that he had installed some new machinery for the efficient running of the mill and that before the mill is sold he should be allowed to remove the machinery.
It was suggested that perhaps it would be in the interest of all the parties if the mill is sold along with the new machinery at the date of sale.
The other parties, however said that it would be best if Banarsidas removes the machinery before the expiry of the lease.
In the circumstances, we can give no direction in the matter.
It will be open to the parties, however, to agree upon the course to be adopted when the Receiver sets about selling the machinery, or if they do not agree, to obtain directions from the High Court.
While we dismiss the Civil Miscellaneous Petitions, we make no order as to costs.
Appeals allowed.
| The petitioners were holders of Stage carriage permits on Jodhpur Bilara arid Bilara Beawar routes.
The Rajasthan Roadways published a draft scheme which provided for taking over the transport service on the Jodhpur Bilara Beawar Aj mer route by the Roadways and also for taking over three overlapping routes or portions thereof which were entirely on Jodhpur Bilara Beawar Ajmer road and the names of the permit holders on these three overlapping routes with their permits were also specified for cancellation and no other transport vehicles were to ply on the route to be taken over.
The petitioners filed objection and challenged the scheme on the ground of discrimination before the Legal Remembrancer as some overlapping routes were not notified.
He held that even though these routes were not specified in the draft scheme and no notice had been given to the permit holders thereof, it was open to him to render the permits ineffective with respect to these routes also and passed orders accordingly.
The permitholders affected by the order of the Legal Remembrance filed writ petitions in the High Court.
The High Court directed the Legal Remembrancer to go into the matter again and to leave the question of the twelve partially overlapping routes for a subsequent scheme.
The effect of the decision of the Legal Remembrancer considered in tile light of the decision of the High Court was that all the twelve partially overlapping routes were left out of the scheme and only the three routes notified in the draft scheme were affected.
The present petition is directed against his decision approving the scheme as modified by him and published on August 31, 1962.
In this Court it was urged (1) that the procedure of approving a part of the scheme once and another part later was illegal; 221 (ii)that the approval of the scheme by the Legal Rem embrancer after abdication of his own judgment was not a valid approval ; (iii) that the Legal Remembrancer ought to have given a fresh hearing ab initio to the objectors ; (iv) that there was no proper hearing and (v) that there was discrimination, as the, operators of the twelve partially overlapping routes were left out of the scheme.
Held, that as the twelve overlapping routes were never included in the draft scheme, the approval given to the craft scheme without touching these routes cannot be called 0an approval of a part of the scheme.
Held, further that in the present case the order of the High Court was analogous to a remand order and therefore, the decision of the Legal Remembrancer must be treated as a fresh decision and not a review of his earlier decision and there was no abdication by him of his functions.
Held, further, that when the objectors had been given full opportunity to lead evidence on the previous occasion which was still there for the Legal Remembrancer to take into account, it was sufficient for him to hear the objector 's arguments.
If it is borne in mind that the order passed by the High Court in the proceedings was in the nature of a remand order, this objection must fail.
Held, further, that the fact that the rules did not provide for a coercive process to secure attendance of witnesses did not mean that there could be no proper hearing without it.
Held, further, that under section 68C it was open to the State Government to take over any area or route to the complete or partial exclusion of other persons and there was no discrimination in the present case, for routes completely covered, by the route taken over stand on a different footing from the routes only partially covered.
|
tition Nos. 501, 643 44, 645, 649 and 1866 of 1981.
(Under article 32 of the Constitution of India) R. K. Garg, V.J. Francis, Sunil Kumar Jain and D. K. Garg for the Petitioners in WP.
501/81.
M. K Ramamurthi, J. Ramamurthi and Miss R. Vagai for the Petitioners in WPs.
643 44/81.
Vimal Dave and Miss Kailash Mehta for the Petitioners in WP.
No. 645/81.
A.K. Goel for the Petitioners in WP.
649/81.
Dalveer Bhandari and H. M. Singh for the Petitioners in WP.
1866/81.
L. N. Sinha, Attorney General, M. K Banerjee, Soliciter General, Miss A. Subhashini and R P. Singh for Respondent No. 1 in all the matters.
L. N. Sinha, Attorney General, O.C. Mathur and Sri Narain, for Respondent No. 2 in all the matters.
P. H. Parekh for the Intervener in WP.
501/81.
Somnath Chaterjee, J. Ramamurthi and Miss R. Vaigai for the Intervener Ajoy Kumar Banerjee in WPs.
643 44/81.
The following Judgments were delivered GUPTA, J.
The validity of the provisions of the Life Insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation (Amendment) ordinance, 1981 which preceded it is challenged in this batch of writ petitions.
The writ petitions have a history behind them which can be conveniently divided into three chapters.
However, it will be easier to follow this history if we referred to some of the provisions of the Life Insurance Corporation Act, 1955 first.
The Life Insurance Corporation was constituted under the to provide for the nationalisation of life insurance business in India 'by transferring all 252 such business to the Life Insurance Corporation of India.
Under section 11(1) of the Act the services of the employees of insurers whose business has vested in the Corporation are transferred to the Corporation.
Sub section (2) of section 11 provides: "Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that, in the interests of the Corporation and its policy holders, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees or any class of them is called for, the Central Government may, not withstanding anything contained in sub section (1), or in the , or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months ' remuneration unless the contract of service with such employee provides for a shorter notice of termination.
" There is an explanation to this sub section which is not relevant for the present purpose.
Section 48 of the Act empowers the Central Government to make rules to carry out the purposes of the Act.
Sub section (2) of section 48 in clauses (a) to (m) specifies some of the matters that the rules may provide for.
Sub section (3) of section 48 states: "Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive session, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses 253 agree that the rule should not be made, the rule shall A thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule." Section 49(1) empowers the Life Insurance Corporation of India to make regulations to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of the Act.
Clauses (a) to (m) of sub section (2) of section 40 specify some of the matters the regulations may provide for.
The matter referred to in clause (b) of sub section (2) is "the method of recruitment of employees and agents of the Corporation and the terms and conditions of service of such employees or agents.
" Clause (bb) speaks of the terms and conditions of service of persons who have become employees of the Corporation under sub section (1) of section 11.
Turning now to the history of the litigation, the first chapter begins with two settlements reached on January 24, 1974 and February 6, 1974 between the Life Insurance Corporation and its class III and class IV employees.
These were settlements under section 18 read with section 2(p) of the .
The settlements were identical in terms; four of the five unions of workmen subscribed to the first settlement while the remaining union was a signatory to the second.
The settlements cover a large ground including the claim for bonus.
Clause 8 of each of the settlements was as follows: "BONUS: (i) No profit sharing bonus shall be paid.
However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees.
(ii) An annual cash bonus will be paid to all Class III and Class IV employees at the rate of 15% of the annual salary (i.e. basic pay inclusive of special pay, if any, and dearness allowance and additional dearness allow 254 ance) actually drawn by an employee in respect of the financial year to which the bonus relates.
(iii) Save as provided herein all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated the 26th June, 1972.
" Clause 12 of the settlements inter alia provides: "This settlement shall be effective from 1st April, 1973 and shall be for a period of four years.
i.e. from 1st April 1973 to 31st March 1977.
" In 1975 an ordinance was promulgated called the Payment of Bonus (Amendment) ordinance which was subsequently replaced by the Payment of Bonus (Amendment) Act, 1976.
The reference to this ordinance and the Act would not have been relevant because section 32 (i) of the original made the said Act not applicable to the employees of the Life Insurance Corporation, but the Central Government appears to have decided also that the employees of establishments not covered by the would not be eligible to get bonus and ex gratia cash payment in lieu of bonus would be made.
Accordingly payment of bonus for the year 1975 76 to the employees of the Corporation was stopped under instructions from the Central Government.
On a writ petition filed by the employees of the Corporation in the Calcutta High Court, a single Judge of that court issued a writ of mandamus directing the Corporation to act in accordance with the terms of the settlement.
Thereafter the Life Insurance Corporation (Modification of Settlement) Act, 1976 was passed.
Some of the employees of Corporation challenged the constitutional validity of the Act by filing writ petition in this Court.
In Madan Mohan Pathak vs Union of India and Ors.(1) this Court held that the 1976 Act offended Article 31(2) of the Constitution and was as such void and issued a writ of mandamus directing the Union of India and the Life Insurance Corporation to forebear from implementing or enforcing the provisions of the 1976 Act and to pay annual cash bonus for the , years 1st April, 1975 to 31st March, 1976 and 1st April, 1976 to 31st March, 1977 to Class Ill and Class IV employees in accordance with the terms of the settlements.
The second chapter began on March 31, 1978 when the Corporation issued a notice under section 19(2) of the Industrial Dis 255 putes Act declaring its intention to terminate the settlements on the expiry of the period of two months from the date the notice was served.
On the same day another notice was issued by the Corporation under section 9A of the stating that it proposed to effect a change in the conditions of service applicable to the workmen.
The change proposed was set out in the annexure to the notice which reads: "AND WHEREAS for economic and other reasons it would not be possible for the Life Insurance Corporation of India to continue to pay bonus on the aforesaid basis; Now, therefore, it is our intention to pay bonus to the employees of the Corporation in terms reproduced hereunder: "No employee of the Corporation shall be entitled to profit sharing bonus.
However, the Corporation may, having regard to the financial condition of the Corporation in respect of any year and subject to the previous approval of the Central Government, grant non profit sharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility of such bonus.
" These notices were followed by a notification issued by the Corporation under section 49 of the on May 26, 1978 substituting a new regulation for the existing regulation No. 58 of the Staff Regulations.
Simultaneously the Life Insurance Corporation (Alteration of Remuneration and other terms and Conditions of Service of Employees) order, 1957, called the Standardisation order, made by the Central Government in exercise of the powers conferred on it by section 11(2) of the was amended with effect from June 1, 1978 substituting a new clause (9) for The original clause concerning bonus.
Clause (9) of the Standardisation order and Regulation 58 of the Staff Regulations after amendment read as follows: "No employee of the Corporation shall be entitled to profit sharing bonus.
However, the Corporation may, having regard to the financial condition of the Corporation in respect of any year and subject to the previous approval 256 of the Central Government, grant non profit sharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility for such bonus. " The validity of the said two notices and the notification issued for the purpose of nullifying any further claim of the workmen to annual cash bonus in terms of the Settlements of 1974 was challenged by the workmen by filing a writ petition in the Allahabad High Court.
The High Court allowed the writ petition and the Corporation preferred an appeal to this Court.
Another writ petition which had been filed in the Calcutta High Court challenging the said notices and the notification was transferred to this court, and the appeal and this writ petition were heard and disposed of by a common judgment.
The two cases were Civil Appeal No. 2275 of 1978, (The Life Insurance Corporation of India vs D.J. Bahadur and others)(1) and Transfer case No. I of 1979 (Chandrashekhar Bose and others vs Union of India and Ors.)(2).
By a majority the appeal preferred by the Corporation was dismissed and the transfer petition was allowed and a writ was issued by this Court to the Life Insurance Corporation directing it "to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation.
" The second chapter closed with this decision.
The third chapter begins with the promulgation of the Life Insurance Corporation (Amendment) ordinance, 1981 on January 31, 1981.
The following changes made in the principal Act by the ordinance are material.
In sub section (2) of section 48 of the principal Act a new sub clause (cc) was inserted with retrospective effect from June 20, 1979.
Clause (cc) relates to "the terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act.
" Three new sub sections (2A), (2B) and (2C) were added to section 48.
Sub section (2A) says that the regulations and other provisions as in force immediately before the commencement of the ordinance with respect to the terms and conditions of service of the employees and agents of the Corporation shall be deemed to be rules made under clause (cc) of 257 sub section (2).
Sub section (2B) provides that the power to make rules under clause (cc) of sub section (2) shall include (i) the power to give retrospective effect to such rules, and (ii) the power to amend by way of addition, variation or repeal the regulations and other provisions referred to in sub section (2A) with retrospective effect, but not from a date earlier than June 2(), 1979.
Sub section (2C) reads as follows: "The provisions of clause (cc) of sub section (2) and sub section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in the or any other law or any agreement, settlement, award or other instrument for the time being in force.
" Certain consequential changes were also made in section 49 of the Act.
In clause (b) of section 49(2) which has been quoted above, the words "and the terms and conditions of service of such employees or agents" were omitted.
This was necessary because the terms and conditions of service of the employees and the agents with regard to which the Corporation was empowered to make regulations by section 49(1) of the principal Act is now a matter included in clause (cc) of section 48(2) as one of the matters covered by the rule making authority of the Central Government under section 48(1) of the Act.
The ordinance also omits clause (bb) from section 49(2).
Clause (bb) also quoted earlier included the terms and conditions of the service of the persons who had become employees of the Corporation under section 11(1) of The Act.
The terms and conditions of service of such persons are now included in the new clause (cc) of section 48(2).
By notification dated February 2, 1981 the Central Government in exercise of the powers conferred by section 48 of the made the rules called the Life Insurance Corporation of India Class III and IV employees (Bonus and Dearness Allowance) Rules, 1981.
The relevant rule is rule 3 : which has been given retrospective operation from July 1, 1979.
Sub rule (1) of rule 3 provides; "No Class III or Class IV employee 258 of the Corporation shall be entitled to the payment of any profit sharing bonus or any other kind of cash bonus.
" Sub rule (2) of rule 3 states that notwithstanding what sub rule (1) provides every Class III and Class IV employee shall be entitled to a payment in lieu of bonus (a) for the period commencing from July 1, 1979 and ending on March 31, 1980 at the rate of 15 per cent of his salary; and (b) thereafter for every year commencing on the 1st April and ending on the 31st day of March of the following year, at such rate and subject to such conditions as the Central Government may determine having regard to the wage level, the financial circumstances and other relevant factors.
There is a proviso to this sub rule which says that (i) no payment in lieu of bonus shall be made to any employee drawing a salary exceeding Rs. 1600 per month; and (ii) where the salary of an employee exceeds Rs. 750 per month but does not exceed Rs. 1600 per month, the maximum payment to him in lieu of bonus shall be calculated as if his salary were Rs. 750 per month.
For the purposes of this sub rule, "salary" was explained as meaning basic pay, special pay, if any, and dearness allowance.
Sub rule (3) of rule 3 rescinds regulation 58 of the Staff Regulations and all other provisions relating to the payment of bonus to the employee to the extent they are inconsistent with rule 3 Writ petition No. 501 of 1981 under Article 32 of the Constitution was filed in this Court on February 5, 1981 by Shri A.V. Nachane and the All India Life Insurance Corporation Employees Federation.
Bombay, challenging the validity of the ordinance and the aforesaid rules.
Similar writ petitions by other associations of the employees of the Corporation followed In the meantime the ordinance was repealed and replaced on March 17, 1981 by the Life Insurance Corporation (Amendment) Act, 1981 which received the assent of the President of India on the same day.
The writ petitions were suitably amended after the Amendment Act came into force.
The provisions of the Act are similar to those of the ordinance except that the Amendment Act adds a new sub section, sub section (3).
to section 49 of the principal Act.
The new sub section (3) which provides that the regulations made under section 49 shall be laid before each House of Parliament are similar in terms to sub section (3) OF section 48 requiring the rules made by the Central Government under the Act to be laid before each House of Parliament.
Section 4 of the Amendment Act repeals the ordinance but provides that "notwithstanding such repeal, anything done or any action taken under the principal Act as amended by the said 259 Ordinance shall be deemed to have been done or taken under the principal Act as amended by this Act The validity of the Amendment Act and the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 have been challenged on several grounds.
It was argued that the Act and the rules were violative of Article 14, 19(1) (g) and 21 of the Constitution.
It was further contended that the said Act was invalid on the ground of excessive delegation of legislative functions.
Another contention raised was that in any event sub section (2C) of section 48 was invalid to the extent it permitted retrospective operation to rule 3 to override the order of this Court disposing of D. J. Bahadur 's case.
The challenge based on Article 19(1)(g) and Article 21 does not appear to have any substance.
Apart from anything else, a claim based on the 1974 settlements is certainly not a fundamental right that could be enforced through this Court.
As regards Article 21, the first premise of the argument that the word 'life ' in that Article includes livelihood was considered and rejected in In re: Sant Ram.
The contention that Article 14 is infringed arises on the provision of sub section (2C) of section 48 that any rule made under clause (cc) of sub section (2) of that section touching the terms and conditions of service of the employees of the Corporation shall have effect notwithstanding anything contained in the .
It is true that after rules are made regarding the terms and conditions of service, the right to raise an industrial dispute in respect of matters dealt with by the rules will be taken away and to that extent the provisions of the will cease to be applicable.
It was argued that there was no basis on which the employees of the Corporation could be said to form a separate class for denying to them the protection of the .
The reply on behalf of the Union of India and the Life Insurance Corporation was that the remuneration that was being paid to class III and class IV employees of the Corporation was far in excess of what was paid to similarly situated employees in other establishments in the public sector.
Some material was also furnished to support this claim though they were certainly not conclusive.
The need for amending the as appearing from the preamble of the Amendment Act and the ordinance is as follows: ". for securing the interests of the Life Insurance Corporation of India and its policy holders and 260 to control the cost of administration, it is necessary that revision of the terms and conditions of service applicable to the employees and agents of the Corporation should be undertaken expeditiously.
" Referring to the preamble of the Act the Attorney General appearing for the Union of India and the Corporation submitted that the problem of mounting cost of administration led to the making of in the impugned law.
He added that it was felt that no improvement in the situation was possible by the process of adjudication and a policy decision was taken that in the circumstances the proper course was legislation and that is why the Amendment Act was passed and the impugned rules were framed.
The learned Attorney General submitted that it was for Parliament to decide whether the situation was remediable by adjudication or required legislation.
According to him the as amended and the rules made after amendment placed the Corporation in the same position as other undertakings, that the advantages being enjoyed by the employees of the Corporation which were not available to similarly situated employees of other undertakings have been taken away removing what he described as discrimination in favour of the employees of the Life Insurance Corporation.
We have already said that the material produced on behalf of the Union of India and the Corporation to show that the terms and conditions of service of the employees in several other undertakings in the public sector compared unfavourably to those of the Corporation employees was not conclusive.
But the burden of establishing hostile discrimination was on the petitioners who challenged the Amendment Act and the rules.
It was for them to show that the employees of the Life Insurance Corporation and the employees of the other establishment to whom the provisions of the were applicable were similarly circumstanced to justify the contention that by excluding the employees of the Corporation from the purview of the they had been discriminated against.
There is no material before us on the basis of which we can hold that the Amendment Act of 1981 and the rules made on February 2, 1981 infringe Article 14.
We do not think that on the facts of this Case Express Newspapers (Private) Limited and another vs Union of India,(1) Moti Ram Deka etc.
vs General Manager N.E.F. Railways, Maligaon, Pandu etc.,(2) relied on by the petitioners, have any application.
261 It was contended that sub section (2C) added to section 48 of the by the Amendment Act of 1981 was invalid because of excessive delegation of legislative functions and that if sub section (2C) which is an integral part of the Amendment Act was ultra vires, the entire Amendment Act would be unconstitutional The Amendment Act introduced clause (cc) in section 48(2) authorising the Central Government to make rules in respect of the terms and conditions of service of the employees and agents of the Corporation.
Sub section (2C) of section 48 provides inter alia that rules made under clause (cc) shall have effect notwithstanding anything contained in the or any other law for the time being in force.
The argument is that the rules made under section 48(2) (cc) can virtually repeal the and other laws to the extent they are inconsistent with these rules.
Repealing a law, it was submitted on the authority of In re Delhi Laws Act,(l) was an essential legislative function which had been delegated to the Central Government and that the delegation was therefore excessive.
It is now well settled that it is competent for the legislature to delegate to other authorities the power to frame rules to carry out the purposes of the law made by it (see In re the Delhi Laws Act,(l) Raj Narain Singh vs The Chairman, Patna Administration Committee, Patna and another,(2) and D.S. Garewal vs State of Punjab and another(3) but the essential legislative functions cannot be delegated.
What is essential legislative function has been explained by Mukerjee., J. in the Delhi Laws case as follows: "The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of con duct.
It is open to the legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy." In Raj Narain Singh vs The Chairman, Patna Administration Committee, Patna, and another(2) a bench of five Judges of this Court held 262 that an executive authority can be empowered by a statute to modify either existing or future laws but not in any essential feature.
In the instant case section 48(2C) read with section 48(2) (cc) authorises the Central Government to make rules to carry out the purposes of the Act notwithstanding the or any other law.
This means that in respect of the matters covered by the rules the provisions of the or any other law will not be operative.
The argument is that sub section (2C) or any other provision introduced in the principal Act by the Amendment Act does not lay down any legislative policy nor supply any guidelines as to the extent to which the rule making authority would be competent to override the provisions of the or other laws.
Reference was made to Municipal Corporation af Delhi vs Birla Cotton Spinning and Weaving Mills, Delhi and another,(l) Gwalior Rayon Silk Manufacturing (Weaving) Company Limited vs Assistant Commissioner of Sales tax and others,(2) for the proposition that unlimited right of delegation is not inherent in the legislative power itself.
The question therefore is, does the Amendment Act of 1981 lay down no legislative policy or furnish no guidance to indicate the nature and extent of the modifications that the rules will be permitted to make in the existing laws to carry out the purposes of the as amended in 1981 ? Learned Attorney General relied on the decision of this Court in Harishankar Bagla and another vs State of Madhya Pradesh (3) This was a case under the Essential Supplies (Temporary Powers) Act, 1946.
Section 3(1) of that Act says that the Central Government for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
Sub section (2) of section 3 states that without prejudice to the generality of the powers conferred by sub section (1), such an order may provide inter alia for regulating by licences or permits or otherwise the production or manufacture and transport, distribution, disposal, acquisition; use or consumption of any essential commodity.
Section 6 of that Act provides inter alia that any order made under section 3 shall have effect notwithstanding any 263 thing inconsistent therewith contained in any enactment other than A that Act.
In exercise of the powers conferred by section 3 of that Act the Central Government made the Cotton Textiles (Control of Movement) order, 1948.
Clause 3 of the said order requires a person to take a permit from the Textile Commissioner to enable him to transport cotton textiles.
One of the question that arose in Harishankar Bagla 's case was whether section 6 of the Essential Supplies (Temporary Powers) Act permitted rules to be made by the Central Government repealing by implication an existing law, which was an essential legislative function and could not validly be delegated.
Mahajan C.J., speaking for the court said: "Section 6 does not either expressly or by implication repeal any of the provisions of pre existing laws, neither does not abrogate them.
Those laws remain untouched and unaffected so far as the statute book is concerned.
The repeal of a statute means as if the repealed statute was never on the statute book.
It is wiped out from the statute book.
The effect of section 6 certainly is not to repeal any one of those laws or abrogate them.
Its object is simply to by pass them where they are inconsistent with the pro visions of the Essential Supplies (Temporary Powers) Act, 1946, or the orders made thereunder.
In other words, the orders made under section 3 would be operative in regard to the essential commodity covered by the Textile Control order wherever there is repugnancy in this order with the existing laws and to that extent the existing laws with regard to those commodities will not operate.
By passing a certain law does not necessarily amount to repeal or abrogation of that law.
That law remains unrepealed but during the continuance of the order made under section 3 it does not operate in that field for the time being.
" We think the Attorney General was right in his submission that what has been said of section 6 of the Essential Supplies (Temporary Powers) Act should hold good for sub section (2C) of section 48 of the which is similar in terms in so far as it authorises the Central Government to make rules bypassing the existing laws.
Mahajan C.J., also holds that assuming that the rules framed under the Act had the effect of repealing the l l existing laws, the power to repeal is exercised not by the delegate but by the Act itself.
This is what he says on this point: 264 "Conceding, however, for the sake of argument that to the extent of a repugnancy between an order made under section 3 and the provisions of an existing law, to the extent of the repugnancy, the existing law stands repealed by implication, it seems to us that the repeal is not by any Act of the delegate, but the repeal is by the legislative Act of the Parliament itself.
By enacting section 6 Parliament itself has declared that an order made under section 3 shall have effect notwithstanding any inconsistency in this order with any enactment other than this Act.
This is not a declaration made by the delegate but the Legislature itself has declared its will that way in section 6.
The abrogation or the implied repeal is by force of the legislative declaration contained in section 6 and is not by force of the order made by the delegate under section 3.
The power of the delegate is only to make an order under section 3.
Once the delegate has made that order its power is exhausted.
Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act.
Parliament being supreme, it certainly could make a law abrogating or repealing by implication provisions of any pre existing law and no exception could be taken on the ground of excessive delegation to the Act of the Parliament itself.
" The Attorney General relied strongly on these observations in submitting that it is not really the rules framed by the Central Government in exercise of the delegated authority that override the or any other existing law but the power of abrogating the existing laws is in sub section (2C) of section 48 enacted by Parliament itself.
The observations quoted above from Harishankar Bagla 's case which was decided by a bench of five Judges appear to support the Attorney General 's contention.
The question however remains to be answered, does the as amended in 1981 state any policy to guide the rule making authority ? We have earlier referred to the observations of Mukerjea J., in the Delhi Laws case that the legislature can formulate a policy as broadly and with as little or as much details as it thinks proper and may delegate the rest of the Iegislative work to a subordinate authority who will work out the details within the framework of the policy.
In Harishanker Bagla 's 265 case one of the questions for decision was whether section 3 of the A Essential Supplies (Temporary Powers) Act, 1946 amounts to delegation of legislative power outside the permissible limits.
It was held that legislature had laid down a legislative principle which was "maintaining or increasing supplies of any essential commodity," and "securing their equitable distribution and availability at fair prices.
" That statement was held as offering sufficient guidance to the Central Government in exercising its powers under section 3.
In the instant case the policy as stated in the preamble of the Amendment Act is that "for securing the interests of the Life Insurance Corporation of India and its policy holders and to control the cost of administration, it is necessary that revision of the terms and conditions of service applicable to the employees and agents of the Corporation should be undertaken expeditiously".
The policy stated here is at least as clear as the one held in Harishanker Bagla 's case offering sufficient guidance to the Central Government in exercising its powers under that Acts We have referred to section 48(3) of the which requires that every rule made by the Central Government under this Act shall be laid before each House of Parliament and that if both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be.
This Court in D.S. Grewal vs State of Punjab and another(supra) observed as follows in respect of a similar provision requiring the rules made by the delegated authority to be laid on the table of Parliament and making the rules subject to modification, whether by way of repeal or amendment on a motion made by Parliament: "This makes it perfectly clear that Parliament has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate.
" In view of what has been held in Harishanker Bagla and D. section Grewal, both of which were decided by a larger bench, we do not find it possible to accept the contention that the Act is invalid on the ground of excessive delegation of legislative functions.
It was contended on behalf of the petitioners that in any event the provisions of the Amendment Act of 1981 could not nullify the effect of the writ issued by this Court in D. J. Bahadur 's case.
In our opinion this contention has substance.
Clause (cc) of section 48(2) empowers the Central Government to make rules with regard 266 to the terms and conditions of service of the employees and agents of the Corporation.
Sub section (2A) of section 48 provides that the regulations made under section 49 of the Act and "other provisions ' as in force before the commencement of the Amendment Act with respect to the said terms and conditions are to be deemed as rules made under clause (cc) of section 48(2).
Sub section (2B) of section 48 says that the power to make rules conferred by clause (cc) of sub section (2) shall include the power to add, vary or repeal the regulations and "other provisions" referred to in sub section (2A) with retrospective effect from a date not earlier than June 20, 1979.
Clearly a writ issued by this Court is not a regulation nor can it be described as 'other provision ' which expression possibly includes circulars and administrative directions.
Sub section (2C) of section 48 however provides inter alia that any rules made under clause (cc) with retrospective effect from any date shall be deemed to have had effect from that date notwithstanding any judgment, decree or order of any court, tribunal or other authority.
The order disposing of D. J. Bahadur 's case, made on November 10, 1980 reads: "In view of the opinion expressed by the majority, the appeal is dismissed with costs to the first, second and third respondents, and the Transfer Petition No. 1 of 1979 stands allowed insofar that a writ will issue to the Life Insurance Corporation directing it to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation.
Costs in respect of the Transfer Petition will be paid to the petitioners by the second respondent.
" The Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 were made by the Central Government on February 2, 1981 in exercise of the powers conferred by section 48 of the as amended by the Life Insurance Corporation (Amendment) ordinance, 1981.
Rule 3 of these rules relates to the subject of bonus concerning class III and class IV employees of the Corporation.
The substance of this rule has been set out earlier in this judgment.
Clearly rule 3 seeks to supersede the terms of the 1974 settlements relating to bonus.
By virtue of rule 1(2), rule 3 'shall be deemed to have come into force on the Ist day of July, 1979".
The question is, can rule 3 read with rule ](2) nullify the effect of the writ issued by this Court on November 10, 1980 in D.J.Bahadur 's case ? In seems to us rule 3 cannot make the writ 267 issued by this Court nugatory in view of the decision of the majority in Madan Mohan pathak vs Union of India & ors.
etc.(supra) to which reference has been made earlier.
In Madan Mohan Pathak 's case it was contended that since the Calcutta High Court had by its judgment dated May 21, 1976 issued a writ of mandamus directing the Life Insurance Corporation to pay annual cash bonus to class III and class IV employees for the year April 1, 1975 to March 31, 1976 as provided by the 1974 settlements and this judgment had become final, the Life Insurance Corporation was bound to obey the writ of mandamus and pay as ordered by the High Court.
The court was dealing with the Life Insurance Corporation ( Modification of Settlement) Act, 1976 in that case.
Section 3 of that Act provided that the terms of the settlements in so far as they related to the payment of annual cash bonus to class III and class IV employees would not have any force or effect and be deemed not to have had any force or effect from April 1, 1975 Bhagwati J., speaking also for Iyer and Desai., JJ.
Observed: "Here, the judgment given by the Calcutta High Court, which is relied upon by the petitioners, is not a mere declaratory judgment holding an impost or tax to be invalid.
so that a validation statute can remove the defect pointed out by the judgment amending the law with retrospective effect and validate such impost or tax.
But it is a judgment giving effect to the right of the petitioners to annual cash bonus under the Settlement by issuing a writ of Mandamus directing the Life Insurance Corporation to pay the amount of such bonus.
If by reason of retrospective alteration of the factual or legal situation, the judgment is rendered erroneous, the remedy may be by way of appeal or review, but so long as the judgment stands, it cannot be disregarded or ignored and it must be obeyed by the Life Insurance Corporation.
We are, therefore, of the view that in any event! irrespective of whether the impugned Act is constitutionally valid or not, the Life Insurance Corporation is bound to obey the writ of Mandamus issued by the Calcutta High Court .
" Beg.
C.J. who delivered a separate but concurring judgment, after pointing out the "hurdle in the way" of the petitioner 's claim based on Article 19(1)(f) of the Constitution, which was that the Act Life Insurance Corporation (Modification of Settlement) Act, 1976) was 268 passed during the emergency, observed: "The object of the Act was, in effect, to take away the force of the judgment of the Calcutta High Court recognising the settlements in favour of Class III and Class IV employees of the Corporation.
Rights under that judgement could be said to arise independently of Article 19 of the Constitution.
I find myself in complete agreement with my learned brother Bhagwati that to give effect to the judgement of the Calcutta High Court is not the same thing as enforcing a right under Article 19 of the Constitution.
It may be that a right under Article 19 of the Constitution becomes linked up with the enforceability of the judgment.
Nevertheless, the two could be viewed as separable sets of rights.
If the right conferred by the judgment independently is sought to be set aside, section 3 of the Act, would in my opinion, be invalid for trenching upon the judicial power.
I may, however, observe that even though the real object of the Act may be to set aside the result of the mandamus issued by the Calcutta High Court, yet, the section does not mention this object at all Probably this was so because the jurisdiction of a High Court and the effectiveness of its orders derived their force from Article 226 of the Constitution itself.
These could not be touched by an ordinary act of Parliament.
Even if section 3 of the Act seeks to take away the basis of the judgment of the Calcutta High Court, without mentioning it, by enacting what may appear to be a law, yet, I think that where the rights of the citizen against the State are concerned, we should adopt an interpretation which upholds those rights.
Therefore, according to the interpretation r prefer to adopt the rights which had passed into those embodied in a judgment and became the basis of a Mandamus from the High Court could not be taken away in this indirect fashion. ' The Attorney General referred to a number of earlier decisions of this Court wanting us to infer that the observations quoted above from the judgment in Madan Mohan Pathak 's case did not state the correct law hl view of the said decisions.
But these observations expressed the majority view of a bench of seven judges bearing 269 directly on the point that arises for decision in the instant case and A are binding on us.
We therefore hold that rule 3 operating retrospectively cannot nullify the effect of the writ issued in D. J. Bahadur 's case which directed the Life Insurance Corporation to give effect to the terms of the 1974 settlements relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation.
The Life insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 are relevant legislation.
However in view of the decision in Madan Mohan Pathak 's case, these rules, in so far as they seek to abrogate the terms of the 1974 settlements relating to bonus, can operate only prospectively, that is, from February 2, 1981, the date of publication of the rules.
The petitions are allowed to this extent only.
In the circumstances of the case we make no order as to costs.
CHINNAPPA REDDY, J.
I have had the advantage of perusing the opinion of my brother Gupta J., I agree with his conclusion that the Life Insurance Corporation (Amendment) Act I of 1981 can operate but prospectively in so far as it seeks to nullify the terms of the 1974 settlements in regard to the payment of bonus.
On some of the other questions I have certain reservations.
I do not, however, desire to express any opinion on those questions as my brother Pathak J., has indicated that he is inclined to agree with Gupta J., on those questions.
Perhaps I will do well to add a few words of my own on the question of retrospectivity.
I am spared the necessity of stating the facts as those that are necessary have been stated by my brother Gupta J.
The 1974 settlements provided, among various other matters, for the payment of annual cash bonus (not a profit sharing bonus) to their Class Ill and Class IV employees at the rate of 15 per cent of the annual salary.
The settlements were to be operative from 1st April 1973 to 31st March 1977.
That the settlements were to be operative from 1st April 1973 to 31st March 1977 did not mean that the settlements would cease to be effective peremptorily from 1 4 1977 and, therefore, the annual cash bonus stipulated under the settlements would cease to be payable from that date onwards.
The settlements would continue to be binding even after 31 3.1977 and would not be liable to be terminated by the issuance of a unilateral notice by the employer purporting to terminate the settlements.
The settlements would cease to be effective only when they were replaced 270 by 'a fresh settlement, an industrial award or relevant legislation '.
This is the law and this was what the law was pronounced to be in Life Insurance Corporation of India vs D. J Bahadur(1) on a consideration of the relevant provisions and precedents.
The attempt made to supersede the settlements, in so far as they related to the payment of bonus, by enacting the Life Insurance Corporation (Modification of Settlement) Act 1976 failed, firstly because the Act was held to violate the provisions of Article 31(2) of the Constitution and secondly because the Act could not have retrospective effect so as to absolve the Life Insurance Corporation from obeying the writ of mandamus issued by the Calcutta High Court, which had become final and binding on the parties.
This was the decision of this Court in Madan Mohan Pathak vs Union of India(a), all the seven judges who constituted the Bench agreeing that the Act violated the provisions of Article 31(21 and four out of the seven judges, namely, Beg C. J., Bhagwati, Krishna Iyer and Desai JJ., taking the view that the Act did not have the effect of nullifying the writ of mandamus issued by the Calcutta High Court and the other three Judges, Chandrachud, Fazal Ali and Shinghal JJ, preferring not to express any view on that question.
The second attempt to nullify the 1974 settlements in regard to payment of bonus, by issuing notices under section 19(2) and Section 9 A of the and by amending the Standardization order and the Staff Regulations, was frustrated by the judgment of this Court in Life Insurance Corporation of India vs D.A. Bandar, the Court taking the view that the two settlements could only be superseded by 'a fresh settlement, an industrial award or relevant legislation '.
In this case, the Court issued a writ to the Life Insurance Corporation "to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation".
The effect of the two judgments in Madan Mohan Pathak 's case and D. J, Bahadhur 's case was clear: the settlements of 1974, in so far as they related to bonus could only be superseded by a fresh settlement.
an industrial award or relevant legislation.
But any such supersession could only have future effect, but not retrospective effect so as to dissentient the Class III and Class IV employees of the Life Insurance Corporation from receiving the cash bonus which had been earned by them, day by 271 day and which the Life Insurance Corporation of India was under an obligation to pay in terms of the writ issued in D. J. Bahadur 's case.
The present attempt made by the 1981 amending Act and the rules thereunder to scuttle the payment of bonus with effect from a date anterior to the date of the enactment must, therefore, fail.
The employees are entitled to be paid the bonus earned by them before the date of publication of the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 19 81.
N.V.K. Petitions partly allowed.
| HELD: In the face of the appellant 's promotion a few months before his compulsory retirement under F. R. 56 (d) and nothing even mildly suggestive of ineptitude or inefficiency after his promotion, it is impossible to sustain the order of the Government retiring him from service.
[79 G] When the Government exonerated him of the charges levelled against him, the basis of the adverse entry in his confidential file was knocked out.
By reason of the promotion of the selection post of Deputy Commissioner and posting as a Member of the Sales Tax Appellate Tribunal, the effect of the entry was further blotted out.
Since then, there was no adverse entry in his service record to discredit him or hinting even remotely that he had outlived his utility as a Government servant.
Had there been another adverse entry after his promotion it would have been possible to read them all in conjunction and say that it was time for him to quit Government service.
But that was not so.
It was therefore odd that he was retired a few months after his promotion.
[79 A C] 76 All this is not to say that previous history of a Government servant should be completely ignored once he is promoted.
Sometimes past events might help to assess the present conduct, but when there was nothing in the present conduct casting any doubt on the wisdom of the promotion there was no justification for needless digging into the past.
[80 A B] Swami Saran Saksena vs State of U.P., [1980] I SCR 923; Baldev Raj Chadha vs Union of India & Ors., [1981] I SCR 430; State of Punjab vs Dewan Chuni Lal, ; ; and Union of India etc.
vs M. E. Reddy & Anr., ; ; referred to.
|
N: Civil Appeal No. 798 of 1963.
Appeal by Special Leave from the judgment and Order dated the 19th August, 1960 of the Madras High Court in Second Appeal No. 871 of 1958.
R. Ganapathy lyer, for the appellant.
C. B. Agarwala and R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Ranmswami, J.
This appeal is brought, by special leave, on behalf of the plaintiff from the judgment of the High Court of Madras dated August 19, 1960 in Second Appeal No. 871 of 1958.
The disputed property consisted of 16 acres and 27 cents of land in Sokkanur village of Coimbatore district of which half share belonged to Palani Moopan and the other half to his daughter Palani Mooppachi.
Palani Moopan executed the document exhibit B 1 with regard to his share of the property in favour of the 1st defendant for a consideration of Rs. 4,000/on May 28, 1946.
Out of the consideration, a sum of Rs. 2,000/was reserved with the vendee to pay off an earlier mortgage and the balance of Rs. 2,000/ was paid to the vendor in cash.
The first defendant discharged the earlier mortgage in accordance with the directions in exhibit B 1.
The document, B 1 was in the form of a sale deed but it contained a stipulation that the 1st defendant should reconvey the property to Palani Moopan on his repaying the amount of Rs. 4,000/ after 5 years and before the end of the 7th year.
After the death of Palani Moopan his sons executed an assignment deed in favour of the plaintiff, exhibit A 1 dated August 10, 1950 for a sum of Rs. 1,600/ .
On the basis of exhibit A 1 the plaintiff has brought the present suit for redemption of the disputed property.
The case of the plaintiff was that exhibit B 1 must be deemed in law to be a mortgage by conditional sale and that he was entitled to redeem as the assignee of the equity of redemption.
The plaintiff further claimed that being an agriculturist, he was entitled to the benefits of Madras Act TV of 1938 as amended.
The plaintiff pleaded alternatively that if Sup.
Cl/66 12. was held to be an out right sale with a condition to repurchase, the first defendant was bound to reconvey the property to him on payment of the amount of Rs. 4,000/ .
The plaintiff alleged that he tendered the amount to the first defendant several times but the latter refused to accept the same.
The suit was contested by the 1st defendant who denied that exhibit B 1 was a mortgage by conditional sale.
It was alleged that exhibit B 1 was an out right sale with a covenant to repurchase and as no tender was made by the plaintiff within the time stipulated in the document, the suit was barred by time.
Upon these rival contentions the trial court held that exhibit B 1 was a mortgage by conditional sale and accordingly granted a preliminary decree to the plaintiff for redemption under O. 34.
r. 7 of the Civil Procedure Code.
The first defendant took the matter in appeal to the Subordinate Judge of Coimbatore but the appeal was dismissed.
The 1st defendant preferred second appeal in the Madras High Court which set aside the decrees of the lower Courts and ordered that the suit should be dismissed, holding that the transaction was an out right sale and not a mortgage by conditional sale.
As regards the alternative plea based on the covenant for reconveyance, the High Court considered that there was no proof that the plaintiff had tendered the amount within the period stipulated in the document.
The question of law involved in this appeal is whether the document, exhibit B 1 executed by Palani Moopan in favour of the 1st defendant is, in its true effect, a mortgage by conditional sale or a sale with a condition for retransfer.
By section 58(c) of the a mortgage by conditional sale is defined as follows : "58.
(c) Where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgaged money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: 921 Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.
" The proviso to this clause was added by Act 20 of 1929.
Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed.
Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale.
But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended.
The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances.
The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed.
In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified.
The distinction between the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt.
The form in which the deed is clothed is not decisive.
The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the document viewed in the light of surrounding circumstances.
If the language is plain and unambiguous it must in the light of the evidence of surrounding circumstances be given its true legal effect.
If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts.
In the present case, the document exhibit B 1 reads as follows ". . . . . .
I have settled to sell to you on this day for a suit of Rs. 4,000 0 0 the undermentioned immovable pro 922 perties and have received the consideration of rupees four thousand only, as detailed below : In the matter of my having directed you yourself to pay the sum of Rs. 2,000/ , being my half share payable towards the usufructuary mortgage deed executed on 7th September 1944, in respect of the share of properties detailed below and in respect of some other share of properties, jointly by me and Palani Mooppachi, wife of one Palani Mooppan of the aforesaid place in favour of M. Maniyam P. V. Ramaswami Goundar, son of Venkatachala Goundar, residing in Pattampalayam village cusba, Palladam taluk, for a sum of Rs. 4,000/ and registered as Document No. 1122 of 1944, Book 1, Volume 210, pages 415 and 416 in the Office of the Sub Registrar of Kunnathur to the aforesaid usufructuary mortgagee, get release of the properties mentioned herein and take possession of the same, the amount received by me is Rs. 2,000/ .
The amount which I have received in cash on this day is Rs. 2,000/ .
As, in all, I have received the sale consideration of Rs. 4,000/ as detailed above, you yourself shall, in future, hold and enjoy absolutely the undermentioned properties.
In future, neither myself nor my heirs shall have any right or future claim, whatever, in respect of these properties.
There is no other encumbrance, whatever, except the encumbrance mentioned above, in respect of these properties.
In case anything is left out, I am bound to get the same discharged from and out of my other properties.
Whereof, in all these, and in the well in good condition, situate in Government Survey No. 93/1 and in the cocoanut, palmyrah, tamarind and wood apple trees and in the fruit bearing and timber trees, which are in the aforesaid fields, the half share in common.
In future I have neither share nor right, whatever, in the aforesaid fields.
The aforesaid Palani Mooppachi shall discharge the above mentioned balance usufructuary mortgage amount of Rs. 2,000/ from and out of the balance of the usufructuary of mortgage properties.
Should I pay in cash the aforesaid sale consideration of rupees four thousand after a period of five years within a period of seven years from the date of 923 the execution of the deed, during the date of expiry of the said deed of any year (the said properties) should be reconveyed for the very same amount to me.
This condition is not valid after the aforesaid period.
" We consider that in the present case there are several cir cumstances to indicate that exhibit B 1 was a transaction of mortgage by conditional sale and not a sale with a condition for, retransfer.
In the first place, there is the important circumstance that the condition for repurchase is embodied in the same, document.
In the second place, there is the significant fact that the consideration for exhibit B 1 was Rs. 4,000/ , while the real value of the property was, according to the Munsif and the Subordinate Judge, Rs. 8,000/ .
The High Court has dealt with this question and reached the finding that the value of the property was Rs. 5,5001 , but it is submitted by Mr. Ganapathi lyer on behalf of the appellant that the question of valuation was one of fact and the High Court was not entitled to go into the question in the second appeal.
The criticism of learned Counsel for the appellant is justified and we must proceed on the basis that the valuation of the property was Rs. 8,000/ and since the consideration for exhibit B 1 was only Rs. 4,000/ it was a strong circumstance suggesting that the transaction was a mortgage and not an out right sale.
In the third place, there is the circumstance that the patta was not transferred to the 1st defendant after the execution of exhibit B 1 by Palani Moopan.
It appears that defendant No. I did not apply for the transfer of patta and the patta admittedly continued in the name of Palani Moopan even after the execution of exhibit B 1.
Exhibits A 6 and A 7 are certified copies of thandal extract of patta for the years 1945 54 and they prove this fact.
These exhibits also show that the plaintiff had obtained patta for the land on the basis of exhibit A 2.
The registered deed of transfer of patta was executed by the sons of Palani Moopan in favour of the plaintiff.
There is also the circumstance that the, kist for the land was continued to be paid by Palani Moopan and after his death, by the sons of Palani Moopan.
Lastly, there is the important circumstance that the consideration for reconveyance was Rs. 4,000/ , the same amount as the consideration for exhibit B 1.
Having regard to the language of the document, exhibit B 1 and examining it in the light of these circumstances we are of the opinion that the transaction under exhibit B 1 was mortgage by conditional sale and the view taken by the High Court with regard to the legal effect of the transaction must be reversed.
It follows, therefore, that the plaintiff is entitled to a preliminary decree for redemption under 0.
r. 7, Civil Procedure Code, 924 for taking accounts and for declaration of the amounts due to the 1st defendant under exhibit B 1.
For these reasons we set aside the judgment and decree of the High Court and.
restore the judgment and decree of the Subordinate Judge of Coimbatore granting the plaintiff a preliminary decree for redemption of the mortgage.
A period of six months is granted for payment of the amount under the preliminary decree.
The appeal is accordingly allowed with costs.
Appeal allowed.
| The respondent company obtained under an agreement with the Ruler of the erstwhile State of Dharampur an exemption from levy of income tax and super tax for the first seven years of its working.
it commenced business in June 1949.
In August 1949 the State of Dharampur merged with the Province of Bombay.
The company then applied for and obtained under para 15 of the Merged States (Taxation Concession) Order, 1949, an exemption from income tax and supper tax for five years commencing from April, 1950.
In the assessment year 1956 57 when the company was to be assessed under the Indian Incometax Act, 1922, for the first time, it claimed that as no depreciation had actually been allowed to it earlier the original cost of its machinery etc. should be taken as the written down value for the purpose of calculating the allowable depreciation.
The assessing and appellate authorities held against the company but the High Court held in its favour.
In appeal to this Court by the Revenue it was contended that (1) on a proper interpretation of section 10(5)(b) of the Indian Income tax Act, 1922 the depreciation must be deemed to, have been allowed to the assessee in the years in which its income was exempted and (2) the concession given by the Commissioner must be deemed to be a continuation of the agreement with the Ruler and therefore the Taxation Laws (Merged States) (Removal of difficulties) Order 1949 as amended by the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment Order,), 1962 applied to the facts of the case.
HELD: (i) The words 'actually allowed ' in section 10(5)(b) did not include any notional allowance and the High Court had rightly decided that the original cost was the written down value.
[862 C] Commissioner of Income tax, Madhya Pradesh vs M/s. Straw Products Limited, Bhopal, [1966] S.C.R. applied.
(ii) The exemption granted to the company under para.
15 of the Merged States (Taxation Concession) Order, 1949 was an exemption under section 60A of the Income tax Act and not under any agreement.
The case of the assessee had therefore to be determined with reference to section 10(5)(b) of the Act unaffected by the amendment made by the 1962 Order.
[862 G]
|
ivil Appeal No. 4494 of 1989.
From the Judgment and Order dated 31.5.88 of the Central Administrative Tribunal, Allahabad in O.A. No. 427/1986.
B. Dutta, ASG.
(N.P.), C.V. Subba Rao, A. Subba Rao and P. Parmeshwaran for the Appellants.
Harbans Lal and A.K. Mahajan for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Special leave is granted.
Heard learned counsel for both parties.
The respondents were holding the posts of Junior Scien tific Officers (Group 'B ' posts) in the Defence Research & Development Service.
They were promoted to the posts of Scientists 'B ' with effect from October 16, 1985 or from the date they would actually assume charge of the posts.
The respondents filed an application before the Central Adminis trative Tribunal, Allahabad, claiming that they should have been promoted to the posts of Scientists 'B ' with effect from July 1, 1984.
The Tribunal rejected the prayer of the respondents that their promotions should have been made with effect from July 1, 1984.
The Tribunal, however, directed that their promotions should be with effect from the date on which the promotional posts were created.
753 The short question involved in this appeal is whether the Tribunal was justified in directing that the respondents ' promotion should be with effect from the date the promotion al posts were created.
Under rule 8(1)(a) of the Defence Research & Development Service Rules, 1970, hereinafter referred to as 'the Rules ', all those who have been recruited before the promulgation of the Rules as Junior Scientific Officers in the Defence Research & Development Organisation on regular basis and possess the educational qualifications and experience as laid down for direct recruits, shall be eligible, till they are wasted out, for promotion to the post of Scientist 'B ' up to 50 per cent of the vacancies in the grade.
Under the first proviso to rule 8(1)(a), the total number of posts filled in that grade shall at no time exceed 50 per cent of the total sanctioned strength for the grade on the date of promulgation of the Rules, and that this concession shall also be admissible to those persons who are appointed or promoted as Junior Scientific Officers on regular basis on or after the promulgation of the Rules.
There were a total number of 512 posts available in the grade of Scientists 'B ' in 1979.1n view of rule 8(1)(a) of the Rules, the Junior Scientific Officers were entitled to be promoted to the 50 per cent of these posts, that is to say to 256 posts.
These 256 posts were filled up by promo tion of the Junior Scientific Officers between the period 1979 and 1983.
According to the respondents, the posts of Scientists 'B ' to which they have been promoted with effect from October 16, 1985, were created between 1984 and 1985 and that, accordingly, the respondents should have been promoted to these posts with effect from 1st July, 1984.
It was the contention of the respondents that on previous occasions up to the year 1983, promotions were given effect from 1st July of the year in which the promotions were granted.
It has been already noticed that the Tribunal has overruled the said contention of the respondents and has directed that their promotions should be with effect from the date the said promotional posts of Scientists 'B ' were created.
At the same time, it has been found by the Tribunal that the flexible complementing scheme or SITU promotions, as provided in rule 8(2)(f) of the Rules, were not available to the Junior Scientific Officers.
It is not disputed that the promotions of the Junior Scientific Officers to the posts of Scientists 'B ' are vacancy based and such promo tions are granted after the assessment by the Assessment Board as provided in the Rules.
It has also been observed by the Tribunal that normally the promotions will take effect from the date of the order granting such promotions.
The only ground on which the Tri 754 bunal has directed that the promotions of the respondents should take effect from the date the posts of Scientists 'B ' were created, is that up to 1983 such promotions were given effect from 1st July of the year in which the promotions were granted.
There is no statutory provision that the promotion to the post of Scientist 'B ' should take effect from 1st July of the year in which the promotion is granted.
It may be that, rightly or wrongly, for some reason or other, the promotions were granted from 1st July, but we do not find any justifying reason for the direction given by the Tribu nal that the promotions of the respondents to the posts of Scientists 'B ' should be with effect from the date of the creation of these promotional posts.
We do not know of any law or any rule under which a promotion is to be effective from the date of creation of the promotional post.
After a post falls vacant for any reason whatsoever, a promotion to that post should be from the date the promotion is granted and not from the date on which such post falls vacant.
In the same way when additional posts are created, promotions to those posts can be granted only after the Assessment Board has met and made its recommendations for promotions being granted.
If on the contrary, promotions are directed to become effective from the date of the creation of addi tional posts, then it would have the effect of giving promo tions even before the Assessment Board has met and assessed the suitability of the candidates for promotion.
In the circumstances, it is difficult to sustain the judgment of the Tribunal.
For the reasons aforesaid, we set aside the judgment of the Tribunal directing that the promotions of the respond ents should be not from the date of the orders of promotion, but from the date the posts were created.
The orders of the appellants promoting the respondents with effect from Octo ber 16, 1985 will stand.
The appeal is allowed.
There will, however, be no order as to costs.
N .P.V.
Appeal allowed.
| The petitioners in the special leave petition started, without recognition, a teachers training college in Bihar, and later applied for permission to allow its students to appear at the examination on the ground that the question of its recognition had not been decided by the Government.
The petitioners failed to get the desired relief from the High Court.
Dismissing the special leave petition, this Court, HELD: (1) A number of mushroom institutions have sprung up in the State of Bihar without getting any recognition and thereafter have tried to get the permission from courts that its students be allowed to appear at the examination on grounds of sympathy.
[24G] (2) It is not possible to grant any such permission as prayed for because the granting of such permission would be clearly violating the provisions of the Education Act.
[25B] S.L.P. No. 12014 of 1987 decided on November 25, 1987 A.P. Christians Medical Educational Society vs Government of A.P. & Anr., ; , referred to.
(3) The application for recognition in this case was made by the petitioners as early as 1986 and that applica tion has not still been disposed of.
The same should be disposed of within 4 weeks from today.
[25F] (4) The concerned department of the Government of Bihar, should see to it that applications for recognition of educa tional institutions are decided promptly and where such an application is without 24 merit, the Government should promptly reject, the same and take steps to see to it that the rejection is brought to the attention of the students of the institution concerned so that they may not waste further time and money by undergoing training in that institution.
[25C] (5) The failure of the Government to take such action would only reflect callous indifference to the interests of the young students to whom the Government certainly owes certain responsibilities.
[25D] (6) The State should consider taking such steps, Crimi nal or Civil, as open to it in law, to stop such institu tions and those who run them from misleading students and deceiving them.
[25E] (7) The State Government of Bihar shall get published advertisements in at least three newspapers in that State with wide circulation warning students not to take admission in any educational institution which has not got recognition and making it clear that if they do so, they would be doing so at their own risk.
|
cellaneous Petition No, 641 of 1954, 72 562 Application for review of the Judgment of this Court in Civil Appeal No. 152 of 1954.
N. C. Chatterjee (G. C. Mathur, with him) for the petitioner.
Veda Vyas (section K. Kapoor and Naunit Lal, with him) for the respondent.
October 18.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This is an application for review of the judgment of this Court in Civil Appeal No. 52 of 1954.
That was an appeal against an order of the Election Tribunal, Himachal Pradesh (Simla), dismissing a petition to set aside the election of the respondent to the Legislative Assembly, Himachal Pradesh, from the Rohru Constituency.
Two points were raised at the hearing of the appeal before us: One was that the respondent was disqualified for election to the Assembly under section 17 of Act No. XLIX of 1951, read with section 7(d) of Act No. XLIII of 195 1, by reason of the fact that he was interested in contracts for the supply of Ayurvedic Medicines to the Himachal Pradesh Government, and the other, that he had appointed Government servants as polling agents, and had thereby contravened section 123(8) of Act No. XLIII of 1951.
On the first question, we held that, on a true construction of section 17, what would be a disqualification for election to either House of Parliament under article 102 would, under that section, be disqualification for election to the Legislatures of States, and that the disqualification under section 7 (d) of Act No. XLIII of 1951 would accordingly be a disqualification under section 17 of Act No. XLIX of 195 1.
A further contention was then raised on behalf of the respondent that even if section 7(d) were to be imported into section 17, that would not disqualify him, because under that section, the disqualification must be to being elected to either House of Parliament, and that under sections 7 and 9 of Act No. XLIII of 1951, a contract to operate as a disqualification to the election to either House of Parliament must be, with the Central Government, whereas 563 the contracts of the respondent were with the Government of Himachal Pradesh.
The answer of the petitioner to this contention was that under article 239 the administration of States was vested in the President acting through the Chief Commissioner or the Lieutenant Governor, and that the contracts of the respondent with the Chief Commissioner, Himachal Pradesh, must be held to be contracts with the Central Government.
We, however, disagreed with this con tention, and held that article 239 had not the effect of merging States with the Central Government, and converting contracts with the States into those with the Central Government.
In this application, Mr. Chatterjee appearing for the petitioner invites our attention to the definition of " Central Government " in section 3(8)(b)(ii) of the .
It is as follows: "Central Governmnet" shall in relation to anything done or to be done after the commencement of the Constitution, mean the President; and shall include in relation to the administration of a Part C State, the Chief Commissioner or Lieutenant Governor or Government of a neighbouring State or other authority acting within the scope of the authority given to him or it under article 239 or article 243 of the Constitution, as the case may be." He argues that by force of this definition, contracts with the Chief Commissioner of Himachal Pradesh must be treated as contracts with the Central Government, and that in consequence, the respondent was disqualified for election under section 17 of Act No. XLIX of 1951, read along with section 7(d) of Act No. XLIII of 1951.
As against this, Mr. Veda Vyas for the respondent relies on the definition of " State " in section 3(60)(b) of the , which runs as follows: " State Government " as respects anything done or to be done after the commencement of the Constitution, shall mean, in a Part A State, the Governor, in a Part B State the Rajpramukh, and in a Part C State the Central Government.
" 564 His contention is that there being in the Constitution a fundamental distinction between the Government of the Union and Government of the States, section 3(8) of the should be so construed as not to destroy that distinction, and that having regard to the definition of " State " in section 3(60), it must be held that to the extent the Central Government administers States under article 239, its character is that of the State Governments.
We are unable to agree that section 3(8) has the effect of putting an end to the status of States as independent units, distinct from the Union Government under the Constitution.
It merely recognies that those States are centrally administered through the President under article 239, and enacts that the expression " Central Government " should include the Chief Commissioner administering a Part C State under the authority given to him under article 239.
Section 3(8) does not affect the status of Part C States as distinct entities having their own Legislature and judiciary, as provided in articles 239 and 240.
Its true scope will be clear if, adapting it, we substitute for the words " Central Government" in section 9 of Act No. XLIII of 195 1, the words " the Chief commissioner acting within the scope of the authority given to him under article 239.
" A contract with the Chief Commissioner would, therefore, under section 9 read with section 3(8) of the , be a contract with the Central Government, and would operate as a disqualification for election to either House of Parliament under sections 7(d) and 9 of Act No. XLIII of 1951, 'and it would be a disqualification under section 17 of Act No. XLIX of 1951, for election to the Legislative Assembly of the State.
It is argued for the respondent that this construction would lead to this anomaly that whereas in the States in Part A or Part B a contract with the State would operate as disqualification only for election to the State Legislatures, such a contract would in States operate as a disqualification to be chosen, both to the State Legislature and to either House of Parliament.
That anomaly is undoubtedly 565 there.
But the contrary conclusion also involves the anomaly already pointed out, that in States a contract with the State Government is not a disqualification for election even to the State Legislature, as it is in Parts A and B States.
Whatever the anomaly, in our view, the proper course is to give effect to the plain language of the statute.
We must accordingly hold that in view of section 3(8) of the , a contract with the Chief Commissioner in a State is a contract with the Central Government, and that would be a disqualification for election to the Legislative Assembly under section 17 of Act No. XLIX of 1951 read with section 7(8) of Act No. XLIII of 1951.
This conclusion, however, can result in no advantage to the petitioner, as the further finding of the Election Tribunal is that no contracts of the respondent with the Himachal Pradesh Government were proved to have been subsisting at the material period.
That finding is, for the reasons already given, not open to attack in this appeal, and is sufficient answer to the objection that the respondent was disqualified under section 17.
The second point that was argued before us in appeal was that the respondent had appointed certain Government servants to act as polling agents, and had thereby committed a major corrupt practice under section 123(8) of Act No. XLIII of 1951.
In rejecting this contention we observed that, "as an abstract proposition of law, the mere appointment of a Government servant as a polling agent in itself and without more" is not an infringement of section 123(8).
The correctness of this conclusion is now challenged by Mr. Chatterjee.
His contention is that having regard to the nature of the duties of a polling agent as laid down by the Rules and furtfier elucidated by the instructions contained in the Election Manual issued by the Government, the polling agent must be held to be interested in the candidate for whom he acts as polling agent, and that his employment would therefore be hit by section 123(8).
Examining closely the duties of a polling agent under the Rules and under the Election Manual, they 566 can be grouped under three categories.
The first category relates to the period of time antecedent to the recording of votes.
The duties of the polling agent at this stage are to see that the ballot boxes are, to start with, empty, that the names of the candidates and their symbols are correctly set out thereon, that the slits in the boxes are in an open position, that the knobs of the slits are properly secured, and that the boxes are properly bolted and sealed.
These are duties which are cast on the presiding officer and the polling officers as well, and as these are matters to be attended to before any recording or votes begins, it is difficult to see how they can be said to assist in the furtherance of the election prospects of any one candidate more than of any other.
The second stage is when the polling is actually in progress.
The duty of the polling agent at this stage is to identify the voters.
Rule 27 provides that when there is a doubt as to the identity of a voter, the presiding officer may interrogate the voter and that be should do so, if so required by a polling agent.
Under rule 30, it is open to the polling agent to challenge any voter on the ground that he is not the person whose name is entered in the voters ' list, and when such objection is taken, it is the duty of the presiding officer to hold an enquiry and pass an order.
The object of these Rules is to prevent personation, and that is a matter in which the duty is cast equally on the presiding officer.
Rule 24 provides that, "The presiding officer may employ at the polling station such persons as he thinks fit to assist him or any polling officer in identifying the electors.
The work of the polling agent under rules 27 and 30 is of the same character, and it cannot in itself be said to further the election prospects of any particular candidate.
The third stage is reached after the polling is over '.
Then the boxes are to be examined with.
a view to find out whether the slits are open and the seals intact, the object of these provisions being to ensure that the ballot boxes had not been tampered with during the time of actual polling.
Then the unused ballot papers, the tendered ballot papers and other material documents are required to be put in separate 567 packages, and the polling agents have the right to seal all of them.
It cannot be said that in carrying out these duties the polling agent advances the election prospects of the candidate, as they admittedly relate to a stage after the completion of the polling.
Indeed, the work of the polling agent both in the first stage and in the last stage is similar in character, and neither can be said to contravene section 123(8).
As regards the second stage, as already stated in our judgment, the duty of polling agent is merely to identify a voter, and that could not by itself and without more be said to further the election prospects of the candidate.
Reliance was placed by Mr. Chatterjee on the following passage in Parker 's Election Agent and Returning Officer, Fifth Edition, at page 20: "The polling agents appointed for the same candidate to attend the several polling stations at any election, are engaged on the same duty and in the same interest, and it is generally very desirable that they should meet, under the presidency of the candidate or his election agent, before the opening of the poll for the purpose of mutual discussion and co operation.
" What that passage means is that as the duty to be performed by the polling agents at the several booths is of the same character, it would be desirable that they should all be assembled and their duties explained to them.
This has no bearing on the question whether those duties are such as must inherently promote the election prospects of the candidate.
A passage which is more in point is the one at page 18, mentioning who could be appointed as polling agents.
It is as follows: "Any competent person, whether an elector or not, may be appointed as polling agent, provided he be not the returning officer, the acting or deputy acting returning officer, or an officer or clerk appointed under P.E.R., r. 27, or a partner or clerk of any of them.
" In this connection, it must be noted that while section 41 of Act No. XLIII of 1951 contains a prohibition against the appointment of certain persons as election agents, there is none such with, reference to the appointment of polling agents under section 46 of the 568 Act.
To hold that Government servants are, as such and as a class, disqualified to act as polling agents would be to engraft an exception to the statute, which is not there.
Accordingly, we reaffirm the view taken by us that the appointment of a Government servant as polling agent does not, without more, contravene section 123(8).
It is scarcely necessary to repeat our observation in the original judgment that "if it is made out that the candidate or his agent had abused the right to appoint a Government servant as polling agent by exploiting the situation for furthering his election prospects, then the matter can be dealt with as an infringement of section 123(8).
" In the result, this petition is dismissed; but under the circumstances, without costs.
Petition dismissed.
| A contract was entered into between the appellant and the respondent in 1964 for sale of 200 bags of Cone yarn.
The contract inter alia conrained the condition that in case of any dispute arising out of the contract "the matter in dispute shall be referred to the arbitration of the Indian Chamber of Commerce whose decision shall be binding on both the parties".
The appellant was not a member of the said Chamber of Commerce; the respondent was On dispute arising between the parties and being referred to the Chamber for arbitration the appellant wrote to the Registrar of the Tribunal of Arbitration of the Chamber to intimate to it the names of the persons constituting the court to enable the appellant to ascertain whether they were independent and disinterested persons.
The Registrar refused to disclose the names on the ground that under the rules of the Chamber they could not be disclosed to a non member.
On persistent refusal to disclose the names the appellant filed an application under section 33 of the Indian before the Calcutta High Court the application was dismissed, whereupon appeal by special leave was filed in this Court.
It was urged that the non disclosure of the names of the arbitrators by the Registrar was violatire not only of the rules of natural justice but also infringed the provisions of the .
It was contended that there was a conflict between r. III(3) of the Rules of Arbitration of the Chamber of Commerce and sections 5 and 11 or section 30 ' of the Act.
HELD: The appeal must be dismissed.
( i) The power given to the Registrar not to disclose names of the members of the arbitration court to non members is discretionary 'and he is not bound in every case to refuse to disclose the names.
At any rate as soon as the proceedings commence the parties will know the names of the.
arbitrators and objection can be taken at that stage.
Under section 5 of the it is not essential that the authority of an appointed arbitrator should be got revoked before the commencement of the arbitration proceedings.
Section 11 contemplates a stage subsequent to the arbitrator entering on the reference.
There is thus no conflict between r. 111(3) of the Rules of Arbitration of the Chamber and sections 5 and 11 and 30 of the Act.
These Rules do not interfere with or take away the powers and jurisdiction of the court under the aforesaid provisions.
The appellant itself had agreed to submit to the arbitration of the Chamber which meant that it was bound by all the Rules of Arbitration of the said body.
No illegality or invalidity could be projected into the agreement by the presence of r. III(3).
[434 C F].
430 (ii) The statement in Russel on Arbitration (17th Edn.
p. 207) that the appointment of an arbitrator by a party is not complete without communication hereof to the other party could be of no avail to the appellant since in the present case the appointment of the arbitrator, namely, the Chamber of Commerce, was in every sense complete.
[434 G H] (iii) The rule objected to by the appellant is part of the long standing practice of Chambers of Commerce in this country its justification being the elimination of all possibility or chance of a party trying to influence the members of the Arbitration court before they enter upon or proceed with the reference.
[435 C D] Unreported judgment of Calcutta High Court in Suraj Ratan Birany vs Hindustan Motors Ltd. decided onApril 10, 1964, disapproved.
|
Civil Appeal Nos.
11431144/73 and 1201 (N) of 1973.
From the Judgment and order dated 16 11 1972 of the Delhi High Court in C.W. No. 580/71, LPA No. 58/72 and 54/72.
P. N. Lekhi and M. K. Garg for the Appellants in C.A. Nos.1143 44/73 and for Respondents in C.A. No. 1201/73.
F. section Nariman P. D. Singhania, Homi Ranina, Ravinder Narain and T. Ansari in C.A. No. 1143/73 for the Intervener.
section N. kaeker Sol.
General and A. V. Ramgam for the Respondent in C.A. No. 1144/73 and for the Appellant in C.A. No. 1201/73.
section N. Kaeker, Sol.General, B. P. Maheshwari, section Sethi, Bikramjit Nayyar and E. C. Sharma for Respondent No. 1 in C.A. Nos.
1143 44/73 S.T. Desai, section P. Nayyar and Miss A. Subhashini for the Intervener, C.I.T. Delhi.
611 The Judgment of the Court was delivered by BHAGWATI, J.
These appeals by certificate raise a common question of law relating to assessment of annual value for levy of house tax where the building is governed by the provisions of Rent Control legislation, but the standard rent has not yet been fixed.
One appeal relates to a case where the building is situate within the jurisdiction of the New Delhi Municipal Committee and is liable to be assessed to house tax under the Punjab Municipal Act, 1911 while the other two relate to cases where the building is situate within the limits of the Corporation of Delhi and is assessable to house tax under the Delhi Municipal Corporation Act, 1957.
The house tax under both statutes is levied with reference to the annual value of the building.
Section 3(1)(b) of the Punjab Municipal Act, 1911 defines "annual value" to mean, in the case of any house or building "the gross annual rent at which such house or building may reasonably be expected to let from year to year" subject to certain specified deductions, and the same definition of "annual value" is to be found in section 116 of the Delhi Municipal Corporation Act, 1957 with only this difference that there is a second proviso to section 116 which is absent in section 3(1)(b).
That proviso reads: "Provided further that in respect of any land or building the standard rent of which has been fixed under the Delhi and Ajmer Rent Control Act, 1952, the rateable value thereof shall not exceed the annual amount of standard rent so fixed.
" It was, however, common ground between the parties that this proviso is immaterial and, in fact, it was so held in Corporation of Calcutta vs Life Insurance Corporation(1).
We may, therefore, ignore the existence of this proviso and deal with both the categories of appeals on the basis of the same definition of "annual value". "Annual value" of a building, according to this definition, would be the gross annual rent at which the building may reasonably be expected to let from year to year (emphasis supplied).
It is obvious from this definition that unlike the English Law where the value of occupation by a tenant is the criterion for fixing annual value of the building for rating purposes, here it is the value of the property to the owner which is taken as the standard for making assessment of annual value.
The criterion is the rent realisable by the landlord and not the value of the holding in the hands the tenant.
The rent which the landlord might realise if the building were let is made the basis for fixing the annual value of the 612 building.
The word "reasonably" in the definition is very important.
What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value.
Now, what is reasonable is a question of fact and it would depend on the facts and circumstances of a given situation.
Ordinarily, as pointed out by Subba Rao, J., speaking on behalf of the Court in Corporation of Calcutta vs Padma Devi(1); "a bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness.
An inflated or deflated rate of rent based upon fraud, emergency, relationship and such other considerations may take it out of the bounds of reasonableness".
The actual rent payable by a tenant to the landlord would in normal circumstances afford reliable evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations such as relationship, expectation of some other benefit etc.
There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant.
But where the rent of the building is subject to rent control legislation, this approximation may and often does get displaced.
It is, therefore, necessary to consider the effect of rent control legislation on the determination of annual value This is fortunately not a virgin field.
There are at least three decisions of this Court which have spoken on this subject.
The first is the decision in Corporation of Calcutta vs Padma Devi (supra).
The question which arose in that case was whether the "annual value" of a building governed by the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 could be determined at a figure higher than the standard rent fixed under the provision of that Act.
The definition of "annual value" in section 127(a) of the Calcutta Municipal Act, 1923 under which the house tax was being levied was the same as in section 3(1)(b) of the Punjab Municipal Act, 1911 or section 116 of the Delhi Municipal Corporation Act, 1957 without the second proviso and hence in order to determine the "annual value" of the building it was necessary to find out what was the rent at which the building might reasonably be expected to let from year to year.
The Court speaking through Subba Rao, J. emphasized the use of the word "reasonably" in the definition and pointed out that since it was penal for the landlord to receive any rent in excess of 613 the standard rent fixed under the Act, the landlord could not reasonably expect to receive any higher rent in breach of the law.
It is the standard rent alone which the landlord could reasonably expect to receive from a hypothetical tenant, because to receive anything more would be contrary to law.
The learned Judge, after analysing the provisions of the Act, observed: "A combined reading of the said provisions leaves no room for doubt that a contract for a rent at a rate higher than the standard rent is not only not enforceable but also that the landlord would be committing an offence if he collected a rent above the rate of the standard rent.
One may legitimately say under those circumstances that a landlord cannot reasonably be expected to let a building for a rent higher than the standard rent.
A law of the land with its penal consequences cannot be ignored in ascertaining the reasonable expectations of a landlord in the matter of rent.
In this view, the law of the land must necessarily be taken as one of the circumstances obtaining in the open market placing an upper limit on the rate of rent for which a building can reasonably be expected to let".
It may be noted that in this case the standard rent of the building was fixed under the Act and since it was penal for the landlord to receive any rent higher than the standard rent fixed under the Act, it was held that the landlord could not reasonably expect to receive anything more than the standard rent from a hypothetical tenant and the annual value of the building could not exceed the standard rent.
The next decision to which we must refer in this connection is the decision of this Court in Corporation of Calcutta vs Life Insurance Corporation (supra).
This case also related to a building situate in Calcutta which was governed by the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
Section 2(10) (b) of the Act defined "standard rent" to mean "where the rent has been fixed under section 9, the rent so fixed, or at which it would have been fixed if application were made under the said section".
Here, unlike Padma Devi 's case, the standard rent of the building had not been fixed under section 9 but it was common ground between the parties that Rs. 2,800 per month being the amount of the agreed rent represented the figure at which the standard rent would have been fixed if an application had been made for the purpose under section 9 and the standard rent of the building was therefore 614 Rs. 2,800 per month within the meaning of the second part of the definition of that term.
The question which arose for consideration was whether the annual value of the building was liable to be determined on the footing of this standard rent or it could be determined by taking into account the higher rent received by the tenant from its sub tenants.
The principle of the decision in Padma Devi 's case was invoked by the assessee for contending that the annual value of the building could not be determined at a figure higher than the standard rent and this contention was upheld by the Court, though there was no fixation of standard rent by the Controller under section 9 and the statutory prohibition was only against receipt of rent in excess of the standard rent fixed under the Act.
The Court pointed out that the standard rent stood defined by the latter part of section 2(10) (b) and by virtue of that provision it was statutorily determined at Rs. 2,800 per month though not fixed by the Controller under section 9 and proceeded to hold, by applying the principle of the decision in Padma Devi 's case, that the landlord could not reasonably expect to receive any rent higher than the standard rent from a hypothetical tenant and the annual value of the building could not, therefore, be fixed at a figure than the standard rent.
It will be seen that this decision marked a step forward from the decision in Padma Devi 's case because here the standard rent was not fixed by the Controller under section 9 and it was not penal for the landlord to receive any rent in excess of the statutorily determined standard rent of Rs. 2.800 per month and yet it was led by this Court that the standard rent determined the upper limit of the rent at which the landlord could reasonably expect to let the building to a hypothetical tenant.
It may be pointed out that an attempt was made on behalf of the Corporation to distinguish the decision in Padma Devi 's case by contending that that decision was based on the interpretation of section 127(a) of the Calcutta Municipal Corporation Act, 1923 while the provision which fell for interpretation in this case was section 168 of the Calcutta Municipal Corporation Act, 1951 which was different from section 127(a), in that it contained a proviso that "in respect of any land or building the standard rent of which has been fixed under section 9. the annual value thereof shall not exceed the annual amount of the standard rent so fixed" which was absent in section 127 (a).
The argument was that under the proviso the annual value was limited to the standard rent only in those cases where the standard rent was fixed under section 9 and since in the case before the Court the standard rent of the building was not fixed under section 9, the proviso has no application and the assessing authority was not bound to take into account the limi 615 tation of the standard rent.
This argument was negatived by the Court and it was held that the enactment of the proviso in section 168 of the Calcutta Municipal Corporation Act, 1951 did not alter the law and by the addition of the proviso, the meaning of the expression "gross rent at which the land or building might reasonably be expected to let" was not changed.
It was for this reason that we pointed out at the commencement of the judgment that the existence of the proviso in section 116 of the Delhi Municipal Corporation Act, 1957 is immaterial and we may proceed to deal with the appeals arising under that Act as if the definition of "annual value" did not contain that proviso.
That takes us to the third decision in Guntur Municipal Council vs Guntur Town Rate Payers ' Association(1) which extended still further the principle of the decision in Padma Devi 's case.
This was a case where the annual value was to be determined under the Madras District Municipalities Act, 1920 which applied in the city of Guntur.
Section 82 sub section (2) of the Act gave a definition of "annual value" practically in the same terms as section 3(1)(b) of the Punjab Municipal Act, 1911 and section 116 of the Delhi Municipal Corporation Act, 1957 without the second proviso.
There was also in force in the city of Guntur, the Andhra Pradesh Buildings (Lease Rent and Eviction) Control Act, 1960, which provided inter alia for fixation of fair rent of buildings.
It is necessary to refer to a material provisions of this Act.
Section 4, sub section (1) conferred power on the Controller, on application by the tenant or landlord of a building, to fix the fair rent for such building after holding such inquiry as he thought fit and sub section (2) to (5) of section 4 laid down the formulae for determination of fair rent in different classes of cases.
Sub section (1)(a) of section 7 gave teeth to the determination of fair rent by providing that where the Controller has fixed the fair rent of a building, the landlord shall not claim, receive or stipulate for the payment of anything in excess of such fair rent and sub section 2(a) of that section recognised that where the fair rent of a building has not been fixed by the Controller, the agreed rent could be lawfully paid by the tenant to the landord and it was only payment of a sum in addition to the agreed rent that was prohibited by that sub section.
Section 29 made it penal for any one to contravene the provisions of subsections 1(a) and 2(a) of section 7.
Now there could be no doubt that if the fair rent of a building were fixed under section 4, sub section (1), the decision in Padma Devi 's case would be clearly 616 applicable and the annual value would be limited to the fair rent so fixed.
But, would the same principle apply where the fair rent were not fixed ?
Would the annual value in such a case be liable to be assessed in the light of the provisions contained in the Rent Act ? That was the question which arose before the Court in the Guntur Municipal Council 's case.
The Guntur Municipal Council urged that the decision in Padma Devi 's case was not applicable and attempted to distinguish it by saying that under section 7, sub section (1) it was only after the fixation of fair rent of a building that the landlord was debarred from claiming or receiving payment of any rent in excess of such fair rent and since the fair rent of the building in that case had not been fixed, it was not penal for the landlord to receive any higher rent and the assessment of annual value was therefore, not "limited or governed by the measure provided by the provisions of the Act for determination of the fair rent.
" This attempt, however, did not find favour with the court and it was held that there was no distinction "between buildings the fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed.
" The Court pointed out: "It is perfectly clear that the landlord cannot lawfully expect to get more rent than the fair rent which is payable in accordance with the principles laid down in the Act.
The assessment of valuation must take into account the measure of fair rent as determinable under the Act.
It may be that where the Controller has not fixed the fair rent, the municipal authorities will have to arrive at their own figure of fair rent but that can be done without any difficulty by keeping in view the principles laid down in section 4 of the Act for determination of fair rent.
" It will thus be seen that even though fair rent had not been fixed under the Act as in Padma Devi 's case, nor was it statutorily determined as in the Life Insurance Corporation 's case (there being no provision in the Andhra Pradesh Rent Act similar to the latter part of section 2(10)(b) of the West Bengal Rent Act) and it was clear from the provisions of the Rent Act that it was only after the fair rent of a building was fixed by the Controller that the prohibition against receipt of any amount in excess of fair rent became applicable and so long as the fair rent was not fixed by the Controller it was open to the landlord to receive the agreed rent even though it might be higher than the fair rent, yet it was held by the court that in view of the provisions in the Rent Act in regard to fair rent, the landlord could not reasonably expect to receive from a hypothetical tenant anything more than the fair rent payable in accordance with the principles laid down in the Rent Act and the annual value was liable to be determined on the 617 basis of fair rent as determinable under the Rent Act.
The Court observed that the assessing authority would have to arrive at its own figure of fair rent by applying the principles laid down in sub sections (2) to (5) of section 4 for determination of fair rent.
This decision clearly represented a further extension of the principle in Padma Devi 's case to a situation where no standard rent has been fixed by the Controller and in the absence of fixation of standard rent, there is no prohibition against receipt of higher rent by the landlord.
It is in the light of these decisions that we must consider whether in case if a building in respect of which no standard rent has been fixed by the Controller under the Delhi Rent Control Act, 1958 the annual value must be limited to the measure of standard rent determinable under that Act or it can be determined on the basis of the higher rent actually received by the landlord from the tenant.
But before we proceed to examine this question, we must refer to a recent decision of this Court in Municipal Corporation, Indore & Ors.vs Smt.Ratnaprabha & Ors.(1) which apparently seems to strike a different note.
That was a case relating to a building situated in Indore and subject to the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
The building was self occupied and hence there was no occasion to have its standard rent fixed by the Controller.
The annual value of the building was sought to be assessed for rating purposes under the Madhya Pradesh Municipal Corporation Act, 1956 and section 138(b) of that Act provided that the annual value of any building shall, notwithstanding anything contained in any other law for the time being in force be deemed to be the gross annual rent at which such building might reasonably be expected to let from year to year, subject to certain specified deductions.
The argument of the assessee was that even though no standard rent in respect of the building was fixed by the Controller, the reasonable rent contemplated by section 138(b) could not exceed the standard rent determinable under the Act and it was incumbent on the Municipal Commissioner to determine the annual value of the building on the same basis on which its standard rent was required to be fixed under the Act.
This argument was sought to be supported by relying on the three decisions to which we have already made a reference.
Now it would appear that the decision in Guntur Municipal Council 's case was clearly applicable on the facts of this case and following that decision the Court ought to have held that the annual value of the building could not exceed 618 the standard rent determinable under section 7 of the Act and the assessing authority should have arrived at its own estimate of the standard rent by applying the principles laid down in that section and determine the annual value on the basis of such standard rent.
But the Court negatived the applicability of the decision in Guntur Municipal Council 's case and the earlier two cases by relying on the words "notwithstanding anything contained in any other law for the time being in force" in section 138(b).
The Court pointed out that while 'the requirement of the law is that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would be so "notwithstanding anything contained in any other law for the time being in force" and observed that it would be a proper interpretation of these words "to hold that in a case where the standard rent of a building has been fixed under section 7 of the Madhya Pradesh Accommodation Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, but where this is not so, and the building has never been let out and is being used in a manner where the question of fixing its standard rent does not arise, it would be permissible to fix its reasonable rent without regard to the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
This view will, in our opinion, give proper effect to the non obstante clause in clause (b), with due regard to its other provision that the letting value should be "reasonable".
The Court leaned heavily on the non obstante clause in section 138(b) and distinguished the decision in Guntur Municipal Council 's case and the earlier two cases on the ground that in none of the three Municipal Acts which came up for consideration before the Court in these cases, there was any such non obstante clause.
We are not at all sure whether this decision represents the correct interpretation of section 138(b) because it is rather difficult to see how the non obstante clause in that section can possibly affect the interpretation of the words "the annual value of any building shall. . . . be deemed to be the gross annual rent at which such building. might reasonably . . be expected to be let from year to year.
" The meaning of these words cannot be different in section 138(b) than what it is in section 127(a) of the Calcutta Municipal Corporation Act, 1923 and section 82(2) of the Madras District, Municipality Act, 1920 and the only effect of the non obstante clause would be that even if there is anything contrary in any other law for the time being in force that should not detract from full effect being given to these words according to their proper meaning.
But it is not 619 necessary for the purpose of the present appeals to probe further into the question of correctness of this decision, since there is no non obstante clause either in section 3(1)(b) of the Punjab Municipal Act, 1911 or in section 116 of the Delhi Municipal Corporation Act, 1957 and this decision has therefore, no application.
Now let us turn to the present appeals and see how far the trilogy of decisions referred to earlier throws light on the solution of the problem before us.
We may first refer to the relevant provisions of the Delhi Rent Control Act, 1958 for that was the law in force at the material time relating to restrictions of rent of buildings situate within the jurisdiction of the Delhi Municipal Corporation and the New Delhi Municipal Committee.
Section 2(k) defined 'standard rent ' in relation to any premises to mean "the standard rent referred to in section 6 or where the standard rent has been increased under section 7, such increased rent.
" Sub section (1) of section 4 provided that, subject to a single narrow exception which is not material for our purpose, "no tenant shall, notwithstanding any agreement to the contrary be liable to pay to his landlord for the occupation of any premises any amount in excess of the standard rent of the premises" and sub section (2) of section 4 declared that, subject to provision of sub section (1) "any agreement for the payment of rent in excess of the standard rent shall be construed as if it were an agreement for the payment of the standard rent only".
Section 5 sub section (1) enacted a prohibition injuncting that "no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary." Then, section 6 proceeded to set out different formulae for determination of standard rent in different classes of cases and each formula gave a precise and clear cut method of computation yielding a definite figure of standard rent in respect of building falling within its coverage.
Section 9 sub section (1) provided that the Controller shall, on an application made to him in this behalf either by the landlord or by the tenant, fix in respect of any premises the standard rent referred to in section 6 and sub section (2) of section 9 laid down that in fixing the standard rent of any premises, the Controller shall fix an amount which appears to him to be reasonable having regard to the provisions of section 6 and the circumstances of the case.
Sub section (4) of section 9 provided for determination of standard rent in a case where for any reason it was not possible to determine the standard rent on the principles set forth under section 6 and said that in such a case "the Controller may fix such rent as would be reasonable having regard to the situation, locality 620 and condition of the premises and the amenities provided therein and where there are similar or nearly similar premises in the locality, having regard also to the standard rent payable in respect of such premises".
Section 9 sub section (7) enjoined the Controller, while fixing the standard rent of any premises, to specify a date from which the standard rent so fixed shall be deemed to have effect and added a proviso that in no case the date so specified shall be earlier than one year prior to the date of the application for the fixation of the standard rent.
Lastly, section 12 laid down a period of limitation within which an application for fixation of the standard rent may be made by the landlord or the tenant by providing that such application must be made within 2 years from the date of commencement of the Act in case of premises let prior to such commencement and if the premises were let after such commencement, then within 2 years from the date on which the premises were let to the tenant.
The proviso to section 12 empowered the Controller to entertain the application after the expiry of the period of limitation if he was satisfied that the applicant was prevented by sufficient cause from filing the application in time.
These provisions of the Delhi Rent Control Act, 1958 came up for consideration before this Court in M. M. Chawla vs J. section Sethi(1) where the question was whether in answer to a suit for eviction filed by the landlord, the tenant was entitled by way of defence to ask the Controller to fix the standard rent of the premises and to resist eviction by paying or depositing the standard rent so fixed even though at the date of the filing of the defence, the period of limitation for making an application for fixation of the standard rent had expired.
The argument of the tenant was that by reason of the prohibition enacted in section 4 and sub section (1) of section 5, it was not competent to the landlord to claim or receive any amount in excess of the standard rent and even though the period of limitation prescribed for making an application for fixation of standard rent had expired, the tenant was entitled to ask the Controller by way of defence to fix the standard rent, since the period of limitation was applicable only where a substantive application was made for fixation of standard rent and it had no application where the fixation of standard rent was sought by way of defence.
This Court speaking through Shah, J. negatived the contention of the tenant and construing the scheme of the Act, pointed out: ". . . . . the prohibition in sections 4 and 5 operate only after the standard rent of 621 premises is determined and not till then.
So long as the standard rent is not determined by the Controller, the tenant must pay the contractual rent: after the standard rent is determined the landlord becomes disentitled to recover an amount in excess of the standard rent from the date on which the determination operates.
We are unable to agree that standard rent of a given tenement is by virtue of section 6 of the Act a fixed quantity, and the liability for payment of a tenant is circumscribed thereby even if the standard rent is not fixed by order of the Controller.
Under the scheme of the Act standard rent of a given tenement is that amount only which the Controller determines.
Until the standard rent is fixed by the Controller the contract between the landlord and the tenant determines the liability of the tenant to pay rent.
That is clear from the terms of section 9 of the Act.
That section clearly indicates that the Controller alone has the power to fix the standard rent, and it cannot be determined out of court.
An attempt by the parties to determine by agreement the standard rent out of court is not binding.
By section 12 in an application for fixation of standard rent of premises the Controller may give retrospective operation to his adjudication for a period not exceeding one year before the date of the application.
The scheme of the Act is entirely inconsistent with standard rent being determined otherwise than by order of the Controller.
In our view, the prohibition against recovery of rent in excess of the standard rent applies only from the date on which the standard rent is determined by order of the Controller and not before that date.
" it was, thus, held that the prohibition in section 4 and sub section (1) of section 5 against recovery by the landlord of any amount in excess of the standard rent was operative only after the standard rent was fixed by the Controller under section 9 and until the standard rent was so fixed, it was lawful for the landlord to receive the contractual rent from the tenant and if the period of limitation prescribed for making an application for fixation of the standard rent had expired, the tenant could not, thereafter, get the standard rent fixed by the Controller and would continue to be liable to pay the contractual rent to the landlord.
The Revenue relied heavily on this decision and contended that since in each of the present appeals the building was let out to the tenant, but its standard rent 622 was not fixed by the Controller under section 9 and the period of limitation for making an application for fixation of the standard rent had expired, the landlord was entitled to continue to receive the contractual rent from the tenant without any legal impediment and hence the annual value of the building was not limited to the standard rent determinable in accordance with the principles laid down in the Act, but was liable to be assessed by reference to the contractual rent recoverable by the landlord from the tenant.
The argument of the Revenue was that if it was not penal for the landlord to receive the contractual rent from the tenant, even if it be higher than the standard rent determinable under the provisions of the Act, it would not be incorrect to say that he landlord could reasonably expect to let the building at the contractual rent and the contractual rent therefore provided a correct measure for determination of the annual value of the building.
This argument, plausible though it may seem at first blush, is in our opinion not well founded and must be rejected.
Ordinarily we would have examined the validity of this argument first on principle and then turned to the authorities, but we propose to reverse this order because the decisions in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case (supra) completely cover the present controversy and do not leave any scope for further argument.
Of course, the decision in Padma Devi 's case may be said to be distinguishable on the ground that in the present cases, unlike Padma Devi 's case, the standard rent of the building was not fixed by the Controller and hence it could not be said that it was unlawful or penal for the landlord to receive anything more than then the standard rent.
But so far as the decision in Life Insurance Corporation 's case is concerned, it is difficult to see how its applicability could be disputed, because there also, as in the present case, the standard rent of the building was not fixed by the Controller and in the absence of fixation of the standard rent, it was open to the landlord to receive rent in excess of the standard rent determinable under the Act.
The only distinction which could be urged on behalf of the Revenue was that under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, which came up for consideration in the Life Insurance Corporation 's case, the standard rent was statutorily determinable on the application of a mathematical formula without any discretion being left in the Controller, while under the Delhi Rent Control Act, 1958, the standard rent was not a certain and definite figure to be arrived at mathematically by application of the formulae laid down in section 6 but it was left to the Controller under section 9 sub section (2) to 623 fix the standard rent at such amount as appeared to him to be reasonable having regard to the provisions of section 6 and the circumstances of the case and hence, until the standard rent was fixed by the Controller, it could not be said what would be the standard rent of the building.
Now undoubtedly there is some difference in the provisions of the two statutes but this difference is not of such a character as to affect the applicability of the decision in the Life Insurance Corporation 's case, because in that case too, the prohibition against the landlord to receive any rent in excess of the standard rent was operative only after the fixation of the standard rent by the Controller and so long as the standard rent was not fixed, it was not unlawful or penal for the landlord to receive any rent in excess of the standard rent.
If the standard rent though not fixed and hence not legally enforceable, could provide the measure for the reasonable expectation of the landlord to receive rent from a hypothetical tenant in the Life Insurance Corporation 's case, there is no reason, why it should not equally be held to provide such measure in the present cases; as in the one case so also in the other.
The upper limit of the standard rent, though yet to be fixed by the Controller, would enter into the determination of the reasonable rent.
Moreover, it is not correct to say that under section 9 sub section (2) of the Delhi Rent Control Act, 1958 it is left to the unfettered and unguided discretion of the Controller to fix any standard rent which he considers, reasonable.
He is required to fix the standard rent in accordance with the relevant formula laid down in section 6 and he cannot ignore that formula by saying that in the circumstances of the case, he considers it reasonable to do so.
The only discretion given to him is to make adjustments in the result arrived at on the application of the relevant formula, where it is necessary to do so by reason of the fact that the landlord might have made some addition, alteration or improvement in the building or circumstances might have transpired affecting the condition or utility of the building or some such circumstances of similar character.
The compulsive force of the formulae laid down in section 6 for the determination of the standard rent is not in any way whittled down by section 9 sub section (2) but a marginal discretion is given to the Controller to mitigate the rigour of the formulae where the circumstances of the case do require.
The amount calculated in accordance with the relevant formulae set out in section 6 would, therefore, ordinarily represent the standard rent of the building, unless the landlord or the tenant, as the case may be, can persuade the Controller that there are circumstances requiring adjustment in the amount so arrived at.
It would thus be seen that there is no material distinction between the West Bengal Premises 624 Rent Control (Temporary Provisions) Act, 1950 and the Delhi Rent Control Act, 1958 so far as the provisions regarding determinations of standard rent are concerned and the decision in the Life Insurance Corporation 's case must be held to be applicable in determination of that annual value in the present cases.
But more than the decision in the Life Insurance case decision, it is the Guntur Municipal Council 's case which is nearest to the present case and is almost indistinguishable.
In that case also, so in the present cases, the standard rent of the building was not fixed by the Controller and under the Andhra Pradesh Rent Act which applied in the town of Guntur, in the absence of fixation of the fair rent, it was lawfully competent to the landlord to recover rent in excess of the fair rent determinable under that Act.
Moreover, the Andhra Pradesh Rent Act did not prescribe any clear cut formula to be applied mechanically for statutorily determining the standard rent, but it was left to the Controller to fix the standard rent having regard to (a) the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during the 12 months prior to 5th April, 1944; (b) the rental value entered in the property tax assessment book of the concerned local authority relating to the period mentioned in clause (a) and (c) the circumstances of the case, including any amount paid by the tenant by way of premium or any other like sum in addition to rent after 5th April 1944 with a provision for allowance of increase depending on the quantum of the rent so arrived at.
The discretion left to the Controller to fix the fair rent was thus much larger than that under the Delhi Rent Control Act, 1958 and yet it was held that, even though the fair rent was not fixed by the Controller, the annual value was limited by the measure of the fair rent determinable under the Act.
The view taken was that there was no material distinction between buildings fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed and even if the fair rent has not been fixed by the Controller, the upper limit of the fair rent payable in accordance with the principles laid down in the Act is bound to enter into the determination of the rent which the landlord could reasonably expect to receive from a hypothetical tenant.
The principle of this decision applies wholly and completely in the present cases and following that principle, it must be held that the annual value of a building governed by the Delhi Rent Control Act 1958 must be limited by the measure of standard rent determinable under that Act.
The landlord cannot reasonably expect to get more rent than the standard rent payable in accordance with the principles laid down in the Delhi Rent 625 Control Act, 1958.
It is true that the standard rent of the building not having been fixed by the Controller, the assessing authority would have to arrive at its own figure of standard rent by applying the principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent, but that is a task which the assessing authority would have to perform as a part of the process of assessment and in the Guntur Municipal Council 's case, this Court has said that it is not a task foreign to the function of assessment and has to be carried out by the assessing authority.
When the assessing authority arrives at its own figure of standard rent by applying the principles laid down in the Act, it does not, in any way, usurp the functions of the Controller, because it does not fix the standard rent which would be binding on the landlord and the tenant, which can be done only by the Controller under the Act, but it merely arrives at its own estimate of standard rent for the purpose of determining the annual value of the building.
That is a perfectly legitimate function within the scope of the jurisdiction of the assessing authority.
Now it is true that in the present cases the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in such of the cases, the tenant was precluded by section 12 from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance.
But from this fact situation which prevailed in each of the cases, it does not follow that the landlord could, therefore, reasonably expect to receive the same amount of rent from a hypothetical tenant.
The existing tenant may be barred from making an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent at any time within two years of the hypothetical letting and the limit of the standard rent determinable under the Act would, therefore, inevitably enter into the bargain and circumscribe the rate of rent at which the building could reasonably be expected to be let.
This position becomes absolutely clear if we take a situation where the tenant goes out and the building comes to be self occupied by the owner.
It is obvious that in case of a self occupied building, the annual value would be limited by the measure of standard rent determinable under the Act, for it can reasonably be presumed that no hypothetical tenant would ordinarily agree to pay 626 more rent than what he could be made liable to pay under the Act.
The anomalous situation which would thus arise on the contention of the Revenue would be that whilst the tenant is occupying the building the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self occupied, the annual value would be restricted to the standard rent determinable under the Act.
It is difficult to see how the annual value of the building could vary accordingly as it is tenanted or self occupied.
The circumstance that in each of the present cases the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent, cannot therefore affect the applicability of the decisions in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case and it must be held that the annual value of the building in each of these cases was limited by the measure of the standard rent determinable under the Act.
The problem can also be looked at from a slightly different angle.
When the Rent Control Legislation provides for fixation of standard rent, which alone and nothing more than which the tenant shall be liable to pay to the landlord, it does so because it considers the measure of the standard rent prescribed by it to be reasonable.
It lays down the norm of reasonableness in regard to the rent payable by the tenant to the landlord.
Any rent which exceeds this norm of reasonableness is regarded by the legislature as unreasonable or excessive.
When the legislature has laid down this standard of reasonableness, would it be right for the Court to say that the landlord may reasonably expect to receive rent exceeding the measure provided by this standard? Would it be reasonable on the part of the landlord to expect to receive any rent in excess of the standard or norm of reasonableness laid down by the legislature and would such expectation be countenanced by the Court as reasonable? The legislature obviously regards recovery of rent in excess of the standard rent as exploitative of the tenant and would it be proper for the Court to say that it would be reasonable on the part of the landlord to expect to recover such exploitative rent from the tenant ?
We are, therefore, of the view that, even if the standard rent has not been fixed by the Controller, the landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent determinable under the Act and this would be so equally whether the building has been let out to a tenant who has lost his right to apply for fixation of the standard rent or the building is self occupied by the owner.
The assessing authority would, in either case, have to arrive at its own figure of the standard rent by 627 applying principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent.
It is, therefore, clear that in each of the present cases, the annual value of the building must be held to be limited by the measure of the standard rent determinable on the principles laid down in the Delhi Rent Control Act, 1958 and it cannot exceed such measure of standard rent.
We accordingly allow Appeals Nos. 1143 and 1144 of 1973 and declare in such of these two cases that the assessment of the Annual value of the building in excess of the standard rent determinable on the principles laid down in the Delhi Rent Control Act, 1958 was illegal and ultra vires.
So far as Appeal No. 1201(N) of 1973 preferred by the Municipal Corporation of Delhi is concerned, it relates to assessment of annual value of self occupied building and since we have held that in case of self occupied building also the annual value must be determined on the basis of the standard rent determinable under the provisions of the Delhi Rent Control Act, 1958 and there we have agreed with the judgment of the High Court, that appeal must be dismissed.
The assessee in each case will get his costs throughout.
N.K.A. C.A. Nos.1143 & 1144/73 allowed.
C.A. 1201 (N)/73 dismissed.
| Section 22 A of the was inserted in the Act by the Electricity (Amendment) Act, 1959 (32 of 1959).
Sub section 1 of section 22 A authorised the State Government to issue direction to a licensee to supply energy to an establishment in preference to any other consumer, if in its opinion it is necessary in the public interest to give such direction and (ii) if the establishment in question is in the opinion of the State Government as establishment used or intended to be used for maintaining supplies and services essential to the community and the decision of the State Government that in its opinion the establishment is used or intended to be used for maintaining supplies and services essential to the community is notified by that Government in the Official Gazette.
Sub section (3) of Section 22 A provides that where in any agreement by a licensee, whether made before or after the commencement of the Electricity (Amendment) Act, 1959 for the supply of energy with any establishment referred to in sub section (1) expires, the licensee shall continue to supply energy to such establishment on the same terms and conditions as are specified in the agreement until receipt of a notice in writing from the establishment requiring discontinuance of the supply.
The Respondent Municipality which was under an obligation to make reasonable and adequate provision for lighting of public streets, places and buildings situated within its limit, entered into an agreement on August 14, 1940 with the Appellant Company which was licensee under the Electricity Act, 1910.
The period during which the supply of electrical energy was to be made under the said agreement was 20 years from the date on which it was executed.
On May 10, 1960 the Company wrote a letter to the municipality that the said agreement was to come to an end and on its expiry, the Company was not under any obligation to continue to supply energy to the Municipality as per the rates, terms and conditions stated in the agreement.
The company also informed that if the municipality was not willing to purchase energy at the revised rates the supply would be discontinued on the expiry of the period of the agreement.
The municipality thereafter wrote a letter on August 6, 1960 requesting the Company to renew the agreement on the same terms and conditions.
The Company by its reply informed the municipality that it would not supply electrical energy on the same terms and conditions and insisted on payment being made at the revised rates as stated in its letter dated May 10, 1960.
The municipality thereafter filed a suit relying upon the provisions of sub section (3) of section 22 A 477 of the Act, for a declaration that it was entitled to the supply of electrical energy from the Company on the same terms and conditions as were specified in the agreement, until the Company received a notice in writing from the municipality requiring it to discontinue the supply.
The company contested the suit on the ground that the municipality was not entitled to the benefit of sub section (3) of section 22 A of the Act as it was not an establishment to which the said provision was applicable.
The Trial Court held that in the absence of a notification as required by sub section (1) of Section 22 A of the Act the municipality was not entitled to claim the benefit of the provision and therefore no relief could be granted in the suit and accordingly dismissed the suit.
The municipality 's appeal to the District Court was dismissed, but the second appeal was partly allowed by a Single Judge of the High Court, and a decree was passed granting relief in favour of the municipality declaring that the company was bound under sub section (3) of section 22 A of the Act to continue to supply electrical energy to the municipality at the same rates and on the same terms and conditions as were specified in the agreement, dated August 14, 1960.
The Letters Patent Appeal filed by the company was dismissed by the Division Bench of the High Court, which however certified the case as a fit one for appeal under Article 133(1)(c) of the Constitution.
In the appeal to this Court, on the question whether the municipality was an establishment which can claim the benefit of sub section (3) of section 22 A of the Act.
^ HELD: 1.
The High Court was in error in ignoring the requirements which an establishment had to satisfy before claiming the benefit of sub section (3) and in holding that if in the opinion of the Court, the establishment satisfied that it was being used or intended to be used for maintaining supplies and services essential to the community, it could claim the benefit of sub section (3) even though no notification had been issued by the State Government under sub section (1) of Section 22 A of the Act.
[489H 490B] 2.
If the agreement referred to in sub section (3) of section 22 A of the Act is an agreement entered into by a licensee with an establishment which is at the time of the agreement, an establishment referred to in sub section (1) of section 22 A of the Act, then the provision in sub section (3) making it applicable to agreements made before the commencement of the Electricity (Amendment) Act, 1959 by which section 22 A was introduced becomes meaningless because the formation of the two opinions of the State Government that an establishment is being used or intended to be used for maintaining supplies and services essential to the community and that it is necessary to issue a direction in respect of it under sub section (1) can only be done after section 22 A of the Act was introduced in the Act and there would be no establishment satisfying the requirements of section 22 A(1) before section 22 A(1) was introduced.
[486 G 487 A] 3.
Sub section (1) of section 22 A of the Act was enacted by the Parliament for the purpose of enabling the State Government to issue a direction and subsection (3) was enacted for the purpose of providing for the continuance of an agreement entered into by a licensee with an establishment referred to in sub section (1) of section 22 A. What, is however, common to the two sub sections is that the establishment referred to in sub section (1) and an establishment 478 referred to in sub section (3) of section 22 A should be of the same kind that is it should be an establishment which is in the opinion of the State Government used or intended to be used for maintaining supplies and services essential to the community and the fact of formation of such opinion is notified in the Official Gazette.
It should satisfy the test laid down in sub section 22 A(1) of the Act.
[487 C E] 4.
There is no impediment for the State Government issuing a notification under sub section (1) of section 22 A in order that an establishment notified therein gets the benefit of sub section (3) of section 22 A of the Act.
[487 H 488 A] 5.
The words 'referred to in sub section (1) appearing in sub section (1) of section 22 A of the Act are descriptive of and define the establishment to which sub section (3) of section 22 A applies and in order to identify such establishment, recourse should be had to the latter part of sub section (1) which lays down the criteria which such establishment should satisfy.
[488 B] 6.
A statutory definition or abbreviation should be read subject to all the qualifications expressed in the Statute and unless the context in which the word defined appears otherwise requires, it should be given the same meaning given by the words defining it.
[488 C] 7.
The power to issue a notification under section 22 A(1) of the Act involves an element of selection and the said process of selection cannot be construed as an empty formality which can be dispensed with.
Nor can that power of selection which is entrusted to the State Government by the Parliament be claimed by the Courts.
It is for the State Government to notify the establishment which should be the beneficiary of a direction to be issued under section 22 A(1) or which is entitled under section 22 A(3) of the Act to the supply of electrical energy on the same terms and conditions as are specified in the agreement entered into by it with the licensee even after the expiry of the agreement until such establishment serves a notice in writing on the licensee asking the licensee to discontinue the supply.
[488 H 489 B] 8.
Section 22 A of the Act, suggests that the intention of Parliament appears to be that the State Government can issue a direction only in the case of an establishment which in its opinion satisfies the qualifications mentioned therein and that sub section (3) should be applicable only to an establishment which in the opinion of the State Government satisfies the said qualifications.
[488 E] 9.
Sub section (3) of section 22 A of the Act makes a serious inroad into the rights of the licensee flowing from a contract stipulating a specific period during which it should subsist and compels the licensee to supply energy to the establishment even after the expiry of the agreement until a notice is issued in writing by the establishment requiring the licensee to discontinue the supply.
[489 D]
|
vil Appeal No. '1376 of 1977.
From the Judgment and Order dated 26.5.77 of the Punjab and Haryana High Court in Civil Revision No. 125/77.
Ashok Sen, S.C. Manchanda, Mrs. Urmila Kapoor, Ms. section Janani and Ms. Meenakshi for the Appellant.
E.C. Aggarwala, Miss Purnima Bhatt, V.K. Pandita, A.V. Paila, and Atul Sharma for the Respondents.
The Judgment of the Court was delivered by SAIKIA, J.
This appeal by special leave is from the Judgment of the High Court of Punjab and Haryana allowing the revision petition, setting aside the order of the Senior Subordinate Judge and dismissing the application of the decree holder praying for permission to deposit the balance amount of the pre emption decree.
On 21.9.1975 the Court of the Senior Subordinate Judge decreed a claim to pre emption in favour of the appellant and against the respondents subject to the deposit of the purchase money being Rs.41,082 less the amount of 'Zare Panjum ' on or before 31.12.1975 failing which his suit would stand dismissed.
The appellant by application dated 22.11.1975, annexing a treasury challan, obtained permission to deposit 4/5th of the purchase money amounting to Rs.33582 and the amount was deposited on 28.11.1975, although the last date for depositing the amount was 31.12.1975.
On 4.12.1975 he filed an execution petition for being delivered possession of the land and the possession was actually delivered on 29.1.1976.
21 It appears, on 21.1.1976 the office reported that the amount deposited fell short of the decretal amount by Rs. 100.
Thereupon two separate applications were filed by the respondents judgment debtors and the appellants decree holder.
The former in their application prayed that the latter having not complied with the condition of the decree, he having deposited Rs. 100 less, the decree was a nullity and the suit stood dismissed, and hence, the land be re stored to them.
The appellant decree holder in his applica tion prayed for condonation of the delay and for permission to deposit the balance of Rs. 100 stating that there was an inadvertent arithmetical mistake on his part as also on the part of the Court officials.
The learned Senior Subordinate Judge applying the maxim "Actus curiae neminem gravabit and relying on Jang Singh vs Brijlal & Ors., ; and holding that the mistake of the decree holder was shared by the Court, condoned the delay and allowed 10 days ' time to deposit the balance of Rs. 100, failing which the suit should stand dismissed.
The respond ents having moved in revision therefrom under section 115 CPC, the High Court by the impugned Judgment, holding that the decree holder himself filed the application annexing the challan mentioning the amount and as such there was no mistake on the part of any Court officials, and applying Labh Singh vs Hardayal & Anr., [1977] 79 Punjab Law Reporter 417, allowed the revision petition, set aside the order of the Senior Subordinate Judge and dismissed the appellant decree holder 's application for condonation and permission to deposit the balance of Rs. 100.
Hence this appeal.
Mr. A.K. Sen, the learned counsel for the appellant submits that the Senior Subordinate Judge having exercised power within his jurisdiction under section 148 CPC in extending the time to deposit the deficit amount of Rs. 100, the revisional court mis directed itself in holding that the court officials were not at fault in not pointing out the shortfall while permitting the deposit of the decretal amount; and it erred in setting aside the order extending time.
Counsel further submits that the decree holder having already obtained the warrant of possession and thereby taken actual delivery of possession, the decree was already exe cuted and the same having not been questioned, the revision petition was liable to be dismissed as infructuous.
Mr. E.C. Aggarwala, the learned counsel for the respond ent while not disputing that if power under section 148 CPC was exercised by the Senior Subordinate Judge in extending the time the order could not have been interfered with in revi sion, submits that the challan having been prepared by the decree holder himself, there was no mis 22 take on the part of any court officials in accepting short deposit, and the High Court rightly held that the appel lant 's suit stood dismissed because of non deposit of the decretal amount within time; and therefore there was no question of extension of any time for depositing the same.
The precise question to be decided in this appeal, therefore, is whether on the facts and in the circumstances of the case of preemption decree, the amount deposited within time by the decree holder having fallen short of the decretal amount by Rs. 100 owing to inadvertent arithmetical mistake, the court could extend the time to deposit that deficit amount exercising powers under section 148 CPC in view of the provision in Order XX Rule 14(1) CPC; and if so, whether the High Court erred in interfering with that order in revision under section 115 CPC.
Order XX Rule 14(1) provides: "Where the Court decrees a claim to pre emp tion in respect of a particular sale of property and the purchase money has not been paid into court, the decree shall (a) specify a day on or before which the purchase money shall be so paid, and (b) direct that on payment into court of such purchase money, together with the costs (if any) decreed against the plaintiff, on or before the day referred to in clause (a), the defendant shall deliver possession of the property to the plaintiff, whose title thereto shall be deemed to have accrued from the date of such payment, but that, if the purchase money and the costs (if any) are not so paid, the suit shall be dismissed with costs." In the instant case pre emption decree specified 31.12.1975 'as the day on or before which the purchase money was to be paid into Court.
But the exact amount to be paid was not specified; it only said Rs.41,082 "less the amount of Zare Panjum" which the parties admit to be 1/5th.
Thus only 4/5 of the amount was to be paid.
However, parties do not dispute that the amount deposited fell short of the decretal amount by Rs. 100.
From the above provision there is no doubt that where the entire purchase money payable has not been paid and there is no order from any court to justify or excuse non payment, the suit shall be dismissed 23 with costs.
This shall be done by virtue of the above provi sion.
But when the decree holder deposits into court what he believes to be the entire purchase money but due to inad vertent mistake what is deposited falls short of the decre tal amount by a small fraction thereof and the party within such time after the mistake is pointed out or realised, as would not prove wilful default or negligence on his part, pays the deficit amount into the court with its permission, should the same result follow? This Court in Naguba Appa vs Namdev, AIR 1964 SC 50, has held that mere filing of an appeal does not suspend the pre emption decree of the trial Judge and unless that decree is altered in any manner by the Court of appeal, the pre emptor is bound to comply with its directions, and has upheld the finding that the pre emption suit stood dismissed by the reason of his default in not depositing the pre emption price within the time fixed in the trial court 's decree and that the dismissal of the suit is as a result of the mandatory provisions of Order 20 Rule 14 and not by reason of any decision of the Court.
There the pre emption money was not deposited within the fixed time.
The pre emptor thereafter made an application to the Court for depositing the amount without disclosing that the time fixed had expired.
The application was allowed; but the defendant applied to the Court for disposal of the suit pointing out that the time fixed for deposit had expired.
The trial Judge held that the pre emption money not having been paid within the time fixed in the decree the suit stood dismissed.
This decision was held to be correct.
It was a case of nondeposit of the whole of the purchase money and not of any fraction thereof.
In Jang Singh vs Briflal and Ors.
, (supra) the pre emption decree on compromise was passed in favour of Jang Singh and he was directed to deposit Rs.5951 less Rs. 1000 already deposited by him, by May 1, 1958, and failing to do so punctually his suit would stand dismissed with costs.
On January 6, 1958 Jang Singh made an application to the trial court for making the deposit of the balance of the amount of the decree.
The clerk of the Court, which was also the executing Court, prepared a challan in duplicate and handed it over with the application to Jang Singh so that the amount might be deposited in the Bank.
In the challan (and in the order passed on the application, so it was alleged) Rs.4950 were mentioned instead of Rs.4951 and it was depos ited.
In May, 1958, he applied for and received an order for possession of the land and the Naib Nazir reported that the entire amount was deposited in Court.
Bohla Singh (the vendee) then 24 applied on May 25, 1958, to the Court for payment to him of the amount lying m deposit and it was reported by the Naid Nazir on that application that Jang Singh had not deposited the correct amount and the deposit was short by one rupee.
Bhola Singh applied to the Court for dismissal of Jang Singh 's suit and for recall of all the orders made in Jang Singh 's favour.
The trial court allowed that application and also ordered reversal of its earlier orders and directed that the possession of the land be restored to him.
On appeal, the District Judge, holding that Jang Singh having approached the Court with an application intending to make the deposit the Court and its clerk made a mistake by order ing him to make the deposit of an amount which was less by one rupee.
Jang Singh was excused inasmuch as the responsi bility was shared by the Court and it accordingly held that the deposit made was a sufficient compliance with the terms of the decree and accordingly allowed the appeal setting aside the trial court 's order dismissing the suit.
On appeal by Bhola Singh the High Court took the view that the decree was not complied with and that under the law the time fixed in the decree for payment of the decretal amount in pre emption case could not be extended by the Court and that the finding that the short deposit was due to the act of the Court was not supported by evidence and accordingly allowed the appeal, set aside the decision of the District Judge and restored that of the trial court.
On appeal by Jang Singh this Court found that the application whereupon the Court directed the deposit of Rs.4950 remained untraced.
However, it was quite clear that the challan was prepared under the Court 's direction and the duplicate challan prepared by the Court as well as the one presented to the Bank had been produced in the case and they showed the lesser amount.
That challan was admittedly prepared by the Execution Clerk and it was also an admitted fact that Jang Singh was an illiter ate person.
The amount was deposited promptly relying upon the Court 's Officers.
The Execution Clerk had deposed to the procedure which was usually followed and he had pointed out that first there was a report by the Ahmed about the amount in deposit and then an order was made by the Court on the application before the challan was prepared.
It was, there fore, quite clear that if there was an error the Court and its officers largely contributed to it.
This Court, ob served: "It is no doubt true that a litigant must be vigilant and take care but where a litigant goes to Court and asks for the assistance of the Court so that his obligations under a decree might be fulfilled by him strictly, it is incumbent on the Court, if it does not leave the litigant to his own devices, to ensure that the correct information is fur nished.
25 If the Court in supplying the information makes a mistake the responsibility of the litigant, though it does not altogether cease, is at least shared by the Court.
If the liti gant acts on the faith of that information the Courts cannot hold him responsible for a mistake which it itself caused.
There is no higher principle for the guidance of the Court than the one that no act of Courts should harm a litigant and it is the bounden duty of Courts to see that if a person is harmed by a mistake of the Court he should be restored to the position he would have occupied but for that mistake.
This is aptly summed up in the maxim: "Actus curiae neminem gravabit." In the facts of that case it was held that an error was committed by the Court which the Court must undo and which could not be undone by shifting the blame on Jang Singh, who was expected to rely upon the Court and its officers and to act in accordance with their directions.
It was also ob served that he deposited the amount promptly and a wrong belief was induced in his mind by the action of the Court that all he had to pay was stated in the challan.
The appeal was accordingly allowed, the High Court 's order was set aside and the appellant was ordered to deposit Re.1 within one month from the date of receipt of the record in the trial court.
It should be noted that in the facts and cir cumstances of a case of non deposit of a fraction of the purchase money extension of time to deposit the balance was granted by this Court.
It cannot therefore be said that on failure to deposit a minute fraction of the amount by the fixed date owing to wrong belief induced by Court officials the suit must be taken to have stood dismissed.
No doubt this was so because of the maxim actus curiae neminem gra vabit but there is no reason why the same result should not follow on similar justifiable grounds.
While mere filing of an appeal does not suspend a pre emption decree, a stay order passed by an appellate court may suspend it in the manner ordered therein.
In Dattaraya vs Shaikh Mahboob Shaikh Ali, ; , the pre emption decree in favour of the appellant was passed with the direction to pay the consideration of Rs.5,000 within 6 months from the date of the decree and in case of default the suit was to be deemed to have been dismissed.
The decree was confirmed in respondent 's appeal to the District Court on January 28, 1955.
The amount was deposited within the time fixed, but was subsequently withdrawn by him under orders of the Court.
While dismissing the appeal, the Dis trict Court directed the appellant to re deposit the 26 sum of Rs.5,000 on or before April 30, 1955 and directed the respondent on such deposit to deliver the possession of the properties and on failure to deposit the suit should stand dismissed with costs.
During the pendency of the respond ent 's Second Appeal in the High Court the respondent prayed for stay of execution of the decree.
On March 23, 1955 the High Court passed a stay order which was received by the trial court on April 19, 1955.
The appellant deposited the purchase price on May 2, 1955, that is, 3 days after the date fixed, filing an application stating that he could not deposit this within time as he fell ill.
The respondent 's Second Appeal was dismissed on October 6, 1960 and the pre emption decree in favour of the appellant was confirmed, and he obtained an order of possession.
The respondent having applied to the Executing Court for restitution of the properties on the ground that the appellant had defaulted in depositing the purchase money by the date fixed by the lower appellate court 's decree, i.e. April 30, 1955, the appellant contended that he would get by necessary implication a fresh starting point for depositing the purchase money from the date of the High Court 's decree.
The Executing Court reject ed the claim of the respondent for restitution and this decision was affirmed by the District Court.
But the High Court in appeal took the view that there was default on the part of the appellant in depositing the amount and, there fore, the appellant 's suit stood dismissed automatically.
While allowing the appeal therefrom this Court held: "The decree framed under 0.20, r. 14 Civil Procedure Code requires reciprocal rights and obligations between the parties.
The Rule says that on payment into Court of the purchase money the defendant shall deliver possession of the property to the plaintiff.
The decree holder therefore deposits the purchase money with the expectation that in return the pos session of the property would be delivered to him.
It is therefore clear that a decree in terms of 0.20, r. 14; Civil Procedure Code imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance by the other.
To put it differently, the obligations are recip rocal and are inter linked, so that they cannot be separated.
If the defendants by obtaining the stay order from the High Court relieve themselves of the obligation to deliv er possession of the properties the plaintiff decree holder must also be deemed thereby to be relieved of the necessity of depositing the money so long as the stay order continues.
We are accordingly of the opinion that the order of stay dated March 23, 27 1955 must be construed as an order staying the whole procedure of sale including delivery of possession as well as payment of price.
The effect of the stay order therefore in the present case is to enlarge the time for pay ment till the decision of the appeal.
" This Court was further of the opinion that the effect of the High Court 's order dated October 6, 1960 dismissing the second appeal was to give by necessary implication a fresh starting point for depositing the amount from the date of the High Court 's decree.
The decree of the High Court was dated October 6, 1960 and the appellant could have deposited the amount immediately after this date.
But the appellant had deposited the amount on May 2, 1955, long before the date of High Court 's decree and there was no default on the part of the appellant in fulfilling the terms of the High Court 's decree.
It was accordingly held that a decree of the High Court in second appeal should be construed in that case as affording by implication a fresh starting point to the plaintiff for making payment into the Court.
In Sulleh Singh vs Sohan Lal; , , reiterating what was held in Naguba Appa vs Narndev, (supra) and Dattaraya vs Shaikh Mahboob Shaikh Ali, (supra).
The trial court directed re spondents Sohan Lal and Nathi to deposit Rs.6,300 and Rs.5,670 respectively on or before 1st April, 1969 less 1/5th of the pre emption amount already deposited by them.
Sohan Lal 's decree was for possession by pre emption in respect of Killa Nos.
14/1, 17 and 18/1 of Rectangle 37.
The plaintiffs aggrieved by that order filed an appeal contend ing that the decree should have been passed for the whole of the land because the respondent Sohan Lal was also a tenant of Killa No. 24 of Rectangle 37 under them.
On 29th July, 1969, the Additional District Judge passed a decree for possession by pre emption in favour of respondent ' Sohan Lal in respect of Killa No. 24 of Rectangle 37 also on payment of Rs.9,100 and he was also directed to deposit this amount on or before 20th August, 1969.
The decree in favour of Nathi was maintained without change.
The appellants filed an appeal to the High Court contending that respondents did not deposit the decretal amount by 1st April, 1969 as directed by the trial court and, therefore, the suit was liable to be dismissed under Order 20 Rule 14 of the CPC and the High Court allowed the appeal against Nathi and dismissed the appeal against Sohan Lal holding that since the lower appel late Court granted Sohan Lal decree for one more Killa and directed that the amount would be Rs.9,100 to be deposited on or before 20th August, 1969, the respondent was to comply with the appellate decree and not the decree of the trial court.
This Court upheld the appellant 's contention that the lower 28 appellate court was wrong in extending the time for payment because the failure of the plaintiffs respondents to deposit the amount in terms of the trial court 's decree would result in pre emptors ' suit standing dismissed by reason of default in not depositing pre emption price.
It was only if the plaintiffs respondents had paid the decretal amount within the time granted by the trial court or if the plaintiffs respondents had obtained another order from the lower appel late Court granting any order of stay that the lower appel late court might have considered the passing of appropriate order in favour of pre emptors.
A Full Bench of the Punjab and Haryana High Court in Labh Singh & Anr.
vs Hardayal and Anr., (supra) held on the facts of that case as no prayer was made by the appellant to the Court for verification of the pre emption amount and the amount which was to be deposited, was mentioned in the application along with the challan in duplicate and the amount so mentioned was ordered to be deposited, it was not the responsibility of the Court to verify from the record and to direct the pre emptor to deposit the amount as men tioned in the decree.
It was a different matter if a liti gant sought the assistance of the Court and while giving such assistance, because of the mistake of the Court, less amount was deposited.
The Court observed that a litigant may not be allowed to suffer for the mistake of the Court but it could not be held that it was the duty of the Court in every case to verify the actual amount mentioned in every decree to be deposited.
In that case appellant Labh Singh obtained pre emption decree on May 27, 1971 and a direction to pay Rs.28,881.50 less 1/5th pre emption amount already deposited by 10th July, 1971 and the appellant deposited Rs.23,48 1.50 on 7th July, 1971.
Obviously there was short payment of Rs.200.
The vendees filed an appeal against the decree on 7th June, 1971 and prayed for stay of dispossession during the pendency of the appeal, which was allowed on 8th June, 1971 by the first appellate Court but that appeal was dis missed on 18th August, 1972 whereafter the appellant filed application for execution of the pre emption decree and was put in possession of the land on 2nd December, 1971 and when the vendees were to withdraw the amount they found the shortage of Rs.200 and applied for restitution of possession of the land which was allowed by the Executing Court on 15th June, 1974 and the same order was affirmed by the first appellate Court on 10th January, 1975.
The appeal therefrom having been referred to full Bench which held as above.
The Full Bench distinguished Dattaraya decision observing that in a given case if the Appellate Court while deciding the appeal extends the time for depositing the pre emption money no exception could be taken if the amount was 29 thus deposited by the time extended but no such order admit tedly was passed in that case nor the amount had been depos ited till the date of the judgment.
It also distinguished the decision in Jang Singh vs Brijlal & Ors., (supra), on the facts that the clerk of the Court made a mistake in making a report and consequently the pre emption amount deposited by the plaintiff was less by rupee one.
Jogdhayan vs Babu Ram & Ors.
, ; , also is a case of failure to deposit a fraction of the decretal amount.
The appellant obtained a pre emption decree and deposited a sum of Rs. 15,500 at the purchase price and Rs. 100 as the registration charges and other expenses of the deed.
The respondents ' appeal therefrom was dismissed by the Additional District Judge with the modification directing the appellant to deposit a sum of Rs. 1836.25 more in the trial court for payment to the vendee within 15.4.1967; in case of failure the suit would stand dismissed.
On 14.4.1967 the appellant deposited Rs. 1836 only instead of Rs. 1836.25.
He, however, made good the short deposit of 25 paise on 28.10.1968 with the permission of the Court aver ring that the omission to deposit 25 paise was due to bona fide mistake.
The vendee 's appeal was dismissed by the High Court with a direction to the appellant to deposit within 3 months time a further sum of Rs.500 for the improvements made to the land and the appellant deposited that sum within time.
Before the Executing Court the respondentvendee filed the application under Order 20 Rule 14(1)(b) contending that the short deposit of 25 paise within 15.4.1967 amounted to deemed dismissal of the suit itself and that the default could not be condoned.
The Executing Court having overruled the objections, the Judgment debtor 's appeal therefrom was accepted by the Additional District Judge holding that Order 20 Rule 14(1)(b) CPC was mandatory and the short deposit was not due to bona fide mistake and hence the default could not be condoned.
The appellant 's second execution appeal before the High Court was dismissed on the ground of limitation.
On appeal by special leave, this Court held that the admitted position was that the appellant deposited the entire amount of purchase money together with the costs decreed against him, less 25 paise within the time fixed by the Court and 25 paise too was deposited but beyond time.
The Executing Court held that the short deposit of 25 paise was due to the bona fide mistake while the executing appellate Court held that it was not due to any bona fide mistake, but it was a de fault and thereby the executing appellate Court deprived the decree holder of the legitimate fruits of the decree he obtained in all the Courts.
The finding of the first execut ing appellate Court that the non deposit could not be due to any bona fide mistake, was absolutely 30 untenable for the reason that while the appellant had depos ited in total Rs. 17,936.00 from time to time as directed by the Courts, there was absolutely no reason as to why they would not have deposited 25 paise unless it was due to a mistake.
This was pre eminently a case in which the first execution appellate Court ought to have exercised its dis cretionary powers under Section 148 CPC and accepted the delayed deposit of 25 paise, as was done by the original Executing Court.
The appeal was accordingly allowed, the Orders of the High Court as well as the first execution appellate Court were set aside and the Order of the original executing Court was restored.
In Jogdhayan vs Babu Ram & Ors., (supra) this Court considered the provision of section 148 CPC qua 0.20 r. 14 CPC and held that the appellate Court could have exercised the power as was done by the lower Court.
section 148 deals with enlargement of time and provides: "Where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired.
" This section empowers the Court to extend the time fixed by it even after the expiry of the period originally fixed.
It by implication allows the Court to enlarge the time before the time originally fixed.
The use of the word 'may ' shows that the power is discretionary, and the Court is, therefore, entitled to take into account the conduct of the party praying for such extension.
From the above decisions one could distinguish the cases of non deposit of the whole of the purchase money within the fixed time where there was no stay order granted by the appellate Court from the cases of non deposit of the decre tal amount consequent upon a stay order granted by the appellate Court.
In the first category of above cases the provisions of 0.20 r. 14(1) would be strictly applicable the provision being mandatory as was held in Naguba 's case (supra).
In the second category of above cases, it would be necessary to examine the nature and effect of the stay order on the deemed disposal of the suit and also to see whether a fresh period is fixed thereby as were the cases in Duttaraya (supra) and Jogdhayan (supra).
31 In the third category of eases, namely, non deposit of only a relatively small fraction of the purchase money due to inadvertent mistake whether or not caused by any action of the Court, the Court has the discretion under Section 148 CPC to extend the time even though the time fixed has al ready expired provided it is satisfied that the mistake is bona fide and was not indicative of negligence or inaction as was the case in Jogdhayan, (supra).
The Court will extend the time when it finds that the mistake was the result of, or induced by, an action of the Court applying the maxim 'actus curiae neminem gravabit an act of the Court shall prejudice no man, as was the case in Jang Singh (supra).
While it would be necessary to consider the facts of the case to determine whether the inadvertent mistake was due to any action of the Court it would be appropriate to find that the ultimate permission to deposit the challaned amount is that of the Court.
Proceeding as above, in the instant case we find that the decree did not quantify the purchase money having only said "Rs.41,082 less the amount of 'Zare Panjum".
Of course, 'certum est quod certum reddi potest ' that is certain which can be rendered certain.
The amount of 'Zare Panjum ' was not specified.
Parties do not controvert that it was 1/5th.
But the amount was not calculated by the Court itself.
Inadvert ent error crept in arithmetical calculation.
The deficit of Rs. 100 was a very small fraction of the total payable amount of Rs.33,682 which was paid very much within the fixed time, and there was no reason, except for the mistake, as to why he would not have paid this Rs. 100 also within time.
The appellants ' application with the challan annexed was allowed by Court officials without pointing out the mistake.
The amount was deposited and even possession of the property was delivered to the appellant.
The Senior Subordi nate Judge allowed the application made by the appellant in exercise of the discretion vested in him apparently on the view that sufficient cause had been made out for non deposit of Rs. 100.
This order, however, as seen above, was set aside by the High Court in a civil revision under section 115 C.P.C.
The question which comes in the forefront is whether any case was made out for interference by the High Court in its revisional jurisdiction under section 115 CPC with the order of the Senior Subordinate Judge.
The scope of section 115 CPC has been the subjectmatter of a catena of decisions of this Court and the law by now is so well settled that we do not find it necessary to make any detailed reference of those cases.
We find it sufficient to refer to the leading case on the point in Keshardeo Chamria vs Radha Kissen Chamria and 32 Others, [1953] SCR page 136 where it was held that Section 115 CPC applies to matters of jurisdiction alone, the irreg ular exercise or nonexercise of it or the illegal assumption of it, and if a subordinate court had jurisidiction to make the order it has made and has not acted in breach of any provision of law or committed any error of procedure which is material and may have affected the ultimate decision, the High Court has no power to interfere, however profoundly it may differ from the conclusions of that court on questions of fact or law.
Consequently, the High Court had jurisdiction to inter fere with the order of the Senior Subordinate Judge only (i) if the said Judge had no jurisdiction to make the order it has made, and (ii) had acted in breach of any provision of law or committed any error of procedure which was material and may have affected the ultimate decision.
If neither of these conditions was met the High Court had no power to interfere, however profoundly it may have differed from the conclusion of the Senior Subordinate Judge on questions of fact or law.
Coming to the question as to whether the Senior Subordinate Judge had jurisdiction to make the order made by him it may be pointed out that section 148 CPC, as seen above,conferred ample jurisdiction on him in this regard.
Apart from the cases cited above in support of the proposi tion we may refer to a Full Bench decision of the Allahabad High Court succinctly laying down the law on the point in Gobardhan Singh vs Barsati, [1972] A.L.J. page 169.
Relying on a decision of this Court in Mahanth Ram Das vs Ganga Das, [1961] 3 SCR page 763 it was held: "Even in cases where an order is made by the Court for doing a thing within a particular time and the order further provides that the application, suit or appeal shall stand dis missed if the thing is not done within the time fixed, the Court has jurisdiction, if sufficient cause is made out, to extend the time even when the application for extension of time is made after the expiry of the time fixed.
It is not the application for grant of further time, whether made before or after the expiry of the time granted, which confers jurisdiction on the Court.
The Court possesses the jurisdiction under Sec.
148 CPC to enlarge the time and the application merely invokes that jurisdiction.
" In Ganesh Prasad Sah Kesari and Another vs Lakshmi Narayan Gupta, [1985] 3 SCC page 53 it was held: 33 " . . where the court fixes a time to do a thing, the court always retains the power to extend the time for doing so.
Section 148 of the Code of Civil Procedure provides that where any period is fixed or granted by the court for the doing of any act prescribed or allowed by the Code, the court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired.
The princi ple of this section must govern in not whit tling down the discretion conferred on the court.
" In this view of the matter there seems to be no manner of doubt that the Senior Subordinate Judge had jurisdiction to extend the time under section 148 CPC on sufficient cause being made out.
The first condition precedent to enable the High Court to exercise its revisional jurisdiction under section 115 CPC was, therefore, lacking.
Likewise, nothing has been brought to our notice on the basis of which it could be said that the discretion exercised by the Senior Subordinate Judge was in breach of any provision of law or that he committed any error of procedure which was material and may have affected the ultimate decision.
That being so, the High Court had no power to interfere with the order of the Senior Subordinate Judge, however, profoundly it may have differed from the conclusions of that Judge on ques tions of fact or law.
On the facts and circumstances of the case we feel justified in allowing this appeal, setting aside the im pugned judgment of the High Court, and in restoring that of the Senior Subordinate Judge allowing 10 days time to depos it the balance of Rs. 100 exercising power under section 148 CPC on facts of the case.
If the amount has not already been deposited, it shall be deposited within 30 days from today and the respondents shall withdraw the same according to law.
The appeal is accordingly allowed, but under the facts and circumstances of the case, without any order as to costs.
R.S.S. Appeal allowed.
| The appellant 's claim to pre emption was decreed by the Senior Subordinate Judge in his favour.
The pre emption decree specified 31.12.1975 as the day on or before which the purchase money was to be paid into Court.
But the exact amount to be paid was not specified; it only said Rs.41,082 "less the amount of Zare Panjum" which the parties admit to be 1/5th.
Thus only 4/5th of the amount was to be paid.
Subsequently it was reported by the office that the amount deposited fell short of the decretal amount by Rs. 100.
Thereupon, the appellant decree holder filed an application praying for condonation of delay and for permission to deposit the balance of Rs. 100 stating that there was an inadvertent arithmatical mistake on his part, as also on the part of the Court officials.
The Senior Subordinate Judge applying the maxim "Actus curiae neminem gravabit" condoned the delay holding that the mistake of the decree holder was shared by the Court.
The High Court, however, allowed the respondent 's review petition filed under section 115 CPC., and held that the decree holder himself filed the applica tion annexing the challan mentioning the amount and as such there was no mistake on the part of any Court officials.
Before this Court it was inter alia contended on behalf of the appellant that the Senior Subordinate Judge having exercised power within his jurisdiction under section 148 CPC in extending the time to deposit the deficit amount of Rs. 100, the revisional court mis directed itself in holding that the court officials were not at fault in not pointing out the shortfall while permitting the deposit of the decretal amount.
On behalf of the respondents it was contended that the challan having been prepared by the decree holder himself, there was no mistake on the part of any Court official in accepting short deposit, and the 18 High Court rightly held that the appellant 's suit stood dismissed because of non deposit of the decretal amount within time, and thereafter there was no question of exten sion of any time for depositing the same.
Allowing the appeal, this Court, HELD: (1) There is no doubt that where the Court decrees a claim to pre emption and the entire purchase money payable has not been paid and there is no order from any court to justify or excuse non payment, the suit shall be dismissed under order XX Rule 14(1) CPC.
[22H] (2) While mere filing of an appeal does not suspend a pre emption decree of the trial Judge a stay order passed by the appellate court may suspend it in the manner ordered therein.
[28B] Naguba Appa vs Namdev, AIR (1954) SC 50 and Dattaray vs Shaikh Mahboob Shaikh Ali; , , referred to.
(3) One could distinguish the cases of non deposit of the whole of the purchase money within the fixed time where there was no stay order granted by the appellate Court from the cases of non deposit of the decretal amount consequent upon a stay order granted by the appellate Court.
[30G] (4) In the first category of above cases the provisions of 0.20 r.14(1) would be strictly applicable, the provision being mandatory.
[30G] Naguba Appa vs Namdev, AIR (1954) SC 50, referred to.
(5) In the second category of above cases, it would be necessary to examine the nature and effect of the stay order on the deemed disposal of the suit and also to see whether a fresh period is fixed thereby.
[30H] Dattaraya vs Shaikh Mahboob Shaikh Ali, ; and Sulleh Singh vs Sohan Lal, ; , referred to.
(6) In the third category of cases, namely, non deposit of only a relatively small fraction of the purchase money due to inadvertent mistake whether or not caused by any action of the Court, the Court has 19 the discretion under section 148 CPC to extend the time even though the time fixed has already expired provided it is satisfied that the mistake is bona fide and was not indica tive of negligence or inaction.
[31A B] Jogdhayan vs Babu Ram & Ors.
, ; , referred to.
(7) The Court will extend the time when it finds that the mistake was the result of, or induced by, an action of the court applying the maxim 'actus curiae nominem gravab it ' an act of the court shall prejudice no man.
While it would be necessary to consider the facts of the case to determine whether the inadvertent mistake was due to any action ' of the Court, it would be appropriate to find that the ultimate permission to deposit the channeled amount is that of the court.
[31B C] Jang Singh vs Brijlal & Ors., ; and Labh Singh vs Hardayal, [1977] 79 Punjab Law Reporter 4 17, referred to.
(8) In the instant case, inadvertent error crept in arithmetical calculation.
The deficit of Rs. I00 was a very small.
fraction of the total payable amount which was paid very much within the fixed time, and there was no reason, except for the mistake, as to why he would not have paid this Rs. 100 also within time.
The appellants ' application with the challan annexed was allowed by Court officials without pointing out the mistake.
The amount was deposited and even possession of the property was delivered to the appellant.
[31D E] (9) There seems to be no manner of doubt that the Senior Subordinate Judge had jurisdiction to extend the time under section 148 CPC on sufficient cause being made out.
[32D] Gobardhan Singh vs Barsati, ; Mahanth Ram Das vs Ganga Das, ; and Ganesh Prasad Sah Kesari vs Lakshmi Narayan Gupta, ; , referred to.
(10) Section 115 CPC applies to matter of jurisdiction alone, the irregular exercise or non exercise of it or the illegal assumption of it.
The High Court had therefore jurisdiction to interfere with the order of the Senior Subordinate Judge only (i) if the said Judge had no juris diction to make the order it has made, and (ii) had acted in breach of any provision of law or committed any error of procedure which was material and may have affected the ultimate decision.
The first condition precedent to enable the High Court to exercise its revisional jurisdiction under section 115 CPC was lacking.
Likewise, nothing has been 20 brought out on the basis of which it could be said that the discretion exercised by the Senior Subordinate Judge was in breach of any provision of law or that he committed any error of procedure which was material and may have effected the ultimate decision.
That being so, the High Court had no power to interfere with the order of the Senior Subordinate Judge, however profoundly it may have differed from the conclusion of that Judge on questions of fact or law.
[32A; C; 33D E] Keshardeo Chamria vs Radha Kissen Chamria & Ors., ; , referred to.
|
s (C) Nos.
2275 86 of 1982 Etc.
(Under Article 32 of the Constitution of India) WITH Special Leave Petition (C) No. 4090 of 1985.
From the Judgment and Order dated 4.12.
1984 of the Madras High Court in W.A. No. 414/78.
B. Datta, Additional Solicitor General, G. Ramaswamy, Additional Solicitor General, M.K. Ramamurthy, V.M. Tar kunde, Gobind Mukhoty, S.C. Manchanda, G.B. Pai, K.K. Venug opal, Mrs. Shyamala Pappu, M.A. Krishnamurthy, Ms. Chandan Ramamurthy, J.D. Jain, MS.
Kanwaljit Kochhar, K.B. Rohtagi, B.R. Agarwala, Ms. Sushma Manchanda, R.B. Hathikhanwala, Ms. Sunita Sharma, P.H. Parekh, S.S. Khanduja, Y.P. Dhingra, B.K. Saluja, H.S. Parihar, Vipin Chandra, R.K. Maheshwari, Pramod Dayal, R.P. Saxena, D.K. Garg, A.D. Sanger, Pramod Swarup, Krishna Prasad, P.C. Kapur, A.N. Badriyar, M.P. Jha, V.N. Sharma Petitioner inperson, B.B. Sahoo, section Srinivasan, Vineet Kumar, Ms. Urmila Kapoor, Ms. section Janani, Dalveer Bhandari, C. Ramesh, G.D. Gupta, L.K. Gupta, G. Venkatesh Rao, Ms. A. Subhashini, Ms. Sushma Suri, C.V. Subba Rao, P. Parmeshwaran, J.R. Das, S.K. Patri, Ms. Lira 692 Goswami, D.N. Mishra, V.J. Francis, N.M. PopIi, S.K. Dhin gra, K.J. John, Y.P. Rao, Mahabir Singh, Ms. Bharti Anand, Indra Makwana and S.K. Jain for the appearing parties.
The Judgment of the Court was delivered by SAWANT, J.
This group of petitions concerns the workers in canteens run in the different railway establishments.
The relief claimed in all the petitions is that the workers concerned should be treated as railway employees and should be extended all service conditions which are available to the railway employees.
For our purpose, these canteens have to be classified into three categories, viz. (i) Statutory Canteens These are canteens required to be provided compulsorily in view of the provisions of Section 46 of the (hereinafter referred to as the Act) since the Act admitted ly applies to the establishments concerned and the employees working in the said establishments exceed 250; (ii) Non Statutory Recognised Canteens These canteens are run in the establishments which may or may not be governed by the Act but which admittedly employ 250 or less than 250 employees, and hence, it is not obligatory on the railways to maintain them.
However, they have been set up as a staff welfare measure where the employees exceed 100 in number.
These canteens are established with the prior approval and recog nition of the Railway Board as per the procedure detailed in the Railway Establishment Manual; and (iii) Non Statutory Non Recognised Canteens These canteens are run at estab lishments in category (ii) above but employ 100 or less than 100 employees, and are established without the prior approv al or recognition of the Railway Board 3.
The present petitions concern employees in all the three types of canteens.
It will be convenient to deal separately with the employees in the three types of can teens, because, the history of litigation and the arguments advanced in respect of each of the categories are different.
4.(i) Statutory Canteens: Section 46 of the Act which makes it obligatory on an occupier of a factory as defined under the Act, to provide a canteen or canteens where more than 250 workers are ordinarily employed runs as follows: "Canteens: (1) The State Government may make rules 693 requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for (a) the date by which such canteen shall be provided; (b) the standards in respect of construction, accommodation, furniture and other equipment of the canteen; (c) the foodstuffs to be served therein and the charges which may be made therefore; (d) the constitution of a managing committee for the canteen and representation of the workers in the management of the canteen; (dd) the items of expenditure in the running of the canteen which are not to be taken into account in fixing the cost of foodstuff and which shall be borne by the employer; (e) the delegation to the Chief Inspector, subject to such conditions as may be prescribed, of the power to make rules under clause (c).
" It is evident from the aforesaid provision that the occupier of a factory (a railway establishment for the purposes of the said provisions is a factory within the meaning of the Act) is not only obliged to run a canteen where more than 250 workers are employed but is also obliged to abide by the rules which the concerned Government may make, including the rules for constitution of a managing committee for running the canteen and for representation of the workers in the management of the canteen.
The occupier may also be required to bear a part of the expenses of running the canteen and to comply with the rules prescribing standards in respect of construction, accommodation, furniture and other equipment of the canteen the foodstuffs to be served and the prices to be charged for them.
In other words, the whole paraphernalia of the canteen has to conform to the statutory rules made in that behalf.
As is pointed out on behalf of the Railways, it appears that there are 89 such statutory canteens function ing in the railway premises.
694 5.
It appears that the workers working in the statutory canteen at Loco Carriages and Electrical Workshops of the South Eastern Railways Workshop, Kharagpur had preferred a writ petition in the Calcutta High Court praying for a direction to the Union of India to recognise them as railway employees and grant them a11 service conditions available to the railway employees.
A learned Single Judge by his deci sion dated 7.8.
1973 dismissed the said petition holding that the workers were not entitled to the reliefs claimed by them.
Against the said decision, the workers preferred an appeal before the Division Bench of the said Court and the Division Bench by its decision of July 16, 1974, allowed the same and directed the respondent Union of India to recognise the workers as employees of the Railway Administration under the , but rejected the demand to pay salary and allowances to them as if they were railway employees.
On the other hand, the High Court held that the employment of the workers must be deemed to be on the basis of appointment letters and that they had no statutory or legal right and the Railway Administration had no corresponding statutory or legal obligation to pay salaries etc.
above the minimum wages, or dearness allowances as claimed by them.
The court held that their service conditions were in the realm of contract or depending on a policy followed by the Railway Administration, at its discretion.
Being aggrieved, the Union of India had come in appeal to this Court being Civil Appeal No. 368 of 1978.This Court by its order of October 22, 1980 disposed of the appeal as follows: "The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be interfered with in this appeal.
Prima facie we are inclined to agree that the High Court decision is right.
Moreover, the learned Attorney General agrees to apply the Act as if it were applicable to canteen employees.
In this view, a final pronouncement on this question by this Court need not be given in the present case.
We leave it open to Union of India in an appropriate case to raise the point and seek a pronouncement.
" The Act referred to in the aforesaid order obviously means the .
Therefore, what was confirmed by this Court was the declaration given by the Calcutta High Court that the employees of the Statutory Canteens were railway.employees for the purposes of the and that their service conditions were determined by the con tract as incorporated in their appointment letters or by the policy decision of the Railway Administration which was discretionary.
It is 695 necessary to note this fact at the very outset.
It has further to be remembered that the Calcutta High Court had given the aforesaid declaration in favour of the statutory canteen workers notwithstanding the fact that the canteens were managed by the Committee of Management nomi nated by the Railway Administration or by a managing commit tee elected or nominated by the employees or by the Corpera tive Society relying on the express provision contained in Chapter XXVIII` Of 'the Railway Establishment Manual.
It may, however, be mentioned that the High Court had taken into consideration Note 2 of Para 2834(2) of the Manual which had declared that in cases where the canteens were being run on cooperative basis either by the Co operative Society or the managing committee of the staff, the canteen staff shall not be treated as railway servants because in that case master and servant relationship existed between the Co operative Society (through its managing committee) and the concerned employees.
The High Court had relied upon the fact that even in such cases the entire cost of the staff was reimbursed by the Railway Administration to the Co operative Society managing committee and that over all control over the canteen and the staff, vested in the Rail way Administration.
In fact, the direction under para 2832 of the Railway Establishment Manual was that where even a Co operative Society was running the canteen, the bye laws of the Society should be suitably amended to provide for such overall control by the Railway Administration since the legal responsibility for the proper management of the can teen vested not with the agent like the Co operative Soceity but solely with the Railway Administration.
6. 1t is undoubtedly true, however, that this Court in its Order dated October 22, 1980 had reserved the right to the Union of India to raise the question as to whether the employees of the Statutory canteens were the employees of the Railway Establishment, finder the and get a pronouncement on the same.
It appears that after the said order of this Court, the Railway Board had issued a letter dated May 22, 1981 to the General Manager, South Eastern Railway, Calcutta Conveying the decision of the Ministry of the Railways that the employees of Kharagpur Workshop Statu tory Canteen, (which employees were a party to the said decision) should be deemed to be railway servants with effect from October 22, 1980 and till Government decided otherwise, the said workers would continue to be governed by the conditions of service and emoluments as existed on October 21, 1980.
It was also stated there that what was stated in the letter had the sanction of the President and the letter was issued/with 696 the concurrence of the Finance Directorate of the Ministry of Railways.
Subsequently, the Board issued another circular letter of June 8, 1981 addressed to the General Managers of all Indian Railways stating therein that it was decided that employees of all other statutory canteens on the railways irrespective of the type and management of the canteens should also be deemed to be railway servants w.e.f. October 22, 1980 and that till Government decided otherwise, the staff of the statutory canteens would continue to be gov erned by the conditions of service and emoluments as existed on October 21, 1980.
On March 11, 1982, the Railway Board issued a letter and referred to its earlier communication of June 8, 1981 and September 18, 1981.
In this, letter, it was stated that pursuant to the said two earlier communications (where it was stated that the question of pay scale and retirement benefits were under consideration and that a separate commu nication would follow), a Schedule showing revised pay scale applicable to the employees of the statutory canteens of the railways was enclosed for necessary action.
The letter stated that the existing employees of these canteens would be entitled to exercise an option under Rule 2019 (F.R. 23) and Rule II either to retain their existing pay scale as presently applicable to them or opt for the revised pay scale.
However, on promotion such employees would be compul sorily brought on to the revised pay scales.
It was made clear that those who opt for the revised scales would not be eligible to other facilities/perquisites admissible to them in their existing pay scale such as free food, snacks, commission etc.
A period of three months was given for exercising the option and it was stated that if no option was exercised it would be assumed that the employees con cerned had elected to be governed by the revised pay scales w.e.f. October 22, 1980.
The Schedule annexed to the letter mentioned, among other things, that the canteen employees will be entitled to the dearness allowance, house rent allowance and city compensatory allowance as per the in structions issued by the Railway Ministry; that the age of retirement of employees would be 58 years as in the case of other railway employees; and that the employees of the canteen would be entitled to the benefit of productivity linked bonus on the principles applicable to the stall of the office/establishment to which they were attached from the date of their being declared as railway servants.
In a decision of this Court reported in ; , this Court directed that for the purpose of calculating pensionary benefits, the service rendered by the said em ployees prior to October 22, 1980 should also be computed.
By its letterr dated May 13, 1983 addressed to 697 all the General Managers, the Ministry of Railways placed on record the fact that pursuant to the Order of this Court dated October 22, 1980 the employees of all the statutory and 11 Delhi based nonstatutory canteens had been treated as railway servants w.e.f. October 22, 1980, and the revised pay scale applicable to the employees had been communicated vide the Railway Board 's letter dated March 11, 1982.
On December 4, 1984, a Division Bench of the Madras High Court delivered a Judgment in Writ Appeal No. 414 of 1978, Railway Board & Anr.
vs Parthasarthy and Anr., and in Writ Appeal No. 415 of 1978 relying upon the order dated October 22, 1980, passed by this Court and held that can teen employees will have to be treated as railway employees for the purposes of the , in view of th, con cession made by the Railways before this Court and also the con cession made by the counsel appearing for the Railways before the High Court.
We have then on record an Office Order dated July 27, 1983 issued to an employee of a statutory canteen con veying to him appointment as a TY/Cleaner in a scale of pay plus usual allowances w.e.f.
January 12, 1983.
In this order, it is stated that the employee would be eligible for house rent allowance under the Rules in force from time to time, that he will be on probation for a period of one year and that the appointment would be terminated with 14 days ' notice on either side.
It is, however, added that no such notice would be required, for the termination of service as and by way of removal or dismissal as a disciplinary measure effected after compliance with the provisions of clause (2) of Article 311 of the Constitution of India.
It is also stated that the employee should take oath of allegiance to the Union of India and that he should apply for allotment of quarters within 7 days from the date of his appointment and then alone should apply for house rent allowance.
It is now necessary to refer to the relevant provi sions of the Railway Establishment Manual which deal with the canteens.
Paragraph 2829 of Chapter XXVIII of the Manual refers to the provisions of Section 46 of the and underwrites the fact that under these provisions, there is a statutory obligation on the Railway Administra tion to set up canteens in Railway establishments which are governed by the said Act and which employ more than 250 persons.
The paragraph further mentions that Railway Admin istration should strictly abide by the rules which are framed by the respective State 698 Governments under sub section 2 of the Act regarding the constitution of the Managing Committees of such canteens.
Paragraph 2832 then ordains that the staff served by the said canteens should be actively associated in their manage ment, and for this purpose a Committee of management of the staff should be formed in accordance with the rules framed by the concerned State Government.
The paragraph further states that although the Administration can employ as agent a Staff Committee or a Co operative Society for management, the legal responsibility for proper management rests not with the agency but solely with the Railway Administration.
In case the management is entrusted to a consumer co opera tive society the bye laws of the society are directed by the said paragraph to be amended suitably to provide for an overall control by the Railway Administration.
Paragraph 2834 deals with the incidence of cost of the canteens.
As regards the statutory canteens, the paragraph directs that in addition to the facilities which are given to the non statutory canteens, the Administration will have also to bear the expenditure on the entire paraphernalia including the furniture as well as the salaries of the cook and the canteen staff.
Note 2 of the said paragraph then states that where the canteens are being run on co operative basis either by co operative society or by Managing Committee of the staff and there subsists a relationship of master and servants between the society/ managing committee and the workers, i.e. where the canteen staff has been employed by the society/managing committee and not by the Administration as such, the canteen staff are not to be treated as railway servant even though the cost of this staff is reimbursed by the Administration.
We have also on record the second edition (1988) of "ADMINISTRATIVE INSTRUCTIONS ON DEPARTMENTAL CANTEENS IN OFFICES AND INDUSTRIAL ESTABLISHMENTS OF THE GOVERNMENT" issued by the the Deptt.
of Personnel & Training, Ministry of Personnel, Public Grievances & Pensions of the Govt.
of India, first published in 1980 (hereinafter briefly called as the Instructions).
They are applicable to: (a) Canteens/Tiffin Rooms set up on departmental basis and run as per scheme issued by the Deptt.
of Personnel and Training; (b) Canteens/Tiffin Rooms set up on Co operative basis by a Society of Government employees with the Head of the Deptt./ Office/Establishment or his nominee as Chairman; and (c) Canteens/Tiffin Rooms set up in Industrial Establish ments 699 (other than those covered under Section 46 of the ) of the Government and which have not been exempted from following the rules in the said Instructions due to the availability of a separate and distinct set of rules and guidelines framed by the controlling Ministries/Departments.
(para 1.3) It is made clear in these Instructions that the orders issued under the said Instructions are applicable to all Canteens/Tiffin Rooms functioning or to be set up in any Ministry, Department, Establishment, Office, Installation of the Government of India (industrial or nonindustrial) which should be centrally registered with the office of the Direc tor of Canteens, Deptt.
of Personnel & Training, New Delhi including those functioning under the Ministries of Defence, P & T and Railways, unless these three Ministries had previ ously decided to exempt any of their Canteens/Tiffin Rooms from the purview of the said Instructions due to specific reasons, and they had framed or they propose to frame a separate set of instructions for the exempted canteens.
(para 1.4).
The Instructions further state that the policy matters and coordination on canteen matters will be central ly done by the Deptt.
of Personnel and Training (Director of Canteens) (para 1.14).
To be entitled to subsidy all the departmental canteens have to get themselves registered centrally with the Director of Canteens and Training (Para 1.15).
The canteens are entitled to subsidy on wages and gratuity payable to the workers employed in the canteens and for their uniforms as well as to capital and replacement grants for equipment including utensils, crockeries, cutt lery and furniture and also to interest free loans.
In addition to subsidy for equipment, the canteens are also entitled to other facilities such as accommodation on nomi nal rent of Rs. 1 electricity, water etc.
The Instructions in terms state that since the canteens are run departmental ly as a measure of staff welfare, the beverages, snacks and meals etc.
have to be made available to the staff at econom ic rates and for this purpose the Government has to provide necessary accommodation at the nominal rent and provide the necessary grants, subsidy and loans.
(Para 1.2).
In, addi tion, the concerned Department/Office has to bear the elec tricity and water bills.
In chapter V which deals with the personnel in the canteens, the Instructions lay down the entitlement of Canteens/Tiffin Rooms to the number and categories of employees according to the grades of Canteens/Tiffin Rooms.
With regard to the recruitment rules, conditions of service, status and the scales of pay of the canteen workers, the procedure for taking disciplinary action against them as well as for giving training to them, the chapter makes it clear that since the canteen workers have acquired the status of the holders of civil posts 700 w.e.f. October 1, 1979, their recruitment and conditions of service etc.
would be governed by the rules framed under proviso to Article 309 of the Constitution contained in GSR 54 issued under Government of India, Department of Personnel and Training Notification dated 23rd December, 1980.
It is made clear that the said rules also apply to the employees of the Canteens run by the Co operative Societies in con junction with the bye laws of the Society and local co operative laws in force.
It is further made clear that the workers in the non statutory departmental and co operative Canteens/Tiffin Rooms will be paid the pay and allowances at the same rate and on the same basis w.e.f. 26.9.
83 on which the employees of the statutory canteens are paid the same.
The chapter also mentions that before taking any disci plinary action against any canteen worker procedure as set out in chapter IV (Conduct and Discipline) of GSR of 1954 dated 23rd December, 1980 published in the Gazette of India Part II Section 3, sub Section (1) dated 17th January, 1981 will be followed.
The chapter further directs periodical training programmes to be arranged by the Director of Can teens for managerial, personnel and other canteen staff.
Chapter VI contains guidelines for constituting the Managing Committees of the canteens.
This chapter ordains that the Chairman of the managing committee should prefera bly be the Head of the Department/Office himself or his Deputy, and that the Honorary Secretary of the managing committee should normally be the Welfare Officer or the Administrative Officer of the Department/ Office of the minimum rank of a Section Officer or a Major or equivalent in services, who shall be nominated by the Office/Establish ment, and in the case of Co operative Canteens may be elect ed as per the bye laws of the Society.
One of the officials who should be of the rank of Section Officer/Major or above is to be nominated on the managing Committee by the Chair man.
Paragraph 6.11 defines the Legal Status of the Managing Committee.
It says that the Committee functions in the Deptt./Office/establishment of the Government of India for the welfare of the Govt.
employees, under the orders of the Government of India and its functions are connected with the affairs of the Union.
The Committee, therefore does not enjoy an autonomous status.
With respect to the contractual obligations, it functions "for and on behalf of the the President of India".
The proceedings of the Committee will not be conducted or decided on resolutions or voting system, but the official decision will rest with the Chairman of the Managing Commitsee or the Head of the Department/Office.
In the case of canteens run by the co operative societies, this provision is to apply as per the 701 bye laws of the society and the co operative law in force.
The presence of the Chairman and the Hony.
Secretary is necessary to constitute the quorum for holding the meeting of the Managing Committee.
The Head of the Department/Office is given power to depute a Government servant of the rank of Section Officer/equivalent or below if he can be spared, for part time or whole time assistance to the Managing Commit tee.
The Department/Office concerned is required to provide stationery, stencils, cyclostyling facilities, postage stamps, office assistance etc.
to enable the Managing Com mittee to conduct its business.
The annual accounts of the Canteens have to be submitted to the Financial Advisers of the Department/Office concerned with copies thereof to the Director of the can teens, and the audit of the accounts of the Canteens/Tiffin Rooms is to be carried out by the Departmentalised Accounts Organisations of the concerned Ministries/Departments/Of fices.
Out of the surplus of net profits of the Canteens, 1/3 amount is required to be remitted to the Director of Canteens Funds for welfare of the canteen employees in general.
All the aforesaid provisions apply to all types of Tiffin Rooms classified into Type B and A where the strength of the Department/Office is between 25 49 and 50 99 respec tively and to the Canteens classified in Types D, C, B and A where the strength is between 100 249, 250 499, 500 699 and 700 1200 respectively.
Where the strength is above 1200 a further higher classification is given to the Canteens.
These provisions contained in the Instructions, therefore, show that the Government has a complete control over the canteens and the workers employed therein are holders of civil posts within the meaning of Article 311 of the Constitution.
Their recruitment and service conditions are governed by the rules applicable to the employees of the Government Deptt./Office/Establishment to which the canteens are attached.
It is against this background that we have to con sider the question as to whether the staff employed in the statutory canteens m ' the Railway Establishment, industrial or non industrial, are railway employees or not.
According to the workers, in view of the aforesaid documents on record there is no reason why the employees in the canteens con cerned should not be given the status of the railway employ ees with all consequential benefits.
On the other hand, the 702 contention advanced on behalf of the Railways is that the documents in question show that the employees of the statu tory canteens are to be deemed railway employees only for the purpose of the and for no other purpose.
In no case, they can be deemed as holders of civil posts either for Article 309 or for Article 311 or for any other purpose.
On behalf of the employees, a preliminary objection was raised, namely, that in view of the order of this Court dated October 22, 1980 in Civil Appeal No. 368 of 1978 and another, it is not open to the Railways to agitate the question whether the employees in the statutory canteens are railway employees or not, and further whether they are railway employees for the purposes of the .
We are not inclined to entertain this objection for it is clear from the said order that the Court had left open even the question as to whether the employees of the statutory can teens were railway employees for the purposes of the said Act.
Hence, the question whether they are employees of the railways for all purposes necessarily remains res integra.
We may reproduce here the said order which is clear enough on the subject: "The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be interfered with in this appeal.
Prima facie we are inclined to agree that the High Court decision is right.
Moreover, the learned Attorney General agrees to apply the Act as if it were applicable to canteen employees.
In this view a final pronouncement on this question by this Court need not be given in the present case.
We leave it open to the Union of India in an appropriate case to raise the point and seek a pronouncement.
Leave granted in the petition flied by Railway Canteen Karmachari Association.
We have in C.A. No. 368 of 1978 passed an order and the point raised by the workmen in this appeal closely resembles the one raised in the sister case just referred to.
We apply the same principle as has been decided by the Calcutta High Court to this case also and the workmen will be given the same benefits.
We, however, make it clear here also that the Union of India will be free in an appopriate case to challenge the correctness of the legal point 703 decided by the Calcutta High Court.
It will be equaly open to the workmen to challenge the decision of the Delhi High Court if it becomes necessary.
With these observations we dispose of both the appeals.
The appellants in C.A. No. 368/1978 will pay the costs of the respondents.
" It must be remembered in this connection that both the Calcutta and the Madras High Courts had taken the view that the employees in the statutory canteens were the employees of the Railways for the purposes of the said Act.
The Delhi High Court had distinguished the decision of the Calcutta High Court on the ground that, that decision did not apply to the employees in the non statutory canteens with which it was concerned, and had held that the employees of the non statutory canteens were not railway employees for any pur pose.
It is in this circumstance that this Court had given liberty to the Railway Administration as well as the employ ees to challenge the respective decisions of the Calcutta and Delhi High Courts.
It will not, therefore, be correct to say that this Court had pronounced its final opinion on the said issue by the said order.
It has also to be remembered in this connection that the issue before this Court in those matters was whether the employees either of the statutory or non statutory canteens were the railway employees for the purposes of the .
The larger issue whether they were railway employees for all purposes was neither dis cussed nor even tentatively decided in those proceedings.
We are, therefore, of the view that both the said issues are at large in the case of the employees of the statutory as well as of the non statutory canteens.
Before us therefore two issues arise for considera tion, viz. (a) whether the employees of the statutory can teens are railway employes for the purposes of the said Act? and (b) whether they are railway employees for all other purposes as well? 20.
As regards the first contention, namely, whether the said employees are the employees of the Railway Administra tion for the purposes of the said Act, according to us the view taken by the Calcutta High Court in that behalf is correct.
Section 2(1) of the defines "worker" as follows: "Worker" means a person employed, directly or through any agency (including a contractor) with or without the knowl edge of the principal employer, whether for remuneration or not in any manufacturing process or in 704 cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work inciden tal to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union;" Since in terms of the Rules made by the State Govern ments under Section 46 of the Act, it is obligatory on the Railway Administration to provide a canteen, and the can teens in question have been established pursuant to the said provision there is no difficulty in holding that the can teens are incidental to or connected with the manufacturing process or the subject of the manufacturing process.
The provision of the canteen is deemed by the statute as a necessary concomitant of the manufacturing activity.
Para graph 2829 of the Railway Establishment Manual recognises the obligation on the Railway Administration created by the Act and as pointed out earlier paragraph 2834 makes provi sion for meeting the cost of the canteens.
Paragraph 2832 acknowledges that although the Railway Administration may employ anyone such as a Staff Committee or a Co operative Society for the management of the canteens, the legal re sponsibility for the proper management rests not with such agency but solely with the Railway Administration.
If the management of the canteen is handed over to a consumer cooperative society the bye laws of such society have to be amended suitably to provide for an overall control by the Railway Administration.
In fact as has been pointed out earlier the Adminis trative Instructions on departmental canteens in terms state that even those canteens which are not governed by the said Act have to be under a complete administrative control of the concerned Department and the recruitment, service condi tions and the disciplinary proceedings to be taken against the employees have to be taken according to the rules made in that behalf by the said Department.
In the circumstances, even where the employees are appointed by the Staff Commit tee/ Cooperative Society it will have to be held that their appointment is made by the Department through the agency of the Committee/ Society as the case may be.
In addition, as stated earlier, the Railway Board by its circular dated June 8, 1981 had communicated that it was decided to treat the employees of all statutory canteens, as railway servants irrespective of the type and management of the canteens, and to extend to them the conditions of service and emoluments of the railway servants as existed on October 21, 1980, w.e.f.
22nd October 1980.
No doubt it was stated in this letter that the said decision would 705 prevail till Government decided otherwise.
Subsequently on March 11, 1982, the Board also prescribed the pay scales, dearness allowance, house rent allowance, city compensatory allowance and productivity bonus, and fixed the age of their superannuation.
As also pointed out earlier, this court in its decision reported in ; , subsequently directed that for the purpose of calculating pensionary benefits the service rendered by the said employees prior to October 22, 1980 would be computed.
What is further, the Ministry of Railways by its letter of May 13, 1983 placed on record the fact that not only the employees of all the statutory canteens but the employees of eleven Delhi based non statutory canteens had been treated as railway servants with effect from October 22, 1980.
It must be remembered in this connection that neither the Railway Ministry nor the Railway Board had stated in their letters/orders that the employees of the statutory canteens and of the eleven Delhi based non statutory canteens were being treated as railway servants only for the purposes of the or that they were to be so treated till further decision of this Court.
It is possible to place a liberal construction on these letters/ orders and interprete the relevant direction name ly, "till further directions from the Government" as being the directions after the decision of this Court in the present matters, and for the sake of argument we may proceed on that basis while dealing with the present contention.
The admitted facts, however, are that these canteens have been in existence at their respective places continuously for a number of years.
The premises as well as the entire para phernalia for the canteens is provided by the Railway Admin istration and belong to it.
The employees engaged in the canteens have also been in service uninterruptedly for many years.
Their wages are reimbursed in full by the Rly.
Admin istration.
The entire running of the canteens including the work of the employees is subject to the supervision and control of the agency of the Railway Admn.
whether the Agency is the staff committee or the society.
In fact, as stated by the Rly.
Administration in its Establishment Manual the legal responsibility for running the canteen ultimately rests with it, whatever the agency that may intervene.
The number and the category of the staff engaged in the canteen is strictly controlled by the Administration.
As has been pointed out earlier, much before the order of this Court dated October 22, 1980, the employees of the departmental canteens/tiffin rooms were declared as holders of civil posts under the Government of India Notification No. 6(2)/23/77 Welfare dated December 11, 1979 which notifi cation is an annexure 4 to the Administrative Instructions 706 referred to above.
That notification stated that all posts in the said canteens/tiffin rooms are to be treated as posts in connection with the affairs of the Union, and according ly, present and future incumbents of such posts would quali fy as holders of civil posts under the Central Government.
The notification further stated that necessary rules govern ing the conditions of service of the employees would be framed under proviso to Article 309 of the Constitution to have retrospective effect from October 1, 1979.
Accordingly the service rules were framed under Article 309 as per the Notification No. GSR 54 issued by the Govt.
of India, Deptt.
of Personnel & Training on December 23, 1980.
These rules contained both the recruitment rules and conditions of service of the said employees including the procedure for disciplinary action to be taken against them.
As stated earlier the Administrative Instructions are applicable to the canteens/tiffin rooms run by all the Ministries includ ing the Railway Ministry unless they had previously decided to be exempt from them and had framed their own rules in that behalf.
On behalf of the respondents, one Shri Sud, Joint Director of Establishment, Ministry of Railways has filed an affidavit contending that Section F of Chapter XXVIII of the Railway Establishment Manual (to the relevant paragraphs of which we have made a reference earlier) con tains the necessary instructions for running the canteens and hence the Railway Administration should be deemed to have been exempted from the operation of the said Adminis trative Instructions.
Although there is nothing expressly on record to show that the railway canteens are exempted from the said Instructions, we will proceed on the assumption that they are so exempted by virtue of the relevant provi sions of the Railway Manual.
But the fact remains that there are as yet no notifications on the lines of December 11, 1979 and December 23, 1980 issued for the benefit of the employees in the railway canteens.
Whatever the differences in the nature of work performed by the order staff in the different Ministries, it cannot be argued that there is any difference in the work performed by the employees in the canteens run in the establishments of the Ministries.
Hence, we are of the view that if the said two notifications are applicable to the employees in the canteens run by the other departments of the Government of India, there is no reason why the same should not apply also to the employees in the canteens run by the Railways.
On behalf of the Railway Admn.
no material has been placed before us to treat the employees in their canteens as a class separate from the employees in the canteens run by the other departments of the Government.
In the circumstances, it would be highly discriminatory not to apply the said two notification to the employees in the Railway canteens.
It would be violative of Articles 14 and 16 of 707 the Constitution.
We are, therefore, of the view that the employees in the statutory canteens of the Railways will have to be treated as Railway servants.
Thus the relationship of employer and employee stands created between the Railway Administration and the canteen employees from the very inception.
Hence, it cannot be gainsaid that for the purposes of the the employees in the statutory canteens are the employees of the Railways.
The decision of the Calcutta and Madras High Courts (supra) on the point, therefore, are both proper and valid.
The next question is whether the said employees are railway employees for all purposes.
Mr. Ramaswamy, the learned counsel appearing for the Railways contended that the Railways undertake varied welfare activities in the nature of handicrafts centres, cooperative stores, banks, housing societies, credit societies, educational institu tions etc.
and the Railways spend about a hundred crores annually on these activities.
He submitted that if it is decided to treat the employees engaged in the canteens as railway employees it will be difficult to resist the claim from employees of these other institutions numbering over 27,500 for a similar status.
He also submitted that the Railways provide financial assistance to various non Railway institutions such as non Railway schools.
But teachers and other employees working in these schools are the employees of the respective organisations and cannot be treated as railway servants.
Since, according to him, the canteens are run for the benefit of the staff, the Government has only a general responsibility to see that the labour laws are properly followed and not infringed.
He further submitted that an indentical responsibility also devolves on the Railways in regard to contractors who execute works for the Railways with their own labour.
In addition, the Railways have nearly 2.3 lakh casual labourers who are normally employed on works which are of seasonal nature, intermitant or extending over short periods.
These employees are engaged by the contractor to whom the execution of work is entrust ed.
In case the employees of the canteens are to be treated as Railway servants, similar demands will be made from such casual labourers.
His next contention in this behalf was that the Railways have a primary objective of carrying goods and passengers, and the welfare activities are ancillary to the main objective.
Hence, the canteens continue at the discretion of the Railway Administration where there have provided 70% subsidy to the management of the statutory canteens.
If at any stage the Government so decides, it can change the form of this welfare measure 708 and may choose to have another set up which in their view may prove more convenient and financially workable such as engaging a contractor or an established agency like Tea Boad, Coffee Board, Women 's Organisation, etc.
to run the canteens.
For all these reasons, he submitted the employees in the statutory canteens should not be treated as the Railway employees.
While discussing above the contention that the employees in the statutory canteens cannot be treated as Railway employees even for the purposes of the said Act, we have referred to the various developments, and documents on record including the court decisions.
It is not necessary to repeat them here.
In view of the same, the contention ad vanced by Mr. Ramaswamy that the Railway Admn.
is engaged in varied welfare activities, and the employees engaged in these activities will also have to be treated as Railway employees, in case, the canteen employees are recognised as Railway employees does not appeal to us.
We express no opinion on the subject as to whether the employees engaged in other welfare activities will or will not be entitled to the status of the Railway employees, since neither they nor the facts pertaining to them are before us.
Our conclusion that the employees in the statutory canteens are entitled to succeed in their claim is based purely on facts peculiar to them as discussed above.
If by virtue of all these facts that they are entitled to the status of Railway employees and they cannot be deprived of that status merely because some other employees similarly or dis similarly situated may also claim the same status.
The argument to say the least can only be discribed as one in terroram, and as any other argument of the kind has to be disregarded.
(ii) Non Statutory Recognised Canteens: Paragraph 2830 of the Railway Established Manual enjoins upon the Rly.
Administration to take steps to develop their canteen organ isation to the maximum possible extent as a measure of staff welfare preferably by encouraging the development of can teens for staff on co operative basis.
This injunction is for provision of canteens in addition to the canteens as required by the for which provision is made in paragraph 2829 of the said Manual.
Paragraph 2831 lays down the principles governing the setting up of the canteens which apply also to the nonstatutory canteens provided for under paragraph 2830.
It says, among others things, that a regular canteen should be provided where the strength of the staff is 100 or more and a scheme for provision of a new canteen should be submitted to the Railway Board for approv al indicating financial implications duly vetted by the F.A.C.O. Paragraph 709 2833 contains provisions for the management of such non statutory canteens.
Among other things, it states that such canteens can be run either by a Committee of Management to be formed for the purpose or by a Consumer Cooperative Society.
The Committee of Management should consist of the duly elected representatives of the staff and where it is run by a Cooperative Society, it should consist of the representatives of the share holders of the Society.
Howev er, in either of the cases, a representative of the Railway Administration is to be nominated either as a Chairman or a Secretary or as a Member of the Committee.
This nominee of the Railway Administration is under an obligation to bring to the notice of the Administration any decision of the Managing Commttee which is likely to affect the interests of the Railway Admn.
in its capacity as an owner of the prem ises and of the furniture, equipment, etc., or if the deci sion is likely to be of considerable harm to the staff.
In such cases, the Management Committee cannot take action on the particular decision till the General Manager of the Railway has recorded his decision thereon.
The paragraph further ordains that where the canteens are managed by a co operative society, the society should make a suitable provisions in its bye laws for supervision of the canteen by the Committee of Management.
The paragraph also makes provi sion for granting loans to such canteens as initial capital from the Staff Benefit Fund.
Paragraph 2834 then details various facilities which are extended to such canteens which include the necessary accommodation, sanitary and 'electric installations, furniture and cooking utensils.
The Railway Admn.
is also required to bear rent on sanitary and electric installations, service taxes and charges for the electricity and water consumed.
These canteens are also entitled to subsidies at present to the extent of 70% of the wages of the employees engaged therein.
It is further an admitted position that for the purposes of giving subsidy for wages, the rates of pay and allowances as obtaining in July 1963 were adopted as a basis.
In September 1967, on account of a representation received from the canteen employees, the Railway Board left the question of revision of the scales of pay and dearness allowance to the Managing Committees.
However to ensure that the canteen employees functioning at the Metropolitan Cities were not affected adversely, the Board prescribed a minimum dearness allowance relief to the said employees.
In May 1970, the Board reviewed the question of scales of pay, and decided to enhance the dearness allowance relief in respect of employees working in the Metropolitan Cities, and also fixed the scales of pay of the employees working in all non statutory canteens (vide a Railway Board 's letter No. E(W) 69 710 C.N. 1 12 dated 29 5 1970).
These scales of pay were again revised in December 1979, including dearness allowance for employees working in the Metropolitan cities as well as for those working in cities other than Metropolitan cities with effect from 1 10 1979 (Railway Board 's letter No. E (W)/79 C.N. 1 12 dated 14 12 79).
A. further revision of pay scales was elfcoted by the Board in May 1983 (Railway Board 's letter No. E(W)/83/C.N. 1 8 dated 13 5 1983 to ensure com pliance with the interim directions given by this Court on April 22, 1983.
The direction of this Court was to the effect that the salary and allowances of the employees of the non statutory canteens (recognised) should be at the same rate and on the same basis as applicable to the employ ees of the statutory canteens deemed as railway servants with effect from October 22, 1980.
This direction was on the basis of the decision of this Court given on October 22, 1989 (supra).
It is further an admitted fact that the Board has made applicable to these employees the scales of pay as recommended by the Fourth Pay Commission with effect from January 1, 1986.
The employees in these canteens are also entitled to free medical treatment as out door patients in railway hospitals, to railway passes/PTO 's, one increment as an incentive for adoption of a small family.
They are also governed by the provisions of the Employees ' Provident Fund Act.
The Board has also framed recruitment rules for these employees vide its letter dated June 7, 1978.
These rules, among other things, lay down minimum qualifying age for recruitment, and superannuation age, minimum educational qualifications, the mode of recruitment and eligibility for promotion for various posts.
The nominee of the Railway Administration on the Managing Committee of the canteen is to be the Appointing Authority.
At present there are about 173 non statutory recognised canteens employing about 2145 workers.
As pointed out earlier, from the decision dated March 7, 1980 of the Delhi High Court in Writ Petition No. 269 of 1980 filed on behalf of the employees of eleven Delhi based non statutory recognised canteens, the Railway Canteen Karamchari Association had filed a special leave petition before this Court being SLP No. 4132 of 1980 which was disposed of by this Court by its decision of October 22, 1980 (supra).
By that decision, this Court had disposed of the said appeal in terms of the order which was passed in another similar Civil Appeal No. 368 of 1978, and the em ployees were given the same benefits by accepting the prin ciple laid down by the Calcutta High Court.
Thus by the said decision, the employees of the non statutory 711 canteens were directed to be treated on par with the employ ees of the statutory canteens, although by giving liberty to the Railway Administration to agitate the point that neither the employees of the statutory nor of the non statutory recognised canteens were railway employees either for the purposes of the or for any other purpose.
Shri Ramaswamy advanced the same contentions in the case of these employees as he advanced in the case of the employees of the statutory canteens.
He submitted that these employees are appointed by the Staff Managing Committee or Co operative Societies and not by the Rly.
Administration, that their service in the canteen is purely in the nature of a private employment as in a private sector undertaking and that the recruitment procedures differ widely from canteen to canteen and they are not akin to the procedure followed by the Railways.
The Managing Committee which appoints the employees, supervises and controls the canteens is a non Government body.
The said Committee functions as a separate entity independent of the Railway Administration and the control when exercised by the Railway Administration is only to ensure that the canteen is run in conformity with certain requirements.
There is no relationship of master and servant between the Rly.
Administration and the canteen employees.
The letters of appointment issued to the employees make it expressly clear that the employment is non Governmental and purely temporary and does not carry any pensionary or gratu ity benefits.
The employees recruited further are not sub jected to rigorous standards as to age limit, educational qualifications, medical fitness, character verification etc.
He further submitted that the order dated October 22, 1980 passed by this Court in the case of the employees of the eleven Delhi based non statutory canteens is expressly subject to the liberty given to the Railway Administration to contend in a future appropriate case that they are not railway employees and hence it cannot act as a precedent.
He also contended as he did in the case of the statutory can teen employees, that if the employees engaged in these canteens are treated as Railway servants, the employees engaged in other welfare activities, casual labourers etc.
may have also to be treated as such. 29.
These arguments can be dealt with together.
In the first instance, there is hardly any difference between the statutory canteens and non statutory recognised canteens.
The statutory canteens are established wherever the railway establishments employ more than 250 persons as is mandatory under the provisions of Section 46 of the Act while non statutory canteens are required to be established under 712 paragraph 2831 of the Railway Estb.
Manual where the strength of the staff is 100 or more.
In terms of the said paragraph, the non statutory canteens to be recognised have to be approved of by the Railway Board in advance.
Every Rly.
Administration seeking to set up such canteens is required to approach the Railway Board for their prior approval/recognition indicating financial implications involved duly vetted by the Financial Advisor and Chief Accounts Officer of the Railway concerned.
It is only when the approval is accorded by the Railway Board that the canteen is treated as a recognised non statutory canteen.
By the sanction, the details in regard to the number of staff to be employed in the canteen, recurring and non recurring expenditure etc. are regulated.
The only material difference between the statutory canteen and non statutory recognised canteen is that while one is obligatory under the said Act the other is not.
However, there is no difference in the management of the two types of canteens as is evident from the provisions of paragraphs 2832 and 2833 which respective ly provide for their management.
Regarding the incidence of cost to be borne by the Railways again, as far as the Manual is concerned, the only additional obligation cast on the Administration, in the case of the statutory canteens is that in addition to the facilities given to the non statuto ry canteens, the Administration has also to meet the statu tory obligations in respect of the expenditure for providing and maintaining canteens arising from the said Act and the rules framed thereunder.
A perusal of the relevant provi sions shows that the said Act and the rules made thereunder do not make demands on the Administration for more expendi ture than what is provided for in the Railway Manual for the non statutory canteens.
We have already referred to the service conditions applicable to the employees of the statu tory and non statutory canteens.
Besides, while discussing the case of the employees in statutory canteens we have pointed out the relevant provisions of the Administrative Instructions on Departmental Canteens in Government Officers and Govt.
Industrial Establishments.
These Instructions are applicable to both statutory and nonstatutory recognised canteens.
The Instructions do not make any difference be tween the two so far as their applicability is concerned.
In fact these Instructions require that the canteens run by engaging solely part time daily wage workers may be convert ed to departmental canteens (para 1.3).
Hence we donot see why any distinction be made between the employees of the two types of canteens so far as their service conditions are concerned.
For this very reason, the two notifications of December 11, 1979 and December 23, 1980 (supra) should also be equally applicable to the employees of these canteens.
If this is so, then these employees would also be entitled to be treated as rail 713 way servants.
A classification made between the employees of the two types of canteens would be unreasonable and will have no rational nexus with the purpose of the classifica tion.
Surely it cannot be argued that the employees who otherwise do the same work and work under the same condi tions and under a similar management have to be treated differently merely because the canteen happens to be run at an establishment which employs 250 or less than 250 members of the staff.
The smaller strength of the staff may justify a smaller number of the canteen workers to serve them.
But that does not make any difference to the working conditions of such workers.
We have already dealt with the other arguments advanced by Shri Ramaswamy while dealing with the cases of employees in statutory canteens.
It is not necessary to repeat the said discussion here.
We are, therefore, of the view that the case of these employees should be treated on par with that of the employees in the statutory canteens and they should also be treated for all purposes as railway servants.
This is apart from the fact that by an order of this Court the employees of eleven Delhi based non statutory recognised canteens have already been directed to be treated as railway servants for all purposes.
(iii)Non Statutory Non Recognised Canteens: The difference between the non statutory recognised and non statutory nonrcognised canteen is that these canteens are not started with the approval of the Railway Board as re quired under paragraph 2831 of the Railway Establishment Manual.
Though, they are started in the premises belonging to the Railways they are so started with the permission of the local officers.
They are not required to be managed either as per the provisions of the Railway Establishment Manual or the Administrative Instructions (Supra).
There is no obligation on the Railway Administration to provide them with any facilities including the furniture, utensils, electricity and water.
These canteens are further not enti tled to nor are they given any subsidies or loans.
They are run by private contractors and there is no continuity either of the contractors or the workers engaged by them.
Very often than not the workers go out with the contractors.
There is further no obligation cast even on the local of fices to supervise the working of these canteens.
No rules whatsoever are applicable to the recruitment of the workers and their service conditions.
The canteens are run more or less on ad hoc basis, the Railway Administration having no control on their working neither is there a record of these canteens or of the contractors who run them who keep on changing, much less of the workers engaged in these can teens.
In the circumstances we are of the view of 714 that the workers engaged in these canteens are not entitled to claim the status of the railway servants.
The result, therefore, is that the workers engaged in the statutory canteens as well as those engaged in non statutory recognised canteens in the Railway Establishments are railway employees and they are entitled to be treated as such.
The Railway Board has already treated the employees of all statutory and eleven Delhi based non statutory recog nised canteens as railway employees w.e.f. October 22, 1980.
The employees of the other non statutory recognised canteens will, however, be treated as railway employees w.e.f. April 1, 1990.
They would, therefore, be entitled to all benefits as such railway employees with effect from the said date, according to the service conditions prescribed for them under the relevant rules/orders.
The Writ Petitions and appeals of these employees are allowed to the above extent accordingly with no order as to costs.
As far as the employees in non statutory non recog nised canteens are concerned their petitions are dismissed.
There will, however, be no order as to costs.
R.S.S. Petitions and Appeals allowed.
| Section 49 of the U.P. Consolidation of Holdings Act, 1953 puts a bar on the civil and revenue courts in respect of disputes in regard to which proceedings could or ought to have been taken under the Act.
The plaintiff appellant, an illiterate lady, wanted to make a gift of her properties in favour of her daughter.
Defendant Nos. 3 and 4, who undertook to make arrangements to execute and register the necessary deed, however, prac tised a fraud on her.
They made her put her thumb impression on two documents which she had been told and she honestly believed were the gift deed in favour of her daughter.
She had in fact executed two deeds, one of which was a gift in favour of her daughter and the other a sale deed in favour of the defendants.
Later when she tame to know of the facts, she filed a suit for cancellation of the sale deed.
Consoli dation proceedings were then pending in respect of the property in question.
The suit was decreed by the trim court and that decree was confirmed in appeal by the First Appellate Court.
The High Court, however, found that the plaintiff was totally deceived as to the character of the document which she had executed and the document was, therefore, void and of no effect whatsoever.
Accordingly, it held that the suit was barred by reason of section 49 of the Act.
In the appeal by special leave it was contended for the appellant that since it was a case of the document having been vitiated by fraud, the transaction was voidable but not void and, therefore, the bar of section 49 of the Act was not attracted.
Dismissing the appeal, the Court, HELD: 1.1 A voidable document is one which remains in force 800 until set aside and such a document can be set aside only by a competent civil court.
A suit for that purpose would, therefore, be maintainable.
A claim that a transaction is void is, however, a matter which can be adjudicated upon by the consolidation authorities.
[802E F] Gorakh Nath Dube vs Hari Narain Singh & Ors., ; , referred to. 1.2 In the instant case, the plaintiff appellant was totally ignorant of the mischief played upon her.
She hon estly believed that the instrument which she executed and got registered was a gift deed in favour of her daughter.
She believed that the thumb impressions taken from her were in respect of that single document.
She did not know that she had executed two documents, one of which alone was the gift deed, but the other was a sale of the property in favour of the defendants.
This was, therefore, a case of fraudulent misrepresentation as to the character of the document executed by her and not merely as to its contents or as to its legal effect.
The plaintiff appellant never intended to sign what she did sign.
She never intended to enter into the contract to which she unknowingly became a party.
Her mind did not accompany her thumb impressions.
It was thus a totally void transaction.
[804C E] Ningawwa vs Byrappa & Ors., ; , applied.
No suit was, therefore, maintainable by reason of the bar contained in section 49 of the Act.
[804E] 2.
The remedy of the plaintiff lies in the proceedings pending before the consolidation authorities and it is open to the parties to approach them for appropriate relief.
[804F]
|
Special Leave Petition (Civil) No. 3661/78.
From the Judgment and order dated 9 5 1978 of the Delhi High Court in L.P.A. No. 41/78.
A.K. Gupta for the Petitioner.
N. D. Garg and T.L. Garg for the Respondent.
507 The order of the Court was delivered by KRISHNA IYER, J.
Upon hearing counsel, the Court passed the following order: This matrimonial litigation, where a husband (the petitioner) unsuccessfully tried to get a decree for divorce of his wife (the respondents under Section 13(1) (b) of the Hindu Marriage Act, has landed in this Court as a petition for special leave to appeal.
Customary accusations on both sides were made in the pleadings and evidence, but the High Court (both the single judge and the division bench) did not grant dissolution of marriage.
When we heard counsel on both sides on a preliminary basis we impressed upon them the benign perspective which the Court must bring to bear upon a matrimonial cause.
lt is fundamental that reconciliation of a ruptured marriage is the first essay of the judge, aided by counsel in this noble adventure.
The sanctity of marriage is, in essence, the foundation of Civilisation and, therefore, Court and counsel owe a duty to society to strain to the utmost to repair the snapped relations between the parties.
This task.
becomes more insistent when an innocent off spring of the wedding struggles in between the disputed parents.
In the present case, there is a child, quite young, the marriage itself being young.
We have had the advantage of responsive counsel on both sides who shared the spirit of our suggestion, worked on the minds of their clients.
and healed a wounded situation into a healthy rapprochement.
What is equally noteworthy is the circumstance that the parties themselves reacted sensitively and constructively.
Naturally, there was initial resistance, mistrust, apprehension and, therefore, a string of conditions in arriving at a consensus between the parties.
At the end of this conciliatory journey, it was possible to reach a happy destination resulting in the resolution of the conflict between the parties and eventual restoration of the conjugal home.
Today, counsel on both sides put in statements which we are recording in the proceedings.
In substance, both husband and wife are basically agreed upon living together with the ardour and lover of partners in life.
The minor frictions which got distorted into disruption was really the wear and tear of wedded fabric.
We are able to discern in the two statements a sincere wish to come together and enjoy the conjugal bliss which is their right.
We further notice a concern on both sides for the little, lovely child whose future is largely moulded by the sweetness and survival of the wedlock.
At the end of brief submissions on both sides, the respondent (wife) agreed to go to her matrimonial home and live with her 508 husband (the petitioner) right away.
On our gentle persuasion, they moved from the Court to live together in the husband 's home the husband assuring the Court that he will live with and love his wife and the wife, in turn, agreeing to live in the family of the husband as a good daughter in law would do in a Hindu family.
We are glad that the story has ended happily.
We direct the husband and wife (petitioner and respondent) to live together in terms of their statements and, hopefully, never to separate until death do them part.
As a preliminary experiment we have directed that the Court will wait for three months to know whether the marriage is back on its wheels to run smoothly.
We have impressed on the spouses that an ideal marriage is one where "each sucked into each, on the new stream rolls, whatever rocks obstruct".
The special leave petition will stand adjourned to 25th January 1980 and counsel on both sides will report on Republic Day eve about the fortunes of the wedlock which by joint endeavour is apparently restored.
Judicial monitoring is a salutary prophylactic.
| The late H.E.H. Nawab Mir Sir Osman Ali, the Nizam of Hyderabad by an indenture dated March 29, 1951 created the trust called H.E.H. the Nizam 's Jewellery Trust in respect of 107 items of extremely valuable, rare and priceless jewellery for the benefit of his two sons, two grand sons, two grand daughters, daughter and step son.
The nominee of the Government of India .
N. Malhotra, Addl.
Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs was made the Chairman of the Board of Trustees.
In addition to the Chairman, there were four trustees and a Secretary for the Trust.
Clause 13 of the trust deed provided that after a period of three years from the date of the death of the settlor and his eldest son the trustees may sell the trust property in their absolute discretion either, in India or in any foreign country without their being liable or accountable to any person whomsoever for the propriety of or justification for such sale, or for reasonableness or otherwise of the price or consideration or other terms in respect of the sale.
Prince Azam Shah the eldest son of the Nizam died in October, 1970 and the trustees on July 1, 1972 submitted a memorial to the Prime Minister to acquire the jewellery as they were of great historical and cultural value and 'keep the same intact as part of the national heritage.
The Government of India appointed an Expert Committee to advise whether any part of the jewellery should be acquired as antiques under the Antiquity and Art Treasures Act 1972 and in pursuance to its report acquired eighteen selected pieces of jewellery at a mutually negotiated price of Rs. 1.17 crores.
It appears that the beneficiaries of the trust were in very straitened circumstances due to abolition of privy purse, heavy incidence of income tax and wealth tax and being thus heavily indebted, pressed upon the Board of Trustees to effect an immediate sale of 37 items of jewellery.
On January 9, 1978 the Chairman conveyed to the trustees that the Government of India were not likely to acquire any of the 37 pieces of jewellery with regard to which tho negotiations were being made.
The Board of Trustees 460 accordingly passed a resolution to sell the jewellery immediately.
Pursuant to the resolution of the Board, the Secretary of the Board decided upon the procedure to be adopted for the sale of the 37 items of jewellery and eventually on March 9, 1978 the tenders that were submitted in respect of the sale of those items were opened by the four trustees, in Bombay, the Chairman R. N. Malhotra being absent due to official pre occupation at New Delhi.
On March 10, 1978 the first respondent in the appeal who was one of the beneficiaries of the Trust and a grand daughter of the Nizam instituted proceedings under section 74 of the Trust Act for removal of the trustees alleging dereliction of duty, negligence and mismanagement on their part in respect of the 37 items of jewellery belonging to the Trust which were brought to sale.
An application for injunction under order 39, Rule 1 of the Code of Civil Procedure was filed for restraining the trustees from taking any further steps towards the finalisation of the sale of the jewellery.
The City Civil Court granted an ad interim injunction restraining the trustees from taking any steps towards the finalisation of the sale of the jewellery, which was got vacated by one of the trustees.
On March 28, 1978, the first respondent filed an appeal in the High Court which directed that status quo ante be maintained.
In the meanwhile, the 8th respondent made an offer to purchase the 37 items of jewellery in one lot for Rs. 20.25 crores and also applied to be impleaded as a party in the appeal.
On April 18, 1978 the appellant, who was one of the successful bidders also, applied to be impleaded as a party respondent.
The High Court impleaded the appellant as a party to the appeal, and in order to test the bona fides of the 8th respondent directed that he should deposit the offered amount within one week.
On such deposit being made, the 8th respondent was allowed to inspect all the items of jewellery.
The first respondent filed an application to withdraw the appeal which was heard but before any orders could be passed, her sister, the second respondent applied for permission to be impleaded as appellant No. 2, as there was a danger of the entire body of the beneficiaries being deprived of an amount of Rs. 5.78 crores.
The first respondent was permitted to withdraw and the second appellant was brought on record.
The High Court set aside the alleged sale of 37 items of jewellery by the Board of Trustees in favour of the appellant and other successful tenderers on the ground that there was no concluded contract between the parties and instead accepted the offer of the eighth respondent.
On appeal to this Court the matter was remitted to the High Court for impleading all the tenderers and affording an opportunity to the appellants to substantiate their claim that there was a concluded contract for the sale of the jewellery to them for Rs. 14.43 crores.
The High Court impleaded the other tenderers, respondents Nos. 7 to 17 and after giving opportunity to substantiate their claims held that no binding contract came into existence.
In appeals to this Court on the questions (1) Whether there was a concluded contract effected between the appellants and the other successful bidders on the one part and the Board of Trustees on the other, for the sale of the 37 items of jewellery for Rs. 14.43 crores by the alleged acceptance of their bids by the four trustees on March 19, 1978.
461 (2) Whether there was frustration of the contract in that the ad interim injunction of the City Civil Court on March 14, 1978 made further performance of the alleged contracts impossible; and (3) Whether the exercise of the discretionary power of sale exercised by the trustees conferred on them by cl. 13 of the trust deed, ought not to be set aside under section 49 of the Trusts Act as an improvident sale because of the fact that an amount of Rs. 20.25 crores for the 37 items of jewellery had been offered by the eighth respondent.
^ HELD: 1.
The High Court was justified in setting aside the alleged sale of 37 items of jewellery belonging to H.E.H. the Nizam 's Jewellery Trust affected by the Board of Trustees in favour of the appellants and other tenderers for Rs. 14.43 crores on the ground that there was no concluded con tract between the parties.
[480D] 2.
The contract was frustrated by the grant of an ad interim injunction by the Court of the Chief Judge, City Civil Court, Hyderabad on March 14, 1978.
The grant of such injunction prevented the performance of the alleged contacts.
The appellants could not have tendered 90 percent of the tender amount, i.e., the balance of the price, by the stipulated date or taken delivery 1 of the jewellery so long as the injunction lasted.
[481C] 3.
The High Court had come to a definite conclusion that the improvident sale of the jewellery at such a low price without due public notice was not a bonafide exercise of power, conducive of beneficial management.
There is no reason to come to a different conclusion.
When one deals with another 's property, it matters little to him what price the property fetches.
But in the case of a trust there arises the duty of the trustees to act with prudence and as a body of reasonable men.
[485E, D] 4(a).
In the case of a private trust, where there are more trustees than one, all must join in the execution of the trust.
The concurrence of all is in ' general necessary in a transaction affecting the trust property, and a majority cannot bind the trust estate.
In order to bind the trust estate the act must be the act of all.
They constitute one body in the eye of law, and all must act together.
This is, subject to any express direction given by the settlor.
[473 E] Lala Mohan Das vs Janki Prasad, LR (1944) 72 IA 39, L. Jankiranza Iyer & ors vs Neelakanta lyer & Ors., [1962] Supp.
I SCR 206; Lewin 's Law of Trusts, 15th Ed. 198 referred to.
Where there are several trustees they must act unanimously in making a sale or a contract of sale, unless it is provided otherwise by the terms of the deed.
In exercising the power of sale, as in the exercise of the other powers, a trustee cannot, therefore, properly delegate the performance of the acts which he ought personally perform.
Although a trustee may listen to the opinion and wishes of others, he must exercise his own judgment.
A trustee for sale of property, cannot leave the whole conduct of the sale 11 531SCI/79 462 to his co trustees.
The reason for this is that the settler has entrusted the trust property and its management to all the trustees, and the beneficiaries are entitled to the benefit of their collective wisdom and experience.
[474C D] Underhill 's Law of Trusts and Trustees, 12th Ed., pp. 434, 442 443, Scot on Trusts, Vol.
p. 1033, 5.
All acts which the trustees intend to take for executing the trust must be taken by all of them acting together, as provided by section 48 of the Trusts Act, 1882.
Where there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides.
If the validity of an alienation affected by the trustees falls to be considered only in the light of section 48, the fact that out of the three trustees only two have executed the sale deed would by itself make the transaction invalid and would not convey a valid title to the transferee.
[474E G] 6.
The High Court rightly observed, there is no clause in the trust deed authorising the execution of the trusts to be carried out not by all but by one or more or majority of the trustees.
In the absence of such a specific provision, the general law envisaged in section 48 of the Act would govern the rights of the parties.
The alleged contracts of sale entered into by the four trustees were not binding and of no legal effect, and could not be enforced.
It must necessarily follow that the alleged contracts for sale entered into by them could not ripen into concluded contracts so as to bind the entire body of beneficiaries.
[474H 475B] 7.
Section 48 is a corollary of section 47.
If the trustees cannot delegate their duties, it follows that they must all personally perform those duties, and not , appoint one of themselves to manage the business of the trust; for the settlor has trusted all his trustees, and it behoves each and every one of them to exercise his individual judgment and discretion on every matter, and not bindly to leave any questions to his co trustees or co trustee.
The view taken by the High Court of the resolution of the Board of Trustees dated March 8, 1978 was right.
The language used in the resolution is perhaps not of a trained draftsman, but it clearly does not, in terms, confer 'authorisation ' upon the remaining four trustees to accept the bids, or any of them.
[475D F] 8.
The statement of Malhotra that it was decided at the meeting on March 8, 1978 that 'the trustees were free to accept the highest tenders, if they did not see any reason to reject the same ' and also that 'if the trustees felt that a higher amount could be obtained they could negotiate with the tenderer and obtain a higher price ' is of little consequence.
Perhaps that is what the trustees meant, i.e., the remaining four trustees, were fully authorised to deal with the matter in all its aspects.
But that intention of the trustees is not at all manifested in the said resolution, the terms of which are clear and explicit.
[476B C] 9.
In this case of a trust, the 'authorisation ' must be express, specific and in the clearest of terms.
The words "be examined and decided" in the first part of the resolution may mean anything, and are not necessarily susceptible of the only construction as contended for, namely that of 'acceptance '.
The expression "to negotiate for sale" in relation to the authority of an estate agent, has a definite legal connotation.
He gets an authority to find a purchaser, 463 but he cannot bind the principal by entering into a contact of sale.
There is a substantial difference between 'to sell ' and 'to find a purchaser '.
[476D E] , Chadburn vs Moore, ; Rosenbaum vs Abdul Ahmed vs Animendra Kissen Mitter, ; referred to 10.
If the second part of the resolution has to be construed with reference to the first, as is contended for, then their authority was limited to find purchasers for the jewellery, and then place the matter before a meeting of the Board of Trustees, for acceptance of their bids.
When the trustees took care in drafting the second part which relates to rejection of bids, there was no reason for their leaving any ambiguity in the first part.
It is not permissible to spell out something which is not explicit, by merely saying that it is implicit, when the language is clear and it does not bear out any such construction.
A view which would be prejudicial to the entire body of beneficiaries is not to be taken.
There is no reason why the words 'be examined and decided ' in the first part, should not have their plain meaning that the tenders were to be opened and examined by the remaining four trustees to see if they were valid tenders.
The first part did not, give any 'authorisation to the remaining trustees to accept any of the tenders.
If they did not find a satisfactory offer or offers for any of the items offered for sale they could only under the second part reject the tenders submitted.
Delegation must be express.
The trend of cross examination of Malhotra, also shows that his concurrence was necessary.
[476F, 477B] 11.
The Secretary drew up the note, dated March 14, in undue haste despite the Court 's order granting the injunction.
[478D] 12.
The minutes of the meetings held on March 5, 1978 and of March 8, 1978 are there.
Thereafter appears the minutes of a meeting held on May 15, 1978, Ext.
B. 125.
But there are no minutes of a meeting held on March 9, 1978.
It is thus clear that no meeting of the Board of Trustees was held at all on March 9, 1978.
The absence of any minutes of the alleged meeting held on March 9, 1978 must, as it should, clearly excite suspicion about the genuineness of the sale.
exhibit 123 is the tabular statement prepared by the Secretary containing acceptance of bids by the four trustees.
The authenticity of this document is not beyond question.
It is a tabular chart running into 34 large sheets with minute details.
On each of the sheets there is a letter 'A ' encircled against the highest tender, and at the foot appear the alleged initials of three trustees bearing the date March 9, 1978.
None of the remaining trustees except M. A. Abbasi have entered the witness box and none of the trustees has proved the initials at the foot of the document, exhibit 123, Nothing is known as to when the initials were put and by whom.
Though the other three trustees are alleged to have put their initials at the foot of the statement on March 9, 1978, there is nothing on record to show that all this was done that day, at one sitting, at the same time.
[478F, 478H 479D] 13.
If the four trustees with the assistance of the Secretary, could prepare these large tabular charts there was no reason why they could not record the 464 minutes of the meeting, if any held on that day showing that there was acceptance of the bids by them.
The Minutes Book is the primary evidence, and the chart cannot form the basis for a finding that there was any acceptance of the tenders on March 9. 1978.
[479E F] In the instant case, cls.
11 and 12 of the conditions of sale embodied the terms of the contract.
By cl. 11, time is made the essence of contact.
Clause 11 cannot be read in isolation, but both cls.
11 and 12 must be read together because they form an integral part of the contract.
These clauses in addition to making time the essence of contract, clearly provided that in the event there was a failure to pay 90 percent of the tender amount, the balance of the price "the contract would be deemed to have been cancelled. ' on a reading of both cls.
11 and 12 together there can be no doubt that the passing of the property was dependent upon the tender of the balance of the price and the taking delivery of the goods upon payment.
[480H 481B] 14.
It was certainly open to the Board of Trustees to effect a sale of the 37 items of jewellery under cl. 13 of the deed.
But the power, although discretionary, must be exercised reasonably and in good faith.
The power conferred on the Board of Trustees is no doubt discretionary, but the principle embodied in section 49 is that when such discretionary power is not exercised reasonably and in good faith, such power may be controlled by a court.
There was no warrant for the suggestion made by the Board of Trustees before the High Court that the power is absolute.
[482E G] Underhill 's Law of Trusts & Trustees, 12th Ed. 472 p. 472, referred to 15.
On the totality of the evidence, the High Court rightly came to the conclusion that though there were no mala fides corrupt motives, fraud or mis representation on the part of the trustees and they acted honestly, the trustees in the facts and circumstances of the case, did not act reasonably and in good faith i.e. with due care and attention.
[485F] 16.
Upon the finding that there was no concluded contract between the parties within the meaning of section 2(h) of the Contract Act, the High Court accepted the offer of the eighth respondent for Rs. 20.25 crores for the purchase of the 37 items of jewellery, but this part of the order is set aside as acceptance of his bid without calling for fresh tenders would be subject to the same infirmity.
From the evidence on record that no body knows the actual value of the jewellery and it may be well worth more than Rs. 20.25 crores, and therefore reauction ordered.
[485G, 486E, G]
|
: Criminal Appeal No. 79 of 1984.
From the Judgment and Order dated 5.10.1983 of the Punjab and Haryana High Court in Criminal Original Contempt Petition No. 27 of 1983.
R.K. Garg, Mahabir Singh and S.Srinivasan for the Appellant.
Kapil Sibal, R.N. Karanjawala, Mrs. M.Karanjawala,and Ejaz Maqbool for theRespondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal under section 19(1) of the Contempt of Courts Act, hereinafter referred to as 'the Act ', is directed against the judgment and order of the Punjab & Haryana High Court dismissing the application for contempt filed by the appellant against Shri Bhajan Lal, who was then the Chief Minister of the State.
In the application for contempt, it was, inter alia, alleged by the appellant that one Shri Devinder Sharma was a Forest Minister in the Council of Ministers headed by Shri Bhajan Lal.
The said Devinder Sharma was defeated in the legislative assembly election held in 1982.
Shri Bhajan Lal, because of his political and personal relations with Shri Devinder Sharma, was personally very keen on giving him an office of profit.
In order to achieve this objective, Bhajan Lal got an Ordinance being Ordinance No. 44 of 1982 promulgated by the Governor.
The Ordinance, inter alia, provided the constitution of a Forest Development Board.
According to the appellant, such Board was constituted with a view to appointing the said Devinder Sharma as its Chairman.
It was further alleged by the appellant that the constitutional validity of the said Ordinance was challenged by twelve Indian Forest Officers including the appellant by filing a writ petition in the High Court.
It was alleged that the respondent, Bhajan Lal, through Shri R.K. Vashisth, the Superintendent of Police, pressurised and threatened the writ petitioners to withdraw the said writ petition and, pursuant to that, eleven officers withdrew from the petition.
It was only the appellant who continued to prosecute the writ petition and, as a consequence of which, the appellant was transferred from the Forest Expert Special Project Cell to the Forest Department, Haryana, on 891 March 18, 1983.
The further allegation of the appellant was that after having failed to threaten and demoralise the appellant through indirect means the respondent, Bhajan Lal, called him to his official residence on July 26, 1983 through the Acting Chief Conservator of Forests and criminally intimidated him to withdraw the writ petition.
Thereafter, the appellant filed an application for contempt against the respondent, Bhajan Lal, in the High Court complaining of interference by the respondent with the due course of judicial proceedings.
The application was admitted and a rule nisi was issued upon the respondent.
The respondent appeared in the rule and opposed the same by filing an affidavit denying all the allegations made against him by the appellant.
The learned Single Judge of the High Court, after considering the application, affidavits and the submissions made on behalf of the parties, took the view that there were circumstances to indicate that it was not a fit case in which the court should exercise its jurisdiction under the Act.
In that view of the matter, the learned Judge dismissed the application and discharged the rule nisi.
It is apparent from the facts stated above that the allegations made by the appellant, if proved would consitute a criminal contempt.
It is also not disputed by the parties that it was a case of criminal contempt as defined in section 2(c) of the Act.
The scope and ambit of this judgment will, therefore, be confined to criminal contempt.
Mr. Sibbal, learned Counsel appearing on behalf of the respondent, has taken a preliminary objection to the maintainability of the appeal under section 19(1) of the Act.
It is contended by him that as no punishment was imposed on the respondent by the High Court in exercise of its jurisdiction to punish for contempt, section 19(1) is inapplicable and the appeal is incompetent.
Section 19(1) provides as follows: "19(1).
An appeal shall lie as of right from any order or decision of a High Court in the exercise of its jurisdiction to punish for contempt (a) where the order or decision is that of a single judge, to a Bench of not less than two Judges of the Court; 892 (b) where the order or decision is that of a Bench, to the Supreme Court.
Provided that where the order or decision is that of the Court of the Judicial Commissioner in any Union territory, such appeal shall lie to the Supreme Court.
" The right of appeal will be available under sub section (1) of section 19 only against any decision or order of a High Court passed in the exercise of its jurisdiction to punish for contempt.
In this connection, it is pertinent to refer to the provision of Article 215 of the Constitution which provides that every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.
Article 215 confers on the High Court the power to punish for contempt of itself.
In other words, the High Court derives its jurisdiction to punish for contempt from Article 215 of the Constitution.
As has been noticed earlier, an appeal will lie under section 19(1) of the Act only when the High Court makes an order or decision in exercise of its jurisdiction to punish for contempt.
It is submitted on behalf of the respondent and, in our opinion rightly, that the High Court exercises its jurisdiction or power as conferred on it by Article 215 of the Constitution when it imposes a punishment for contempt.
When the High Court does not impose any punishment on the alleged contemnor, the High Court does not exercise its jurisdiction or power to punish for contempt.
The jurisdiction of the High Court is to punish.
When no punishment is imposed by the High Court, it is difficult to say that the High Court has exercised its jurisdiction or power as conferred on it by Article 215 of the Constitution.
It is, however, strenuously urged by Mr. R.K. Garg, learned Counsel appearing on behalf of the appellant, that when the High Court acquits a contemnor after hearing the parties and after considering the facts and circumstances of the case, the High Court does so also in the exercise of its jurisdiction as conferred by Article 215 of the Constitution.
Counsel submits that jurisdiction to punish for contempt includes also the jurisdiction to dispose of the case either by punishing the contemnor or by acquitting him.
In support of the contention much reliance has been placed on behalf of the appellant on a decision of this Court in Smt.
Ujjam Bai vs State of Uttar Pradesh, [1963] 1 SCR 778 wherein S.K. Das, J. observed "jurisdiction means authority to decide." Relying upon the said observation it is submitted by Mr. Garg that the jurisdiction of the High Court to punish for contempt also includes the jurisdiction to decide whether such punishment 893 should be imposed or not and when the High Court comes to the finding that such punishment should not be imposed on the contemnor or that no contempt has been committed by the alleged contemnor and acquits him, such decision of the High Court acquitting the contemnor is made in the exercise of its jurisdiction to punish for contempt.
We are unable to accept this contention.
The said observation, in our opinion, should not be read dehors the context in which it was made.
In that case, the Sales Tax Officer disallowed the claim of the petitioner to exemption from payment of Sales Tax under a certain notification.
An appeal preferred by the petitioner to the Court of the Judge (Appeals), Sales Tax, Allahabad, was dismissed.
The question that came up for consideration before this Court was whether a writ of certiorari could be issued for quashing the order of Assessment on the ground that the authority concerned had erroneously exercised its jurisdiction by not granting exemption to the petitioner.
In that context the said observations was made and which was immediately followed by further observation: "Whenever a judicial or quasi judicial tribunal is empowered or required to enquire into a question of law or fact for the purpose of giving a decision on it, its findings thereon cannot be impeached collaterally or on an application for certiorari but are binding until reversed on appeal.
Where a quasi judicial authority has jurisdiction to decide a matter, it does not lose its jurisdiction by coming to a wrong conclusion whether it is wrong in law or in fact.
" There can be no doubt that whenever a court, tribunal or authority is vested with a jurisdiction to decide a matter, such jurisdiction can be exercised in deciding the matter in favour or against a person.
For example, a civil court is conferred with the jurisdiction to decide a suit; the civil court will have undoubtedly the jurisdiction to decree the suit or dismiss the same.
But when a court is conferred with the power or jurisdiction to act in a particular manner, the exercise of jurisdiction or the power will involve the acting in that particular manner and in no other.
Article 215 confers jurisdiction or power on the High Court to punish for contempt.
The High Court can exercise its jurisdiction only by punishing for contempt.
It is true that in considering a question whether the alleged contemnor is guilty of contempt or not, the court hears the parties and considers the materials produced before it and, if necessary, examines witnesses and, thereafter, passes an order either acquitting or punishing him for contempt.
When the High Court acquits the contemnor, the High Court does not exercise its jurisdic 894 tion for contempt, for such exercise will mean that the High Court should act in a particular manner, that is to say, by imposing punishment for contempt.
So long as no punishment is imposed by the High Court, the High Court cannot be said to be exercising its jurisdiction or power to punish for contempt under Article 215 of the Constitution.
It does not, however, mean that when the High Court erroneously acquits a contemnor guilty of criminal contempt, the petitioner who is interested in maintaining the dignity of the court will not be without any remedy.
Even though no appeal is maintainable under section 19(1) of the Act, the petitioner in such a case can move this Court under Article 136 of the Constitution.
Therefore, the contention, as advanced on behalf of the appellant, that there would be no remedy against the erroneous or perverse decision of the High Court in not exercising its jurisdiction to punish for contempt, is not correct.
But, in such a case there would be no right of appeal under section 19(1), as there is no exercise of jurisdiction or power by the High Court to punish for contempt.
The view which we take finds support from a decision of this Court in Paradakanta Mishra vs Mr. Justice Gatikrushna Mishra; , Right of appeal is a creature of the statute and the question whether there is a right of appeal or not will have to be considered on an interpretation of the provision of the statute and not on the ground of porpriety or any other consideration.
In this connection, it may be noticed that there was no right of appeal under the .
It is for the first time that under section 19(1) of the Act, a right of appeal has been provided for.
A contempt is a matter between the court and the alleged contemnor.
Any person who moves the machinery of the court for contempt only brings to the notice of the court certain facts constituting contempt of court.
After furnishing such information he may still assist the court, but it must always be borne in mind that in a contempt proceeding there are only two parties, namely, the court and the contemnor.
It may be one of the reasons which weighed with the Legislature in not conferring any right of appeal on the petitioner for contempt.
The aggrieved party under section 19(1) can only be the contemnor who has been punished for contempt of court.
For the reasons aforesaid, there is substance in the preliminary objection raised as to the maintainability of the appeal.
In our view the appeal is incompetent and is, accordingly, dismissed.
There will, however, be no order as to costs.
H.S.K. Appeal dismissed.
| A car owned by a firm was entrusted to Guru, proprietor of M/s Auto Electrical Works, for electrical repairs.
The car was insured with M/s. Oriental Insurance Co. Ltd. as required under the ( 'The Act ').
When Momad Donttach an employee of the repairer, was repairing the car, the respondent No. 1 was knocked down when the car dashed against the said respondent as a result whereof she had to be hospitalised and treated for injuries.
The respondent No. 1 instituted a claim petition under section 110 A of the Act before the Motor Accidents Claims Tribunal, impleading the firm the owner of the car Guru, the repairer, Momad Donttach, the mechanic, and the insurer M/s.
Oriental Insurance Co. Ltd. as respondents.
The respondents contested the petition.
The Tribunal passed its award, allowing a compensation of Rs.90,000 to the respondent No. 1 for the injuries suffered by her, payable jointly and severally by the insurer and all the other respondents.
Aggrieved by the decision of the Tribunal, the insurer and Guru filed appeals before the High Court, which allowed the appeal of the insurer, however, holding that under section 92 A of the Act, the insurer was liable to pay to the extent of Rs.7,500.
Guru 's appeal was dismissed, holding that he and his mechanic Momad Donttach alone were jointly and severally liable to pay the compensation, i.e. the entire sum awarded minus Rs.7,500 above said.
Aggrieved by the decision of the High Court.
Guru moved this Court for relief by special leave.
Allowing the appeal and modifying the order of the High Court, the Court, 171 ^ HELD: The only question of law arising for consideration was whether the insurer was liable to pay the compensation to the claimant, which has to be resolved in the light of the provisions of the Act.
[175 B, C] If a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person, property or to a legal representative of the third party in case of death of the third party caused by use of the vehicle at a public place.
The liability to pay the said compensation arises when the insured is using the vehicle in a public place.
It also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period, unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.
[176E ] In this case, neither Guru Govekar, the repairer, nor his mechanic Momad Donttach had taken a policy of insurance covering the liability to pay compensation payable to a third party, when a motor vehicle taken for repairs from its owner has caused the death of or injury to a third party.
When the owner of a Motor vehicle entrusts his vehicle to a repairer to carry out repairs, he is allowing the repairer to use his vehicle in that connection.
It is also implicit in the said transaction that unless there is any contract to the contrary, the owner of the vehicle also causes or allows any servant of the repairer, engaged in the work of repairs to use the vehicle in connection with the work of repairs and when such work of repair is being carried out in a public place, if on account of the negligence of either the repairer or his employee engaged in the repair work, a third party dies or suffers injury to his person or property, the insurer becomes liable to pay the compensation under the provisions of the Act.
While it may be true that under the Law of Torts, the owner may not be liable on the principle of vicarious liability, the insurer would be liable to pay the compensation by virtue of the provisions of sections 94 and 95 of the Act.
On the facts of the case, the insurer was liable to pay the compensation found due to the claimant as a consequence of the injuries suffered by her due to the negligence of the mechanic engaged by the repairer who had undertaken to repair the vehicle, by virtue of the provisions contained in section 94 of the Act.
Any other view will expose the innocent third 172 parties to go without compensation when they suffer injuries on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act.
[176H; 177A C; 180F; 181F] The Court allowed the appeal, modified the order of the High Court and directed the insurer to pay to the claimant the sum of Rs.90,000, etc.
[181G] Monk vs Warbey and others, ; McLeod (or Houston) vs Buchanan, ; Vijaynagaram Narasimha Rao and others vs Chanashyam Das Tapadia and others, ; Shantibai and others vs The Principal Govindram C. Sakseria Technological Institute, Indore and others, ; D. Rajapathi vs University of Madurai and others, ; New Asiatic Insurance Co. Ltd. vs Pessumal Dhanamal Aswani and Ors., , referred to.
|
Civil Appeals Nos.
58 59 and 880 883 of 1971.
From the Judgment and order dated 10 4 1970 of the Madras High Court in Writ Petition Nos.
437/67 and 520/68 and Tax Cases Nos.
135 138 of 1970 respectively.
P. Ram Reddy, A. V. Rangam and Miss A. Subhashini, for the Appellant in C.As.
58 59/71.
Sachin Chandra Chaudhury and Mrs. section Gopalakrishnan for Respondent.
Gobind Das.
P. H. Parekh and Miss Manju Jetley for the Intervener (M/s Durga Steel) The Judgment of the Court was delivered by BEG, J.
The two Civil Appeals Nos.58 59 of 1971 arise out of a judgment of a Division Bench of the Madras High Court dismissing two Writ Petitions filed against notices issued by a Commercial Tax officer showing institution of Sales tax assessment proceedings in respect of certain iron and steel goods for the assessment year 1965 66 in Writ Petition No. 437 of 1967 and for the assessment year 1966 67 in Writ Petition No. 520 of 1968.
The High Court of Madras had certified the cases as fit for appeal to this Court under Article 132 and 133(1)(a) and (c) of the Constitution.
Although, the Writ Petitions had been dismissed on the ground that they involve an investigation into the question of fact whether the iron and steel scrap, out of which the manufactured goods, sought to be subjected to Sales tax, had been made, were already taxed or not, yet, the State of Tamil Nadu was aggrieved by the decision of the Madras High Court holding that the manufactured goods, said to consist of "steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes, could not be taxed again if the material out of which they were made had already been subjected to sales ' tax once an iron and steel scrap as both were "Iron and steel".
It was possible to leave the assessing authorities free to decide all the questions which they had jurisdiction to consider.
But, it appears that the Madras High Court thought it proper to decide the question as the Sales ' tax 170 authorities had already adopted the view, in other cases, that such goods, though covered by the broad genus "Iron and Steel", were separately taxable commodities because each kind of "Iron and Steel" goods was a commercially different and separately taxable species or category.
Moreover, this very question was also before the High Court in regular revision petitions under the Tamil Nadu Sales Tax Act (hereinafter referred to as 'the Tamil Nadu Act ').
Civil Appeals Nos. 880 883 of 1971 arise out of four petitions for revision under the provisions of the Tamil Nadu Act for the years 1964 65 and 1965 66, which were allowed by the Madras High Court 4 setting aside assessment orders by following its judgment and decision mentioned above given on 24 6 1970 on Writ Petitions Nos.
437 of 1967 and 520 of 1968.
The Madras High Court had also granted Certificates of fitness for appeal to this Court under Article 132 read " with Article 133(1)(a)(c) in the four cases before it on revision petitions.
Hence, six cases were connected and heard together by us.
58 59 of 1971 before this Court, arise in all of them.
All the six cases before us relate to what are known as "declared goods" under Section 14 of the Central Sales Tax Act (hereinafter referred to as 'the Central Act ').
It was claimed, on behalf of the r dealers, sought to be assessed in each case, that, by reason of the restrictions imposed by Section 15 of the Central Act, the levy of tax under the Tamil Nadu Act was not permissible.
The list of goods given there at No. (iv), as it stood in 1968, was: "(IV) Iron and Steel, that it to say (a) 'pig iron and iron scrap (b) iron plates sold in the same form in which they are directly Produced by the rolling mill; (C) steel scrap, steel ingots, steel billets, steel bars and rods; (d) (i) steel plates (ii) steel sheets, (iii) sheet bars and tin bars, sold in the same form in which they are (iv) rolled steel sections, directly produced by the rolling mill;" (v) tool alloy steel, , sole in the same from in which they are directly produced by the rolling mil;" By the Central Sales Tax (Amendment) Act 61 of 1972, clause (iv) r was redrafted.
It now reads as follows: "(iv) iron and steel, that is to say (i) pig iron and cast iron including ingot, moulds, bottom plates, iron scrap, cast iron scrap, runner scrap andiron skull scrap; (ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes); (iii)skelp bars, tin bars, sheet bars, heebars and sleeper bars; 171 (iv) steel bars (rounds, rods, squares, flats, octagone and A hexagone, plain and ribbed or twister, in coil from as well as straight lengths): (v) steel structurals (angles, joints, channels, tees, sheet piling sections, sections or any other rolled sections); (vi) sheets, hoops, strips and skelp, both black and galvanised, hot and cold rolled, plain and corrugated, in all qualities, in straight lengths and in coil form, as rolled and in rivetted condition; (vii)plates both plain and chequered in all qualities; (viii)discs, rings, forgings and steel castings; (ix) tool, alloy and special steels of any of the above categories; (x) steel melting scrap in all forms including steel kull, turnings and borings; (xi) steel cubes, both welded and seamless, of all diameters and lengths, including tube fittings; (xii)tin plates, both hot dipped and electrolytic and tin free plates; (xiii)fish plate bars, bearing plate bars, crossing sleeper bars, fish plates, bearing plates, crossing sleepers and pressed steel sleepers, rails heavy and crane rails; (xiv)wheels, tyres, axles and wheel sets; (xv) wire rods and wires rolled, drawn, galvanised, alumanised, tinned or coated such as by copper; (xvi)defectives, rejects, cuttings or end pieces of any of the above categories"; It will be seen that "Iron and Steel" is now divided into 16 categories which clearly embrace widely different commercial commodities, from mere scrap iron and left overs of processes of manufacturing to "wires" and "wheels, tyres, axles, and wheel sets".
Some of the enumerated items like "melting scrap" or "tool alloys" and "special steels" could serve as raw material out of which other goods are made and others are definitely varieties of manufactured goods.
The G reason given, in the statement of objects and reasons of the 1972 Act, for an elucidation of the "definition" of iron and steel, was that the "definition" had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity.
The Select Committee, which recommended the amendment, called each specified category "a sub item" falling under "Iron and Steer '.
Apparently, the intention was to consider each "sub item" as a separate taxable commodity for purposes of Sales ' tax.
Perhaps some items could overlap, but no difficultly arises in cases before us due to this feature.
As we have 172 pointed out, the statement of reasons for amendment spoke of Section 14(iv) as a "definition" of "Iron and Steel".
A definition is expected to be exhaustive.
Its very terms may, however, show that it is not meant to be exhaustive.
For example, a purported definition may say that the term sought to be defined "includes" what it specifies, but, in `that case, the definition itself is not complete.
Although, we have looked at the subsequent amendment of 1972 in order to find an indication of the original intention, because subsequent history of legislation is not irrelevant, yet, we think that, even if we confine our attention to Section 14 as it originally stood at the relevant time, with which we are concerned in the cases before us, the object was not to lay down that all the categories or sub items of goods, as specified separately even before the amendment of 1972, were to b viewed as a single saleable commodity called "Iron and Steel" for purposes of determining a starting point for a series of sales.
The more natural and normal meaning of such a mode of listing special or declared kinds of goods seems to us to be that the object of specification was to enumerate only those categories of items, each of which was to serve as a new starting point for a series of sales, which were to be classed as "declared" goods.
What we have inferred above also appears to us to be the significance and effect of the use of words "that is to say" in accordance with their normal connotation and effect.
Thus, in Stroud 's Judicial Dictionary, 4th Edn.5, at page 2753, we find: "THAT IS TO SAY.
(1) 'That is to say ' is the commencement of an ancillary clause which explains the meaning of the principal clause.
It has the following properties: (1) it must not be contrary to the principal clause: (2) it must neither increase nor diminish it; (3) but where the principal clause is general in terms it may restrict it: see this explained with many examples, Stukeloy vs Butler Hob. 171"; The quotation, given above, from Stroud 's Judicial Dictionary shows that, ordinarily, the expression "that is to say" is employed to make clear and fix the meaning of what is to be explained or defined.
Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word "includes" is generally employed.
In unusual cases, depending upon the context of the words "that is to say", this expression may be followed by illustrative in stances.
In Megh Raj & Anr.vs Allah Rakhia & Ors.(1) the words "that is to say.
", with reference to a general category "land" were held to introduce "the most general concept" when followed, inter alia, by the words: "Rights in or over land.
Both were wide classes.
The object of using them or subject matter of legislation was, obviously, to lay down a wide power to legislate.
But, in the context of single point sales ' tax, subject to special conditions when imposed on separate categories of specified goods, the expression was apparently employed to specifically enumerate separate categories of goods on a given list.
The purpose of such specification and enumeration in a statute dealing with sales ' tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute at separate class for a series of sales.
Otherwise, the listing itself loses all meaning and would be without any purpose behind it.
Learned Counsel appearing for an intervener argued that the chemical position of iron and steel affords a clue to the meaning of "Iron and Steel" as used in Section 14 of the Central Act.
We are unable to agree that this could be what Parliament or any legislature would be thinking of when enumerating items to be taxed as commercial goods.
The ordinary meaning to be assigned to a taxable item in a list of specified items is that each item so specified is considered as a separately taxable item for purposes of single point taxation in a series of sales unless the contrary is shown.
Some confusion has arisen because the separate items are all listed under one heading "Iron and Steel".
If the object was to make iron and steel taxable as a substance, the entry could have been: "Goods of Iron and Steel." Perhaps even this would not have been clear enough.
The entry to clearly have that meaning would have to be: "Iron and Steel irrespective of change of form shape or character of goods made out of them".
This is the very unusual meaning which the respondents would like us to adopt.
If that was the meaning, sales ' tax law itself would undergo a change from being a law which normally taxes sales of "goods" to a law which taxes sales of substances out of which goods are made.
We, however, prefer the more natural and normal interpretation which follows plainly from the fact of separate specification and numbering of each item.
This means that each item so specified forms a separate species for each series of sales although they may all belong to the genus: ' 'Iron and Steel." Hence, if iron and steel "plates" are melted t and converted into "wire" and then sold in the market, such wire would only be taxable once so long as it retains its identity as a commercial goods belonging to the category "wire" made of either iron or steel.
The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make up difference for purposes of the law of sales ' tax.
The object appears to us to be to tax sales of.
goods of each variety and not the sale of the substance.
Out of which they are made.
As we all know, sales ' tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have 174 been made.
As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales ' tax.
Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are`merely jointed together, they may remain commercially the same goods which cannot be taxed again, in a series sales, so long as they retain their identity as goods of a particular type.
In State of Madhya Bharat vs Hiralal(1) this Court held that a dealer, who bought some scrap iron locally and imported some iron plates from outside and then converted the material into bars, flats and plates, by rolling them in his mills, and then sold them, was still entitled to exemption given to iron and steel from sales tax.
But, in that case, the language of the provision giving the exemption justified this interpretation.
The exemption was given to a sale by either an importer or a purchaser of "goods prepared from any metal other than gold or silver.
In that context, it had become necessary to examine whether the exemption from sales ' tax was meant for all goods made out of a particular sub stance, or for goods as separate commercial commodities.
This Court held that the raw material from which the goods were made was decisive for the purposes of the exemption given.
This Court said (at p 315): "A comparison of the said two Notifications brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel while the former is exempted from tax, the latter is taxed.
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the respondent was merely re rolled into bars, flats and plates.
They were processed for convenience of sale.
The raw materials were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold 'Iron and steel ' in the shape of bars,` flats and plates and the customer purchased 'iron and steel ' in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
" The law to be interpreted in Hiralal 's case (supra) was entirely different.
In interpreting it, this Court did observe that a mere change of the form of a substance excepted from sales ' tax did not matter.
The language of the notifications involved there made it clear that the exemption was for the metal used.
In the cases before us now the object of single point taxation is the commercial commodity and not the sub stance out of which it is made.
each commercial commodity here becomes a separate object of taxation in series of sales of that commercial commodity so long as it retains its identity as that commodity.
vs (1) [1966] 17 S.T.C. 313, 315.
175 The State of Punjab & ors.(1) where Subba Rao, C.J. speaking for a Constitution Bench of this Court, said at (p. 447).
"Now coming to Civil Appeals Nos. 39 to 43 of 1965, the first additional point raised is that when iron scrap is converted into rolled steel it`does not involve the process of manufacture.
Before the High Court this contention was not pressed.
That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz, rolled steer sections.
During the process the scarp iron loses its identity and becomes a new marketable commodity.
" The process is certainly one of manufacture.
It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new market able commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods.
No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods.
Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the Sales ' Tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place.
The law of sale tax is also concerned with "goods" of various descriptions.
It, therefore, becomes necessary to determine when they cease to be goods of one taxable description and become those of a commercially different category and description.
It appears to us that the position has been simplified by the amendment of the law, as indicated above, so that each of the categories falling under "Iron and Steel" constitutes a new species of commercial commodity more clearly new.
It follows that when one commercial commodity is transformed into another, it becomes a separate commodity for purposes of sales tax.
We think that the Madras High Court had committed an error in applying Hiralal 's case (supra) to the decision of cases now before us which turns really on a correct interpretation of Section 14 of the Central Act.
On the question now before us, we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun Iron & Steel Rolling Mills vs State of PunJab(2).
Section 15 of the Central Act places certain restrictions and conditions upon State enactments imposing Sales tax.
It says: Every sales tax law of a State shall, in so for as it imposes or authorises the imposition of a tax on the sale or (1) (1967) 20 S.T.C. 430 at 447.
(2) (1961) 12 S.T.C. p. 590 176 purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof,.
and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale ill the course of inter State trade or commerce in such manner and subject to such condition as may be provided in any law in force in that State".
It has not been shown to us that any provision of the Tamil Nadu Sales Tax Act violates Section 15 of the Central Act enacted in accordance with Article 266(3) of the Constitution.
Section 3 of the Tamil Nadu Act leviesm taxes on sales and purchases of "goods" as defined in Section 2(j) of the Act: "(j) 'goods, means all kinds of movable property (other than newspapers, actionable claims, stocks and shares and securities) and includes all materials, commodities, and articles (including these to be used in the fitting out, improvement or repair of movable property), and all growing crops grass or things attached to, or forming part of, the land which are agree to be severed before sale or under the contract of sale," Section 4 of the Tamil Nadu Act lays down: "4. Tax in respect of declared goods.
Notwithstanding anything contained in Section 3, the tax under this Act shall be payable by a dealer or the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in the Second Schedule on the turn over in such goods in each year, whatever be the quantum of turnover in that year".
Item 4 of the second schedule specifies the rates of tax in accordance with the Central Act.
It reproduces Section 14(iv) of the Central Act.
On an amendment of Section 14(iv) of the Central Act, serial No. 4 of the second schedule of the Tamil Nadu Act was also correspondingly amended so as to reproduce the sixteen items found in Section 14(iv) of the Central Act.
Other provisions only fortify our conclusion.
177 The result is that we allow these appeals.
We set aside the orders of the High Court and restore the orders of the assessing authorities in cases giving rise to Civil Appeals Nos. 880 883 of 1971.
In cases but of which Civil Appeals Nos.58 59 of 1971 arise, we set aside the judgment of the High Court but maintain its order dismissing the Writ Petitions and order that the assessing authorities will now proceed to determine such question of fact and law as still survive for determination after the decision given above of the question considered by us.
The parties will bear their own costs.
P.H.P. Appeals allowed.
| The respondent entered service of the State of Mysore in 1935 as instructor of Tailoring in the Department of Public Instruction.
In 1949 he went on deputation in the Polytechnic Institute at Devangere.
One K. N. Chetty who was far junior to respondent was also sent on deputation to another similar institution in 1949.
K. N. Chetty was absorbed from the date he went or deputation in the new post but respondent was not so absorbed.
In 1955, for no fault of the respondent, Government passed orders reverting him to his parent department.
In 1956, respondent, was again posted on deputation.
The intervening period between his reversion and re posting was treated as leave.
On reorganisation of State respondent 's services were allotted to the new State of Mysore.
The respondent made several representations and stated that he was discriminated against and treated differently from K. N. Chetty who was junior to him in the parent department.
The Public Service Commission found that respondent 's case was on all fours with that of Chetty and that he deserved similar treatment.
The Commission found that the temporary reversion of the respondent lo his parent department was not justified.
The Government in 1964 ordered the absorption of the respondent in the Department of Technical Education from the date of the order subject to the conditions that he would not be entitled to the benefit of revision of scales of pay that had been effected in 1957 and 1961 and that he would not be given any more financial benefit or revision of pay or addition increment for his previous service.
The respondent filed a Writ Petition challenging these condition and praying for a direction that he should be absorbed in the Department of Technical Education from the date of his initial appointment in 1949, and granted consequential benefits or the revision of pay scales etc.
The appellant opposed the Writ Petition on the grounds that the respondent had no legal right to be absorbed in the Department of Technical, Education with effect from.
a particular interior date or to be given the revised pay scales applicable to those borne permanently in the service of that department.
Chetty 's case was sought to be distinguished on the ground that he was absorbed in the year 1951 as against the respondent 's absorption in 1964 and that there was a break in the service of the respondent.
The High Court allowed the Writ Petition and issued a direction that absorption of the respondent in the Department of Technical Education be given effect from 1949 when he initially assumed duty on deputation.
The High Court also declared that he would be entitled to all consequential benefits.
The appellant in an appeal by Special Leave relied on the judgment of this Hon 'ble Court in the case of K. V. Rajalakshmiah Setty vs State of Mysore [1967] 2 S.C.I. 70.
Dismissing the appeal, ^ HELD: In the present case it appears that the State had evolved a principle pursuant to which all the employees who came on deputation from the departments to the Polytechnic excepting the respondent, were absorbed permanently in the Department of Technical Education with effect from the dates on which they came on deputation.
Even Chetty who was admittedly junior to the respondent and was identically situated was accorded the same treatment.
It is an undisputed fact that 6 other employees who were similarly situated were absorbed from the date on which they initially joined duty after deputation to the Polytechnic.
[259 A C, 260 D] 256 There was no justification whatever to depart from this principle of policy in the case of the respondent.
His reversion was not ordered owing to any fault on his part.
The said reversion could not be treated as a break in service since it was treated as leave, nor did it amount to reduction in rank.
60 F H] The High Court was therefore, justified in granting the relief, it did to the respondent.
261 Bl 'Rajalakshmiah Setty vs State of Mysore, ; , distinguished.
|
Appeal No. 132 of 1956.
Appeal by special leave from the judgment and order dated May 16, 1955, of the Election Tribunal, Bhatinda, in Election Petition No. 14 of 1954.
C. K. Daphtary, Solicitor General of India, J. B. Dadachanji, section N. Andley, Rameshwar Nath and K. C. Puri, for the appellant.
N.C. Chatterji, A. N. Sinha and Gopal Singh, for respondent No. 1. 1956.
December 20.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The appellant was one of the candidates who stood for election to the Legislative Assembly of the Paterson and East Punjab States Union from the Farber Constituency in the General Elections held in 1954.
He secured the largest number of votes, and was declared duly elected.
The result was notified in the Official Gazette on February 27, 1954, and the return of the election expenses was published therein on May 2, 1954.
On May 18, 1954, the first respondent filed a petition under section 81 of the Representation of the People Act No. XLIII of 1951, hereinafter referred to as the Act, and therein he prayed that the election of the appellant might be declared void on the ground that We and his agents had committed various corrupt and illegal practices, of which particulars were given.
The appellant filed a written statement denying these allegations.
He therein raised the further contention that the election petition had not been presented within the time limited by law, and was, therefore, liable to be dismissed.
Rule 119, which prescribes the period within which election petitions have to be filed, runs, so far as it is material, as follows: 119.
"Time within which an election petition shall be presented : An election petition calling in question an election may, 27 210 (a) in the case where such petition is against a returned candidate, be presented under section 81 at any time after the date of publication of the name, of such candidate under section 67 but not later than fourteen days from the date of publication of the notice in the Official Gazette under rule 113 that the return of election expenses of such candidate and the declaration made in respect thereof have been lodged with the Returning Officer ," The last date for filing the petition, according to this Rule, was May 16, 1954, but that happened to be a Sunday and the day following had been declared a public holiday.
The first respondent accordingly presented his petition on May 18, 1954, and in paragraph 6 stated as follows: " The offices were closed on 16th and 17th; the petition is, therefore, well within limitation." On this,, the Election Commission passed the following order : "The petition was filed on l8 5 1954.
But for the fact that 16 5 1954 and 17 5 1954 were holidays, the petition would have been time barred.
Admit.
" The plea put forward by the appellant in his written statement based on Rule 119(a) was that whatever might have been the reason therefor, the fact was that the petition had not been filed "not later than fourteen days" from the publication of the return of the election expenses, which was on May 2, 1954, and that it was, therefore, not presented within the time prescribed.
The Tribunal overruled this plea on the ground that under Rule 2(6) of the Election Rules, the General Clauses Act X of 1897 was applicable in interpreting them, and that under section 10 of that Act, the election petition was presented within the time allowed by Rule 119(a).
On the merits, the Tribunal held that of the grounds put forward in the Election Petition, one and only one had been substantiated, and that was that the appellant had 'employed for payment, in connection with his election, 25 persons in addition to the number of persons allowed under Rule 118 read along with Schedule VI thereto, and had thereby 211 committed the major corrupt practice mentioned in section 123(7) of the Act.
The Tribunal accordingly declared the election void under section 100(2)(b) of the Act.
It also observed that on its finding aforesaid, the appellant had incurred the disqualification enacted in sections 140(1)(a) and 140(2) of the Act.
Against this decision, the appellant has preferred this appeal by special leave.
On behalf of the appellant, two contentions have been pressed before us: (1) that the election petition was presented beyond the time prescribed by Rule 119(a), and should have been dismissed under section 90 (4) of the Act; and (2) that on the findings recorded by the Tribunal, the conclusion that Rule 118 had been contravened does not follow and is erroneous.
The first question turns on the interpretation of section 10 of the General Clauses Act, which is as follows: "Where by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open.
" The contention of Mr. Solicitor General on behalf of the appellant is that this section can apply on its own terms only when the act in question is to be done " within a prescribed period", that under Rule 119(a) the petition has to be filed "not later than" fourteen days, that the two expressions do not mean the same thing, the words of the Rule being more peremptory, and that accordingly section 10 of the General Clauses Act cannot be invoked in aid of a petition presented under Rule 119, later than fourteen days.
In support of this contention, he invites our attention to some of the Rules in which the expression "the time within which" is used, as for example, Rule 123, and he argues that when a statute uses two different expressions, they must be construed as used in two different senses.
He also points out that whenever the Legislature intended 212 that if the last date on which an act could be performed fell on a holiday, it could be validly performed on the next working day, it said so, as in the proviso to section 37 of the Act, and that there would be no need for such a provision, if section 10 of the General Clauses Act were intended generally to apply.
This argument proceeds on an interpretation of section 10 of the General Clauses Act which, in our opinion,is erroneous.
Broadly stated, the object of the section is to enable a person to do what he could have done on a holiday, on the next working day.
Where, therefore, a period is prescribed for the performance of an act in a court or office, and that period expires on a holiday, then according to the section the act should be considered to have been done within that period, if it is done on the next day on which the court or office is open.
For that section to apply, therefore, all that is requisite is that there should be a period pres cribed, and that period should expire on a holiday.
Now, it cannot be denied that the period of fourteen days provided in Rule I 1 9 (a) for presentation of an election petition is a period prescribed, and that is its true character, whether the words used are " within fourteen days" or "not later than fourteen days".
That the distinction sought to be made by the appellant between these two expressions is without substance will be clear beyond all doubt, when regard is had to section 81 of the Act.
Section 81 (1) enacts that the election petition may be presented "within such time as may be prescribed, and it is under this section that Rule 119 has been framed.
It is obvious that the rule making authority could not have intended to go further than what the section itself had enacted, and if the language of the Rule is construed in conjunction with and under the coverage of the section under which it is framed, the words "not later than fourteen days" must be held to mean the same thing as "within a period of fourteen days".
Reference in this connection should be made to the heading of Rule 119 which is, " Time within which an election petition shall be presented ".
We entertain no doubt that the legislature has used both 213 the expressions As meaning the same thing, and there are accordingly no grounds for holding that section 10 is not applicable to petitions falling within Rule 119.
We are also unable to read in the proviso to section 37 of the Act an intention generally to exclude the operation of section 10 of the General Clauses Act in the construction of the Rules, as that will be against the plain language of Rule 2 (6).
It should be noted that proviso applies only to section 30 (c) of the Act, and it is possible that the Legislature might have considered it doubtful whether section 30 (c) would, having regard to its terms, fall within section 10 of the General Clauses Act and enacted the province abundant cauterize.
The operation of such a beneficent enactment as a. 10 of the General Clauses Act is not, in our opinion, to be cut down on such unsubstantial grounds as have been urged before us.
We are accordingly of opinion that the petition which the respondent filed on May 18, 1954, is entitled to the protection afforded by that section and is in time.
We should add that the appellant also raised the contention that if we agreed with him that the election petition was not presented in time, we should hold that the order of the Election Commission admitting the petition was not one of condonation within the proviso to section 85, because that proceeded on the footing that the petition was in time, and did not amount to a decision that if it was not, there were sufficient grounds for excusing the delay.
We are not disposed to agree with this contention; but in the view which we have taken that the petition is in time, it is unnecessary to consider it.
Then the next question and that is one of substance is whether there has been contravention of Rule 118.
The material facts are that the appellant is the quondam ruler of Faridkot, which enjoyed during the British regime the status of an independent State, and came in for judicial recognition as such in Sirdar Gurdyal 'Singh vs Rajah of Faridkote (1), and, after Independence, became merged in the State of Pepsu.
The (1) (I894) L.R. 21 I.A. 171.
214 appellant continues to retain a large staff of subordinates, and the charge of the first respondent in his petition was that as many as 54 of them were employed for purposes of election, and that Rule 118 had thus been violated.
Rule 118 is as follows: , "No person other than, or in addition to, those specified in Schedule VI shall be employed for payment by a candidate or his election agent in connection with an election." Under Schedule VI, a candidate for election may employ for payment in connection with election (1) one election agent, (2) one counting agent, (3) one clerk and one messenger, (4) one polling agent and two relief polling agents for each polling station or where a polling station has more than one polling booth, for each polling booth and (5) one messenger for each polling station, or for each polling booth, if a polling station has more than one booth.
The finding of the Tribunal on this question is as follows: " . it is clear that 25 persons named in the foregoing paragraphs took part in the election campaign of respondent No. I apart from any duties they may have performed as polling agents.
Now admittedly all these persons are paid employees of respondent No. 1.
As their number exceeds the statutory number provided in Rule 118, respondent No. I is undoubtedly guilty of a major corrupt practice under section 123 (7).
A question however arises whether the fact that these persons were already in the employ of respondent No. I and were not specially engaged for purposes of election, would take them out of purview of Rule 118.
In our judgment it would not." Then, dealing with the question as to whether the return of election expenses made by the appellant was false in that it did not include anything on account of the services of the 25 employees, the Tribunal says: " We have held under Issue No. 3 that respondent No. I did utilise the services of 25 of his employees for furthering his election prospects.
Now there is no evidence on the record to show that these employees 215 were engaged specifically for the purposes of election.
All of them had been in the service of respondent No. I for a long time before the election in normal course.
Therefore, there is no reason why the emoluments paid should be charged to the election account.
However, if any additional allowances were paid to these persons that would certainly be chargeable to the election account.
But there is no evidence on the record to show that any such allowance was paid.
" Now, the question is whether on these facts there is a contravention of Rule 118.
The contention of Mr. Solicitor General for the appellant is that the Rule would apply only if 'the employment of the persons was specifically for work in connection with the election and such employment was for payment.
In other words, according to him it is only employment ad hoc for the election that ' is within the mischief of the Rule.
On behalf of the respondent Mr. N. C. Chatter bee contends that it is not necessary for the Rule to operate that there should have been an employment specially for the purpose of the election, and that it would be sufficient if the persons who did work in connection with the election were in the employment of the candidate, and that employment carried with it payment of salary or remuneration.
In our opinion, neither of these contentions is wellfounded.
Rule 118 does not require that the person engaged by a candidate to work in the election should have been specially employed for the purpose of the election.
It is sufficient, on the wording of the Rule, that person is employed in connection with the election.
At the same time, the requirements of Rule 118 are not satisfied by proving merely that the person does work in connection with the election.
That work must be done under a contract of employment.
Thus, if the candidate has been maintaining a regular staff of his own and its members have been doing personal service to him and he has been paying them and then the election supervenes, and off and on he sets them on election work but they continue to do their normal work as members of his staff, it cannot 216 be said of them that they have been employed in connection with the election.
But if, on the other hand, he takes them out of their normal work and puts them on whole time or substantially whole time work in connection with the election, that would amount to converting their general employment into one in connection with the election.
It will be a question of fact in each case whether what the candidate has done amounts merely to asking the members of the staff to do casual work in connection with the election in addition to their normal duties, or whether it amounts to suspending the work normally done by them and assigning to them election work instead.
Then again, it is a condition for the application of the Rule that the employment of the person must be for payment.
If the members of the staff continue to do their normal work and do casual work in connection with the election, the payment of salary to them would be a payment on account of their employment as such members of the staff and not in connection with the election.
Rule 118 would not apply to that case, as there is neither an employment in connection with the election, nor a payment on account of such employment.
Indeed, the salary paid to the members would not even be election expenses liable to be included in the return.
But if, in the above case, the members are paid extra for their work, such extra payment will have to be included in the return of election expenses, though it 'may be that Rule 118 itself might have no application for the reason that there is no employment for election and the payment is not in respect of such employment.
If, however, the members of the staff are switched off from their normal work and turned on to election work so that it could be said that work has been assigned to them in supersession of their normal work, then the salary paid to them could rightly be regarded as payment for work in connection with election within Rule 118.
That being our view on the construction of Rule 118, we shall now proceed to consider what the position is, on the authorities cited before us.
217 In the Hartlepools Case(1) the question arose with reference to one Butler who was the general secratary of Mr. Furness, the returned candidate, and certain clerks in a company in which Mr. Furness, had considerable influence.
All these persons had taken part in the election.
As regards Butler, Phillimore J. observed that if it could be held that at the time ' of his employment his duties included also work in elections if and when they, were held, then a proportionate part of his salary should be regarded as election expenses; but, on the facts, he held that it was no part of the duties of Butler in respect of his standing employment to be election agent when called upon, and that, therefore, no part of his salary need be shown as election expenses.
As put by Pickford, J., in Ins concurring judgment, Butler was paid " his salary as private secretary and was not paid anything as election agent ".
Counsel for the appellant relies on these observations, and argues that on the finding of the Tribunal that the 25 men had been in service for a, long time, there could be no question, of their having been employed for work in connection with election, and that they were, therefore, neither election agents nor was the salary paid to them payment on account of any employment in connection with the election.
But then, considering the effect of the clerks of the company taking part in the election, Phillimore J. observed: " .
I am certainly inclined to think that if a business man takes his business clerks and employs them for election work which, if he had not business clerks, would be normally done by paid clerks, he ought to return their salaries as part of his expenses." Counsel for respondent strongly relies on these obser vations.
But then, the point was not actually decided by Philimore, J., as the evidence relatinig to the matter was incomplete, and Pickford, J. expressly reserved his opinion on the question.
In view of the remarks of Sankey, J., in the Borough of Oxford Case (2), in the (1) 28 (2) , 56 57 218 course of his argument, it is doubtful,,how far the observations ' of Phillimore, J. quoted above could be accepted as good law.
They Were, however,.
adopted in two decisions of the Election Tribunals of this country, to which our attention was invited by Mr. Chatterjee.
In the Amritsar Case(1), the following observation occurs: We also consider that if any man in the service of the respondent were put on election work, their wages for the period should have been shown in the return.
(See Hartlepools Case(2) ".
The words " put on election work " in this passage suggest that the employees had been taken out of their original work.
As there is no discussion of the present question, the authority of this decision is, in any event, little.
In Farrukhabad Case(3), this passage,, as also the observations of Phillimore, J., we 're quoted, and in accordance therewith, it was held that the salaries of Tilakdhari Singh, Kundan Singh and Drigpal Singh for the period they worked in connection with the election of the respondent Nol should have been shown in the return It was found in that case that Tilakdhari Singh worked exclusively for 30 days in connections with the election and Kundan Singh and Drigpal Singh would appear to have similarly devoted themselves to election work for certain periods.
None of these cases has considered what would amount to employment in connection with election, when the persons had been previously employed on other work; and they throw no light on the present question.
The position may thsu be summed up : (1)For Rule 118 to apply, two conditions must be satisfied, viz., there should have been an employment by the candidate of a person in connection with,an election, and such employment should have been for payment.
(1) [1924] Hammond 's Election Cases 83.
(2) (3) [1927] Hammond 's Election Cases 349.
219 (2) Where a person has been in the employment of the candidate even prior to his election and his duties do not include work in election 'and he takes part in election, whether he is to be regarded as employed in connection with the election will depend on the nature of the work which he performs during the election.
(3) When the work which he does in election is ', casual and is in addition to the normal work for which, he has been employed , he is not within Rule l 18.
if his work in connection with the election is such that he could be regarded as having been taken 'out of his previous work and put on election work, then he would be within Rule 118.
(4) Whether a person who has been previously employed by the candidate on other work should held to have been employed in connection with election is a question of fact to be decided on the evidence in each case.
In the present case, the finding is that 25 persons belonging to the staff of the appellant had taken part in the election.
It has been found that they had been in the service of the appellant for a long time and that their appointment was not colorable for election purposes.
It has also been found that they were not paid anything extra for what work they might have done in connection with the election.
But there is no finding that having regard to the work which they are proved to have done, they must be taken to have been relieved of their original work and put on election work.
In the absence of such a finding, it cannot be held that Rule II 8 had been infringed.
It is possible that the Election Tribunal did not appreciate the true legal position and has in consequence failed to record the findings requisite for a decision on Rule 118, and that would be a good ground on which we could, if the Justice of the case required it, set aside the order and direct the matter to be heard afresh and disposed of by another Tribunal in accordance with law.
But we do not consider that this is a fit case for passing such an order.
The evidence adduced by the first respondent is very 220 largely, to the effect that the appellant 's men did election work in the morning or in the evening, that is , out of office hours.
That shows that the work the staff was in addition to their normal duties, and on the, principles stated above, they could not be held to have been employed in connection with the election.
As the first respondent does not appear himself to have under , stood the true position under Rule 118 and has failed to adduce, evidence requisite for a decision of the question, he must fail, the burden being on him to establish that Rule had been infringed.
In the result, this appeal is allowed, the order of the, Election Tribunal is set aside and the election petition of the first respondent will stand dismissed.
As the parties have each succeeded on one issue and failed on another, they will bear their own costs, throughout.
Appeal allowed.
| The last day for filing the election petition was a Sunday and the day following was a public holiday.
The petition was presented on the next day after the public holiday.
Held, that section 10 of the General Clauses Act was applicable and that the petition was presented within time.
The appellant, who retains a large staff of subordinates, was charged with employing 54 of them for purposes of the election in violation of Rule 118, and with failure to include their salaries in the return of his election expenses.
The election tribunal found that 25 of the old paid employees of the appellant took part in his election campaign, that their number exceeded the statutory number provided by Rule 118 and that consequently the appellant was guilty of a major corrupt practice under section 123 (7) of the Representation of the People Act, 1951.
The tribunal further held that there was no evidence to show that the employees were engaged specifically for the purposes of the election, that they had been in the service of the appellant for a long time and that the emoluments paid to them were not election expenses.
In the result the tribunal set aside the election of the appellant: Held, that where a person has been in the employment of a candidate even prior to his election and his duties do not include election work but he takes part in the election, and the work which he does is casual and is in addition to his normal work, he is not within Rule 118.
But if the work in connection with the election is such that he could be regarded as having been taken out of his normal work and put on election work, then he would be within Rule 118.
Hartlepooles Case, and Borough of Oxford Case, , referred to.
If the members of the staff of a candidate do their normal work and do casual work in connection with the election, the payment of salary to them would be payment on account of their 209 employment as such members of the staff and not in connec tion with the election.
|
: Criminal Appeal Nos. 285 & 286 of 1986.
From the Judgment and Order dated 7/10.2.86 of the Madhya Pradesh High Court in Criminal Appeal Nos. 1403 to 1404 of 1985.
U.R. Lalit, G.K. Sharma and S.K. Sabharwal for the Appel lants.
T.C. Sharma for the Respondent.
The Judgment of the Court was delivered by KHALID, J.
The appellants Ram Narayan and his son Mahesh have been convicted under Section 302 I.P.C. and sentenced to death.
They are the residents of Village Hinota.
They are alleged to have committed five murders on 21 6 1984 at about 6.30 P.M.
The deceased are Puran Baraua, his wife, Narbad Bai, his mother, Mula Bai, his daughter Kumar Nanhi Bai and his neighbour Gulab.
The learned counsel for the appellants tried to take us through the evidence to persuade us to re appreciate it.
The evidence has been considered minutely by the Courts below.
Then he put forward a feeble right of private defence which has no substance.
Then he made a fervent appeal before us regarding the sentence imposed.
It is useful to advert to one fact which has come out the evidence in the case.
The root cause of the gruesome murder appears to be the marriage of a lady belonging to a higher caste with a Harijan boy.
The High Court deals with it in paragraph 19 as follows: "19.
It may be pointed out that it is clear from the evidence that the incident occurrence when the appellant Mahesh had broken the earthen pot of the deceased Narbad Bai at the well on the ground that the appellents 712 treated Pooran and his inmates of the lower caste because Jankibai, one of the daughters of Pooran had taken a Harijan as her husband.
" The High Court felt compelled to express its concern about the evil of untouchability in paragraph 18, at page 46, as follows: "It is unfortunate that evil of untouchability was still prevalent in some parts of our country even after 38 years of independence and 30 years of coming into force of the untouchability Act, 1955, which evident by the facts of the instant case.
Indeed it is a matter of great concern that very often there occur grave occurrences including group mur ders resulting into untimely death of innocent persons by those who still believe in toucha bility as their way of life.
The present case is one of those gravest killings, and ghastly murders of five persons by the appellants who deserve condemnation by awarding severest punishment provided under the law.
" The evidence shows that Mahesh axed Narbadbai without any provocation, from any member of his family.
Thereafter, Pooran was assaulted and axed by Mahesh.
When the assault of these two persons, by the father and son, was on, the mother of Pooran came from inside and questioned as to why they were doing this.
She too was killed by giving her axe blows by the appellants.
When the neighbour Gulab asked the appel lants as to why they were murdering these people, he was also axed to death by the appellants.
A young girl aged about 14 years standing near the bathing place at the corner of the house was also not spared.
Mahesh gave her an axe blow, on receipt of which she fell down at some distance and died.
The evidence further shows that the blood thirst of the accused was so intense that they knocked and tried to break open the door of the room where Nandram, P.W. 1 and his wife Savithri Bai, P.W. 2 were hiding to save themselves and they left the place only when the door could not be broken.
It is against this background that the request of the appellants ' counsel for interference with the sentence has to be considered.
The High Court observes that the act of the appellant: "was extremely brutal, revolting and gruesome which shocks the judicial conscience." And again as "in such shocking nature of crime as the one before us which is so cruel, barbaric and revolting, it is necessary to impose such maximum punishment under the law as a measure of social necessity 713 which work as a deterrent to other potential offenders.
" We share the concern of the High Court.
We also feel that it will be a mockery of justice to permit these appel lants to escape the extreme penalty of law when faced with such evidence and such cruel acts.
To give the lesser pun ishment for the appellants would be to render the justicing system of this country suspect.
The common man will lose faith in courts.
In such cases, he understands and appreci ates the language of deferrence more than the reformative jargon.
When we say this, we do not ignore the need for a reformative approach in the sentencing process.
But here, we have no alternative but to confirm the death sentence.
Accordingly, we dismiss the appeals.
P.S.S. Appeals dismissed.
| Section 3 of the Bihar Land Reforms Act, 1950 provides for vesting of an estate or tenure in the State by notifica tion.
Under section 9 from the date of such vesting all mines comprised in the estate or tenure, as were in operation at the commencement of the Act and were being worked directly by the intermediary were deemed to have been leased to the intermediary and he was entitled to retain possession there of.
Section 10 provides for vesting of subsisting leases of mines and minerals.
Section 25 provides for computation of compensation payable to the intermediary in respect of royalties on account of mines and minerals or directly working mines comprised in the estate or tenure.
Rule 25 E of the Bihar Land Reforms Rules, 1951 deals with the proce dure for determination of the amount of compensation or annuity.
The estate of the ex landlord comprising vast areas of mineral bearing lands was vested in the State by virtue of a notification under section 3 of the Act with effect from 4th November, 1951.
Some part of the said area was being worked by the lessees under the leases granted to them, who paid royalty to him.
The ex landlord died in 1969.
His successors in inter est, the appellants herein, filed writ petition before the High Court claiming compensation in respect of the coal bearing area having coal reserves vested in the State.
The High Court came to the conclusion that the ex intermediary was not entitled to the compensation as claimed, and dis missed the petition.
225 In this appeal by certificate, it was contended for the appellants that where there are minerals which were not tapped and not exploited by the ex intermediary, acquisition of the source of income for the intermediary would be acqui sition of property, that there was no provision for compen sation for this purpose in the Act, and the statute was, therefore, exproprietary in nature.
For the respondents, it was contended that there was no question of expropriation.
The property being not in existence, it was acquisition of a right which might be a source or ' income and property it ' tapped, but it was not an existing right.
Dismissing the appeal, the Court, HELD 1.
A statute must be read as a whole, fairly and reasonably.
It must be so read, if possible, and warranted by the context to give effect to the manifest intent of the framer.
So read, it cannot be said that the Bihar Land Reforms Act, 1950 provides for any compensation for the minerals not exploited.
That does not make the Act unconsti tutional.
[232D] 2.
The Rules and the sections must be harmoniously construed.
In the instant case, the legislature was acquir ing the estate of an ex intermediary.
For all the existing sources of his income and which were being exploited, com pensation has been provided for.
But for a right which might become a source of income which had not been exploited, no compensation has been provided.
Where a statute provides for the assumption and enforcement of an existing right or liability, it will not be construed as extending that li ability or creating a new one unless it does so in clear terms.
[231F] Halsbury 's Laws of England, 4th Edition, Vol.
44, page 556, paragraph 904, referred to.
In the instant case there is no question of interpreting any law which will expose the Act to constitutional infirmi ty.
The right was not existing at the time of vesting, no question therefore, arises of depriving the ex intermediary of any right without compensation.
[231G] 3.
The basic principle of construction of every statute is to find out what is clearly stated and not to speculate upon latent imponderables.
The scheme of the Act does not support the appellant that it is exproprietary in nature.
Section 25(1)(a) and (b) deal with independent items and section 25(1)(c) is a combination of the two.
The other sub sections make it quite clear.
Compensation for the acquisition of a source which 226 when exploited might become property or income is not neces sary.
Ownership is a bundle of rights and for the existing bundle of rights compensation has been provided lot.
[231 H 232B] 4.
It is not for the court to provide for compensation where legislature has thought it fit not to do so.
The fact that compensation for existing rights has been provided for would not expose the statute to the vice of unconstitution ality as exproprietary.
Had there been such a possibility, other considerations might have been there.
The Act has been incorporated in Item 1 of the 9th Schedule of the Constitu tion.] [232C]
|
Appeal No. 480 of 1958.
Appeal by special leave from the judgment and order dated April 15, 1958, of the Orissa High Court in Misc.
Appeal No. 194 of 1957, arising out of the judgment and order dated October 26, 1957, of the Election Tribunal, Puri, in Election Case No. 1/67 of 1957.
Veda Vyasa and A. V. Viswanatha Sastri, R. Patnaik and Ratnaparkhi, A. G., for the appellant.
H.Mahapatra and P. K. Chatterjee for G. C. Mathur, for respondent No. 1. 1958.
December 18.
The Judgment of the Court was delivered by IMAM, J.
The appellant and the respondent No. 1 were, amongst others, candidates for election to the Orissa Legislative Assembly from the Daspalla doublemember constituency in which a seat was reserved for a scheduled caste candidate.
We are not concerned with the election of the scheduled caste candidate.
120 954 For the general seat the election was contested by the appellant, respondent No. 1 and respondent No. 3.
The appellant obtained 17,700 votes, respondent No. 1 15,568 votes and respondent No. 3 3,589 votes.
The election was held on February 27, 1957, and the appellant was declared elected on March 5, 1957.
Respondent No. 1 filed an election petition questioning, on various grounds, the election of the aPpellant.
The Election Tribunal dismissed the petition holding that no grounds had been established to invalidate the election.
Respondent No. 1 appealed to the High Court of Orissa against the order of the Election Tribunal.
One of the grounds, amongst the many grounds, taken by Respondent No. 1 to invalidate the election of the appellant was that the nomination of respondent No. 3 was improperly accepted as he was disqualified from contesting the election being a Sarbarakar of the 10 villages in the, district of Nayagarh mentioned in the schedule to the petition.
The High Court held that the office of Sarbarakar was an office of profit under the State Government of Orissa.
Respondent No. 3 was accordingly disqualified from being a member of the Assembly.
It, however, held that the acceptance of the nomination of respondent No. 3 had not materially affected the election of the returned candidate under el.
(d) of sub section (1) of section 100 of the Representation of the People Act, 1951, hereinafter referred to as the Act.
Three grounds were urged before the High Court in support of the contention that the appellant had been guilty of corrupt practice.
One was that of bribery; the second was that the appellant and his agents had published a pamphlet, Exbt. 8, containing statements which were false and which he knew or believed to be false in relation to the personal character and conduct of respondent No. 1 and in relation to his candidature; and the third was, the obtaining and procuring by respondent No. 1 of assistance for the furtherance of the prospects of his election from Sarpanches of certain Grama Panchayats.
With regard to the first two grounds the High Court held that the same 955 had not been established.
With reference to the third ground the High Court was of the opinion that a Sarpanch of the Grama Panchayat, though not a Government servant appointed by the Government, was none the less a person in the service of the Government as he performed many of the governmental duties and was also removable by the Government and such a person came within the provisions of section 123(7)(f) of the Act.
A Sarpanch exercised under the Orissa Grama Panchayats Act, 1948, hereinafter referred to as the Orissa Act, mostly governmental functions like collection of taxes, maintenance of public accounts, etc.
It thought that if such a person was not brought under section 123(7)(f) there would be " a lot of undue influence exercised on the voters by these persons who in the village exercised a lot of influence considering the nature of their powers and the ideas of the village people ".
The High Court accordingly allowed the appeal and set aside the appellant 's election but was of the opinion that although its finding resulted in the appellant being disqualified for membership of Parliament and the Legislature of every State for six years under section 140 of the Act, this was a fit case for the removal of the disqualification by the Election Commission under section 144 of the Act.
The appellant applied to the High Court for a certificate that this was a fit case for appeal to this Court.
The certificate was granted, but one of the learned Judges was in some doubt whether this was a case in which the provisions of article 133(1)(c) of the Constitution applied.
On behalf of respondent No. 1 an objection had been taken that article 133(1)(c) of the Constitution did not apply and the High Court could not have certified that this was a fit case for appeal to this Court.
It seems to us unnecessary to decide whether in a case of this kind the provisions of article 133(1)(c) applied because, in our opinion, even if they did not apply and the High Court could not have issued a certificate, this was just the kind of case where we would have granted special leave to appeal under article 136 of the Constitution because the appeal raised a point of law of considerable public importance.
956 In order to remove all doubts in the matter, we grant the appellant special leave to appeal against the decision of the High Court of Orissa and proceed to deal with the appeal on that basis.
The Act was amended in 1956.
Before the amendment the relevant portion of section 123 for the purpose of this appeal was contained in sub section
(8) which % as as follows : " (8) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person with the connivance of a candidate or his agent, any assistance for the furtherance of the prospects of the candidate 's election from any person serving under the Government of India or the Government of any State other than the giving of vote by such person.
Explanation For the purposes of this clause (a) a person serving under the Government of India shall not include any person who has been declared.
By the Central Government to be a person to whom the provisions of this clause shall not apply ; (b) a person serving under the Government of any State shall include a patwari, chaukidar, dafedar, zaildar, shanbagh, karnam, talati, talari, patil, village munsif, village headman or any other village officer, by whatever name lie is called, employed in that State, whether the office be holds is a whole time office or not, but shall not include any person (other than any such village officer as aforesaid) who has been declared by the State Government to be a person to whom the provisions of this clause shall not apply." After the amendment the relevant portion of section 123 is in sub section (7) which reads as follows: " (7) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person, any assistance (other than giving of vote) for the furtherance of the prospects of that candidate 's election from any person in the service of the Government and belonging to any of the following classes, namely: (a) gazetted officers; (b) stipendiary judges and magistrates; 957 (c) members of the armed forces of the Union; (d) members of the police forces; (e) excise officers; (f) revenue officers including village accountants, such as, patwaris, lekhpals, talatis, karnams and the like but excluding other village officers; and (g) such other class of persons in the service of the Government as may be prescribed.
Explanation (I) In this section the expression "agent " includes an election agent, a polling agent and any person who is held to have acted as an agent in connection with the election with the consent of the candidate.
(2)For the purposes of clause (7), a person shall be deemed to assist in the furtherance of the prospects of a candidate 's election if he acts as an election agent, or polling agent or a counting agent of that candidate.
" There is a material difference between the phraseology of section 123(8) before it was amended and section 123(7) as now contained in the Act.
Under the former provision there was a prohibition against obtaining any assistance for the furtherance of the prospect of a candidate 's election from any person serving under the Government of India or the Government of a State other than the giving of a vote by such person.
The Explanation, however, gave authority to the Central Government to declare any person serving under it to be a person to whom these provisions would not apply.
In other words, unless there was such a declaration these provisions covered every person serving tinder the Government of India.
Clause (b) of the Explanation further widened the meaning of any person serving under the Government of a State by including the persons specified therein and any other village officer, by whatever name he may be called, employed in that State, but the State Government was authorized to declare that any such person, other than any such village officer, to be a person to whom these provisions did not apply.
The language of the provisions of section 123(8) covered a wide field and referred to every person serving under the Government of India or a 958 State unless such 'Person was declared to be one to whom the provisions would not apply.
After the amendment, however, the provisions of section 123(7) are narrower in scope.
These provisions apply to any person in the service of the Government belonging to the classes specified in cls.
(a) to (g) and none else.
For the purpose of this appeal it is el.
(f) which will have to be considered, as the other clauses cannot in any case apply.
The principal question for consideration is whether a Sarpanch of a Grama Panchayat constituted under the Orissa Act is a person in the service of the Government of the State of Orissa and belongs to the class specified in cl.
(f) of section 123(7).
Obviously, two things will have to be established before the provisions of section 123(7)(f) can apply to a Sarpanch of a Grama Panchayat constituted under the Orissa Act: (1) That such a person is in the service of the Government and (2) that he comes within the class specified in cl.
It would not be enough to establish only one of these conditions.
It is necessary, therefore, to decide, in the first instance, whether a Sarpanch of a Grama Panchayat under the Orissa Act is a person in the service of the Government of the State of Orissa.
For this purpose, it will be necessary to consider whether any of the provisions of the Orissa Act relating to the Grama Panchayat and the duties to be discharged by the Sarpanch indicate that the Sarpanch is in the service of the Government, because independent of those provisions there is no material upon which any such conclusion can be arrived at.
It was urged on behalf of the appellant that under the Orissa Act a Grama Sasan can be constituted by notification by the State Government.
The Grama Sasan is to be a body corporate having perpetual succession and a common seal with power to acquire and hold property, to transfer any property held by it and to enter into contracts and to do all other things necessary for the purpose of carrying out the provi sions of the Orissa Act and to sue and be sued in its corporate name.
For every Grama Sasan there shall be a Grama Panchayat and the functions of the 959 Grama Sasan shall be exercised, performed and discharged by the Grama Panchayat.
The Executive power of the Grama Panchayat shall be exercised by the Sarpanch elected under section 10, who shall act under the authority of the said Grama Panchayat.
The Grama Sasan shall elect, in the prescribed manner, from amongst its members an Executive Committee which will be known as the Grama Panchayat and the Grama Panchayat shall elect, in the prescribed manner, a Sarpanch.
The appointment of a Sarpanch, therefore, was not by the Government.
The Sarpanch was elected by the Grama Panchayat which in turn was elected by the Grama Sasan and the Grama Sasan consisted of a village or a group of contiguous villages and its members were the population residing in the Grama.
As the appointment of the Sarpanch is Dot by Government, this would be one of the factors in holding that the Sarpanch was not in the service of the Government.
Under section 8, the Sarpanch has to act under the authority of the Grama Panchayat.
Prima facie, this would also be a factor to discountenance the theory that a Sarpanch was in the service of the Government.
Another factor which would militate against the theory that a Sarpanch was in the service of the Government was that he received no remunera tion from the Government.
The power to remove a Sarpanch by the State Government is stated in section 16 but the removal can only be for negligence, inefficiency or misbehaviour.
This restricted power of removal was not a conclusive factor on the question whether a Sarpanch was in the service of the Government.
It was accordingly urged that three important factors to be taken into consideration in deciding whether a person was in the service of the Government, namely, appointment of the person, such a person to act under the authority of the Government and one who received remuneration from Government were lacking in the case of a Sarpanch.
The restricted power of removal by the Government was not a conclusive factor ' Instances were not lacking in the Municipal Acts of various States where the State Government had vested in it the power of removal of 960 a Chairman of the Municipality, but it could not be said that the members of the Municipality or their Chairman were in the service of the Government.
On behalf of respondent No. 1 it was urged that the expression in service of Government" had a wider concept than the expression serving under the Government ".
Exercise of governmental functions would amount to being in Government 's service.
A Sarpanch could be equated with a patwari, Lekhpal, talati, karnam, etc., and it was not necessary to consider whether he was in service of Government because the word " and " before the words " belonging to any of the following classes " should be read as " or He referred to the various provisions of the Orissa Act in support of his submission that a Sarpanch must be regarded as one in service of Government.
Under section 10(2) the District Magistrate was to decide the manner in which the local area of any Grama Sasan shall be divided into electoral wards and the number of members to be returned for each of such wards.
Under sub section
(4) of this section the number of members of a Grama Panchayat shall be fixed by the District Magistrate.
Under sub section
(6) if in an election the requisite number of members of a Grama Panchayat is not elected, the State Government shall appoint persons to fill up the vacancies and the Grama Panchayat so constituted, consisting of elected and appointed members, shall elect a Sarpanch from amongst its members.
Under sub section
(8) the State Government was empowered by notification for sufficient cause to extend the term of office of any Grama Panchayat for a period of one year.
Under a. 11 the State Government may by notification direct that general election of members of a Grama Panchayat be held at any time before the expiration of the term of office of such members includ ing its Sarpanch.
Under section 14 the State Government is authorized to decide any dispute or difficulty arising out of the interpretation of any of the provisions of the Orissa Act or any rule made thereunder or any difficulty which arises in the working of the Act.
Under section 16 the State Government is empowered 961 to remove a Sarpanch on the ground of negligence, inefficiency, or misbehaviour.
Under section 17 a Sarpanch shall give effect to the decision of the Grama Panchayat; provided that if in his opinion any such decision is subversive of peace and order in the locality or results in manifest injustice or unfairness to an individual or body of individuals or a particular community or is generally against public interest, he shall refer the matter to the Sub divisional Magistrate and thereafter act according to such directions as be may receive from such Magistrate.
Under sub section
(2) of this section, the Sub divisional Magistrate may, on his own motion or on the representation by the Sarpanch, set aside a decision of the Grama Panchayat, if he finds that the decision is of the nature as stated above.
Under sub section
(3) of section 18 the Sub divisional Magistrate may nominate any member of the Grama Panchayat to carry on the duties of the Sarpanch till a new Sarpanch is elected on the resignation of the former.
Under section 22 a Grama Panchayat may, if a majority of its members so decide, with the previous approval of the Government and if the Provincial Government so direct undertake within its area the control and administration of and be responsible in the matters mentioned in cls.
(a) to (y).
Clause (x) refers to the doing of anything the expenditure on which is declared by the Provincial Government or by a District Board with the sanction of the Provincial Government to be an appropriate charge on the Grama Sasan 's funds.
Even in the matter of appointing staff to a Grama Panchayat, under section 32 the Grama Panchayat has to prepare a scheme containing its proposals for the employment of whole time or part time staff, for their salaries and allowances and shall submit the same to the prescribed authority who shall have the power to approve or modify or reject the scheme.
Section 35 refers to the liability of the members of the Grama Panchayat or of any Joint Committee or any other Committee constituted under the Orissa Act and provides for the institution of suits against them for loss, waste or misapplication of any property belonging to the 121 962 Grama Panchayat as the result of direct consequence of his neglect or misconduct while a member of the Grama Panchayat, Joint Committee or other Committee.
Under sub section
(3) the Provincial Government has the power to institute such a suit on its own initiative.
Under section 36 all members of the Grama.
Panchayat shall be deemed to be public servants and in the definition of " legal remuneration " in section 161 of the Indian Penal Code" the word " Government" for the purpose of this section shall be deemed to include a Grama Sasan or a Grama Panchayat.
Under section 44(2) a Grama Panchayat with the previous sanction of the State Government may impose a tax, toll, fee or rate on matters referred to in cls.
(a) to (n).
Under sub section
(4) the District Magistrate is authorized to review or revise the tax, toll, fee or rate imposed by Grama Panchayat.
Under sub section
(5) the District Magistrate may by an order in writing require the Grama Panchayat to levy or increase any tax, toll, fee or rate specified in sub section
(2) subject to the conditions 'and restrictions contained therein, if in his opinion the income of the Grama Panchayat is or is likely to be inadequate for the proper discharge of the duties imposed under section 21 or undertaken under section 22.
Under section 97 the District Magistrate is authorized to exercise general powers of inspection, supervision and control over the performance of the administrative duties of the Grama Panchayat.
Section 98 contains the general powers of the District Magistrate and section 99 contains the emergency powers of the District Magis trate in relation to a Grama Panchayat whereby he may by an order in writing prohibit the execution or further execution of a resolution or ail order passed or made by it.
Under section 117 A the State Government may delegate any of its powers.
except the power to make rules, to be exercised or discharged by any officer subordinate to State Government, It was urged on behalf of respondent No. 1 that the above provisions of the Orissa Act clearly made the Grama Panchayat come under the control and supervision of the State Government and that the duties and functions of the Grama Panchayat to be performed by its 963 Sarpanch were governmental duties.
It was further urged that in considering whether a Sarpanch was a person in the service of Government the essential elements to be borne in mind were the control and supervision over him by the State Government and its power to remove him from his office.
Neither the absence of appointment by the State Government nor the non payment of remuneration by it would be factors indicating that he was not in the service of the Government.
In our opinion, there is a distinction between I serving under the Government ' and I in the service of the Government ', because while one may serve under a Government, one may not necessarily be in the service of the Government; under the latter expression one not only serves under the Government but is in the service of the Government and it imports the relationship of master and servant.
There are, according to Batt (On the Law of Master and Servant), two essentials to this relationship: (1) The servant must be under the duty of rendering personal services to the master or to others in his behalf and (2) the master must have the right to control the servant 's work either personally or by another servant or agent and, according to him, " It is this right of control or interference, of being entitled to tell the servant when to work (within the hours of service) or when not to work, and what work to do and how to do it (within the terms of such service), which is the dominant characteristic in this relation and marks off the servant from an independent contractor, or from one employed merely to give to his employer the fruits or results of his labour.
In the latter case, the contractor or performer is not under his employer 's control in doing the work or effecting the service; he has to shape and manage his work so as to give the result he has contracted to effect.
Consequently, a jobbing gardener is no more the servant of the person employing him than the doctor employed by a local authority to act as visiting physician to its fever hospital".
None of the provisions of the Orissa Act suggest that as between the State Government and the Grama 964 Panchayat and its Sarpanch any such relationship exists.
It is true that the State Government, the District Magistrate and the Sub divisional Magistrate have been given certain powers of control and supervision over the Grama Panchayat but those powers of control and supervision are in relation to the administrative functions of the Grama Panchayat and the Sarpanch.
The Grama Panchayat is an autonomous body exercising functions conferred under the statute.
It can hardly be said that the Grama Panchayat in so functioning is in the service of the Government.
Its administrative functions are akin to the functions generally performed by Municipalities and District Boards.
It would be a conception hitherto unknown to suppose that any Municipality or District Board was in the service of the Government merely because it exercised administrative functions and to some extent was under the control of the Government.
Co operative societies generally are very much under the control and supervision by the State Government or one of its officers authorized in that behalf.
It would be difficult to accept the suggestion that because of that a Cooperative society and its members must be regarded as in the service of the Government.
Even with respect to companies, progressively, legislation has been giving power to the Government to control and supervise them.
Under section 259 of the Indian , in certain circumstances, any increase in the number of its directors must be approved by the Central Government and shall become void if it is disapproved.
Under section 269, in the case of a public company or a private company which is a subsidiary of a public company, the appointment of a managing or whole time director for the first time after the commencement of this Act in the case of an existing company, and after the expiry of three months from the date of its incorporation in the case of any other company, shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by the Central Government.
Under section 408 the Government has the power to prevent mismanagement in the affairs of the 965 Company and under the proviso in lieu of passing any order under sub section
(1) the Central Government may, if the company has not availed itself of the option given to it under section 265, direct the company to amend its Articles in the manner provided in that section and make fresh appointments of directors in pursuance of the Articles as so amended, within such time as may be specified in that behalf by the Central Government.
Section 409 empowers the Central Government to prevent change in the number of directors likely to affect the company prejudicially.
It could not be said, because of these provisions, that a company was in the service of the Government.
It seems to us, therefore, that the mere power of control and supervision of a Grama Panchayat exercising administrative functions would not make the Grama Panchayat or any, of its members a person in the service of the Government.
Even if it could be said that the Grama Panchayat in the exercise of its administrative functions exercised duties in the nature of Governmental duties it could not thereby be said that its Sarpanch was in the service of the Government.
So far as the Sarpanch is concerned, he is merely the executive head of the Grama Panchayat which carries out its functions through him.
He is not appointed by the Government.
He is not paid by the Government.
He does not exercise his functions as one in the service of the Government and he can only be removed on the ground of negligence, inefficiency or misbehaviour.
We have been unable to find a single provision of the Orissa Act from which we could say that a Sarpanch is a person in the service of the Government.
Reference had been made on behalf of the respondent No. 1 to section 31 of the Orissa Act which authorizes the Grama Panchayat to enter into a contract with the State Government to collect all or any class of taxes or dues payable to the Government at a prescribed percentage as collection charges.
As the Grama Sasan is a body corporate and the Grama Panchayat is its executive authority, the statute enabled the Grama Panchayat by provisions of section 31 to enter into a contract with the State Government to collect its taxes and its dues.
It 966 cast no obligatory duty upon the Grama Panchayat to collect such taxes or dues of the Government.
No provision of the Orissa Act has been placed before us by which the State Government could order a Grama Panchayat to collect its taxes or its dues.
Furthermore, under el.
(b) to section 31, a Grama Panchayat is authorized to enter into similar contracts with proprietors or land holders to collect their rents.
The provisions of section 31 militate against the theory that the Grama Panchayat is in the service of the Government.
There would be no occasion for such a provision if the Grama Panchayat was in the service of the Government in which case it would have to carry out the orders of the Government to collect its taxes or its dues.
Even if on a reasonable construction of the provisions of the Orissa Act it could be held that a Sarpanch of the Grama Panchayat was a person in the service of the Government, it would have to be further held that he was of the class of officers mentioned in section 123(7)(f).
Clause (f), in the first instance, speaks of a person in the service of the Government who is a revenue officer and then further extends the class to village accountants.
The words " such as patwaris, lekhpals, talatis, karnams and the like " are merely descriptive of the words " Revenue officers including village accountants".
Under cl.
(f) it is essential that a person in the service of the Government must be a revenue officer or a village accountant, by whatever name such officer or village accountant may be described.
The exclusion of every other village officer from the provisions of cl.
(f) compels the conclusion that before this clause can apply to a Sarpanch of the Grama Panchayat under the Orissa Act it must be proved that he is either a revenue officer or a village accountant.
The mere fact that under section 31 of the Orissa Act a Grama Panchayat is enabled to enter into a contract with the State Government to collect its taxes or its dues cannot convert a Sarpanch into a revenue officer.
No doubt a Grama Panchayat would have to supervise and maintain village and field boundary marks and village records if required to do 967 so by the State Government under section 21(r) of the Orissa Act.
In the present case there is no proof that the Grama Panchayats in question were required to do any such thing by the Government.
It is significant that under section 54(1)(xiv) of the Orissa Act it is a choukidar appointed under that Act by the District Magistrate on whom a statutory duty is cast to keep watch over boundary marks and report to the Grama Panchayat any loss or damage caused to the boundary marks defining villages.
The Grama Panchayat, however, has not been assigned positively any functions under the Orissa Act which are discharged by a revenue officer.
The provisions of section 21(r) would not by itself convert a Sarpanch of a Grama Panchayat into a revenue officer.
Similarly, there is no provision of the Orissa Act which shows that a Sarpanch is a village accountant.
It had been suggested on behalf of respondent No. 1 that if it could be established that a Sarpanch was a revenue officer or a village accountant, then the very fact that he was such a person made him a person in the service of the Government.
It is doubtful whether any such necessary conclusion arises, but there is no need to make further reference to this submission as, in our opinion, a Sarpanch of the Grama Panchayat under the Orissa Act is neither a revenue officer nor a village accountant.
It follows, therefore, that in the present case the two essential elements that a Sarpanch must be a person in the service of the Government and that he belongs to the class mentioned in cl.
(f) of sub section
(7) of section 123 have not been established.
Even if one of them had been established and not the other the provisions of section 123(7) would not apply to such a person.
In our opinion, the High Court erred in supposing that because a. Sarpanch of a Grama Panchayat under the Orissa Act exercised governmental duties he must be regarded as a person in the service of the Government.
The High Court did not give any clear finding that a Sarpanch, even if a person in the service of the Government, was either a revenue officer or a village accountant.
In our opinion, the provisions of section 123(7) do not apply to him.
Therefore, it cannot.
be said that 968 any corrupt practice under section 123 had been established in the case and the election of the appellant could not be set aside on the only ground on which his election had been set aside by the High Court.
The appeal is accordingly allowed with costs and the election petition of 'respondent No. 1 is dismissed.
Appeal allowed.
| In exercise of the powers under section 3 Of the Essential Com modities Act, 1955, and under cl. 5 of the Sugar (Control) Order, 1955, the Government of India issued a notification dated July 30, 1958, fixing the ex factory price per maund of sugar produced in Punjab, Uttar Pradesh and North Bihar.
The petitioners challenged the legality of the notification on the grounds (1) that it was beyond the ambit of authority conferred on the Central Government under section 3 of the Essential Commodities Act, 955, and clause 5 Of the Sugar (Control) Order, 1955, and that, in any case, it was bad as it could not subserve the purposes of the Act ensuring equitable distribution of the commodity to the consumer at a fair price, (2) that the Act and the Order did not authorise the Central Government to fix ex factory prices, and,, in any case, the notification failed to fix prices for the ultimate consumer, (3) that it imposed an unreasonable restriction on the right to trade under article 10(1)(g), inasmuch as it fixed the price arbitrarily, and there was no reasonable safeguard against the abuse of power, and (4) that it was discriminatory because it fixed ex factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of India and there was no reasonable classification discernible on any intelligible differentia on the basis of which prices had been controlled in certain regions only.
Held, (1) The notification dated July 30, 1958, is within the authority conferred on the Central Government by section 3 Of the , and cl. 5 of the Sugar (Control) Order,1955.
(2) Section 3 of the Act which provides for control of price is very general in terms and authorises the Central Government to fix the ex factory price of sugar without fixing the wholesale or retail prices; and, since fair prices for the consumer are ensured by fixing the ex factory price, the notification in question subserves the purposes of the Act, and is valid.
(3) Clause 5 of the Sugar (Control) Order, 1955, lays down the factors which have to be taken into consideration in fixing prices, and as the prices were fixed in accordance therewith, the 124 action taken by the Government in the interests of the general public could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under article 19(1)(g) of the Constitution.
(4) Though under the notification prices are fixed for fac tories only in Punjab, Uttar Pradesh and North Bihar, in effect, they are fixed for the whole of India, as the other States are deficit ; consequently, the notification brought about no discrimination between different regions.
|
N: Criminal Appeal Nos.
150/76 and 285 of 1976.
Appeals by special leave from the Judgment and Order dated 29.1.1976 of the Bombay High Court in Cr. A. 526/73.
section B. Bhasme, V. N. Ganpule and Mrs. V. D. Khanna for the Appellant in Cr. A. 150/76.
U. R. Lalit and K. R. Chowdhary for the Appellant in Cr.
A. 285/76 70 R. N. Sachthey and M. N. Shroff for the Respondents in both the Appeals.
The Judgment of the Court was delivered by BAHARUL ISLAM J.
These two appeals arise out of a common judgment and order passed by the High Court of Bombay, Criminal Appeal No. 150 of 1976 has been preferred by two appellants, Mohammad Usman Mohammad Hussain Maniyar (hereinafter "Usman") and Mohammad Taufik Mohammad Hussain Maniyar (hereinafter 'Taufik ') and Criminal Appeal No. 285 of 1976 has been preferred by Mohammad Hussain Fakhruddin Maniyar (hereinafter 'Fakhruddin) and Mohammad Rizwan Mohammad Hussain Maniyar (hereinafter 'Rizwan ').
All of them were convicted and sentenced by the Sessions Judge as follows: (i) Under Section 120B of the Penal Code and sentenced to suffer rigorous imprisonment for three years, each; (ii) Under Section 5 of the Explosive Substances Act and sentenced to rigorous imprisonment for three years each, and to pay a fine of Rs. 1000 each, in default, to suffer rigorous imprisonment for two months, each; (iii) Under Section 5 (3) (b) of the Explosives Act and sentenced to suffer rigorous imprisonment for six months, each, and to pay a fine of Rs. 500/ in default, to suffer rigorous imprisonment for one month, each; (iv) Under Section 3 read with Section 25(1) (a) of the Arms Act and sentenced to suffer rigorous imprisonment for two months each; (v) Under Section 30 of the Arms Act and sentenced to pay a fine of Rs. 100/ each, in default, to suffer rigorous imprisonment for two weeks, each; (vi) Under Section 6 (1) (a) of the Poisons Act read with Rule 2 of the Rules framed under the said Act and sentenced to suffer rigorous imprisonment for one month, each, and to pay a fine of Rs. 50/ each, in default, to suffer rigorous imprisonment for 15 days, each.
The substantive sentences were directed to run concurrently.
The first two preferred one appeal and the second two a separate appeal before the High Court.
The High Court by a common judgment dismissed both the appeals.
Hence this appeal before us 71 by special leave.
This common judgment of ours will dispose of both the appeals.
During the pendency of the appeal before this Court, appellant, Fakhruddin, died on 10.10.1978.
His legal representatives have been brought on record as there are sentences of fine against the deceased appellant.
The facts necessary for the purpose of disposal of these appeals may be stated thus: In the year 1967 a number of murders were perpetrated by a gang of murderers.
During the course of investigation into these offences, potassium cyanide was found to have been used for poisoning the victims.
On 11.9.1964, P.W.17, Bendre, P.S.I, who was attached to the local crime branch at Sholapur received an information that the firm known as M.F. Maniyar & Sons was selling potassium chlorate which is a highly explosive substance.
He then initiated the work of finding out the persons responsible for the supply of the explosive to the miscreants.
He received information that appellant, Fakhruddin, was the owner of the shop known as M.F. Maniyar & Sons, situated at house No. 383, East Mangalwar Peth, Sholapur, and possessed licence for sale and storage of potassium chlorate in House No. 615 in East Mangalwar Peth; Fakhruddin with the assistance of his three sons (appellants 2 to 4) and his servants stored at the place mentioned in their shop situated at house No. 383, East Mangalwar Peth, to persons who did not possess licence to purchase potassium chlorate.
P.W. 17 and Sub inspector Tasgaokar of the local Intelligence Branch proceeded to Mangalwar Peth Police Chowky and called a bogus customer 'Basanna Pujari ' by name.
He also called the local panchas.
He, then, gave a ten rupee currency note to P.W.4.
He initialled the currency note.
He also gave a bag to P.W.4. and told him to buy half kg.
of potassium chlorate from M/s. M.F. Maniyar & Sons.
P.W.4 went to the shop.
He found in the shop accused Chandra Kant (since acquitted), who was a servant of Fakhruddin.
P.W.5 gave him the ten rupee currency note and asked for half kg.
of potassium chlorate.
which he said he needed for blasting purpose.
Chandra Kant gave him half k.g of potassium chlorate and returned an amount of Rs. 2.50p.
P.W.4 took the powder in the bag and was returning.
Police challenged him and seized the bag.
Police interrogated him.
He told police in presence of the Panchas that he had purchased the powder which was inside of the bag from M.F. Maniyar and got back Rs. 2.50P. P.W.17 searched the cash box in the firm of Fakhruddin and found 72 the ten rupee currency note initialled by him.
The shop was searched and 220 grams of Black gun powder was found in the show case.
He then alongwith the panchas went up to the first floor.
They found black gun powder there also.
They found it to be a mixture of potassium chlorate and sulphate used for fire arms.
Samples were sealed and one of them was given to appellant, Fakhruddin.
A panchnama, Ex.20, was prepared.
P.W.17, thought it necessary to send for an expert to identify the powder.
He, therefore, posted some constables at the shop, sealed appellants ' godowns in Mangalwar Peth and Shukrawar Peth and made panchnamas, Exhibits 22 and 23.
Next morning, he sealed both the shops and prepared panchnamas Exhibits 24 and 25.
On 13th September, he sent the samples to the Explosives Inspector.
On the 14th he lodged a complaint at the Jail Road Police Station at Sholapur.
Police registered a case and the P.S.I started investigation.
The P.S.I sent for the Drugs Inspector and the Central Excise Inspector.
All of them, then visited the appellants ' godowns at Shukarwar Peth at Sholapur.
They found the shops in the sealed condition.
A search was conducted in the presence of the appellants.
The Police officer and others, having observed due formalities, searched the premises.
In course of the search they found and seized some powder as per Panchnama, exhibit 27.
Samples of the powder seized were also given to the appellants.
After that they went and searched the appellants ' premises in Mangalwar Peth.
Nothing incriminating was found there.
They, then, returned to the firm M/s. M.F. Maniyar and searched it.
They found and seized some powders as per Panchnama, exhibit 28.
Samples of these powders also were given to the appellants.
On the same night they found 49 percussion caps on the roof of the adjacent shop and seized them as per Ext.
On the same night P.S. I., Patil, received a panchnama made by P.S.I., Joshi, (P.W.18) under which detonators had been seized.
Acting on an information from P.W. 17.
P.W. 18 arrested appellant, Taufik on September 15, 1967.
Appellant, Taufik told the police that he had buried some detonators in the compound of his bungalow and he would produce them.
Accordingly, he led P.W. 18 to his bungalow which was admittedly in occupation of all the appellants, removed some earth under a mango tree in the premises and took out three tins containing 20 packets of detonators.
It was seized under panchnama, exhibit 33.
As the detonators were explosive they were not opened.
Taufik was arrested and produced before P.W.17.
The Explosives Inspector was of the opinion that some of the explosives seized were highly explosive.
P.W.17, then, with the 73 permission of the District Superintendent of Police destroyed the explosives as instructed by the Explosives Inspector.
During the course of investigation from 11.9.1967 to 15.9.1967 the following arms and explosives were seized: (1) 200 grams of highly explosive gun powder.
(2) 40 kg.
and 150 grams of blasting powder.
(3) 3 kg.
and 350 g. of mixture of potassium chlorate and sulphur.
(4) 54 detonators.
(5) 251 caps like contrivances containing prohibited mixture of red arsenic sulphide and chlorate used to act as improvised percussions caps.
(6) 104 kg.
and 500 g. of potassium chlorate.
(7) 37.5 kg.
of special gelatines.
(8) 300 kg. of sulphur.
(9) 2496c campion crackers of prohibited size and containing prohibited mixtures.
(10) 510 grams of potassium cyanide.
(11) About 450 kg. of sulphur.
(12) 217 caps like contrivances of the same description as is the case with item No. 5 above.
(13) 2500 detonaters.
(14) 27 live cartridges, 12 bores, and (15) Mixture of sulphur and potassium chlorate 1/2 kg.
Out of these articles, the articles at serial Nos.
1 to 5 were found in the shop of M/s. M.F. Maniyar & Sons.
Articles at serial numbers 6 to 11 were found in the clandestine godown situated at 986, Shukarwar Peth at Sholapur on 15.9.1967.
Article at serial No. 12 was found on the roof at East Mangalwar Peth, Shukarwar which is adjacent to the shop of M/s.
M.F. Maniyar & Sons.
Article at serial number 13 were produced by appellant, Taufik, as stated earlier from the compound of their bungalow at 156A, Railway Lines, 74 Sholapur.
Articles at serial number 14 consist of 12 bore cartridges found in the house of accused Abdulla Mandolkar (since acquitted).
They were alleged to have been delivered by appellant, Fakhruddin, to accused, Fateh Ahmed Phuleri (since acquitted).
The article at serial number 15 was the one sold to P.W. 4, Basanna by accused, Chandrakant (since acquitted).
Appellant number 1 is the father of appellants 2 to 4.
Accused Chandrakant and Fateh Ahmed (both since acquitted) were the servants of Fakhruddin working in the shop.
Accused Abdula Mandolkar (since acquitted) was a relation of Fateh Ahmed.
Police after investigation submitted charge sheet.
Eventually the appellants and the three other above named co accused were committed to the court of Sessions for trial.
The allegations against the appellants in substance were that they agreed to do the following illegal acts; (i) to acquire and prepare explosives unauthorisedly and to possess and supply explosives for illegal purposes; (ii) to acquire and possess sulphur unauthorisedly and to sell the same; (iii) to acquire and possess and sell gun powder and cartridges in breach of the conditions of the licence granted under the Arms Act and Explosives Act; (iv) to acquire and stock in clandestine godown and illegally sell potassium chlorate in breach of the conditions of the licence granted under the provisions of the Arms Act; (v) to acquire without licence percussion caps and to sell them illegally; and (vi) to acquire and posssess without licence poison and to sell the same illegally.
The changes were also to the above effect.
The appellants pleaded not guilty.
In his statement under Section 342 of the Code of Criminal Procedure, appellant, Fakhruddin, additionally stated that he alone managed the shop M/s. M.F. Maniyar & Sons from which the incriminating substances were found.
He admitted his presence at the place and at the time of the first raid on the 11th September He has also admitted the search and seizure of articles as per Exhibit 28.
He has also admitted that potassium cyanide was purchased and possessed by him but he has pleaded that he was told that no licence was necessary for possessing potassium cyanide.
Mr. Lalit learned Advocate, appeared for appellants No. 1 & 2 and Mr. Bhasme, learned Advocate, appeared for appellants 3 & 4.
Learned counsel have not challenged the convictions and sentences of the appellants under Section 5(3)(b), Section 3 read 75 with Section 25(1)(a), and Section 30 of the Arms Act, and under Section 6(1)(a) of the Poison Act read with rule 2 of the rules framed under that Act.
They have only challenged the conviction and sentences under Section 5 of the Explosive Substances Act, and Section 120B of the Penal Code.
We are, therefore, called upon to examine the correctness or otherwise of the convictions under Section 5 of the Explosive Substances Act and Section 120B of the Penal Code.
Let us first consider the conviction under Section 5 of the Explosives Substances Act.
The Section reads as follows: 5. "Any person who makes or knowingly has in his possession or under his control any explosive substance, under such circumstances as to give rise to a reasonable suspicion that he is not making it or does not have it in his possession or under his control for a lawful object, shall, unless he can show that he made it or had it in his possession or under his control for a lawful object, be punishable with transportation for a term which may extend to fourteen years, to which fine may be added, or with imprisonment for a terms which may extend to five years, to which fine may be added" 10.
In order to bring home the offence under Section 5 of the Explosive Substances Act, the prosecution has to prove; (i) that the substance in question is explosive substance; (ii) that the accused makes or knowingly has in his possession or under his control any explosive substance; and (iii) that he does so under such circumstances as to give rise to a reasonable suspicion that he is not doing so for a lawful object.
The burden of proof of these ingredients is on the prosecution.
The moment the prosecution has discharged that burden, it shifts to the accused to show that he was making or possessing the explosive substance for a lawful object, if he takes that plea.
Explosive substance has been defined in section 2 of the Explosive Substances Act.
The definition is as follows: "2.
In this Act the expression "explosive substance" shall be deemed to include any materials for making any explosive substance; also any apparatus, machine, implement or material used, or intended to be used, or adapted for causing, or aiding in causing, any explosion in or with any explosive 76 substance; also any part of any such apparatus, machine or implement." "Explosive substance" has a broader and more comprehensive meaning than the term 'Explosive ', 'Explosive substance ' includes 'Explosive '.
The term 'Explosive ' has not been defined in the Act.
The dictionary meaning of the word 'Explosive ' is 'tending to expand suddenly with loud noise; 'tending to cause explosion ' (The Concise Oxford Dictionary).
In the Explosives Act, the terms 'explosive ' has been defined as follows: "4.
In this Act, unless there is something repugnant in the Definitions, subject or context, (1) "explosive" (a) means gunpowder, nitro glycerine, dynamite, guncotton, blasting powders, fulminate of mercury or of other metals, coloured fires and every other substance, whether similar to those above mentioned or not, used or manufactured with a view to produce a practical effect by explosion, or a pyrotechnic effect; and (b) includes fog signals, fireworks, fuses, rockets, percussion caps, detonators, cartridges, ammunition of all descriptions, and every adaptation or preparation of an explosive as above defined;" It may be mentioned that the definition of 'explosive ' under Section 4 was amended later, but we are not concerned with the amendment as the occurrence in the instant case took place before the amendment.
On a consideration of the evidence of the Explosives Inspector, and other evidence.
the Sessions Judge and the High Court have found, in our opinion correctly, that the substances in question were explosive substances within the definition of the expression.
In the instant case, appellant I has admitted, as stated earlier, that these articles were seized from his possession.
The evidence also shows that his three sons, appellants 2 to 4, used to manage and run the shop M. F. Maniyar & Sons from which the incriminating substance were seized.
It was argued by learned counsel that possession within the meaning of Section 5 of the Explosive Substances Act means 77 'conscious possession '.
There can be no doubt about it.
The substances seized were not minute or small in quantity.
They were in large quantities.
In fact half k.g. of the incriminating substance was sold to P. W. 4 by an employee of the firm.
The detonators were produced by appellant No. 3 from the premises of the Bungalow occupied by all the occupants.
It cannot but, therefore, be held that the appellants were in 'conscious possession ' of the substance seized.
The notification dated 1st of April, 1966 published by the Government of India, Ministry of Works and Housing and Urban Development (exhibit 65) reads as follows: "NOTIFICATION" No. 3/12/65 PII (IX) In exercise of the powers conferred by Section 6 of the Indian (4 of 1884), and in supersession of the notification of the Government of India in the later Department of Labour No. M 1217, dated the 9th February 1939, the Central Government is pleased to prohibit the manufacture, possession and importation of any explosive consisting of or containing sulphur or sulphurate in admixture with chlorate or potassium or any other chlorate; Provided that this prohibition shall not extend to the manufacture or possession of such explosive: (a) in small quantities for scientific purpose; (b) for the purpose of manufacturing heads of matches; or (c) for use in toy amorces (paper caps for toy pistols).
Sd/ P. Rajaratnam Under Secretary to the Government of India" The appellants had no licence or authority to make or possess the explosive substances as required by the above Government notification.
The licence possessed by them is dated 31.3.1956 (Exhibit 90) which was not in pursuance and in conformity of the aforesaid Government Notification.
The possession of the 'explosive substances ' by the appellants, therefore, were without any authority.
78 15.
Learned counsel for the appellants cited before us 1939 (2) All E. R. 641 in support of his contention.
The head note of the report reads: "Upon an indictment against an accused for knowingly having in his possession explosive substances, the prosecution has to prove that the accused was in possession of an explosive substance within the Explosive Substances Act, 1883, section 9, in circumstances giving rise to a reasonable presumption that possession was not for a lawful object.
Proof of knowledge by the accused of the explosive nature of the substance is not essential, nor need any chemical knowledge on the part of the accused be proved.
" The appellants have also cited another English decision reported in in which it has been observed: "We think that the clear meaning of the section is that the person must not only knowingly have in his possession the substance but must know that it is an explosive substance.
The section says he must knowingly have in his possession an explosive substance; therefore it does seem that it is an ingredient in the offence that he knew it was an explosive substance.
" With respect, the above decisions lay the correct legal proposition.
But the question is whether in his case appellants knew that the substances in question were explosive substances.
The knowledge whether a particular substance is an explosive substance depends on different circumstances and varies from person to person.
An ignorant man or a child coming across an explosive substance may pick it up out of curiosity and not knowing that it is an explosive substance.
A person of experience may immediately know that it is an explosive substance.
In the instant case, the appellants had been dealing with the substances in question for a long time.
They certainly knew or atleast they shall be presumed to have known what these substances they were and for what purpose they were used.
In fact, when P. W. 4 Basanna asked for half k. g. of blasting powder, appellants ' servant, accused Chandrakant, immediately supplied the requisite powder to P. W. 4 from the shop.
This evidence clearly establishes that the appellants did know the nature and character of the substance.
In other words, they knew that the substances in question were explosive substances.
The courts below therefore, were right in holding that an offence under Section 5 of the Explosive Substances Act was committed.
79 16.
Learned Counsel submitted that the evidence on record shows that appellant, Fakhruddin, alone acquired and possessed the substance in question.
That was the plea of Fakhruddin.
It also might be true that Fakhruddin also had acquired the substances but the evidence on record clearly shows that all the appellants were in possession and control of the substances in question.
The submission of the appellants has no substance and all the four persons are liable for the offence.
Now to turn to the conviction under Section 120B of the Penal Code.
Section 120B provides: "120B. (1) Whoever is a party to a criminal conspiracy to commit an offence punishable. . . " `Criminal conspiracy ' has been defined under Section 120A of the Penal Code as follows: "120 A.
When two or more persons agree to do, or cause to be done. (1) an illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy: Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some tact besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Explanation.
It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object," The contention of learned counsel is that there is no evidence of agreement of the appellants to do an illegal act.
It is true that there is no evidence of any express agreement between the appellants to do or cause to be done the illegal act.
For an offence under section 120B, the prosecution need not necessarily prove that the perpetrators expressly agreed to do or cause to be done the illegal act; the agreement may be proved by necessary implication.
In this case, the fact that the appellants were possessing and selling explosive substances without a valid licence for a pretty 80 long time leads to the inference that they agreed to do and/or cause to be done the said illegal act, for, without such an agreement the act could not have been done for such a long time.
Mr. Lalit additionally submitted that appellant No. 2 Rizwan did not do any overt act.
He was a mere partner of M/s. M.F. Maniyar & Sons and as such his conviction has been bad in law.
The submission is not correct.
For, appellant Rizwan himself in his statement under Section 342, Cr. P. C., has stated "Myself (and) accused Nos. 1 and 4 looked after the business of the Firm.
M.F. Maniyar & Sons".
The learned courts below on a consideration of the evidence on record have come to the conclusion that he also occasionally used to work in the firm.
We do not have valid reason to differ from them.
Now comes the question of sentence.
The real man in the entire clandestine trade was appellant No. 1, who is now dead.
The three other appellants being his sons were merely assisting him.
We are told that appellant No. 2, Rizwan, has already served 81/2 months of imprisonment and appellants 3 and 4, Usman and Taufik, six months of imprisonment each.
In our view ends of justice will be met if the sentences of imprisonment are reduced to the periods already undergone by the three living appellants.
In addition to the sentence of imprisonment there was a fine of Rs. 1000/ each for the offence under Section 5 of the Explosive Substances Act and also sentence of fine against the appellants under Section 5(3) (b) of the and under Section 30 of the Arms Act.
In our opinion, ends of justice will be met if the fine under Section 5 of the Explosives Substances Act is remitted in case of all the appellants, including appellant No. 1, Fakhruddin.
With the above modification in the sentence the appeals are dismissed.
section R. Appeals dismissed.
| The two deceased were the two younger half brothers of the first respondent.
A day before the day of the murder of the two deceased, the brothers had divided the family properties and started living separately.
P.W. 3, the wife of one of the deceased, in the F.I.R. given to the police, stated that on the day of the occurrence when the two deceased and she went to the bagichi for milking the cattle, the first respondent and his sons surrounded the two deceased in the court yard, the first respondent dealt a blow on the head of her husband with a gandasi while the others gave lathi blow on the second deceased.
Both of them succumbed to the injuries.
It was also stated in the F.I.R. that P.W. 4, the sister of the deceased, was with her at the time of the occurrence and that when they screamed, the assailants asked them to keep quiet on pain of death to them.
The assailants, it was alleged, thereafter dragged the two dead bodies and burnt them in the nearby heap of cow dung cakes after pouring kerosene on the heap.
The defence of the two accused was alibi.
All the accused, who were charged of offences under section 302 read with section 34 of the Penal Code were sentenced; the first respondent to death and the others to imprisonment for life.
On appeal, the High Court set aside the conviction and sentences and acquitted all of them.
Allowing the State 's appeal, ^ HELD : 1.
When an accused pleads alibi, the burden of proof under section 103 of the Evidence Act is on the accused.
The plea of all the accused that they were elsewhere at the time of the offence is not true.
[4 G, 5 C] 2.
The guilt of the two respondents had been established beyond all reasonable doubt.
The High Court rejected the evidence of P.W. 10 on the ground that he had not stated in the statement before the police that in the partition of the family properties among the brothers, there was a hitch.
The prosecution is not bound to prove motive of any offence in a criminal case, for motive is known only to the perpetrators of the crime and may not be known to others.
If the motive is proved by the prosecution, the Court has to consider it and see whether it is adequate.
[11E, 6 B C] 2 In the instant case the motive proved is apparently inadequate, although it might be possible.
[6 C] 3.
The High Court had taken a wrong view in rejecting the evidence of P.Ws. 3 and 4 on the ground that they were close relations of the deceased; that it was highly improbable that P.W. 3 who was in advance stage of pregnancy would go to the place of occurrence.
[8F; 9F G] 4.
Although both the witnesses P.Ws. 3 and 4 were close relations of the deceased, their evidence could not be rejected solely on that ground.
They were also related to the respondents and there is nothing on record to show that they were inimically disposed towards the respondents to falsely implicate them in the murder.
Secondly, it was a pure conjecture of the High Court when it said that panchas and sarpanchas and other respectables of the village took an opportunity to implicate the respondents.
It was also a conjecture on the part of the High Court to say that the deceased were murdered by unknown culprits and that the respondents were falsely implicated by the village respectables.
The High Court found as a fact that the respondents and the deceased slept in the bagichi during nights to keep watch over the cattle.
Had the murder been perpetrated by unknown persons, the respondents would have intervened and informed the neighbours.
[8F 9B] 5.
The fact that P.W. 3 did not mention in the F.I.R. that she had informed some persons of the village before the lodging of the F.I.R. and that for this reason her statement could not be relied on is not correct.
The F.I.R. need not contain all details of the occurrence nor does the omission to mention the name of persons whom she informed in the village detract from the credibility of the report.
The omission is a mere omission of details and not a contradiction.
[9 C] 6.
The High Court was not right in disbelieving the evidence of P.W. 4 on the ground that had she been present at the scene of occurrence, she would have out of love for her real brothers, intervened and tried to save them.
There is nothing unnatural if she had out of a sense of self preservation at the threat of the assailant refrained from attempting to save the two deceased from the murder.
P.W. 3 must have been dazed at the brutal murder of her husband and brother in law.
In such a situation she could not be expected to mention all the details, in the F.I.R. and therefore, the High Court was not right in rejecting the evidence of P.W. 10 solely on the ground that no mention of the extra judicial confession of Respondent No. 1 had been made in the F.I.R. [9H 10B; 10D E] 7.
In view of the fact that the conviction and sentence were passed by the Session Judge in July, 1974 and the High Court passed the order of acquittal in 1975, the extreme penalty of death given to the first respondent is not called for now; ends of justice will be met if all the respondents are sentenced to imprisonment for life.
[11 G]
|
Appeal No. 717 of 1973.
Appeal by Special Leave from the Judgement and Order dated 27 10 1972 of the Allahabad High Court in Sales Tax Ref.
No. 857/71.
section Markandeya, for the Appellants.
O. P. Verma, for the Respondent.
The Judgment of the Court was delivered by SEN J.
This is an appeal from a judgment of the Allahabad High Court dated October 27, 1972 which was given upon a reference of certain questions of law made to the High Court by the Additional Judge (Revisions), Sales Tax, Meerut in compliance with its directions under sub section
(4) of section 11 of the U.P. Sales Tax Act, 1948 calling for a statement of the case.
The two questions referred were as follows: 1.
Whether there is no material in support of best judgment assessment ? 2.
Whether on the facts and in the circumstances of this case the assessee acted in respect of the estimated purchase turnover of Rs. 3,80,000 as a dealer so as to be liable to purchase tax ? The Commissioner of Sales Tax submitted that the first question should be answered in the negative and the second in the affirmative.
The High Court decided in favour of the assessee and against the Commissioner, holding that the submission of the assessee was right and answered both the questions to the contrary.
From this decision the appellant, the Commissioner of Sales Tax, has appealed.
The reference arose out of assessment for the assessment year 1967 68 of Messrs Bishamber Singh Layaq Ram which carries on business in jaggery, amchur, khandsari etc.
on its own account and as kuccha arhatiya in jaggery, foodgrains etc.
at Shahpur in the district of Muzaffarnagar, and is registered as a dealer under section 8 A of the Act (hereinafter referred to as 'the assessee ').
The material facts may be stated as follows: During the assessment year in question, the Sales Tax Officer, Muzaffarnagar by his order dated December 27, 1968 rejected the account books of the 551 assessee on the basis of some discrepancies found during the four surveys carried out at his shop and made a best judgment assessment under sub section
(3) of section 7 of the Act, determining the taxable turnover of purchases effected by it as a kutcha arhatiya at Rs. 5,30,000 and the tax payable thereon at Rs. 25,450.
On appeal the Assistant Commissioner (Judicial), Sales Tax, Muzaffarnagar by his order dated August 11, 1969 reduced the taxable turnover of purchases by Rs. 1,50,000 and the tax by Rs. 7,500.
There were two cross revisions by the Commissioner of Sales Tax and by the assessee, both of which were allowed by the Additional Judge (Revisions), Sales Tax, Meerut who by his order dated February 10, 1970 while negativing the plea of the assessee that he was not a dealer, however, felt that on the material on record, the taxable turnover of the assessee could not reasonably be determined at Rs. 3,80,000.
He accordingly set aside the orders of the Assistant Commissioner (Judicial) and of the Sales Tax Officer and directed that there should be a fresh best judgment assessment.
Upon reference, the High Court on question No. 2, as to the liability of the assessee to tax on transactions effected by it as kutcha arhatiya held that the assessee was not a dealer, observing: "If the assessee is a Kutcha Arhatiya then he is not liable to sales tax.
The change in the definition of the word 'dealer ' in 1961 upon which the Judge (Revisions) has relied does not change the situation.
A person can be liable to tax as a dealer only if he acts as an agent having the authority to pass title in the goods sold.
A kutcha arhatiya merely brings together the seller and the purchaser and helps in settling the price and weighing the goods etc.
The fact that he sometimes advances money to cultivators who bring their produce for sale or sometimes pays the entire sale price to the cultivator from his own pocket is not inconsistent with his being a kutcha arhatiya.
" It was rightly contended on behalf of the Commissioner that the High Court was wrong in holding that the assessee was not a dealer within section 2(c) of the Act and that the Sales Tax Officer was not justified in making an assessment to the best of his judgment under section 7(3).
It is pointed out that the High Court has completely overlooked Explanation to section 2(c) of the Act which was inserted by the U.P. Sales Tax (Amendment) Act, 1959, particularly the words 'through whom the goods are sold or purchased ' appearing therein.
with regard to the applicability of section 7(3), it is urged that the question was not referred.
552 The finding arrived at by the High Court that the assessee as a kutcha arhatiya merely brought together the seller and the buyer charging an additional sum by way of commission and, therefore, could not be regarded as a dealer, i.e., a person engaged in the business of buying and selling goods, is contrary to the admitted facts of the case.
The facts stated in the agreed statement of the case clearly show that the assessee is not a kutcha arhatiya, in the usual sense of the term, but his business brings into existence the relation of vendor and purchaser.
The nature of the business carried on by the assessee is described thus: "Cultivators bring their produce to the assessee for sale.
The goods are weighed at his shop and then supplied to the pucca arhatiyas or to other persons.
Price of the commodity in full or part is paid by the assessee to the cultivators directly.
The price from the purchasers is readied afterwards.
In any case it is not the responsibility of the cultivators to realise the price from the purchasers.
On the contrary, it is the assessee who is responsible for the payment of the price to the cultivators.
Some times the cultivators are also paid advances and these are adjusted when the price of the produce is paid to the cultivators." (Emphasis supplied) The decision on the question whether the assessee is a dealer must turn on the construction of section 2(c), which insofar as material, reads: "2(c) "dealer" means any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh, whether for commission, remuneration or otherwise, Explanation: A factor, a broker, a commission agent or arhati, a del credere agent, an auctioneer, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying or selling goods on behalf of his principals, or through whom the goods are sold or purchased shall be deemed to be a dealer for the purposes of this Act.
" There can be no doubt that a pucca arhatiya comes within the substantive part of the definition of 'dealer ' contained in section 2(c) of the Act, but the question still remains whether a kutcha arhatiya is covered by the definition, by reason of the Explanation thereto.
The basic distinction between a kutcha and a pucca arhatiya is that a kutcha arhatiya acts as an agent on behalf of his constituent and never acts as a principal to him.
The person with whom he enters into a transaction on behalf of his constituent is either brought into contact with the constituent or at least the constituent is informed of 553 the fact that the transaction has been entered into on his behalf with a particular person.
But in the case of a pucca arhatiya, the agent makes himself liable upon the contract not only to third parties but also to his constituent.
He does not inform his constituent as to the third party with whom he has entered into a contract on his behalf.
Thus, a pucca arhatiya acts as a principal as regards his constituent and not as a disinterested middleman who brings about two principals together, there being no privity of contract between the constituent and the third party, and may substitute his own goods towards the contract made for the principal and buy the principals goods on his personal account.
On the other hand a kutcha arhatiya usually denotes a person who merely 'brings together the buyer and the seller ' charging his commission, who has no dominion or control over the goods, unlike a pucca arhatiya who deals as a principal in relation to both his constituent and to the third party.
The crucial test is whether the agent has any personal interest of his own when he enters into the transaction or whether that interest is limited to his commission agency charges and certain out of pocket expenses, and in the event of any loss his right to be indemnified by the principal.
This principle was applied in the case of pakki arhat by Sir Lawrence Jenkins C.J. in Bhagwandas Narotmdas vs Kanji Deoji and approved of by the Judicial Committee in Bhagwandas Parasram vs Burjorji Ruttonji Bomanji and by this Court in Shivnarayan Kabra vs State of Madras.
As to the incidents of pakkiarhat, Sir Lawrence Jenkins in Bhagwandas Narotamdas 's case succinctly states the legal position, in his own terse language: "A pakka adatia is not, in the proper sense of the word, an agent or even a del credere agent.
The relation between him and his up country constituent is substantially one of principal and principal." In a commercial sense, a kutcha arhatiya acts as an agent on behalf of his constituent.
The main characteristic of a kutcha arhatiya has been described by the Judicial Committee in Sobhagmal Gianmal vs Mukundchand Balia(4) in these terms: "When a katcha adatia enters into transactions under instructions from and on behalf of his up country constituent with a third party in Bombay, he makes privity of contract between the third party and the constituent, so that each becomes liable 554 to the other, but also he renders himself responsible on the contract to the third party.
" Vivian Bose J. in Kalyanji Kuwarji vs Tirkaram Sheolal(1) puts the matter thus: "The test to my mind is this: does the commission agent when he sells have authority to sell in his own name? Has he authority in his own right to pass a valid title? If he has then he is acting as a principal vis a vis the purchasers and not merely as an agent and therefore from that point or he is a debtor of his erstwhile principal and not merely an agent.
Whether this is so or not must of course depend upon the facts in each particular case.
" It is plain, on an examination of the language as it stood at the material time, from the definition of 'dealer ' in section 2(c) that even a selling or purchasing agent is within that definition.
A person to be a 'dealer ' under that definition must be engaged in the business of buying and selling goods in Uttar Pradesh whether for commission, remuneration or otherwise.
Explanation to section 2(c) brought within the definition of 'dealer ' not only a commission agent, a factor, a del credere agent or any other mercantile agent by whatever name called, and whether of such description or not, but also a broker, an auctioneer as well as an arhatiya.
The use of the words "through whom the goods are sold or purchased" in the Explanation is significant, and they must be given their due meaning.
Thus, the definition of 'dealer ' in section 2(c) is wide enough to include a selling or purchasing agent of whatever name or description.
The term 'arhatiya ' is wide enough to include a kutcha arhatiya.
If the Explanation to section 2(c) of the Act were not there, perhaps it could be said that a kutcha arhatiya is merely an agent who helps cultivators who bring their produce to the market for sale, to find buyers, assist them in weighment and secure to them payment of price, but the assessee here certainly does not answer that description.
That apart, the Explanation clearly brings within the definition of 'dealer ' in section 2(c) a kutcha arhatiya.
It was not suggested at any time that the Explanation was ultra vires the State Legislature being beyond the ambit of Entry 54 of List II of the Seventh Schedule.
The constitutional validity of a similar Explanation to section 2(c) of the Bengal Finance (Sales Tax) Act, 1941 which brought an auctioneer within the purview of the definition of 'dealer ' in that section.
was upheld by this Court in Chowringhee Sales Bureau (P) Ltd. vs C.I.T., West Bengal.(2) The whole object is to tax a transaction of sale in the 555 hands of a person who carries on the business of selling goods and who has the legal or customary authority to sell goods belonging to the principal.
It is evident from the statement of the case that the business carried on by the assessee was more or less similar to that of a pucca arhatiya and it is a misnomer to call it a kutcha arhatiya.
It actually purchased the goods from the sellers, i.e., the cultivators, and then sold them in the market to the other buyers, as if they were its own, obviously at a profit.
It paid to the cultivators the price of the goods it purchased and received from the buyers the price at which is sold.
Selling of goods was not simultaneous with receiving them.
These facts can lead to no other conclusion except that it bought and then sold goods and not merely brought buyers into contact with sellers and arranged transactions between them.
In these circumstances, the High Court should have held the assessee to be a dealer under section 2(c) of the Act, read with the Explanation thereto.
There remains the question whether the High Court was justified in holding that there was no basis for making a best judgment assessment.
The Addl.
Judge (Revisions) had remanded the case for a reassessment on the basis of best judgment, on his finding that there was no material whatever on record to enable him to come to a conclusion one way or the other, on the disputed question of fact, i.e., whether the best judgment assessment of the taxable turnover at Rs. 3,80,000 could be sustained.
Though the question of the applicability of section 7(3) of the Act was not, in terms, referred to the High Court under section 11(4), the Addl.
Judge (Revisions) in stating the case mentioned that the assessee had contended before him that his account books had been wrongly rejected.
The statement of the case sets out the details of the various surveys made and the nature of the deficiencies found.
The High Court treating the question referred to be a composite one, embarked upon an enquiry as to whether the Sales Tax Authorities were justified in rejecting the account books and in making the best judgment assessment under section 7(3).
It has referred to the four surveys carried out on August 11, 1967, December 13, 1967, January 7, 1968 and March 8, 1968.
In the first survey held on August 11, 1967 it was found that the Nagal Bahi had not been written for eleven days.
The High Court observes that 'no adverse inference could be drawn on this account because the assessee 's explanation was that there were no cash transactions for this period, and, therefore, the Nagal Bahi had not been written '.
With regard to the second survey carried out on December 13, 1967 it was discovered that there was 556 a loose parcha containing several entries.
One of the entries of Rs. 371.17 in the name of Sakh Chand Udit Mohan alone was entered in the account books.
That too on December 13, 1967 after inspection while the payment was actually made on December 11, 1967, i.e., it was not contemporaneous with the transaction.
The High Court observes that 'it has not been found that any other entry contained in the loose parcha had not been entered in the account books ', With regard to the third survey carried out on January 7, 1968 when twelve bags of wheat were found in stock, the stock register was not shown to the surveying officer.
The High Court has again accepted the explanation of the assessee saying that 'there was no duty cast on the assessee to produce the stock register and it was not shown since there was no demand for it '.
It observes that 'there is nothing in section 13 or in any other provisions of the Act or the rules framed thereunder which requires a dealer to produce his books of accounts and other documents, before the surveying officer '.
As regards the last survey held on March 8, 1968 the Mondhi Bahi was found to be posted upto February 29, 1968.
Thus there were no entries for eight days.
The explanation of the assessee was that it had not entered into any contract during the eight days in question.
The High Court observes that 'as there was no material whatever for rejecting his explanation, no adverse inference could be drawn with regard to the veracity of the accounts, since Mondhi Bahi is not a necessary account book '.
We are not inclined to agree with this line of reasoning.
While we refrain from expressing any opinion on the requirements of section 13(2) of the Act, we are satisfied that the finding of the High Court that there was nothing wrong with the method of accounting adopted by the assessee cannot be upheld.
In our opinion, the High Court should have declined to go into the question of the applicability of section 7(3) of the Act.
When a question of law was neither raised before the Addl.
Judge (Revisions) nor considered by him nor did it arise on the findings given by him, it will not be a question arising out of his order.
The question as to whether the Sales Tax officer was justified in making a best judgment assessment under section 7(3) of the Act was not referred to the High Court.
It was, therefore, not open to the High Court to go into the question.
It could not allow the new point to be raised for the first time in reference.
Nor was the High Court entitled on a reference under section 11(4) of the Act to set aside the finding of the Addl.
Judge (Revisions) merely because on a reappraisal of the evidence it would have come to a contrary conclusion.
It was also not entitled to examine whether the explanation of the assessee in regard to the deficiencies found in the account books 557 should or should not be accepted.
It may be that the Sales Tax Authorities should have accepted the explanation of the assessee with regard to the aforesaid deficiencies, but it may as well be that there are various other deficiencies which the assessee will have still to explain.
For all these reasons, the judgment of the High Court is set aside and that of the Addl.
Judge (Revisions), Sales Tax Meerut remanding the case for a fresh judgment assessment under section 7(3) of the Act is restored.
There shall be no order as to costs.
N.V.K. Appeal allowed.
| Section 2(c) of the U.P. Sales Tax Act, 1948 defines "dealer" to mean any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh whether for commission, remuneration or otherwise.
By the U.P. Sales Tax (Amendment) Act, 1949 an Explanation was inserted in this section to provide that a factor, a broker, a commission agent or arhatiya, a del credere agent, an auctioneer, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying or selling goods on behalf of his principles, or through whom the goods are sold or purchased shall be deemed to be a dealer for the purposes of the Act.
The respondent (assessee) who was registered as a dealer under section 8A was carrying on business in jaggery, amchur, khandsari etc.
on its own account and as kutcha arhatiya.
The nature of the business carried on by the assessee was that cultivators brought their produce to the assessee for sale.
The goods were weighed at his shop and then supplied to the pucca arhatiyas or to other persons.
Price of the commodity in full or part was paid by the assessee to the cultivators directly, and the price from the purchaser were realised after wards.
During the assessment year 1967 68 the Sales Tax Officer by his assessment order rejected the account books of the assessee on the basis of some discrepancy found during the four surveys carried out at the shop and made a best judgment assessment under sub section (3) of section 7 of the Act, determining the taxable turnover of purchases effected by the assessee as a kutcha arhatiya at Rs. 5.3 lacs and taxed it.
On appeal the Assistant Commissioner (Judicial), Sales Tax reduced the taxable turnover of purchase by Rs. 1.5 lacs.
Cross revisions by the appellant as well as by the respondent were allowed by the Additional Judge (Revisions), Sales Tax who by his order negatived the plea of the assessee that he was not a dealer but held from the material on record that the taxable turnover of the assessee could not reasonably be determined at Rs. 3.8 lacs.
The orders of the Assistant Commissioner (Judicial) and Sales Tax officer were set aside and a fresh best judgment assessment was directed to be made.
549 The High Court upon reference, as to the liability of the assessee to tax on the transactions effected by it as kutcha arhatiya held that the assessee was not a dealer.
It further held that a person can be liable to tax as a dealer only if he acts as an agent having the authority to pass title in the goods sold, and that a kutcha arhatiya merely brought together the seller and the purchaser and helped in settling the price and weighment of the goods etc.
In the appeal to this Court it was contended on behalf of the appellant, that the High Court was wrong in holding that the assessee was not a dealer within section 2(c) of the Act and that the High Court had completely overlooked the Explanation to section 2(c) which was inserted by the U.P. Sales Tax (Amendment) Act, 1959 particularly the words "through whom the goods are sold or purchased", and that the Sales Tax Officer was not justified in making an assessment to the best of his judgment under section 7(3).
Allowing the appeal ^ HELD: 1(i) The finding arrived at by the High Court that the assessee as a kutcha arhatiya merely brought together the seller and the buyer charging an additional sum by way of commission and, therefore, could not be regarded as a dealer i.e. a person engaged in the business of buying and selling goods, is contrary to the admitted facts of the case.
[551 H] (ii) Explanation to section 2(c) brought within the definition of 'dealer ' not only a commission agent, a factor, a del credere agent or any other mercantile agent by whatever name called, and whether of such description or not, but also a broker, an auctioneer as well as an arhatiya.
[554 D] (iii) The definition of 'dealer ' in section 2(c) is wide enough to include selling or purchasing agent of whatever name or description.
The term 'arhatiya ' is wide enough to include kutcha arhatiya.
[554 E] (iv) The basic distinction between a kutcha and a pucca arhatiya is that a kutcha arhatiya acts as an agent on behalf of his constituent and never acts as a principal to him.
A pucca arhatiya acts as a principal as regards his constituent and not as disinterested middleman who brings principals together, there being no privity of contract between the constituent and the third party.
On the other hand a kutcha arhatiya usually denotes a person who merely 'brings together the buyer and seller ' charging his commission, who has no dominion or control over the goods unlike a pucca arhatiya who deals as a principal in relation to both his constituent and to the third party.
In a commercial sense, a kutcha arhatiya acts as an agent on behalf of his constituent.
[552 G 553 B, F] Bhagwandas Parasram vs Burjorji Ruttonji Bomanji, LR (1917 18) 45 IA 29, Shivnarayan Kabra vs State of Madras.
; , Sobhagmal Gianmal vs Mukundchand Balia, L.R. (1926) 53 I.A. 241, Chowringhee Sales Bureau (P) Ltd. vs C.I.T. West Bengal; , , referred to.
2(i) The High Court should have declined to go into the question of the applicability of section 7(3) of the Act.
When a question of law was neither raised before the Addl.
Judge (Revisions) nor considered by him nor did it arise on findings given by him, it will not be a question arising out of his order.
[556 F] (ii) The question as to whether the Sales Tax Officer was justified in making a best judgment assessment under section 7(3) of the Act was not referred to the High Court.
It was, therefore, not open to the High Court to go into the question.
It could not allow the new point to be raised for the first time in reference.
[556 G] 550 (iii) The High Court was also not entitled on a reference under section 11(4) of the Act to set aside the findings of the Addl.
Judge (Revisions) merely because on a reappraisal of the evidence it would have come to a contrary conclusion.
It was also not entitled to examine whether the explanation of the assessee in regard to the deficiencies found in the account books should or should not be accepted.
[556 H]
|
Appeals No. 632 to 646 of 1976.
(From the Judgment and Order dated the 22/23/26/27th of April, 1976 of the Bombay High Court in S.C.A. Nos.
997, 2128, 2773, 2077, 2065, 2045, 1172, 1193, 1195, 1196, 1199, 1200, 1210/ 75 and 2050 & 2071 of 1976) and CIVIL APPEALS NOS.
655 & 1286 of 1976 (From the Judgment and Order dated the 14 5 1976, 23rd, 24th, 27th April, 1976 of the Bombay High Court in S.C.A. No. 2985 of 1976 and Misc.
Petition 4 of 1976) and WRIT PETITIONS NOS.
98, 102 107, 110 113 & 115 120 1976 Under article 32 of the Constitution of India) B. Sen, (in CA.
632) Y.S. Chitale, (in CA.
633) Sachin Chowdhary, (in CA.
634) F.S. Nariman and R.N. Bennerjee, Adv.
(in CA.
637) H.P. Shah, (in CAs.
632 638) A.J. Rana, (in CA.
635) P.H. Parekh & Miss Manju Jetly, with them, for the appellants in CAs.
632 637 Vallabhadas Mohta, Sardar Bahadur Saharya & Vishnu Bahadur Saharya, for the appellants in CAs.
638 644 & 644.
J.L. Nain, A.J. Rana, Janendra Lal, B.R. Agarwala and Gagras & Co., with him for the appellants in CAs 645 & 646 except for appellant No. 52 in CA.
646 F.S. Nariman, R.N. Banerjee, J.B. Dadachanji " K.J. John with him for the appellant No. 62 in 646/76 Madhukar Soochak, K. Rajendra Chowdhary, K.A. Shah and (Mrs.) Veena Devi Khanna, Advocates for the Appellant in CA.
1286/76 S.K. Dholakia, V.J. Kankaria & R.C. Bhatia, for the petitioners in all the Writ Petitions.
Niren De, Attorney Genl.
(only in CAs.
632, 638 and W.P. No. 98/76 1.
W. Adik, Adv.
of Maharashtra, M.N. Shroff for the Respondents in the appeals and Writ Petitions M.P. Chandrakantral Urs and N. Nettar, for the interven er in CA.
632/76 (State of Karnataka) 832 K. Parasaran, Adv.
Tamil Nadu.
A. V. Rangam, V. Sathiadev and (Miss) A. Subhashini, in the for the inter vener in CA.
632 (State of Tamil Nadu, K. Rajendra Chowdhary, for the interveners/Applicants A Ratnaabhapati and Jayalakshimi & Co. M/s. Jeshtmal, K.R. Chowdhary, Mrs. Veena Devi Khanna, for the intervener/applicant N. Dhanraj.
B.A. Desai, S.C. Agarwala and V.J. Francis, for Re spondents 4 & 5 in CA.
1286/76.
The Judgment of the Court was delivered by KRISHNA IYER, J.
The distance between societal reali ties and constitutional dilettantism often makes for the dillemma of statutory validity and the arguments addressed in the present batch of certificated appeals and writ petitions evidence this forensic quandary.
Likewise, the proximity between rural cum clum economics and sociaL relief legislation makes for veering away from verbal obsessions in legal construction.
A constitution is the documentation of the rounding faiths of a nation and the fundamental direc tions for their fulfilment.
So much so, an organic, not pedantic, approach to interpretation, must guide the judicial process.
The healing art of harmonious construc tion, not the tempting game of hair splitting, promotes the rhythm of the rule of law.
These prologuic observations made.
we proceed to deal with the common subject matter of the appeals and the writ petitions.
A bunch of counsel, led by Shri Nariman and seconded by Shri B. Sen, have lashed out against the vires of the Maharashtra Debt Relief Act, 1976 (for short, the Debt Act).
The former has focused on the fatal flaw in the Act based on article 301 of the Constitution and the latter has concentrated his fire on the incompetency of the State Legislature to enact the Debt Act.
A plurality of submis sions by a procession of lawyers has followed, although the principal points have been comprehensively covered by Shri Nariman and Shri B. Sen.
To encore is not to augment, and yet, some counsel, who had not much to supplement, claimed the right to.
be heard and exercised it ad libiem, essaying what had already been forcefully urged and forget ting that a fine, fresh presentation of a case is apt to be staled by a second version of it and pejorated by a third repetition.
While in constitutional issues of great moment this Court is reluctant to ratio oral submission it is important, by comity of the Bench and the Bar, to conserve judicial time in the name of public justice so that internal allocations avoiding over lapping may be organised among many counsel who may appear in several appeals, substantial ly dealing with the same points.
A happy husbandry of advo cacy is helpful for judge and lawyer alike and to streamline forensic business is the joint responsibility of both the limbs of the institution of justice.
Back to the beginning.
article 301 of the Constitution man dates 833 "301.
Freedom of trade commerce and inter course Subject to the other provisions of this Part, trade, commerce and intercourse through out the territory of India shall be free.
" We may also read the cognate provision viz., article 304 (b): "304 (b).
Restrictions on trade, commerce and among States.
Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law X X X X (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
" The unmincing submission of Shri Nariman is that money ending is very much a trade, that the Debt Act deals drasti cally with moneylenders in defiance of article 301 and, since the manacles on moneylenders and money lending are unreason ably harsh and callously indiscriminate, the 'freedom" which belongs constitutionally to professional money lenders is breached by the 'statutory liquidation of their loans.
Nor can the invalidatory consequence of this violation be obvi ated by article 304(b).
This latter provision salvages stat utes which contravene freedom of trade, commerce and inter course only if they possess the virtues of reasonableness and public interest.
The injustice of wiping out the debts of marginal farmers, rural artisans, rural labour ers and workers as provided in the scheme of the Act was anathematised by Shri Nariman as an unwarrantedly unrea sonable annihilation of the trade and 'its capital.
We will deal with this contention presently but we may merely mention for later discussion another short, lethal objection to a part of the law, put forward by counsel.
He stated that there was legislative incompetency for the State Legislature because it had forfeited the power to legislate on money lending where gold loans were involved, since Parliament had occupied the field under Entry 52 of List I by enacting the Gold Control Act, 1968, and had thereby elbowed out the State Legislature from that field.
Considerable eclectic study of English, Australian and American cases was displayed in the course of arguments, reverberating in Indian precedents dealing with Part XIII of the Constitution.
Of course, we will refer to them with pertinent brevity, although we must administer to our selves the caveat that the same words used in constitutional enactments of various nations may bear different connota tions 834 and when Courts are called upon to interpret them they must acclimatize the expressions to the particular conditions prevailing in the country concerned.
Different lands and life styles, different value systems and economic solu tions, different social milieus and thought ways, different subject matters and human categories these vital variables influence statutory projects and interpretations, although lexicographic aids and understandings in alien jurisdictions may also be looked into for light, but not beyond that.
The constitutional guarantee of the commercial mobility and unity of the country in article 301 is sought to be made the major sanctuary of 'money lenders ' whose 'freedom ' to lend and thereby end the lendee is, by legislative judgment, hand cuffed.
Before unravelling the provisions of the Debt Act, we must first found ourselves on the quintessentials of article 301 and the juristic and economic basics implied in that provision.
We are not construing a petrified legal parchment but reading the luscent lines of a human text with a national mission.
We must never forget that the life of the suprema lex is nourished by the social setting, that juridical abstractions and theoretical conceptions may be fascinating forensics but jejune jurisprudence, if the raw Indian realities are slurred over.
We are expounding the Constitution of a nation whose people hunger for a full life for each, and therefore, a perception of the signature of social justice writ on it is imperative. 'Nothing is more certain in modern society ', declared the American Supreme Court at mid century, 'than the principle that there are not absolutes '.
Legal Einsteinism guides the Court, not doctrinal absolutes, as we will presently discuss.
Since article 301 has loomed large in the debate at the bar, it is pertinent to ask what is its object and design.
For, if the impugned legislation does violate article 301, it must perish unless rescued by article 304(b).
This Court, in Atiabari Tea Co. C), tracing the roots of article 301, observed: "Let us first recall the political and constitutional background of Part X/II.
It is a matter of common knowledge that, before the Constitution was adopted, nearly two thirds of the territory of India was subject to British Rule and was then known as British India, while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States.
A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf, as they pur ported to exercise their legislative power of imposing taxes in respect of trade and com merce which inevitably led to the erection of customs barriers between themselves and the rest of India.
In the matter of such barriers British India was governed by the provisions of section 297 of the Constitution Act, 1935.
To the provisions of this section we will have occasion later to (1) ; , 843. 835 refer during the course of this judgment.
Thus, prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States.
After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and the integration of the several Indian States with the rest of the country was speedily accom plished with the result that when the Consti tution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India, and Part B States which were made up of Indian States.
This merger or integra tion of Indian States with the Union of India was preceded by the merger and consolidation of some of the States inter se between them selves.
It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII.
"The main object of article 301 obviously was to allow the free flow of the stream of trade, commerce and inter course throughout the territory of India.
" It is fair to realise that article 301 springs from Indian history and hope.
We may recall the political and consti tutional background of Part XIII the divided days of Brit ish rule, the united aspirations of Independent India, the parochial pressures and regional pulls leading inevitably to the erection of fiscal barriers and hampering of economic oneness.
The integration of India was not merely a histor ical process but a political, social and economic necessity.
Gajendragadkar J., in Atiabari Tea Co. (supra) pointed out: "In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stablity and progress of the federal polity which had been adopted by the Constitution for the governance of the coun try.
Political freedom which had been won, and political unity which had been accom plished by the Constitution, had to be sustained and strengthened by the bond of economic unity." (p. 843) "Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustain ing and improving living standards of the country.
The provision contained in article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country." (p. 844) 836 Such being the perspective, the judicial sights must be set high ' while reading Article 301.
Social solidarity is a human reality, not mere constitutional piety, and a non exploitative economic order outlined in article 38, is the bedrock of a contented and united society.
Social disorder is the bete noire of commerce and trade.
All this is non controversial ground but the learned Attorney General con tests the very applicability of article 301 to money lenders and moneylending visa vis the humble beneficiaries of the statute, viz., the marginal farmers, rural artisans, rural labourers, workers and small farmers.
It is a cruel legal joke to legitimate as trade this age old bleeding business of agrestic India whereby the little peasant.
the landless tiller, the bonded labourer, the pavement tenant and the slum dweller have been born and buried during the Raj and the Republic in chill penury.
Is trade in human bondage to be dignified legally, betraying the proletarian generation? For whom do the constitutional bells of the socialist Repub lic toll? Therefore, argues the Attorney General, it is juristic blasphemy to call 'unscrupulous moneylending ' a rural spectre which stalks Maharashtra a trade at all.
These chronic operations, socially obnoxious and economical ly inhuman, cannot be recognised as licit and wear the armour of article 301, for this preliminary reason.
Not all systematic economic activity is trade.
Sinister, socially shocking ones, are not.
Shri Nariman has counter asserted, backed by a profusion of precedents, that money lending in the modern complexities of business life is a lubricant for the wheels of commerce and has been treated as trade.
It is the life blood of business.
It needs no argument to say that the topics of legislation, listed in the Seventh Schedule, must receive a large and liberal, yet realistic, interpretation.
So understood, the expression 'trade ' in its wide import, covers not merely 'buying and selling of goods ' but trading facilities like advances, overdrafts, mercantile documents, trading intelligence, telegraphic and telephonic communica tions, banking and insurance and many other sophisticated operations connected with and essential for commerce and intercourse.
Even travel facilities in certain circum stances have a nexus with trade and commerce and are part of them.
Learned counsel referred to Ibrahim(1) wherein this Court has referred to the corresponding provisions in the Australian Constitution and imparted a comprehensive meaning to 'trade '.
American and Australian case law, Halsbury and the Judicial Committee, were read with special emphasis on the amplitude of the expression 'trade '.
An inventory of Indian statutes wherein 'money lending ' as a business was mentioned and licensed, was also brought to our notice.
Indeed, this wealth of legal literature may well be held to make out that money lending, banking, insurance and other financial transactions, commercial credit and mercantile advances may, conceptually, be characterised as 'busi ness '.
Mercantile credit, money lending, pawn broking and advances on pledges are business.
Otherwise, the commerce of our country will grind to a halt.
Can we con ceive of trade without credit, or commerce without mercan tile documents, discounting, lending and (1) 837 negotiable paper? To deny to monetary dealings the status of trade is to push India into the medieval age: Broadly viewed, money lending amongst the commercial community is integral to trade and is trade.
So far we go with Shri Nariman and others who have urged the same point with allomorphic modifications.
The learned Attorney General 's stance is radical and rooted in the rural bondage to break which is the mission of this legislation.
If accepted, it will mean that money lending, in the limited statutory setting and projected on the Indian rural urban screen visa vis the exploited people below the poverty line, cannot be regarded as 'trade '.
It is apt to be reminded of the then famous epigram of Frederick W. Maitland: "A woman can never be outlawed, for a woman is never in law.
" Money lending is it in law at all? No trade, no article 301, and so the baptismal certificate that article 301 insists upon from the economic activity that seeks its 'free ' blessings is that it is 'trade, commerce or intercourse '.
Thus the critical question is as to whether money lending and the class of money lenders who have been preying upon the proletarian and near proletar ian segments of Indian society for generations may be legal ly legitimated as 'traders ' or 'businessmen '.
This is not an abstract legal question turning on semantic exercises but a living economic question of incurable indebtedness.
Blood, sweat and tears animate amelioratory law which exiles literal interpretation.
The heartbeats of the Debt Act, according to the State counsel, cannot be felt without humanistic 'insight by first ostracising, in the name of social order, the die hard, death grip practices which have defied legislative policing in the past and have kept, in chronic servitude, vast numbers of the Indian agrarian community and working class.
But if, as urged by the oppo sition, the law flatly flouts article 301, it fails.
The rule of law, for functional success, must run close to the rule of life.
Therefore, constitutional assays must be on the touchstone of societal factors.
So we cannot embark upon a study of the working of stock exchanges, the dependence of industry and business on credit and key loans, the role of pledges in financing commercial activity, when the challenge is to an economic legislation dealing with the lowliest and the lost, the destitude and the desperate, far from big business and industry, trade and commerce and high finance and sophisticated credit.
We must zero in on the social group the Debt Act seeks to save, the pattern of lending the statute strikes at, the heaviness of the blow and on whom it falls, and the raison detre of the measure.
Does this specific species of deleterious economic activity, masked as moneylending 'trade ', qualify for the .freedom that article 301 confers on trade? The specific social malady and the legislative therapeutics suggested guide the court.
Here again, relativity, not absolutes, rules jurisprudence.
Of course, while interpreting the relevant Articles in Part XIII and pronouncing upon the concept of 'trade ', we must have regard to the general scheme of the Constitution and should not truncate the 838 scope and amplitude of economic unity, free movement, pro tection from discrimination, unhampered financial arrange ments and the like.
Undoubtedly, the freedom, while it is wide, is not absolute.
Our Constitution, framed by those who were sensitive to the massive poverty of the country and determined to extirpate the social and economic backwardness of the masses, could not have envisioned a development where some will be 'free ' to keep many 'unfree ' [See Articles 38 and 39 (c)].
That is why, to make assurance doubly sure, a further provision is made in article 304(b) by adding a rider to the freedom of commerce subjecting it to the requirement of reasonableness and imposition of restrictions in public interest.
Das, J., in Automobile Transport (1) struck the true note, if we may say so with great respect, that while the text of the Articles is a vital consideration in inter preting them, 'we must ' at the same time, remember that we are dealing with the Constitution of a country and the interconnection of the different parts of the Constitution forming part of an integrated whole '.
The learned Judge asks: 'Even textually, we must ascertain the true meaning of the word 'free ' occurring in article 301 From what burdens or restrictions is the freedom assured? This is a question of vital importance even in the matter of construction '.
Later, in the ' judgment, Das J., drives home the point that 'the conception of freedom of trade in a community regulated by law pre supposes some degree of restriction, that freedom must necessarily be delimited by considerations of social orderliness ' (underscoring supplied).
Even the Australian Case (1916 22 CLR 556, 573) conceptulizes freedom as nothing extra legem, lest freedom should be confounded with anarchy. 'We are the slaves of the law ', said Cicero, 'that we may be free '.
Sir Samuel Griffith, C.J. in Duncan vs State of Queensland (22 CLR.556, 573), said: "But the word 'free ' does not mean extra legem any more than freedom means anarchy.
We boast of being an absolutely free peo ple, but that does not mean that we are not subject to.
" The conscience of the commerce clause in India, as elsewhere, is the promotion of an orderly society.
social justice is the core of the constitutional order.
Two inter connected, but different facets of freedom of trade and commerce fall for serious consideration in the light of the above discussion.
Is anti social, usurious, unscrupulous money lending to economically weaker sec tions, eligible for legal recognition as 'trade ' within the meaning of article 30,1 ? Secondly, assuming that even such activities have title to be termed 'trade ' are the provi sions of the Debt Act reasonable, regulatory and in the public interest ? The learned Attorney General argued for the proposition that the narrow, noxious category of money lending with which we are concerned is so oppressive and back breaking so far as the poorest sections of the community are concerned that a sense of social justice forbids the court to legiti mate it as 'trade '.
Not all systematic economic activity, even if not formally banned by the law, can be christened 'trade ', he submits, and relies on Chamorbaughwala to.
reinforce this reason (1) [1963] (1) S.C.R. 491.
(2) ; 839 ing.
In that case the impugned Act was said to offend against article 301.
The Court, therefore, considered whether gambling was not 'trade, commerce or intercourse ' and took a sky view of the numerous decisions in various countries bearing on this branch of sociological jurisprudence.
One of the Australian cases dealing with lotteries (Mansell vs Beck) elicited the observation that lotteries, not conducted under the authority of government, were validly suppressed as pernicious.
Taylor, J. made the trenchant observation: " . whilst asserting the width of the field in which section 92 may operate it is necessary to observe that not every transac tion which employs the forms of trade and commerce will, as trade and commerce, invoke its protection.
The sale of stolen goods, when the transaction is juristically analy sed, is no different from the sale of any other goods but can it be doubted that the Parliament of any State may prohibit the sale of stolen goods without infringing section 92 of the ,Constitution ? The only feature which distinguishes such a transaction from trade and commerce as generally understood is to be found in the subject of the transaction; there is no difference in the means adopted for carrying it out.
Yet it may be said that in essence such a transaction constitutes no part of trade and commerce as that expression is generally understood.
Numerous examples of other transactions may be given, such as the sale of a forged passport, or, the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasion, been referred to as a 'police power ', I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expres sion is used in section 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require for their consummation, the employment of instruments, whereby inter State trade and commerce is commonly carried on." (RMDC Case, pp. 915 916) In the United States of America, operators of gambling sought the protection of the commerce clause.
But the .Court upheld the power of the Congress to regulate and control the same.
Likewise, the Pure Food Act which prohib ited the importation of adulterated food was upheld.
The prohibition of transportation of women for immoral purposes from one State to another or to a foreign land was held valid.
Gambling itself was held in great disfavour by the Supreme Court which roundly stated that 'there is no consti tutional right to gamble '.
Das, C. 1., after making a survey of judicial thought, here and abroad, opined that freedom was unfree when society was exposed to grave risk or held in ransom by the operation of the impugned 840 activities.
The contrary argument that all economic activi ties were entitled to freedom as 'trade ' subject to reasona ble restrictions which the Legislature might impose, was dealt with by the learned Chief Justice in a sharp and forceful presentation: "On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be pro tected as fundamental rights until they are restricted .by law.
Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, of housebreaking, of selling obscene pictures, of trafficking in women and so on until the law curbs or stops such activities.
This appears to us to be completely unrealis tic and incongruous.
We have no doubt that there are certain activities which can under no circumstance be regarded as trade or busi ness or commerce although the usual forms and instruments are employed therein.
To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words.
Learned counsel has to concede that there can be no 'trade ' or 'business ' in crime but submits that this principle should not be extended . " We have no hesitation, in our hearts and our heads, to hold that every systematic, profit oriented activity, however sinister, suppressive or socially diabolic, cannot, ipso facto, exalt itself into a trade.
Incorporation of Directive Principles of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice social, economic and politi cal shall inform all the institutions of the national life, is not idle print but command to action.
We can never forget, except at our peril, that the Constitution obligates the State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers, men and women, are not abused, that exploitation, moral and material, shall be extradited.
In short, State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic.
activities, attired as trade or business or commerce, can be de recog nized as trade or business.
At this point, the legal cul ture and the public morals of a nation may merge, economic justice and taboo of traumatic.
trade may meet and jurispru dence may frown upon dark and deadly dealings.
The consti tutional refusal to consecrate exploitation as 'trade ' in a socialist Republic like ours argues itself.
The next question then is whether rural and allied money lending is so abominable as to be 'bastardized ' by the law for which the Attorney General pleaded.
Shri Nariman controverted the vulgar generalisation that all money lend ers are vampirish as unveracious imagery.
He argued that many of them were not only licenced but had complied with the conditions of their licences in doing honest lending business and supplying rural credit to those in need.
He 841 pointed out that institutional credit had hardly penetrated rural India and the non institutionalised money lenders had done economic service to a primitive peasantry although several of them had abused.
the situation of helplessness in which the weaker denizens of backward regions found them selves.
His contention was that there was no justification for castigating money lending as non trade not was there valid material to condemn wholesale all those who had served as the financial backbone of agricultural communities in the past.
Reasonable restrictions to obviate abuse were permis sible legislation, but obdurate refusal to treat what in fact was trade as trade was injustice born of hostile hunches.
He had separate arguments on the unreasonableness of the provisions of the Debt Act which we will deal with later.
The bone of contention between the parties, there fore, is as to whether money lenders as a class and money lending as a systematic traditional activity in the special context of the weakest sections of agrarian humanity and the working class, can be called 'trade '.
The legal principles have already been explained by us which we may sum up brief ly by stating that, generally speaking, the systematic business of lending is trade, as understood in the commer cial world and in ordinary monetary dealings.
Moreover, trade cannot be confined to the movement of goods but may extend to transactions linked with merchandise or the flow of goods, the promotion of buying and selling, advances, borrowings, discounting bills and mercantile documents, banking and other forms of supply of funds.
It is possible, however, to project a different view point and this is precisely what the learned Attorney Gener al has done.
Free flow, understood in Article 301, implies some movement from place to place.
Freedom of trade, subject to reasonable restrictions, is guaranteed under article 19.
The special advantage derived by the Trade by virtue of article 301 consists in the interdict on impeding, directly and immediately, movement of goods or money transactions con nected with movement of merchandize or commercial inter course.
In short, the Attorney General considers the element of movement as essential to Pat.
301 in contrast with article 19.
We see the force of the submission but are inclined to the view that dealings of Banks and similar institutions having some nexus with trade, actual or poten tial, may itself be trade or intercourse.
All modern com mercial credit and financial dealings, covered by the various rulings cited at the bar, come under this heading.
Even so, the village based, age old, feudal pattern of money lending to those below the subsistence level, to the village artisan, the bonded labourer, the .marginal tiller and the broken farmer, who borrows and repays in perpetual labour, hereditary service, periodical delivery of grain and unvouchered usurious interest, is a countryside incubus.
This is not an isolated evil but a ubiquitous agrarian bondage.
Such debts ever swell, never shrink.
such captive debtors never become quits, such countryside creditors never get off the backs of the victims.
The worker and peasant of India whose lot is to be 'born to Endless Night ' is symbol ized by Jawaharlal Nehru, an architect of the Constitution, as the Man with the Hoe: 842 "Bowed by the weight of centuries he leans Upon his hoe and gazes on the ground, The emptiness of ages on his face, And on his back the burden of the world.
X X X X "Through this dread shape the suffering ages look, Time 's tragedy is in that aching stoop, Through this dread shape humanity betrayed, Plundered, profaned and disinherited, Cries protest to the powers that made the world, A protest that is also prophecy.
" All this painful poetry and prose is borne out by the record in the case and by studies by economists.
A recent issue of the Eastern Economist reads: "The problem of rural indebtedness is as old as Indian agriculture itself.
It is the net result of usurious money lending, improvident spending and adversities in agri culture.
The heavy burden of debt not only continues to cripple our rural economy, but it also grows in alarming magnitude.
Several attempts have been made by expert bodies from time to time for a realistic estimation of rural indebtedness.
Nevertheless, the fact remains that the rural indebtedness in physi cal terms is mounting up and the nightmare of indebtedness continues to haunt the Indian peasants.
Quite recently the report published by the All India Rural Debt and Investment Survey relating to 1971 72 also depicts an increasing trend in rural indebtedness.
It has been estimated that the aggregate borrowings of all rural households on June 30, 1971 was Rs.3921 crores, while the average per rural household being Rs.503/ .
Fortythree per cent of the rural families had reported borrowings .
If the problem of rural indebtedness is to be kept within meaningful limits and man ageable proportions, following legislative and non legislative measures should be taken: 1.
At present the institutional agen cies provide only 50 per cent of the total rural credit needs.
Increased efforts by all the institutional agencies are called for especially in the context of the declaration of moratorium on rural debt which may affect the flow of non institutional finance.
There are about 75 million marginal farmers with less than one hectare of opera tional holding, 20 million artisans and 47 million agricultural labourers in rural sec tor, who constitute the rural poor.
Liquida tion of existing debt is an essential step in order to give relief to these weaker sec tions.
The Debt Relief Acts passed in differ ent states should be effectively implemented.
843 3.
Institutionalisation of rural savings and inculcation of saving habits amongst rural folk is a positive step to mitigate this problem.
Massive propaganda and education on economising expenditure may discourage ex travagant spending by certain categories of rural .households.
If necessary, certain legislative measures such as abolishing dowry system and imposing austere marriages may also be resorted to. 4.
Attempts must also be made to bring the money lenders under some form of monetary regulation and control on the lines suggested by the Banking Commission.
Though at present legislations exist in several states for the regulation of money lenders they lack enforce ment which render the ineffective." (emphasis, added) ( 'Current Trends in Rural Indebtedness by M. Gopalan & V. Kulandaiswamy Eastern Economist d/April 23, 1976 Vol.
66, No. 17, pp. 826 829) Professor Panikar, referring to the nightmare of debt has this to say: "Perhaps, it may be that the need for borrowing is taken for granted.
But the undisguised fear that the oppressive burden of debt on Indian farmers is the main hindrance to progress is unanimous.
There are many writers who depict indebtedness of Indian farmers as an unmixed evil.
Thus, Alak Ghosh quotes with approbation on the French proverb that 'Credit supports the farmer as the hang man 's rope the hanged '." (Rural Savings in India P. G.K. Panikar Somaiya Publications Pvt. Ltd., Bombay, 1970) Dr. Bhattacharya, in his book 'Social Security Measures in India ' (Metropolitan Book Co., Delhi, 1970) dwells on the problem of agri cultural indebtedness: "A sample survey conducted by Second Agricultural Commission revealed the grim condition of rural indebtedness.
The Survey observes, 'Of the estimated total number of 16.3 million agricultural labour households in the country, 63.9 per cent were indebted and debt per indebted household was Rs.138 per annum '.
This is indeed a danger signal par ticularly for a country whose entire economy is dependent on the prosperity .of rural population.
The same source sums up the total volume of rural indebtedness in the following words, 'Thus the total volume of debt of the indebted agricultural labour households may be estimated at about Rs.143 crores in 1956 57.
A similar estimate was made on the basis of the results of the 1950 51 Enquiry (i.e., the First Agricultural Commission Report) and it worked out to about Rs.80 crores, Even though the estimated number of agriculture labour households in 3 206SCI/77 844 1956 57 was lower by 1.6 million, as,com pared with 1950 51, the total debt of indebted agriculture labour.household had considerably increased in 1956 57." (pp.
1.64 165) Dhires Bhattacharya in his 'Concise History of the Indian Economy ' (Progressive Publishers, Calcutta, 1972) refers to the Indian rural drama and the role of the anti hero played by the_ money lender: "Money lending thus became an easy method of earning an income and subsequently of acquiring valuable title to land in the event of default by the debtor.
Throughout the nineteenth century ownership rights in land were being lost by the ryot and acquired by moneyed interests, both rural and urban." "The situation created by such extensive loss of perry by the cultivating classes exploded into riots against money lenders and usurpers of land in several parts of the country.
The agricultural riots in Poona and Ahmednagar in Bombay Presidency in 1875 are most widely known because they were followed by the appointment of a Commission of Inquiry." (pp. 77 78) The author recounts the series of legislation made during the British Indian period and concludes: "These laws also failed in their purpose because no restrictions had been imposed on the transfer of land between members of the agricultural classes.
Money lenders could, therefore, operate through a benamidar (fictitious agent) belonging to an agricultur al class and acquire land almost as easily as before.
At the same time the bigger agricul turists had no difficulty in swallowing up the smaller ones by giving loans at exorbitant rates of interest to the latter.
(p. 78) The economic literature, official and other, on agri cultural and working class indebtedness is escalating and disturbing.
Indeed, the 'money lender ' is an oppressive component of the scheme.
A.N. Agrawal, in his book 'Indian Economy ' (Vikas Publishing House) indicates that 'money lenders charge heavy interest ranging.
from 15% 50% and often more.
In addition to .high interest, these people take advantage of illiteracy of agriculturists and manipulate the accounts regarding loans to their advantage.
The conditions of loan repayment are so designed that the debtor is forced to sell his produce to the mahajan at low prices and purchase goods for consumption and production at high prices.
In many other ways take advantage of the poverty and the helplessness of farmers and exploit them .
Unable to pay high interest and the principal, 845 the farmers even lose their land or live from generation to generation under heavy debt.
Unless viable alternatives are made available, the mahajan will continue to hold, an impor tant, harmful and enervating place m this sphere '.
The harmful consequences of indebtedness are economic and affect efficient farming, social in that the 'relations between the loan givers and loan receivers take on the form of relations of hatred, poisoning the social life '.
The money lenders, few in number, belong to poor class.
There are often dis putes between the two classes which get sharpened. on the exploitation of the poor.
In fact the social groups get split into two broad classes.
The exploiting class and the exploited class.
Apart from losing land and leading to tension in the villages their evil effect is rampant. the heavily indebted farmers lose even their human existence.
They not only render bonded labour to money lenders, their very self respect and even respect of their women folk do not remain safe.
They are forced to live the life of slaves.
Of course, laws have now been enacted which protect these debtors.
But these laws are difficult to be enforced either because farmers are illiterate, or they do not have enough resources to go to the courts, or the money lenders prove too clever for them.
" Dr. C.B. Mamoria in his book 'Agricultural Problems of India ' (Kitab Mahal) has stressed that rural indebtedness has long been one of the most pressing problems of India.
"Rural people have been under heavy indebtedness of the average money lenders and sahukars.
The burden of this debt has been passed on from generation to generation inasmuch as the principal and interest went on increasing for most of them.
According to Wold.
The country has been in the grip of Mahajans.
It is the bond of debt that has shackled agricul ture.
" Very convincing and compelling, with special reference to Maharashtra, is the Report of a high powered Committee appointed by the Government of Maharashtra to make recommen dations for the relief of rural and urban indebtedness.
The study is at once revealing and 'grim.
Rural artisans, industrial workers, marginal farmers and indigent agricul turists have been steeped in debt despite statutory meas ures and ineffective credit institutions.
These human areas have been the happy hunting ground of money lenders.
The Bombay Moneylenders ' Act, according to the Committee, hardly helped bail out the weaker sections.
Despite the Act, licensed and unlicensed moneylenders pursued their exploita tive profession.
The Debt .Act implements some of the recommendations of this Committee although positive institu tional finance to save the sunken segments from the grip of the moneylenders remains to go into action.
Even enforce ment of the Bombay Moneylenders ' Act appears to be lukewarm according to the Committee.
Be that as it may, the economic distress, for which moneylenders dealing with the weaker sections are mainly responsible, is clearly brought out in the Report.
Nor is there anything in this Report or in any other literary material on rural economics (particularly relating to artisans, workers and collapsing cultivators) to substantiate the dichotomy of scrupulous and unscrupulous moneylenders, vehemently pressed before us by Shri 846 Nariman.
The former species are more a pious wish and the latter tribe a spectre on the increase, if statistical economic studies are to be trusted.
The gravestone on the old 'moneylender ' system and the cornerstone of the new liberated order .are thus the programme for the Administra tion.
The Debt Act is part of the package.
There was much argument about the reasonableness of the restriction on moneylenders, not the general category as such but the cruel species the Legislature had to confront and we have at great length gone into the gruesome background of economic illequities, since the test of reasonableness is not to be applied in vacuo but in the context of life 's realities.
Patanjali Sastri C.J., in State of Madras
V.G. Rao(1) observed: "It is important in this context to bear in mind that the test of reasonableness wher ever prescribed, should be applied_ to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevail ing conditions at the time, should all enter into the judicial verdict.
" Money lending and trade financing are indubitably 'trade ' in the broad rubric, but our concern here is blinkered by a specific pattern of tragic operations with no heroes but only anti heroes and victims.
Many Conferences, Commissions and resultant enactments before and after Independence provided but marginal protec tion for the rural debtor.
Even licensing was evaded by the money lender successfully and concilliation machinery proved a mirage.
Statutes made of sterner stuff became the desideratum.
In the counter affidavit filed on behalf of the State of Maharashtra, a lurid presentation of the lender borrower scenario is found.
The deponent states: ". that it was a common sight around the secretariat, Government Offices, Textile Mills, factories and elsewhere in Bombay to find moneylenders waiting at the gates to catch workers to collect their dues.
" There is also reference to a number of Official Committees which have examined the question of indebtedness in the urban and rural areas and have recommended measures of relief.
The affidavit goes on to state: "I say that in Maharashtra and its predecessors the State of Bombay there have been several legislations on this subject including the Deccan Agricultural Debt Relief Act, 1879, Bombay Agricultural Debtors Relief Act, 1939, 847 and in the Vidarbha areas of the State, the Madhya Pradesh Postponement of Execution of Decree Act, 1956.
I say that there is a well established history of dealing with indebted ness in the State by means of legislation.
I say that .the
Reserve Bank carried out an inquiry in the matter of indebtedness in 1971 which is referred to as All India Debt and Investment Survey during 1971 72.
The Reserve Bank of India survey established that the total debt liabilities in the rural areas in Maharashtra was Rs.358 crores in 1971 72.
A preliminary analysis made by the Reserve Bank of India also indicated weaker sections of the community thereby showing the extent of the burden of debt on the weaker sections of the community.
I crave leave to refer to and rely upon the statistical tables prepared by the Reserve Bank of India in this connection when produced.
I say that the extent of indebted ness may be much more than what is indicated by the statistical survey of the Reserve Bank of India.
The licensed moneylenders alone in the State are known by themselves to have disbursed during 1972 73 a sum of about 74.37 crores and the information gathered by the respondents indicates that the known indebted ness in the city of Bombay alone would be of the order of Rs.45 crores.
I say that in addition to the licensed moneylenders unli censed money lending is also carried on in the State. " The Statement of Objects and Reasons of the Maharashtra Ordinance VII of 1975 which was the precursor to the impugned Act contains the following statement: "The problem of urban and rural in debtedness has assumed enormous proportions in recent times.
The noninstitutional sources of credit, namely, unscrupulous.
money lenders, have been charging usurious rates of interest, indulging in malpractices and taking undue advantage of the weak position of the economically weaker sections of the people both in rural and urban areas.
The Ordinance, therefore, seeks to give relief to certain sections of people from indebtedness.
" Even the 'whereas ' vocabulary of the draftsman of the Act refers to the need for immediate action to provide for relief from indebtedness to certain farmers, rural artisans, rural labourers and workers in the State of Maharashtra.
The judgment under appeal also makes reference to the continual legislative effort made in the past to save the agricultural community from chronic indebtedness.
The learned Judges.
observe: "Indeed, agricultural indebtedness has always been the bane of Indian economy ever since the beginning of the twentieth cen tury.
Any elementary book on.
Indian econom ics will disclose that even the British Government had 848 thought it necessary to make an enquiry into agricultural indebtedness.
That was one of the terms of Royal Commission on Agriculture, and from time to time enquiry committees were set up including the Banking Enquiry Committee to go into the question of agricultural indebtedness with a view to find out how alternative sources of credit to be made available to the agriculturists could be brought into existence.
In a sense, the phrase 'agricultural indebtedness ' has earned a connotation over the passage of years to indicate the unhappy position in which an Indian agriculturist has always found ever since the phenomenal fall of prices in 1929.
It has become proverbial that an Indian agriculturist is born in debt, he lives in debt and he dies in debt." Eminent economists and their studies have been adverted to by the High Court and reliance has been placed on a Report of a Committee which went into the question of relief from rural and urban indebtedness which shows the dismal economic situation of the rural farmer and the labourer.
It is not merely the problem of agricultural ' and kindred indebtedness, but the menacing proportions of the moneylend ers ' activities that have ' attracted the attention of the Committee.
Giving facts and figures, which are alarming, bearing on the indebtedness amongst industrial workers and small holders, the Committee has highlighted the exploita tive role of money lenders and the high proportion/on of non institutional borrowings.
We have made this extensive tour of the economic scene, with special reference to agricultural indebtedness and the lot of industrial labour, only to present vividly how the predatory money lender has had a stranglehold on rural and urban proletarians, by resort to methods which are scan dalizingly calamitous and unshakably resistant to legisla tive policing.
The learned Attorney General contends that the courts must have a sense of history .and sociology informing their judicial perspective and then it is easy to_ understand the syndrome of village and working class indebt edness.
There are commercial lendings, banking loans and institutional finances.
There are friendly loans, and occasional accommodations.
There are liabilities arising from various circumstances between citizen and citizen and citizen and State.
But the pernicious species of money lending stubbornly flourishing in the rural and industrial areas of our country, with the weakest sections as their bled white clientele, cannot be regarded as 'trade" because of the painful pages of economic history to which this country is witness.
The life of the law is not neat noesis but actual expe rience.
The perspective of Poverty Jurisprudence is radi cally different from the canons and values of traditional Anglo Indian jurisprudence.
The subject matter of the impugned legislation is indebtedness, the beneficiaries are petty farmers, manual workers and allied categories steeped in debt and bonded to the money lending tribe.
So, in passing on its constitutionality, the principles of Develop mental Jurisprudence ' must come into play.
849 We agree with Shri Nariman that the intimate unity of national life sought to be sustained by Part XIII cannot be invidiously breached against the money lenders provided they qualify to be traders.
If a law cuts into the flesh of the commercial unity and integrity of the country, ' unreasona bly or against public interest, Part XIII electrocutes it.
A meaningful, yet minimal analysis of the Debt Act, read in the light of the times and circumstances which compelled its enactment, will bring out the human ;setting of the statute.
The bulk of the beneficiaries are rural indi gents and the rest urban workers.
These are weaker sections for whom constitutional concern is shown because institu tional credit instrumentalities have ignored them.
Moneylending may be ancilliary to commercial activity and benignant in its effects, but money lending may also be ghastly when it facilitates no flow of trade, no movement of commerce, no promotion of intercourse, no servicing of business, but merely stagnates rural economy, strangulates the borrowing community and turns malignant in its reper cussions.
The former may surely be trade, but the latter the law may well say is not trade.
In this view, we are more inclined to the view that this narrow, deleteri ous pattern of moneylending cannot be classed as 'trade. ' No other question then arises, since the petitioners and appellants cannot summon article 301 to their service.
Assuming that all money lending is 'trade ', can it be contended that this relief measure is invulnerable to attack on the ground that the texture of the restrictions is rea sonable and regulatory ? Article 304(b) relaxes in favour of the State the prohi bition in article 301 provided the law imposes only such re strictions as are reasonable and in public interest.
Shri Nariman 's submission is that the Debt Act is too draconic to fair, processually and substantively, and so it cannot be rescued by article 304(b).
With persuasive pressure he invited us to look at the horror of procrustean infliction of equal hostility by the legislature in dealing with the asuric Shylock and the dharmic lender.
The law which brands the good and the bad alike and indiscriminately discharges all debts, just and unjust, lacks sense, con science and reasonableness.
Secondly 'How is it fair, ' asks Shri Nariman, 'that, if the object of the legislation is to save the victims of rural indebtendness and working class burdens that credit institutions should be exempted while non institutionalised lenders should be picked out for hostile treatment ? ' There is no merit in the plea.
Liabilities due to government to local authorities are not tainted with exploi tation of the debtor.
Likewise, debts due to banking compa nies do not ordinarily suffer from overreaching, unscrupu lousness or harsh treatment.
Moreover, financial insti tutions have, until recently, treated the village and urban worker and petty farmer as untouchables and so do not figure in the picture.
To exempt the categories above referred to is reasonable.
Many debt relief laws adopt this classifica tion and those familiar with the lowest layers of economic life will agree that this is as it should be.
Money lenders of the type we are concerned with in the Debt Act are, 850 by and large, heartless in their lending tactics, and the borrowers are anaemic mostly members of the Scheduled Castes and Scheduled Tribes, nomadic groups, artisans, workers and the like.
Section 13 of the Debt Act is illu minating, regarding the handicapped humans the statute is concerned with.
We quote that provision: "13.
Aggreement for labour in lieu of debt to become void.
Any custom or tradition or any agreement (whether made before or after the appointed day), whereunder or by virtue of which a debtor or any member of his family is required to work as labourer or otherwise for the creditor shall be void and of no effect and shall never be enforceable in any civil court.
" Maybe, some stray money lenders may be good souls and to stigmatize the lovely and unlovely is simplistic betise.
But the legislature.
cannot easily make meticulous excep tions and 'has to proceed on broad categorisations, not singular individualisations.
So viewed, pragmatics overrule punctilious and unconscionable money lenders fall into a defined group.
Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment.
After all, the law makers, representatives of the people, are expected to know the socio economic Conditions and customers.
Since nice distinctions to suit every kindly creditor is beyond the law making process, we have to uphold the grouping as reasonable and the restrictions as justified in the circum stances of the case.
In this branch, there are no finali ties.
The observations of the Privy Council in the Austra lian Bank Nationalisation Case(1) are apposite: "Yet about this, as about every other proposition in this field, a reservation must be made.
For their Lordships do not intend to lay it down that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified.
Every case must be judged on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some state of social devel opment it might be maintained that prohibition with a view to State.
monopoly was the only practical and reasonable manner or regulation, and that inter State trade, commerce and intercourse thus prohibited and thus monopo lized remained absolutely free.
" We do not downright denounce all money lenders but the lawmakers have, based on socio economic facts, picked out a special class of money lenders whom they describe as unscru pulous.
(1) Commonwealth of Australia vs Bank of New South Wales , 311.
851 Every cause claims its martyr and if the law, necessi tated by practical considerations, makes generalisations which hurt a few, it cannot be helped by the Court.
Other wise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating, through endless litigation, the instant relief to the indebted which is the promise of the legislature.
In this perspective, we see no constitutional flaw in the Act on the score that the sheep have not been divided from the goats.
Realism in the legislature is a component of reasonableness.
It was urged by Shri Chitale that the definitional deficiency in ignoring the movable wealth of debtors makes the scheme arbitrary and unreasonable.
A romantic view of the debtors being considerable owners of costly art pieces and sophisticated gadgets and yet eligible for relief is good rhetoric but unrealistic.
A pathetic picture of the money lender being deprived of his loan assets while being forced to repay his lender was drawn but that cannot affect the reasonableness of the relief to the grass roots borrower.
Nor is it value to attack the Act on the score that the whole debt i.e., the very capital of the business, has been dissolved.
More often than not, the money lender would have, over the Iong lived debts and repeated renewals, realized more than the principal if economic studies tell the tale truly.
The injustice of today is often the hangover of the injustice of yesterday, as spelt out by history.
The business of money lending has not been prohibited.
The Act is a temporary measure limit ed to grimy levels of society.
Existing debts of some classes of indigents alone have been liquidated.
If impos sible burdens on huge human numbers are not lifted, social orderliness will be threatened and as a regulatory measure this limited step has been taken by the Legislature.
Regulation, of the situation is necessitous, may reach the limit of prohibition.
Disorder may break out if the law does not step in to grant some relief.
Trade cannot flour ish where social orderliness is not secure.
H the ten sions and unrests and violence spawned by the desperation of debtors are not dissolved by State action, no moneylending trade can survive.
It follows that for the very survival of Trade the regulatory measure of relief of indebtedness is required.
That form this relief should take is ordinarily for the legislature to decide.
It is not ordinarily for the Court to play the role of 'Economic Adviser to the Administration.
Here amelioratory measures have been laid down by the Legislature so that the socio economic scene may become more contented, just and orderly.
Obviously, this is regulatory in the interest of Trade itself.
This policy decision of the House cannot be struck down as perverse by the Court.
The restrictions under the Debt Act are reason able.
Equally clearly, if the steps of liquidation of current debts and moratorium.
are regulatory, article 301 does not hit them.
Even so, argues Shri Nariman, procedural presumptions grossly unreasonable, vitiate the measure.
Of course, reasonableness has a processual facet and if the law is lawless in its modalities, it becomes unlaw constitutional ly.
We may illustratively advert to some of the criticisms but, at the threshold, we confess we are not impressed with the submissions.
852 Shri Nariman itemised the mischievous provisions in the Debt Act from the processual angle.
Others too reiterated with consternation that the provision whereby every debt of every debtor of the specified category stood wholly dis charged was improvident, especially because it did not even require the debtor to move the authorities in that behalf.
On the other hand, the burden was on the creditor to raise the question by instituting a proceeding as to the disquali fication of his debtor for the benefit of the Debt Act.
On top of this obligation to institute proceedings was the precarious prospect of the order being against the creditor because the 'authorised officer ' had to hold in favour of the debtor if he merely produced a certificate under section 7(5) from one of those officials enumerated therein all minor minions of government at the local level.
Once the certif icate was produced by the debtor the onus was shifted to the creditor to make out the contrary. 'How could the money lender prove the debtor 's financial position ? ' asked Shri Nariman.
Moreover, the issuance of a certificate by the local little official was a unilateral process where the creditor was not entitled to be heard as to the means or eligibility of the debtor.
There were two further unreason able procedural impositions on the creditor, argued Shri Nariman.
The lender had to make his application with all the facts within 7 days from the date of receipt of the application from the debtor intimating that the debt stood released.
The 7 day period was too short even to make enquiries about the assets of the debtor, And worse, the application by the creditor shall be entertained by the authorised officer only on the creditor depositing the pledged property of its value.
Thus the dice was 80 heavi ly loaded against the money lender that even persons who were not petty debtors intended to be beneficiaries might, with illegitimate success, claim the bonus of the Debt Act.
Viewed in the abstract, these grievances may look genu ine.
but when we get down to the reality, nothing so re volting exists in these provisions.
It is true that the creditor has to move, and not the, debtor, before the authorised officer.
As between the two, the moneylender is sure to be far shrewder and otherwise more capable of initiating proceedings.
To cast that obligation on the debtor remember, in the bull of cases he is the village artisan, landless labourer or industrial worker is to deny relief in effect while bestowing it in the book.
Likewise, there is nothing horrendous in the debtor seeking a certifi cate of qualification from the small officer of the area.
After all, the officials enumerated in section 7(5) are govern ment servants, local officials, possess familiarity with the wherewithal and the whereabouts of persons within their area and are therefore accessible and competent.
There is no reason whatever for allowing the creditor to be heard at the certificate stage except to prolong and puzzle the proceed ings and by dilatory tactics, deny the relief to be debtor.
The creditor does not suffer because the certificate that the applicant is a debtor raises only a rebuttable pre sumption and it is idle to argue that the creditor has no means of disproving the income or assets of his debtor.
Ordinarily, the mahajan, the sowcar or money lender and the petty borrower live in and around the same neighbourhood the, former knows the circumstances of the latter and often these are not 853 isolated transactions between strangers.
So much so the debtor 's financial horoscope or impecunious kismet is nor mally within the ken of the creditor.
Moreover, a perusal of the pro forma of the certificate to be issued needs mention of several particulars which have to be.
filled up by the certifying officer who has therefore to make the necessary enquiries from and about the debtor.
Assurance about the credibility of the certifying officer 's entries is lent by the personal responsibility cast on him for the correctness of the particulars mentioned in the certificate.
This is a protection for the creditor that routine and reckless entries will not be made and that the certifying officer will take care, prima facie, to be satisfied by proper enquiry before issuing the certificate.
Such a safeguard warrants the raising of a rebuttable presumption of correctness and reduces the possibility of injustice to the creditor for not being allowed an opportunity for being heard at this stage.
In this view also we see noth ing unreasonable in the presumptive evidence of the certifi cate without the hearing of the creditor.
Fairplay is also afforded in the proceeding not only because the creditor can rebut the certificate but also because under section 8 (6) the authorized officer has the power and duty to determine all questions in dispute.
Section 7(7) expressly provides for an opportunity to the creditor and the debtor to be heard.
After all, the authorised officer is one who exercises quasi judicial powers even otherwise on the Revenue side.
While the enquiry is sum mary, the procedure under the Maharashtra Land Revenue Code will be adopted which is a fair safeguard.
Summary trial does not dispense with evidence.
or sound judgment but merely relieves the adjudicator from maintaining elaborate records.
The enquiring officer, may, in appropriate cases, examine the Debtor or others who can throw light.
To equate 'summary ' with 'arbitrary ' is contrary to common experience.
The obligation for the production of the pledged article by the creditor as a preliminary to the institution of the preceedings is also a just measure so that when a decision is reached the article may be returned to the. debtor in the vent of the verdict going in his favour.
The negation of a right of appeal against an order under section 7(6) of the Debt Act is another circumstance.
Shri Nariman has pressed before us.
He cited other debt relief measures where a single appeal had been provided for.
Does the absence of a right of appeal render the procedure unrea sonable ? It depends.
Where the subject matter is substan tial and fraught with serious consequences and complicated questions are litigatively terminated summarily.
Without a second look at the findings by an appellate body, it may well be that unfairness is inscribed on the face of the law, but where little men, with petty debts, legally illiterate and otherwise handicapped, are pitted against money lenders with stamina, astuteness, awareness of legal rights and other superiority, if the purpose of instant relief is to be accomplished, the provision of an appeal may, in many cases, prove abult in booby trap that frustrates and ruins the hand to mouth debtor.
No surer method of baulking the object can be devised ' than enticing 854 the debtor into an appellate bout! Daughter gone and ducate too will be the sequel.
Of course, where the enquiry is a travesty of justice or violaion of provisions, where the finding is a perversity of adjudication or fraud on power, the High Court is not powerless to grant remedy, even after the recent package of Constitutional amendments It is true that in several cases this Court has held that a right of appeal is a gesture of statutory fairness in the disposal of cases.
Our attention was drawn to the rulings reported as Jyoti Pershad (1); Mohd Faruk (1) and Ganesh Beedi Works(2) and other cases hearing on the necessity of a right of appeal, as an incident of fair hearing.
We cannot dogmatise, generalize or pontificate on questions of law whose application depends sensitively on the nature of the subject matter, the total circumstances, the urgency of the relief and what not. 'We have adduced sufficient reason to hold that the Debt Act is not bad for processual perniciousness or jurisprudence of remedies.
The next constitutional missile aimed at the Debt Act was the incompetency of the State Legislature to enact this law, for reasons more than one.
The main ground was covered by Shri Nariman, but yet others made their contributions sometimes overlapping, sometimes overflowing.
Shri B. Sen also challenged the legislative competency, but on a different basis.
Several citations, home spun and foreign, finely woven theories and subtle punditry, gave a grave mein to the argument on this branch.
But the point in issue, in our view, admits of straight solution, by passing the heavy learning and jurisprudential finery.
When Courts are co cooned by case law or caught in the skein of scholarly doctrines, simple questions become complex.
However, prob lems of constitutional law can be well left alone where they do not directly demand a solution in the case on hand.
Enough unto the day is the evil thereof: What then is the incompetence of the State Legislature ? Shri B. Sen urged that the wiping out of private debts which formed the capital assets of the money lenders one of the main things .done by the Debt Act was not in any of the legislative Lists and even if Parliament had residuary power under Entry 97 of List I, the State had none.
Entry 30 in List II is 'money lending and moneylenders; relief of agri cultural indebtedness '.
If common sense and common Eng lish are components of constitutional construction, relief against loans by scaling down, discharging, reducing inter est and principal, and staying the real isation of debts will, among other things, fall squarely within the topic.
And that, in a country of hereditary (1) ; (2) ; (3) ; 855 indebtedness on a colossal scale! It is commonplace to state that legislative heads must receive large and liberal meanings and the sweep of the sense of the rubrics must embrace the widest range.
Even incidental and cognate matters come within their purview.
The whole gamut of money lending and debt liquidation is thus us within the State 's legislative competence.
The reference to the Rajah mundry Electricity Case(1) is of no relevance.
Nor is the absence of the expression 'relief in Entry 30, List II, of any moment when relief from moneylenders is eloquently implicit in the topic.
Sometimes, arguments have only stated to be rejected.
The next ground of attack, in its multi form presenta tion, is that the 'gold loan ' part of the Debt Act is void because Parliament has occupied file field.
It has also been urged that there is inconsistency between the Debt Act and the Gold Control Act, and pro tanto the former fails to have effect.
Let us look at the basics of the legal situation before us, before examining the wealth of learning counsel has accumulated.
Article 24 6 vests exclusive power in Parlia ment over matters enumerated in List I (Seventh Schedule) and the State Legislature enjoys like power over topics in List II, subject to clauses (1) and.
(2) of the Article.
Plainly, therefore, the State can legislate upon any Entry in the State .List.
We may visualize situations where Parliamentary occupation may exclude the State Legislature.
Where, for instance, Parliament while enacting on a matter in the Union List, makes as it is entitled to make, neces sary incidental provisions to effectuate the principal legislation, such ancillary expansions may trench upon the State field in List II.
In such a case, if the State makes a law on an Entry in its exclusive List, and such law covers and runs counter to what has already been occupied by Par liament, through incidental provisions, it may be argued that the State law stands pushed out on account of the superior potency of Parliament 's power in our constitutional scheme.
Again, there are certain telltale heads of legisla tion in the Lists where one may plausibly invoke the, doc trine of occupied field.
Examples may, perhaps, be fur nished by Entries 52 and 54 of List I, Entries 23 and 24 of List Ii and Entry 33 of List III.
Without fear of contra diction, we may assert that article 246(3) read with Entry 30 in List 11, empowers the State to make the impugned law.
Why then is it incompetent? Because, says Mr. Nariman, the field of gold industry is already occupied by Parliament and the State Legislature therefore stands excluded.
Entry 52 in List I reads: "Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
" Parliament, in the Industries (Development and Regula tion) Act, 1951 (Act 65 of 1951) has made the necessary declaration contemplated in Entry 52 and has occupied the field of gold industry ', as is (1)[1954] S.C.R. 770. 856 evident from reading section 2 and item 1.B(2) of tile First schedule therein.
This expression of Parliamentary intent to legislate upon the gold industry is enough to expel from that ' field the State Legislature.
This is Shri Nariman 's contention.
But what is the sequitur ? Assuming the ap proprlation by Parliament of the power to legislate on gold, what follows? It can make laws directly on that industry and ancillarily on every allied area where effective exer cise of the parliamentary power necessitates it.
So much so 'business in gold ', licensing of gold merchants, regula tion of making or pledging of gold ornaments, keeping of jewellery, disclosure of gold possessions and the like are incidental to the parliamentary power and purpose and the Gold Control Act, 1968 and the Rules made thereunder are valid (vide, for example, Bantha 's Case: 1970 I SCR 4 79).
Several sections of the Act, some rules and a few rulings were read before us to drive home the point that gold loans are already within the ken of the law made under Entry 52, List I.
If so, what ? Does it spell death sentence on the Debt Act ? Or maim it ? Or leave it intact ? Here we turn to Entry 24 of List II which runs: "Indus tries subject" to the provisions of entries 7 and 52 of List I".
This means that the State Legislature loses its power to make laws regarding 'gold industry since Entry 24 '.
List II is expressly subject to the provisions of Entry 52 of List I.
This does not mean that other entries in the State List become impotent even regarding 'gold '.
The State Legislature can make laws regarding money lending even where gold is involved under Entry 30, List II, even as it can regulate 'gambling in gold ' under Entry 34 , impose sales tax on gold sales under Entry 54, regulate by munici pal law under Entry 5 and by trade restrictions under Entry 26, the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal.
To multiply instances is easy, but the core of the matter is that where under its this power Parliament has made a law which over rides an entry in the State List, that area is abstracted from the State List.
Nothing more.
In the Kannan Devan Mills Case(1) this Court put the point tersely 'while dealing with Entry 52 of the Union List: "Once it is declared by Parliament by law to be expedient "in the public interest to control the industry, Parliament can legis late on that particular industry and the States I would lose their power to legislate on that industry.
But this would not prevent the States from legislating on subjects other than that particular industry".
(underscor ing, ours).
This is authority for the proposition that while Entry 23 of List II, in the light of the fact that under Entry 52 of List I Parliament has made the Gold ' Control Act has become inoperative to legislate on industry, there ' is no inhibition whatever on State legislation on (1) ; 857 subjects other than that particular industry.
Money.lending is one such subject and the power to legislate thereon remains intact.
We are free to agree that the word 'industry ' as a legislative topic has to be interpreted in the widest ampli tude.
We also find, as a fact, that dealings in gold, including pledging, have been covered in part by the Gold Control Act, 1958; even so nothing prevents the State from making the impugned Act.
In Paresh Chandra Chatterice(1) Subba Rao J (as he then was ) dealt with an apparent con flict between the Central Act (The Tea Act) and a State legislation [The Assam Land (Requisition and Acquisition) Act, 1948].
After examining the scheme of the two Laws, the learned Judge concluded: "A comparative study of both the Acts makes it clear that the two Acts deal with different matters and were passed for differ ent purposes." Unreal and imaginary conflicts between the Central and the State Acts cannot be the foundation for invalidation of the latter.
In Kanan Devan (Supra) it was further pointed out: "If the Act (the Tea Act) is within the competence of Parliament and the impugned Act is within the competence of the State, the ' petitioners must show that the im pugned Act is repugnant to the Tea Act but we can see no conflict between the provisions of the impugned Act and the Tea Act." Banthia(2) was referred to in the course of the arguments and various passages were stressed by different counsel.
The essential question there was as to whether manufacture of gold ornaments.
by goldsmiths fell within the connotation of the word 'industry '.
It did.
It was further pointed out by Ramaswami J in that case that some of the entries overlap and seem to be in direct conflict but the duty of the Court is to reconcile and harmonize while giving the widest ampli tude to the language of the Entries.
We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I, the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List, but incidentally referred also to gold transactions.
Nobody disputes the paramountcy of parliamentary power.
We have to reconciIe the paramountcy principle with the 'trenching ' doctrine.
In the Canadian Constitution, the question of conflict and coincidence in the domain in which provincial and domin ion legislation overlap has been considered.
If both may overlap and co exist without conflict, neither legislation is ultra vires.
But if there is confrontation and conflict the question of paramountcy and occupied field may crop up.
It has been held that the rule as to predominance of domin ion legislation can only be invoked in case of absolutely conflicting legislation in pari materia when it will be an impossibility to give effect to both (1) (2) ; 858 the dominion and provincial enactments.
There must be a real conflict between the two Acts i.e. the two enactments must come into collision.
The doctrine of Dominion paramountey does not operate merely because the Dominion has legislated on the same subject matter.
The doctrine of 'occupied field ' applies only where there is a clash between Dominion Legis latic and Provincial Legislation within an area common to both.
Where both can co exist peacefully, both reap their respective harvests (Please see; Canadian Constitutional Law by Laskin pp. 52 54 , 1951 Edn).
We may sum up the legal position to the extent necessary for our case.
Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money lending business involving gold ornaments, the State, making a law on a different topic but covering in part the same area of gold loans ', must not go into irreconcilable conflicts.
Of course, if article 254(2) can be invoked We will presently examine it then the State law may stir prevail since the assent of the.
President has been obtained for the Debt Act.
Thirdly, the doctrine of 'occupied field ' does not totally deprive the State Legislature from making any law incidentally referable to gold.
In the event of a plain conflict, the State law must step down unless, as.
pointed out earlier in the previous passage, article 254(2) comes to the rescue.
Many more decisions were brought to our notice, bearing on paramountcy, 'occupied field, ' repugnancy and inconsist ency.
They were elaborated by counsel sufficiently to convince us that lawyer 's law is divorced from plain seman tics and common understanding of Constitutional provisions becomes a casualty when doctrinal complexities are injected.
May be every profession has a vested interest in the learned art of incomprehensibility for the laity.
Law, in the administration of which the Bench and the Bar are partners, probably lives up to this reputation.
All these questions become academic for two reasons.
Firstly, there is no conflict between the Gold Control Act and the Debt .Act.
Secondly, the subjects of both the legis lations can be traced to the Concurrent List and article 254(2) validates within the State the operation of the Debt Act.
We are of the view, as earlier discussed, and without citing further cases on the point, that the State 's legisla tive power, save under the, Entry 24 of List II, is not denuded.
Nor is there any conflict between the two Acts.
A detailed study, section by section, of both the legisla tions, has convinced us that they can stand together and that the two authorities and modalities do not contradict each other and that, by elementary comity, a modus vivendi between the Gold Act and the Debt Act can be worked out.
The provisions in the Gold Act for declarations and other formalities may not collide with the obligations and appli cations under the Debt Act.
We have no doubt that the authorities charged with enforcement under the two statutes will understand the sense and spirit of the provisions and 859 see that the object of the Debt Act is not frustrated or its processes paralysed.
Indeed, the learned Attorney General showed how by reading together the two Acts and remember ing their respective purposes a viable resolution of possi ble imbroglios is simple, although officialdom is not unfa miliar with the art of embroilment where artless customers are involved or ulterior ends are to be served.
The State, through an effective programme of legal aid and advice and other prompt instructions to the agencies involved, should avoid harassments, hold ups and red tapes which are the bane of processual justice.
The jurisprudence of remedies is still a Cinderella of our system.
The Advocate General of Maharashtra assured the Court that in the fair enforcement of the law and the follow up of creating alternative credit agencies his client will take quick and impartial care.
The learned Attorney General, it may be mentioned before winding up this part of the discussion, did draw our atten tion to article 254(2) which is self explanatory.
The State law will prevail in the State, even if there be repugnancy with a Central or existing law, given Presidential assent provided both the legislations fall under the Concurrent List.
Do they ? He says, yes; and points, inter alia, to Entry 6 (transfer of property) and Entry 7 (contracts).
Of course, the law of contracts deals with pledges; so does the Gold Control Act.
The latter does not prohibit pawns where gold is involved, but policies it to prevent evils by prescribing special modalities.
The Debt Act relates to contracts and has fulfilled the requirement in Art.254(2).
We have nearly come to the end of the judicatory journey and have reached the constitutional conclusion that the guarantee that Trade and Commerce and Intercourse shall be free does not necessitate that the little lendee shall remain unfree.
Article.
301 does permit, in our view, legislative action to break agrarian indebtedness and urban usurious bondage lest social disorder disruptive of Trade, break out.
The impugned Act is a partial implementation of the economic thesis of Adam Smith when he wrote, two hundred obsolescent.years ago: "No society can surely be flourishing and happy, of which by far the greater part of the numbers are poor and miserable.
" We are in a Republic with social justice as its indeli ble signature.
And the measure under challenge.
promotes social justice, social order and better conditions for the business of healthy money lending.
The appalling indebtness which cripples our people is an unhappy heritage of our economic system.
The bonded yes terday, the yoke today, and the hope of tomorrow obligate the State to spell out the future tense of the rural human order and to focus on the legislative strategies of allevia tion before the backlash of social confusion begins, and to administer, through working mechanisms, and direct, 7 206SCI/77 860 through social cybernetics, our disenchanted society into fresh formulations of a free future.
Without such govern mental measures of rural regeneration even the good money lenders may have to fold up and the better businessmen wind up.
The larger interests of Trade, Commerce and Intercourse whose.
freedom is a constitutional norm demand that social order shall be preserved through legislative methodolo gy, now radical, now reformatory but always motivated and moderated by the felt necessities of the times.
To come to humane terms with harsh realities by subjecting itself to the reasonable, though unpalatable, regulations of the Debt Act and like measures or to face the adaptational break down where law ,may fail to keep order against those who have nothing to lose except their chains this is the sort of sociological Hobson 's choice before the 'money lenders ' of Maharashtra.
The option is obviously the former and that is the constitutional vindication of the impugned legislation.
All these laws, in themselves marginal, are part of the programschrift for a New Deal which is the cornerstone of the Constitution.
We have been addressed many minor criticisms which have chopped little logic and made out small discriminations but serious constitutional decisions go on major considera tions, not gossamer web flimsiness.
We have listened to these meticulous submissions but are not persuaded that we should even mention them in our longish judgment.
A concluding caveat.
The poignant purpose of ending exploitatire rural urban lending to the weaker members of society is the validating virtue of this legislation, viewed from the constitutional angle.
But, as Shri Nariman at some stage mentioned and the learned Attorney General also concurred mere farewell to existing debts is prone to prove a teasing illusion or promise of unreality unless the Administration fills the credit gap by an easy, accessible and needbased network of humane credit agencies, coupled with employment opportunities for the small man.
The experience of the.
past has not inspired adequate confi dence.
Authoritative official pronouncement, however, owns that "Arrangements so far made to.
give credit and inputs (for rural credit) have had only limited impact.
The problem is a vast one and seems to be growing in size.
Rural banks, credit societies, farmers ' service societies all these have to be strengthened and their activities expanded.
To give pur poseful direction to, this task and to ensure that the interests of agriculturists and farmers, especially the small farmer, are looked after, there is need for an Apex Agri cultural Development Bank in India.
" The legislation we uphold is an added responsibility on the State.
it shall be vigorously enforced with sympathy for the victim class, lest the progressive measure.
prove a paper tiger.
The cadres charged with enforcement must have right orientation correct grasp and social activism, if this law is not to leave a yawning implementation 861 gap.
Hercics in court and hortation in the House must be followed by effective enforcement in the field.
We state this not because the State is not in great earnest it is but because many a welfare legislation in the country reportedly remains a cloistered virtue or slumbrous in effect.
The finest hour of the rule of law is when law disciplines life and matches promise with performance.
On this note of hopeful valediction we wind up.
We dismiss the appeals and the writ petitions, leaving.
the parties to bear their costs, although we had at least on one occasion, sufficient provocation to make a different direction.
| In the 1959 Second Pay Commission Report, the pay scales and the revised pay scales of the Computers were shown as identical with that of the Research Assistants Grade II, even though the 'two posts were shown as separate classes.
The Third Pay Commission Report, however, showed that the Computers not only belonged to a separate class of their own but received less pay than Research Assistants ' Grade II.
The petitioners assailed this view under article 32 of the Constitution as violative of Articles 14 and 16 of the Constitution on the ground that they had a Fundamental Right to be equated both in status as well as in Day to that of Research Assistants, Grade II.
Dismissing the petition the Court.
HELD: (1) Equation of posts and equation of pay are matters entirely within the sphere of the function of the Pay Commission.
These are questions entirely unfit for determination upon a petition for a writ for the enforcement of Fundamental Rights.
It requires, firstly, formula tion of correct criteria for each classification.
and, secondly.
the application of these criteria to facts relat ing to the functions and the qualifications for each class.
The Pay Commission had done this in the instant case elabo rately,.
B C] (2) The Court, under article 32.
neither has wider powers nor can do it with greater facility than a High Court can not, when exercising its writ issuing jurisdiction.
This Court had already laid down that equation of posts is not a duty which the High Court was competent to carry out in proceedings under article 226.
[913 D] Union of India vs G.R. Prabhavalkar & Co. ; , referred (3) The question, whether there is or there is not enough material on record in a particular case to establish the basis of a particular discrimination is one of fact for the determination of which no hard and fast rules can be laid down.
A discrimination which involves the invocation of article 14 is not necessarily covered by article 16.
In the instant case, even the material relied upon by the petition ers shows the Computers and Research Assistants Grade II are classified separately, and, therefore, the validity of that classification cannot be displaced by the kind of evidence relied on.
Until that classification is shown to be unjus tified, no question of violating Article 16 can arise.
[913 G H, 914 A] Purshottam Lal and Ors.
vs Union of India & Anr.
held inapplicable.
|
Special leave Petition (Civil) No. 10330 of 1991.
From the Judgement and Order dated 3.5.1991 of the Bomaby High ourt in writ Petition No. 186 of 1991.
Kapil Sibal, Makrand D. Adkar and Ejaz Maqbool for the Petitioner.
R.D. Tulpule, D.M. Nargolkar, Ms. Kiran Bhagalia, Ms. V.D.Khanna and A.M. Khanwilkar for the respondents.
Caveator in person.
The following Order of the Court was delivered.
The petitioner, Bhushan Uttam Khare, appeared for the Third Year M.B.B.S. Examination held by University of Poona in the months of October November, 1990.
The results of the said examination were declared on 12.12.1990.
As per University of Poona Ordinance 134A, the petitioner applied for revaluation of his answer papers.
167 students including the petitioner had applied for revaluation.
When the revaluation results were declared, certain students made representation to the University authorities for their answer papers being revaluate from the same set of examiners.
388 On receipt of the representation, the Executive Council of University appointed a Committee to make an enquiry.
On the report of the Committee, the University of Poona decided to cancel the revaluation results and to conduct further revaluation.
This decision of the Executive Council cancelling the earlier revaluation and directing a second revaluation was challenged by the petitioner and others in writ petitions filed before the High Court at Bomaby.
By the impugned judgement dated May 3, 1991 the High Court dismissed the writ petitions.
Aggrieved by the decisions, the petitioners have moved this petition for special leave.
The Poona University Act, 1974 defines the powers and duties of the Executive Council.
The Executive Council may make Ordinances to provide for the conduct of the examinations.
Under Ordinance 134A, the Vice Chancellor shall use his discretionery powers to decide as to whether all the applications received from the candidates, be considered for revaluation or not.
If as a result of revaluation of answer books, the marks obtained by the candidate increase over the original marks by 10% or more of the marks carried by the paper then only the result of revaluation will be accepted by the University.
Application for vertification of answer books will be entertained within a period of two weeks from the date of declaration of the results.
Ordinance 146 reads: "146.
In any case where it is found that the result of an examination has been affected by error, malpractice, fraud, improper conduct or other course of whatsoever nature, the Executive Council shall have power to amend such result in such manner as shall be in accord with the true position and to make such declaration as the Executive Council shall consider necessary in that behalf.
Provided that, but subject to 0.147, no result shall be amended after the expiration of six months from the date of publication of the said result".
In the Third Year M.B.B.S. Examination, 402 students appeared for the examination and 167 students for revaluation of the answer books.
When the representation of students opting for revaluation was placed before the Executive Council as glaring difference was indicated, a Committee was appointed for scrutiny and to reassess theory papers of the students acquiring more than 20% marks after revaluation, from senior teachers of the Faculty.
After scrutiny, it was found out that the marks are closer to the original marks in Medicine, Surgery and Preventive and Social Medicine.
Therefore, the Committee recommended that the entire revaluation of the papers should be cancelled.
This report of the 389 Committee was placed before the Executive Council in its meeting held on March 27, 1991 and the Council by the resolution cancelled the result of the revaluation and directed fresh revaluation.
The second revaluation was done through the examiners outside the State.
The results on revaluation intimated to the Medical College thus stood cancelled and the final results were delcared in pursuance to the second revaluation.
The action of the Executive Council was attacked on the grounds that it was an arbitrary action; that the choice of the examiners was that of the Vice Chancellor as enjoined under the Ordinance and there was no glaring instance of any malpractice, fraud or other course of whatsoever nature to cancel the revaluation and in the absence of any provision in the statute or the Ordinance for a second revaluation, the decision taken by the Executive Council is unwarranted and, therefore, illegal.
In repelling these contentions, the High Court has taken the view that educational institutions set up Enquiry Committee to deal with problem posed by the adoption of unfair means and it is normally within their domestic jurisdiction to decide all questions in the light of the material adduced.
Unless there is an absolute and compelling justification, the Writ Court is slow to interfere with the autonomous activity of the Executive Councils.
The High Court said that the material on record indicated that this is not a case for exercise of jurisdiction under Article 226 of the Constitution and since the Court has found that there is material to reach the decision as regards cancellation of the impugned result of revaluation, the contentions taken up by the petitioner are untenable.
The petitioners have reiterated the submissions that there had been no improper conduct come to light and the absence of any provision for a second revaluation vitiates the whole action.
We have been taken through a comparative chart containing the marks awarded in the original examination, the first revaluation and the second revaluation.
The attempt of the learned counsel for the petitioners had been to make out that the disparity was not such as to indicate any improper practice and that the Committee constituted consisted of four members of whom two were original examiners and the report submitted by that Committee should not have been made the basis for the decision which affected the prospects and career of a large number of medical students.
The learned counsel for the University as also the standing counsel for the State drew our attention to the fact that Executive Council had only cautiously proceeded in the matter and before ordering cancellation a probe was made and the mem 390 bers of the Enquiry Committee were competent persons and that there is no illegality which warrants interference of the Court.
We have considered all the materials placed before us in the light of arguments advanced keeping in mind the well accepted principle that in deciding the matters relating to orders passed by authorities of educational institutions, the Court should normally be very slow to pass orders in its jurisdiction because matters falling within the jurisdiction of educational authorities should normally be left to their decision and the Court should interfere with them only when it thinks it must do so in the interest of justice.
We are satisfied that there had been sufficient material before the Executive Council to proceed in the manner in which it has done.
It is not correct to say that the University had acted on non existing rule for ordering revaluation.
Ordinance 146 is comprehensive enough to include revaluation also for further action.
The fact that two examiners were also the members of the Committee which recommended for revaluation cannot result in any bias even if they had been directly concerned with the original evaluation.
It is true that in the second revaluation also there had been some changes between the original valuation and the revaluation results.
However, it is not so glaring or demonstrably unconscionable as seen in the first revaluation.
We cannot, therefore, accept the contention of the petitioner that the High Court had erred in not granting the relief sought for.
We can only observe that the case of the petitioner, who alone has come before this Court and who had secured higher marks in the first revaluation and is, therefore, aggrieved by the cancellation of the same, would by duly considered in the selection for Post Graduate Course.
The special leave petition is dismissed.
Y.L. SLP dismissed.
| Consequent upon the announcement of his M.B.B.S. Examination result on 12.12.1990, the petitioner alongwith other 166 students, applied for revaluation of answer books under University of Poona Ordinance 134A.
When the revaluation results were declared, certain students made representation to the University Authorities for their answer papers being revalued from the same set of examiners.
The University on consideration of that representation appointed a Committee for scrutiny and to reasses theory papers of the students acquiring more than 20% marks after revaluation, from senior teachers of the Faculty.
After scrutiny, it was found out that the marks are closer to the original marks in Medicine, Surgery and Preventive and Social Medicine.
The Committee therefore recommended that the entire revaluation of the papers should be cancelled.
The Executive Council by a resolution cancelled the result of the revaluation and directed fresh revaluation and the second revaluation was done through the examiners outside the State and the result declared on the basis thereof.
The peritioner and others challenged the aforesaid decision of the Executive Council cancelling the earlier revaluation and directing a second revaluation by means of writ petitions.
It was contended before the High Court on behalf of the petitioners that the action of the Executive Council was arbitrary in as much as there was no malpractice, fraud or anything objectionable to the revaluation as the examiners were chosen by the Vice Chancellor as enjoined under the Ordinance.
Hence the cancellation of revaluation was not proper.
The High Court repelled the two contentions advanced before it and dismissed the writ petitions.
Hence this Petition for Special Leave to appeal.
Dismissing the Petition for special leave to appeal, this Court, HELD: In deciding the matters relating to orders passed by authorities of educational institutions, the Court should normally be 387 very slow to pass orders in its jurisdiction because matters falling within the jurisdiction of educational authorities should normally be left to their decision and the Court should interfere with them only when it thinks it must do so in the interest of justice.
[390 B] Under Ordinance 134A, the Vice Chancellor shall use his discretionary power to decide as to whether all the applications received from the candidates, considered for revaluation or not.
If as a result of revaluation of answer books, the marks obtained by the candidate increase over the original marks by 10% or more then only the result of revaluation will be accepted by the University.
[388 C D] Ordinance 146 is comprehensive enough to include revaluation also for further action.
The fact that two examiners were also the members of the Committee which recommended for revaluation cannot result in any bias even if they had been directly concerned with the original evaluation.
It is true that in the second revaluation also there had been some changes between the original valuation and the revaluation results.
However, it is not so glaring or demonstrably unconscionable as seen in the first revaluation.
[390 D]
|
Civil Appeal No. 154 of 1951.
Appeal from a judgment and order of the 1st April, 1949, of the High Court of Judicature, Madras (Rajamannar C.J. and Balakrishna Aiyar J.) in Civil Miscellaneous Peti tion No. 1317 of 1949 arising out of Order dated 29th Janu ary, 1949, of the Commissioner of Labour, Madras.
S.C. Isaacs (section N. Mukherjee, with him), for the appel lant.
The respondent was not represented.
April 10.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is directed against a judgment of a Division Bench of the Madras High Court dated 1st April, 1949, passed in a certiorari proceeding, by which the learned Judges directed the issue of a writ of certiorari for quashing a portion of an order made by the Labour Com missioner, Madras, in any enquiry under section 51 of the Madras Shops and Establishments Act.
520 The facts material for our present purpose lie within a narrow compass and to appreciate the point that requires consideration in this appeal it will be convenient first of all to advert to a few relevant provisions of the Madras Act referred to above.
The Act was passed in 1947 and its ob ject, as stated in the preamble, is to provide for the regulation of conditions of work in shops and other estab lishments.
Section 14(1) of the Act sets a statutory limi tation upon the working hours and lays down: "Subject to the other provisions of the Act, no person employed in any establishment shall be required or allowed to work for more than 8 hours in any day and 48 hours in any week.
" A proviso attached to the sub section which by way of exception to the rule enunciated therein, allows employment of a person in any establishment for any period in excess of this statutory limit subject to payment of overtime wages, provided the period of work including overtime work does not exceed 10 hours any day, and in the aggregate 54 hours in any week.
Section 31 provides: "Where any person employed in any establishment is re quired to work overtime, he shall be entitled, in respect of such overtime work, to wages at twice the rate of ordinary rate of wages.
" Section 50 preserves the existing rights and privileges of an employee in any establishment if these rights and privileges are more favourable to him than those created by the Act.
The section runs as follows : "Nothing contained in this Act shall affect any rights or privileges which any person employed in any establishment is entitled to on the date on which this Act comes into operation in respect of such establishment under any other law, contract, custom.
Or Usage applicable to such estab lishment if such rights and privileges are more favourable to him than those to which he would be entitled under this Act.
" 521 The only other relevant section is section 51 which says : "If any question arises whether all or any of the provi sions of this Act apply to an establishment or to a person employed thereto or whether section 50 applies to any case or not, it shall be decided by the Commissioner of Labour and his decision thereon shall be final and shall not be liable to be questioned in a court of law".
The appellant is a limited company carrying on business in Madras, while the respondent is an association of cleri cal employees including those working under the appellant.
On November 10, 1948, the respondent presented an applica tion before the Labour Commissioner, Madras, under section 51 of the Shops and Establishments Act for decision of certain questions referred to in the petition which related to the rights and privileges of the employees of the appel lant.
The Commissioner issued a notice calling upon the appellant to appear and answer the contentions raised on behalf of the employees.
The parties appeared before the Commissioner on 26th November, 1948, and again on 16th December following when they were represented by lawyers.
After hearing the parties and on a consideration of the evidence adduced by them, the Labour Commissioner made his decision on 29th January, 1949.
The questions raised by the employees were classified by the Commissioner under six separate issues and two of them, which are material for our present purpose, are worded as follows : Issue No. 5.
Whether there has been an increase in working hours from 6 to 61/2 on week days from 12th October, 1948, and the increase is permissible ? Issue No. 6.
Whether overtime wages at twice the ordi nary rates should not be paid for work done by the employees after the normal working hours ? On Issue No. 5.
the 'decision of the Commissioner was that the 'business hours of the company were six and half prior to 1st April, 1948 ', when the Act came into force and they continue to be so even now.
It is 522 true that a circular ' was issued which was to take effect from 12th October, 1948, under which the lunch interval was reduced by half an hour, but at the same time it was direct ed that the office would close for business with the general public at 5 P.M. instead of 5 30 P.M.
On all working days so far as business hours are concerned.
As regards Issue No. 6 the Labour Commissioner observes first of all that although it is customary in many estab lishments to fix certain hours of business during which business is transacted with the outside public, yet they are not the 'real hours of employment and as a matter of fact the employees do work outside these business hours, for which they are not entitled to any extra remuneration pro vided.
the statutory limit of 8 hours a day is not exceeded.
In the opinion of the Commissioner if the normal hours of work were previously fixed and strictly adhered to, the employees could have acquired a right or privilege to work only for such hours and they would be entitled to seek protection under section 50 of the Act against the imposi tion of longer hours without a corresponding increase in emoluments.
The Commissioner goes on to say that in such cases it would be sufficient if compensatory wages are paid at the ordinary rate calculated according to rule 10 of the Madras Shops and Establishments Rules for work in excess of the normal hours but less than the statutory hours.
But for work of more than 8 hours a day or 48 hours a week, wages at twice the ordinary rates should be paid as required by the proviso to section 14 (1) and section 31 of the Act.
The conclusion reached by the Commissioner with regard to this issue is expressed by him in the following words: "I hold that the case of Messrs. Parry and Company 's employees falls under the former category and that the employees in this company will be entitled to overtime wages only when the statutory hours are exceeded.
" This order, as said above, was made on 29th January, 1949, and on 16th of February following the 523 respondent association filed a petition before the High Court at Madras, praying for a writ of certiorari to quash the same.
This application was heard by a Bench of two Judges and by the judgment dated 1st of April, 1949, the learned Judges allowed the petition in part and quashed the order of the Labour Commissioner in so far as it decided that the employees of the appellant will be entitled to overtime wages only when the statutory hours were exceeded.
It is the/propriety of this decision that has been chal lenged before us in this appeal.
It is somewhat unfortunate that the respondent remained unrepresented before us and the appeal had to be heard ex parte.
Mr. Isaacs, who appeared on behalf of the appellant, has, however, rendered every assistance that he possibly could and has placed before us all the material facts and relevant provisions of law.
Having given the matter our best consideration, we are of the opinion that the order of the High Court cannot be supported and that this appeal should be allowed.
The High Court seems to have based its decision on the ground that the Commissioner of Labour ' failed to answer the question raised by the association as to whether the company was entitled to require the employees to work more than six and half hours a day.
According to the learned Judge, the Labour Commissioner was not right in holding that even if the working hours were fixed at six and half hours a day, the employees would be entitled to overtime wages only when the statutory hours are exceeded.
As has been pointed out already, the Labour Commission er did decide that if the normal hours of work were previ ously fixed and rigidly adhered to, the employees would be entitled to seek protection under Section 50 of the Act against imposition of longer hours of ,work without a corre sponding increase in their emoluments.
The increase in such cases, according to the Labour Commissioner, should be on the scale of compensatory wages allowed under rule 10 of 524 the Madras Shops and Establishments Rules.
If, however, the increase is more than the statutory period, "the employees will be entitled to wages at double rate under Section 31 of,the Act.
This decision may or may not be right, but it has not been and cannot be suggested that the Labour Commis sioner acted without jurisdiction or in excess of his pow ers.
Under Section 51 of the Madras Shops and Establish ments Act, the Labour Commissioner is the only proper and competent authority to determine the questions referred to it in that section; and there is an express provision in it that the decision of the Labour Commissioner shall be final and not liable to be challenged in any court of/law.
It was the respondent who took the matter before the Labour Commis sioner in the present case and invited his decision upon the questions raised in the petition.
The Commissioner was certainly bound to decide the questions and he did decide them.
At the worst, he may have come to an erroneous conclu sion, but the conclusion is in respect of a matter which lies entirely within the jurisdiction of the Labour Commis sioner to decide and it does not relate to anything collat eral, an erroneous decision upon which might affect his jurisdiction.
The records of the case do not disclose any error apparent on the face of the proceeding or any irregu larity in the procedure adopted by the Labour Commissioner which goes contrary to the principles of natural justice.
Thus there was absolutely no grounds here which would justi fy a superior court in issuing a writ of certiorari for removal of an order or proceeding of an inferior tribunal vested with powers to exercise judicial or quasi judicial functions.
What the High Court has done really is to exer cise the powers of an appellate court and correct what it considered to be an error in the decision of the Labour Commissioner.
This obviously it cannot do.
The position might have been different if the Labour Commissioner had omitted to decide a matter which he was bound to decide and in such cases a mandamus might legitimately issue commanding the authority to determine questions which it left 525 undecided(1); but no certiorari is available to quash a decision passed with jurisdiction by an inferior tribunal on the mere ground that such decision is erroneous.
The judg ment of the High Court, therefore, in our opinion, is plain ly unsustainable.
In the view which we have taken, it is unnecessary to express any opinion as to whether certiorari has been taken away if it can be taken away at all under our Constitution by the provision of section 51 of the Madras Shops and Establishments Act which lays down that the decision of the Labour Commissioner would be final and incapable of being challenged in any court of law.
It was conceded by Mr. Isaacs that in spite of such statutory provisions the superior court is not absolutely deprived of the power to issue a writ, although it can do so only on the ground of either a manifest defect of jurisdiction in the tribunal that made the order or of a manifest fraud in the party procuring it(2).
The result is, that in our opinion the appeal succeeds and the judgment of the High Court is set aside and the order of the Labour Commissioner affirmed.
As the respondent was absent, we do not think it proper, in the circumstances of this case, to make any order for costs.
(1) Vide Board of Education vs Rice and others, [1911] A.C. 179.
(2) Vide Colonial Bank of Australasia vs Robert Willan, 5P.C. Ap, peals 417.
| The High Court cannot issue a writ of certiorari to quash a decision passed with jurisdiction by a Labour Com missioner under the Madras Shops and Establishments Act, 1947, an the mere ground that such decision is erroneous.
Under section 51 of the Madras Shops and Establishments Act, 1947, the Labour Commissioner is the only proper and compe tent authority to.determine the questions referred to him under that section and the decision of the Labour Commis sioner is final and not liable to be challenged in a Court of law.
|
ition Nos. 656 660, 512 533 and 503 511 of 1977.
(Under Article 32 of the Constitution) AND Review Petitions Nos. 34, 62 65, 66 72, 73 74, 75 77, 78 81, 82, 83 84, 85, 86 87, 88, 89 90, 91 92, 93 94, 95, 95A, 96, 103 107, 110, 120, 121, 122 130 of 1977.
AND Writ Petition No. 63 of 1977.
(Under Article 32 of the Constitution).
M. N. Phadke, N. M. Ghatate (Dr.), section N. Bapat and section V. Deshpande for the Petitioners in RPs.
34, 62 95, 95A, 96, 103 107, 120 123 & WPs.
656 660, 503 511/77.
M. section Gupta for the Petitioners in RPs.
110, 122 130/77.
section N. Kherdikar, M. N. Ingle, A. G. Ratnaparkhi and C. K. Ratnaparkhi for the Petitioners in WPs.
512 533/77.
section V. Gupte, Att.
K. H. Bhatt, R. N. Sachthey and Miss A. Subhashini for R 1 in WPs.
503 511, 512 533, 656 660 & RPs.
34, 62 65/77.
section V. Gupte, Att.
C. J. Sawant, M. C. Bhandare, M. B. Bor & M. N. Shroff for R. 2 in WPs.
503 533 and for RR.
2 & 3 in WPs.
656 660/77.
9 section V. Gupte, Att.
Gen. and Miss A. Subhashini for the Att.
R. K. Rastogi, J. section Rastogi and Bardridas Sharma for the State of Rajasthan in WP No. 656/77.
G. N. Dikshit and M. V. Goswami for the State of U.P. Altaf Ahmed for the State of Jammu & Kashmir in WPs.
533 & 656/77.
FOR THE ADVOCATES GENERAL: U. P. Singh and Shambhunath Jha (State of Bihar).
M. M. Abdul Khader and K. R. Nambiar (State of Kerala).
B. M. Patnaik and R. K. Mehta (State of Orissa).
K. M. K. Nair and N. Nettar (State of Karnataka).
K. M. K. Nair and N. Nettar (State of Tamil Nadu).
FOR THE INTERVENERS: V. N Ganpule for Pratap Rao in W.P. 503.
R. K. Garg for Shyam Narain Tiwari in RP 34/77 & WP 512/77 R. N. Bannerjee, J. section Sinha and J.B.D. & Co. for Panch Valley Coal Co. and Shri Bimal Poddar in WP.
512/77.
G. L. Sanghi, Miss Bhubnesh Kumari, K. J. John and J. B. D. & Co. for the Appellant Intervener Lt. Col. Himmat Singh & Ors. section B. Wad for the Applicant/Intervener in WPs.
342 & 343 of 77 and RP. 63/77.
The following Order was delivered on 9th May, 1980.
(1) The Constitution (First Amendment) Act, 1951 which introduced Article 31A into the Constitution with retrospective effect, and section 3 of the Constitution (Fourth Amendment) Act, 1955 which substituted a new clause (1), sub clauses (a) to (e), for the original clause (1) with retrospective effect, do not damage any of the basic or essential features of the Constitution or its basic structure and are valid and constitutional, being within the constituent power of the Parliament.
(2) Section 5 of the Constitution (First Amendment) Act 1951 introduced Article 31B into the Constitution which reads thus: "31B.
Without prejudice to the generality of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provi 10 sions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part, and notwithstanding any judgment, decree or order of any court or tribunal to the contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeal or amend it, continue in force.
" In Kesavananda Bharati decided on April 24, 1973 it was held by the majority that Parliament has no power to amend the Constitution so as to damage or destroy its basic or essential features or its basic structure.
We hold that all amendments to the Constitution which were made before April 24, 1973 and by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are valid and constitutional.
Amendments to the Constitution made on or after April 24, 1973 by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them, are beyond the constituent power of the Parliament since they damage the basic or essential features of the Constitution or its basic structure.
We do not pronounce upon the validity of such subsequent constitutional amendments except to say that if any Act or Regulation included in the 9th Schedule by a constitutional amendment made after April 24, 1973 is saved by Article 31A, or by Article 31C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is put in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Articles 14, 19 or 31, will become otiose.
(3) Article 31C of the Constitution, as it stood prior to its amendment by section 4 of the Constitution (42nd Amendment) Act, 1976, is valid to the extent to which its constitutionality was upheld in Kesavananda Bharati.
Article 31C, as it stood prior to the Constitution (42 Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure.
(4) All the Writ Petitions and Review Petitions relating to the validity of the Maharashtra Agricultural Lands Ceiling Acts are dismissed with costs.
The stay orders granted in these matters will stand vacated.
We quantify the costs at Rs. five thousand which will be borne equally by the petitioners in Writ Petitions Nos.
656 660 of 11 1977; 512 533 of 1977; and 503 to 511 of 1977.
The costs will be payable to the Union of India and the State of Maharashtra in equal measure.
(5) Writ Petition No. 63 of 1977 (Baburao Samant vs Union of India) will be set down for hearing.
(6) Reasons for this Order will follow later.
The following Judgments were delivered: CHANDRACHUD, C.J. A ceiling on agricultural holdings was imposed in Maharashtra by the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 27 of 1961, which was brought into operation on January 26, 1962.
The ceiling fixed by that Act (the Principal Act), was lowered and certain other amendments were made to that Act by Acts 21 of 1975, 47 of 1975 and 2 of 1976.
The validity of these Acts was challenged in the Bombay High Court in a large group of over 2660 petitions.
A Division Bench of the High Court sitting at Nagpur repelled that challenge by a judgment dated August 13, 1976, in Vithalrao Udhaorao Uttarwar vs State of Maharashtra The High Court held that the provisions of the aforesaid Acts were not open to challenge on the ground that they were inconsistent with or took away or abridged any of the rights conferred by Part III of the Constitution, since those Acts were placed in the Ninth Schedule by the Constitution 17th Amendment Act, 1964, and the Constitution 40th Amendment Act, 1976, and also because of the promulgation of Emergency as a result of which, the rights under Articles 14 and 19 of the Constitution could not be enforced.
The High Court also repelled the challenge to the validity of Article 31B itself by holding that far from damaging the basic structure of the Constitution, the Constitution (First Amendment) Act, 1951, which introduced Article 31B into the Constitution, fortified that structure by subserving a fundamental constitutional purpose.
Certain provisions of the Principal Act and of the Amending Acts.
particularly the concept of 'family unit ' were challenged before the High Court on the ground, inter alia, that they were outside the purview of Article 31A.
On an overall consideration of the movement of agrarian reforms, with particular reference to the relevant statistics in regard to Maharashtra, the High Court rejected that challenge too on the ground that those provisions formed a part of an integral scheme of agrarian reforms under which large agricultu 12 ral holdings had to be reduced and the surplus land distributed amongst the landless and others.
The appeals filed against the decision of the Bombay High Court were dismissed by this Court by a judgment dated January 27, 1977 in Dattatraya Govind Mahajan vs State of Maharashtra.
The only point urged in those appeals was that the Principal Act, as amended, was void being violative of the second proviso to Article 31A(1), in so far as it created an artificial 'family unit ' and fixed the ceiling on the agricultural holdings of such family units.
The argument was that the violation of the particular proviso deprived the impugned laws of the protection conferred by Article 31A. That argument was rejected by the Court on the view that even if the impugned provisions were violative of the second proviso, they would receive the protection of Article 31B by reason of the inclusion of the Principal Act and the Amending Acts in the Ninth Schedule.
The Court considered whether, in fact, the provisions of the impugned Acts were violative of the second proviso and held that it was entirely for the legislature to decide what policy to adopt for the purpose of restructuring the agrarian system and the Court could not assume the role of an economic adviser for pronouncing upon the wisdom of such policy.
The second proviso to Article 31A(1) was therefore held not to have been contravened.
The judgment of this Court in the appeals aforesaid was delivered on January 27, 1977 while the proclamation of emergency was in operation.
On the revocation of that proclamation, petitions were filed in this Court by the appellants praying for the review of the judgment in Dattatraya Govind Mahajan (Supra) on the ground that Several contentions, which were otherwise open to them for assailing the constitutional validity of the impugned Acts, could not be made by reason of the emergency and that they should be permitted to make those contentions since the emergency was lifted.
Fresh Writ Petitions were also filed in the Court in which those contentions were put forward.
The Court having accepted the request for the review of the judgment in Dattatraya Govind Mahajan, (supra) these matters have come before us for consideration of the other points involved in the appeals.
In these proceedings, the main challenge now is to the constitutionality of Articles 31A, 31B and the unamended Article 31C of the Constitution.
The various grounds of challenge to the Principal Act and the Amending Acts were met on behalf of the respondents by rely 13 ing on the provisions of these Articles which throw a protective cloak around laws of a certain description and variety, by excluding challenge thereto on the ground that they are violative of certain articles of the Constitution.
The reply of the appellants and the petitioners to the defence of the respondents is, as it could only be, that the very provisions of the Constitution on which the respondents rely for saving the impugned laws are invalid, since these particular provisions of the Constitution, which were introduced by later amendments, damage or destroy the basic structure of the Constitution within the meaning of the ratio of the majority judgment in Keshavananda Bharati.
Articles 14, 19, 31A. 31B, 31C (as unamended) and 368, which are relevant for our purpose, are familiar to lawyers and laymen alike, so great is their impact on law and life.
Article 14, the saviour of the rule of law, injuncts that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
Article 19 confers upon the citizens rights like the freedom of speech and expression, the right to assemble peaceably, the right to form associations, the right to move freely throughout the territory of India, the right to reside and settle in any part of India, and the right to practise any profession or to carry on any trade, business or calling.
These rights make life meaningful and, without the freedoms conferred by Article 19, the goal of the Preamble will remain a dream unfulfilled.
The right to property conferred by Articles 19(1)(f) and 31 was deleted by the 44th Amendment with effect from June 20, 1979.
Article 31A(1) (a) provides that: Notwithstanding anything contained in article 13, no law providing for (a) 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 or article 19.
Article 31B provides that: Without prejudice to the generality of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is 14 inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part, and notwithstanding any judgment, decree or order of any court or tribunal to the contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeal or amend it, continue in force.
Article 31C, as it existed prior to its amendment by the 42nd Amendment Act, which came into force on January 3, 1977, provided that: Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of article 39 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 or article 19; and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy.
Articles 31A and 31B were introduced into the constitution by the Constitution (First Amendment) Act, 1951, the former with retrospective effect from the date of the enactment of the Constitution.
Article 31C (unamended) was introduced by the Constitution (Twenty fifth Amendment) Act, with effect from April 20, 1972.
The last clause of that article, which gave conclusiveness to the declaration regarding the policy of the particular Act, was struck down as invalid in Kesavananda Bharati (supra).
That part now lives an italicized existence in official publications of the Indian Constitution.
The words "the principles specified in clause (b) or clause (c) of article 39 ' were substituted by the words "all or any of the principles laid down in Part IV", by the 44th Amendment, with effect from June 20, 1979.
We are concerned with Article 31C as it stood originally but, of course, without the concluding part struck down in Kesavananda Bharati (supra).
Article 368 of the Constitution reads thus: "368.
(1) Notwithstanding anything in this Constitution, Parliament may in exercise of its constituent power amend by way of addition, variation or repeal any provision of this Constitution in accordance with the procedure laid down in this article.
(2) x x x x x 15 (3) Nothing in article 13 shall apply to any amendment made under this article.
(4) No amendment of this Constitution (including the provisions of Part III) made or purporting to have been made under this article (whether before or after the commencement of section 55 of the Constitution (Forty second Amendment Act 1976) shall be called in question in any court on any ground.
(5) For the removal of doubts, it is hereby declared that there shall be no limitation whatever on the constituent power of Parliament to amend by way of addition, variation or repeal the provisions of this Constitution under this article.
" Clauses (4) and (5) above were inserted by section 55 of the 42nd Amendment Act 1976 with effect from January 3, 1977.
Those clauses were declared unconstitutional, as being beyond the amending power of the Parliament, by a very recent decision of this Court in Minerva Mills which was pronounced on July 31, 1980.
The judgment of the Court on the invalidity of clauses (4) and (5) was unanimous.
The question as to whether Articles 31A(1)(a), 31B and the unamended Article 31C are valid shall have to be decided on the basis that clause (5) of Article 368 is ineffective to enlarge the Parliament 's amending power so as to empower it to make amendments which will damage or destroy any of the basic features of the Constitution and Clause (4) is ineffective to take away the power of the courts to pronounce a constitutional amendment invalid, if it damages or destroys any of the basic features of the Constitution.
Thus, the main question arising before us has to be decided by applying the ratio of Kesavananda Bharati (supra), in its pristine form.
It is quite another matter that learned counsel led by Shri M. N. Phadke question whether any ratio at all is discernible from the majority judgments in Kesavananda (supra).
The first question to which we have to address ourselves is whether in enacting Article 31A (1) (a) by way of amendment of the Constitution, the Parliament transgressed its power of amending the Constitution.
As stated earlier, Article 31A was inserted in the Constitution by section 4 of the Constitution (First Amendment) Act, 1951 with retrospective effect from the commencement of the Constitution.
16 Article 31A(1), as introduced by the 1st Amendment on June 18, 1951, read thus: 31A. (1) Notwithstanding anything in the foregoing provisions of this part, no law providing for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part.
Article 31A was amended, with the same degree of retrospective effect again, by the Constitution (Fourth Amendment) Act, 1955.
Two alterations, not substance wise material, were made by the 4th Amendment.
The opening non obstante clause which originally extended to "anything in the foregoing provisions of this Part", that is to say Part III, was substituted by a clause restricted to "anything contained in Article 13".
Secondly, whereas under the Article as conceived originally, the challenge to laws of agrarian reform was excluded on the broader ground of their inconsistency, abrogation, or abridgement of any of the rights conferred by "any provisions of" Part III, under the amended article the challenge is excluded in relation to the violation of the three specific articles, namely, Articles 14, 19 and 31.
The 4th Amendment introduced clauses (a) to (e) in Article 31A, the content of clause (a) being the same as that of old clause (1).
Clauses (b) to (e) were added newly by the 4th Amendment, comprehending laws of four other categories like laws providing for the taking over of the management of any property by the State for a limited period, laws providing for amalgamation of two or more corporations, laws providing for extinguishment or modification of rights of persons interested in corporations; and laws providing for extinguishment or modification of rights accruing under any agreement, lease or licence relating to minerals.
We are not concerned in these matters with the provisions of clauses (b) to (e), though we would like to state expressly and specifically that whatever is relevant on the question of the validity of clause (a) will apply with equal force to the validity or otherwise of clauses (b) to (e).
By section 7 of the Constitution (Forty fourth Amendment) Act, 1978 the reference to Article 31 was deleted from the concluding portion of Article 31A(1) with effect from June 20, 1979, as a consequence of the deletion, by section 2 of the 44th Amendment, of clause (f) of Article 19(1) which gave to the citizens the right to acquire, hold and dispose of property.
The deletion of the right to property from the array of fundamental rights will not deprive the petitioners of the arguments which were available to them prior to the coming into 17 force of the 44th Amendment, since the impugned Acts were passed before June 20, 1979 on which date Article 19(1)(f) was deleted.
There is no doubt, nor indeed is it disputed, that the Agricultural Lands Ceiling Acts, which are impugned in these proceedings, fall squarely within the terms of clause (a) of Article 31A(1).
Those Acts provide for the extinguishment and modification of rights in an 'estate ', the expression 'estate ' being defined by clause (2) (a) (iii) to mean "any land held or let for purposes of agriculture or for purposes ancillary thereto. ".
It must follow, as a necessary corollary, that the impugned Acts are entitled to the protection of Article 31A(1) (a) when the result that their provisions cannot be deemed, and therefore cannot be declared, to be void on the ground that they are inconsistent with or take away or abridge any of the rights conferred by Articles 14, 19 or 31.
This is the reason why and the contest in which the validity of Article 31A(1)(a) is itself assailed by the petitioners.
If a constitutional provision, which deprives the petitioners of the benefit and protection of Articles 14, 19 and 31, is invalid, the petitioners will be entitled to challenge the impugned laws on the ground that they are inconsistent with or that they take away or abridge the rights conferred by Part III of the Constitution.
Article 13(2), has a sensitive touchstone.
Not only does it mandate that the State shall not make any law which takes away or abridges the rights conferred by Part III but, it provides that any law made in contravention of the clause shall, to the extent of the contravention, be void.
Mere abridgement, that is to say curtailment, and not necessarily abrogation, that is to say total deprivation, is enough to produce the consequence provided for by Article 13(2).
The validity of the constitutional amendment by which Article 31A(1)(a) was introduced is challenged by the petitioners on the ground that it damages the basic structure of the Constitution by destroying one of its basic features, namely, that no law can be made by the legislature so as to abrogate the guarantees afforded by Articles 14, 19 and 31.
It is tautologous to say so but, if we may so put it, the obliteration of the rights conferred by these Articles, which Article 31A (1) (a) brings about, is total and complete because, as the clear and unequivocal language of that Article shows, the application of these three articles stands totally withdrawn in so far as laws falling within the ambit of clause (a) are concerned.
It is no argument to say that the withdrawal of the application of certain articles in Part III in respect of laws of a defined category is not total abrogation of the articles because they will continue to apply to other situations and other laws.
In any given case, what is decisive 18 is whether, in so far as the impugned law is concerned, the rights available to persons affected by that law under any of the articles in Part III is totally or substantially withdrawn and not whether the articles, the application of which stands withdrawn in regard to a defined category of laws, continue to be on the Statute Book so as to be available in respect of laws of other categories.
We must there fore conclude that the withdrawal of the application of Articles 14, 19 and 31 in respect of laws which fall under clause (a) is total and complete, that is to say, the application of those articles stands abrogated, not merely abridged, in respect of the impugned enactments which indubitably fall within the ambit of clause (a).
We would like to add that every case in which the protection of a fundamental right is withdrawn will not necessarily result in damaging or destroying the basic structure of the Constitution.
The question as to whether the basic structure is damaged or destroyed in any given case would depend upon which particular Article of Part III is in issue and whether what is withdrawn is quint essential to the basic structure of the Constitution.
The judgment of this Court in Kesavananda Bharati (supra) provoked in its wake a multi storied controversy, which is quite understandable.
The judgment of the majority to which seven out of the thirteen Judges were parties, struck a bridle path by holding that in the exercise of the power conferred by Article 368, the Parliament cannot amend the Constitution so as to damage or destroy the basic structure of the Constitution.
The seven learned Judges chose their words and phrases to express their conclusion as effectively and eloquently as language can do.
But, at this distance of time any controversy over what was meant by what they said is plainly sterile.
At 'this distance of time ', because though not more than a little less than eight years have gone by since the decision in Kesavananda Bharati (supra) was rendered, those few years are packed with constitutional events of great magnitude.
Applying the ratio of the majority judgments in that epoch making decision, this Court has since struck down constitutional amendments which would otherwise have passed muster.
For example, in Smt.
Indira Gandhi vs Raj Narain article 329A(4) was held by the Court to be beyond the amending competence of the Parliament since, by making separate and special provisions as to elections to Parliament of the Prime Minister and the Speaker, it destroyed the basic structure of the Constitution.
Ray C.J. based his decision on the ground that the 39th Amendment by which article 329A was introduced violated the Rule of Law 19 (p. 418); Khanna J. based his decision on the ground that democracy was a basic feature of the Constitution, that democracy contemplates that elections should be free and fair and that the clause in question struck at the basis of free and fair elections (pp. 467 and 471); Mathew J. struck down the clause on the ground that it was in the nature of legislation ad hominem (p. 513) and that it damaged the democratic structure of the Constitution (p. 515); while one of us, Chandrachud J., held that the clause was bad because it violated the Rule of Law and was an outright negation of the principle of equality which is a basic feature of the Constitution (pp. 663 665).
More recently, in Minerva Mills, (supra) clauses (4) and (5) of Article 368 itself were held unconstitutional by a unanimous Court, on the ground that they destroyed certain basic features of the Constitution like judicial review and a limited amending power, and thereby damaged its basic structure.
The majority also struck down the amendment introduced to Article 31C by section 4 of the 42nd Amendment Act, 1976.
The period between April 24, 1973, when the judgment in Kesavananda Bharati (supra) was delivered and now is of course a short span in our constitutional history but the occasional challenges which evoked equal responses have helped settle the controversy over the limitations on the Parliament 's power to amend the Constitution.
Khanna J. was misunderstood to mean that fundamental rights are not a part of the basic structure of the Constitution when he said in Kesavananda Bharati (supra): I have no doubt that the power of amendment is plenary and would include within itself the power to add, alter or repeal the various articles including those relating to fundamental rights.
(p. 688) But he clarified the true position in his judgment in the Election Case (supra) (pages 497 499), by drawing the attention of doubters to a significant qualification 'which he had engrafted on the above statement, at pages 688 and 758 of his judgment in Kesavananda Bharati (supra).
The qualification was that subject to the retention of the basic structure or framework of the Constitution, the power of amendment was plenary.
The law on the subject of the Parliament 's power to amend the Constitution must now be taken as well settled, the true position being that though the Parliament has the power to amend each and every article of the Constitution including the provisions of Part III, the amending power cannot be exercised so as to damage or destroy the basic structure of the Constitution.
It is by the application of this principle that we shall have to decide upon the 20 validity of the Amendment by which Article 31A was introduced.
The precise question then for consideration is whether section 4 of the Constitution (First Amendment) Act, 1951 which introduced Article 31A into the Constitution damages or destroys the basic structure of the Constitution.
In the work a day civil law, it is said that the measure of the permissibility of an amendment of a pleading is how far it is consistent with the original: you cannot by an amendment transform the original into the opposite of what it is.
For that purpose, a comparison is undertaken to match the amendment with the original.
Such a comparison can yield fruitful results even in the rarefied sphere of constitutional law.
What were the basic postulates of the Indian Constitution when it was enacted ? And does the 1st Amendment do violence to those postulates ? Can the Constitution as originally conceived and the amendment introduced by the 1st Amendment Act not endure in harmony or are they so incongruous that to seek to harmonize them will be like trying to fit a square peg into a round aperture ? Is the concept underlying section 4 of the 1st Amendment an alien in the house of democracy? its invader and destroyer ? Does it damage or destroy the republican framework of the Constitution as originally devised and designed? These questions have a historical slant and content: and history can furnish a safe and certain clue to their answer.
The relevant part of the statement of Objects and Reasons of the 1st amendment says: During the last fifteen months of the working of the Constitution, certain difficulties have been brought to light by judicial decisions and pronouncements specially in regard to the chapter on fundamental rights.
The citizen 's right to freedom of speech and expression guaranteed by article 19(1) (a) has been held by some courts to be so comprehensive as not to render a person culpable even if he advocates murder and other crimes of violence.
In other countries with written constitutions, freedom of speech and of the press is not regarded as debarring the State from punishing or preventing abuse of this freedom.
The citizen 's right to practise any profession or to carry on any occupation, trade or business conferred by article 19(1)(g) is subject to reasonable restrictions which the laws of the State may impose "in the interests of the general public." While the words cited are comprehensive enough to cover any scheme of nationalisation which the State may undertake, it is desirable to place 21 the matter beyond doubt by a clarificatory addition to article 19(6).
Another article in regard to which unanticipated difficulties have arisen is article 31.
The validity of agrarian reform measures passed by the State Legislatures in the last three years has, in spite of the provisions of clauses (4) and (6) of article 31, formed the subject matter of dilatory litigation, as a result of which the implementation of these important measures, affecting large numbers of people has been held up.
The main objects of this Bill are, accordingly, to amend article 19 for the purposes indicated above and to insert provisions fully securing the constitutional validity of zamindari abolition laws in general and certain specified State Acts in particular.
The opportunity has been taken to propose a few minor amendments to other articles in order to remove difficulties that may arise.
In Shankari Prasad vs Union of India, Patanjali Sastri, C.J. explained the reasons that led to the insertion of Articles 31A and 31B by the 1st Amendment thus: What led to that enactment is a matter of common knowledge.
The political party now in power, commanding as it does a majority of votes in the several State Legislatures as well as in Parliament, carried out certain measures of agrarian reform in Bihar, Uttar Pradesh and Madhya Pradesh by enacting legislation which may compendiously be referred to as Zamindari Abolition Acts.
Certain Zamindars, feeling themselves aggrieved, attacked the validity of those Acts in Courts of law on the ground that they contravened the fundamental rights conferred on them by Part III of the Constitution.
The High Court at Patna held that the Act passed in Bihar was unconstitutional while the High Courts at Allahabad and Nagpur upheld the validity of the corresponding legislation in Uttar Pradesh and Madhya Pradesh respectively.
Appeals from those decisions are pending in this Court.
Petitions filed in this Court by some other zamindars seeking the determinations of the same question are also pending.
At this stage, the Union Government, with a view to put an end to all this litigation and to remedy what they considered to be certain defects brought to light in the working of the Constitution, brought forward a Bill to amend the Constitution, which after undergoing amendments in various particulars, 22 was passed by the requisite majority as the Constitution (First Amendment) Act, 1951.
Article 31A was further amended with retrospective effect by the Constitution (Fourth Amendment) Act 1955, the object of which was explained as follows in the Statement of Objects and Reasons of that Amendment: It will be recalled that the zamindari abolition laws which came first in our programme of social welfare legislation were attacked by the interests affected mainly with reference to article 14, 19 and 31, and that in order to put an end to the dilatory and wasteful litigation and place these laws above challenge in the courts, articles 31A and 31B and the Ninth Schedule were enacted by the Constitution (First Amendment) Act.
Subsequent judicial decisions interpreting articles 14, 19 and 31 have raised serious difficulties in the way of the Union and the States putting through other and equally important social welfare legislation on the desired lines, e.g., the following: (i) While the abolition of zamindaries and the numerous intermediaries between the State and the tiller of the soil has been achieved for the most part, our next objectives in land reform are the fixing of limits to the extent of agricultural land that may be owned or occupied by any person, the disposal of any land held in excess of the prescribed maximum and the further modification of the rights of land owners and tenants in agricultural holdings.
(ii) x x x x x x (iii) x x x x x x (iv) x x x x x x It is accordingly proposed in clause 3 of the Bill to extend the scope of article 31A so as to cover these categories of essential welfare legislation.
The Constitution (First Amendment) Act was moved in the Provisional Parliament on May 12, 1951 as Bill No. 48 of 1951.
It was referred to a Select Committee and after the receipt of its report, it was debated in the Parliament on various dates in May and June.
It received the Presidential assent on June 18, 1951.
The speeches made in the Provisional Parliament by Jawaharlal Nehru and other national leaders who had participated in the freedom 23 movement show, in a significant measure, the genesis of the 1st Amendment and its avowed purpose.
While moving that the Bill be referred to a Select Committee, Jawaharlal Nehru said: This Bill is not a very complicated one: nor is it a big one.
Nevertheless, I need hardly point out that it is of intrinsic and great importance.
Anything dealing with the Constitution and change of it is of importance.
Anything dealing with Fundamental Rights incorporated in the Constitution is of even greater importance.
Therefore, in bringing this Bill forward I do so and the Government does so in no spirit of lightheartedness, in no haste, but after the most careful thought and scrutiny given to this problem.
I might inform the House that we have been thinking about this matter for several months, consulting people, State Governments, Ministers of Provincial Governments, consulting when occasion offered itself, a number of Members of this House, referring it to various Committees and the like and taking such advice from competent legal quarters as we could obtain, so that we have proceeded with as great care as we could possibly give to it.
We have brought it forward now after that care, in the best form that we could give it, because we thought that the amendments mentioned in this Bill are not only necessary, but desirable, and because we thought that if these changes are not made, perhaps not only would great difficulties arise, as they have arisen in the past few months, but perhaps some of the main purposes of the very Constitution may be defeated or delayed.
The Parliamentary Debates, Part II, Volumes XII and XIII (May 15 June 9, 1951) contain the record of the speeches made while the 1st Amendment was on the anvil.
We reproduce below the relevant extracts from the speeches of the then Prime Minister, Jawaharlal Nehru: The real difficulty which has come up before us is this.
The Constitution lays down certain Directive Principles of State Policy and after long discussion we agreed to them and they point out the way we have got to travel.
The Constitution also lays down certain Fundamental Rights.
Both are important.
The Directive Principles of State Policy represent a dynamic move towards a certain objective.
The Fundamental Rights represent something static, to preserve certain 24 rights which exist.
Both again are right.
But somehow and sometime it might so happen that dynamic movement and that static standstill do not quite fit into each other.
A dynamic movement towards a certain objective necessarily means certain changes taking place that is the essence of movement.
(p. 8820) Now I shall proceed with the other article, the important one, namely article 31.
When I think of this article the whole gamut of pictures comes up before my mind, because this article deals with the abolition of the zamindari system, with land laws and agrarian reform.
I am not a zamindar, nor I am a tenant.
I am an outsider.
But the whole length of my public life has been intimately connected, or was intimately connected, with agrarian agitation in my Province.
And so these matters came up before me repeatedly and I became intimately associated with them.
Therefore I have a certain emotional reaction to them and awareness of them which is much more than merely an intellectual appreciation.
If there is one thing to which we as a party have been committed in the past generation or so it is the agrarian reform and the abolition of the zamindari system.
(p. 8830) Now apart from our commitment, a survey of the world today, a survey of Asia today will lead any intelligent person to see that the basic and the primary problem is the land problem today in Asia, as in India.
And every day of delay adds to the difficulties and dangers, apart from being an in justice in itself.
(pp 8830 8831) . it is patent that when you are out to remedy inequalities, you do not remedy inequalities by producing further inequalities.
We do not want anyone to suffer.
But, inevitably, in big social changes some people have to suffer.
(p. 8831) How are we to meet this challenge of the times ? How are we to answer the question: For the last ten or 20 years you have said, we will do it.
Why have you not done it ? It is not good for us to say: We are helpless before fate and the situation which we are to face at present.
Therefore, we have to think in terms of these big changes, and changes and the like and therefore we thought of amending article 31.
Ultimately we thought it best to propose additional articles 31A and 31B and in addition to that there is a Schedule 25 attached of a number of Acts passed by State Legislatures, some of which have been challenged or might be challenged and we thought it best to save them from long delays and these difficulties, so that this process of change which has been initiated by the State should go ahead.
(pp. 8831 8832) The other day I was reading an article about India by a very eminent American and in that article which contained many correct statements and some incorrect statements, the author finished up by saying that India has very difficult problems to face but the most acute of them he said can be put in five words and those five words were: land, water, babies, cows and capital.
I think that there is a great deal of truth in this concise analysis of the Indian situation.
8832 8833) Now I come to articles 31, 31A and 31B.
May I remind the House or such Members of the House as were also Members of the Constituent Assembly of the long debates that we had on this issue.
Now the whole object of these articles in the Constitution was to take away and I say so deliberately to take away the question of zamindari and land reform from the purview of the courts.
That is the whole object of the Constitution and we put in some proviso etc.
in regard to article 31.
(p. 9082) What are we to do about it? What is the Government to do ? If a Government has not even the power to legislate to bring about gradually that equality, the Government fails to do what it has been commanded to do by this Constitution.
That is why I said that the amendments I have placed before the House are meant to give effect to this Constitution.
I am not changing the Constitution by an iota; I am merely making it stronger.
I am merely giving effect to the real intentions of the framers of the Constitution, and to the wording of the Constitution, unless it is interpreted in a very narrow and legalistic way.
Here is a definite intention in the Constitution.
This question of land reform is under article 31(2) and this clause tries to take it away from the purview of the courts and somehow article 14 is brought in That kind of thing is not surely the intention of the framers of the Constitution.
Here again I may say that the Bihar High Court held that view but the Allahabad and Nagpur High Courts held a contrary view.
That is true.
There is confusion and doubt.
Are we to wait for this confusion and 26 doubt gradually to resolve itself, while powerful agrarian movements grow up ? May I remind the House that this question of land reform is most intimately connected with food production.
We talk about food production and grow more food and if there is agrarian trouble and insecurity of land tenure nobody knows what is to happen.
Neither the zamindar nor the tenant can devote his energies to food production because there is instability.
Therefore these loud arguments and these repeated appeals in courts are dangerous to the State, from the security point of view, from the food production point of view and from the individual point of view, whether it is that of the zamindar or the tenant or any intermediary.
(pp 9082 9084) (Emphasis is supplied in the passages above) These statements were made by the Prime Minister on the floor of the house after what is correctly described as the most careful deliberation and a broad based consultation with diverse interests.
They were made in order to resolve doubts and difficulties and not with the intention of creating confrontation with any other arm of the Government or with the people.
They stand in a class apart and convey in a language characterized by logic and directness, how the Constitution was failing of its purpose and how essential it was, in order to remove glaring disparities, to pour meaning and content into the framework of the Constitution for the purpose of strengthening its structure.
Looking back over the past thirty years ' constitutional history of our country, we, as lawyers and Judges, must endorse the claim made in the speeches above that if Article 31A were not enacted, some of the main purposes of the Constitution would have been delayed and eventually defeated and that by the 1st Amendment, the constitutional edifice was not impaired but strengthened.
Conscious as we are that though extraneous aids to constitutional interpretation are permissible the views of the mover of a Bill are not conclusive on the question of its objects and purposes, we will consider for ourselves the question, independently, whether the 1st and the 4th Amendments damage or destroy the basic structure of the Constitution in any manner.
But before doing that, we desire only to state that these amendments, especially the 1st were made so closely on the heels of the Constitution that they ought indeed to be considered as a part and parcel of the Constitution itself.
These Amendments are not born of second thoughts and they do not reflect a fresh look at the Constitution in order to deprive the people of the gains of the Consti 27 tution.
They are, in the truest sense of the phrase, a contemporary practical exposition of the Constitution.
Article 39 of the Constitution directs by clauses (b) and (c) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good, that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.
These twin principles of State policy were a part of the Constitution as originally enacted and it is in order to effectuate the purpose of these Directive Principles that the 1st and the 4th Amendments were passed.
In his address to the Allahabad Session of the Agri Economics Conference, Dr. D. R. Gadgil put a home truth succinctly by saying: "Among all resources, the supply of land is the most limited and the claimants for its possession are extremely numerous.
It is, therefore, obviously unjust to allow the exploitation of any large surface of land by a single individual unless other over whelming reasons make this highly desirable.
Further, in the light of the available supplies of land, labour and capital, it would be undesirable to encourage capital intensive method of production.
Moreover, whatever the economics of large scale management, they should, in the congested state of our countryside, accrue to collective or co operative bodies of cultivators rather than an individual family.
Lastly, in the context of the current socio political climate, re distribution of land would rather appear to be imperative.
" As stated in the Report of the Committee of the Panel on Land Reforms (Government of India, Planning Commission, 1959), the policy of imposition of ceiling on agricultural lands fulfils the following objectives: "(i) meeting the wide spread desire to possess land; (ii) reducing glaring inequalities in ownership and use of land; (iii) reducing inequalities in agricultural incomes, and (iv) enlarging the sphere of self employment.
" The Report of the Working Group on Land Reforms, 1978 (Ministry of Agriculture and Irrigation, Department of Agriculture) says that it was widely recognised that the imposition of ceiling on agricultural holdings and tenancy reforms constituted the substance of the agrarian reform movement and that, concentration of land in the hands of a 28 small group inhibits production, encourages concealed or irregular tenancies and results in unequal accesses to facilities of production in the rural sector.
In any economy with a preponderant agricultural sector, overall growth of the economy is largely determined by growth in agricultural production and elimination of constraints on production has to be a major national priority.
Studies in certain developing countries have established that the productivity of smaller holdings can conceivably be higher than that of larger holdings, primarily because the intensity of farming operations varies inversely with the size of the holding.
The Report of the Working Group says in paragraph 2.1 that whether or not this is true in all situations, the production system that denies opportunities of gainful employment to large numbers of workers and leads to pronounced distortions in the distribution of economic disadvantages, needs imperative over hauling.
In paragraph 2.2, the Report proceeds to say that in a predominantly agricultural society, there is a strong linkage between ownership of land and the person 's status in the social system.
Those without land suffer not only from an economic disadvantage, but a concomitant social disadvantage has also to be suffered by them.
In the very nature of things, it is not possible to provide land to all landless persons but that cannot furnish an alibi for not undertaking at all a programme for the redistribution of agricultural land.
Agrarian reform therefore requires, inter alia, the reduction of the larger holdings and distribution of the excess land according to social and economic considerations.
These then are the objectives of the Constitution and these the reasons that formed the motive force of the 1st Amendment.
Article 31A (1) could easily have appeared in the original Constitution itself as an illustration of its basic philosophy.
What remained to be done in the hope that vested interests will not distort the base of the Constitution, had to be undertaken with a sense of urgency and expediency.
It is that sense and sensitivity which gave birth to the impugned amendment.
The progress in the degeneracy of any nation can be rapid, especially in societies riven by economic disparities and caste barriers.
We embarked upon a constitutional era holding forth the promise that we will secure to all citizens justice, social, economic and political, equality of status and of opportunity; and, last but not the least, dignity of the individual.
Between these promises and the 1st Amendment there is discernible a nexus, direct and immediate.
Indeed, if there is one place in an agriculture dominated society like ours where citizens can hope to have equal justice, it is on the strip of land which they till and love, the land which assures to them and dignity of their person by providing to them a near decent means of livelihood.
29 The First Amendment has thus made the constitutional ideal of equal justice a living truth.
It is like a mirror that reflects the ideals of the Constitution; it is not the destroyer of its basic structure.
The provisions introduced by it and the 4th Amendment for the extinguishment or modification of rights in lands held or let for purposes of agriculture or for purposes ancillary thereto, strengthen rather than weaken the basic structure of the Constitution.
The First Amendment is aimed at removing social and economic disparities in the agricultural sector.
It may happen that while existing inequalities are being removed, new inequalities may arise marginally and incidentally.
Such marginal and incidental inequalities cannot damage or destroy the basic structure of the Constitution.
It is impossible for any Government, howsoever expertly advised, socially oriented and prudently managed, to remove every economic disparity without causing some hardship or injustice to a class of persons who also are entitled to equal treatment under the law.
Thus, the adoption of 'family unit ' as the unit of application for the revised ceilings may cause incidental hardship to minor children and to unmarried daughters.
That cannot, in our opinion, furnish an argument for assailing the impugned laws on the ground that they violate the guarantee of equality.
It seems to us ironical indeed that the laws providing for agricultural ceilings should be stigmatised as destroying the guarantee of equality when their true object and intendment is to remove inequalities in the matter of agricultural holding.
The Note of the Panel set up by the Planning Commission in May 1959 on the adoption of 'family unit ' as the unit of application for the revised ceilings and the counter affidavit of Shri J. G. Karandikar, Deputy Secretary to the Government of Maharashtra show the relevance and efficacy of the family being treated as the real operative unit in the movement for agrarian reform.
Considering the Indian social milieu, the Panel came to the conclusion that agricultural ceiling can be most equitably applied if the base of application is taken as the family unit consisting of husband, wife and three minor children.
In view of this expert data, we are unable to appreciate how any law passed truly for implementing the objective of Article 31A(1) (a) can be open to challenge on the ground that it infringes Articles 14, 19 or 31.
For these reasons, we are of the view that the Amendment introduced by section 4 of the Constitution (First Amendment) Act, 1951 does not damage or destroy the basic structure of the Constitution.
That Amendment must, therefore, be upheld on its own merits.
30 This makes it unnecessary to consider whether Article 31A can be upheld by applying the rule of stare decisis.
We have, however, heard long and studied arguments on that question also, in deference to which we must consider the alternate submission as to whether the doctrine of stare decisis can save Article 31A, if it is otherwise violative of the basic structure of the Constitution.
In Shankari Prasad vs Union of India (supra) the validity of the 1st Amendment which introduced Articles 31A & 31B was assailed on six grounds, the fifth being that Article 13(2) takes in not only ordinary laws but constitutional amendments also.
This argument was rejected and the 1st Amendment was upheld.
In Sajjansingh vs State of Rajasthan the Court refused to reconsider the decision in Shankari Prasad (supra), with the result that the validity of the 1st Amendment remained unshaken.
In Golaknath it was held by a majority of 6: 5 that the power to amend the Constitution was not located in Article 368.
The inevitable result of this holding should have been the striking down of all constitutional amendments since, according to the view of the majority, Parliament had no power to amend the Constitution in pursuance of Article 368.
But the Court resorted to the doctrine of prospective overruling and held that the constitutional amendments which were already made would be left undisturbed and that its decision will govern the future amendments only.
As a result, the 1st Amendment by which Articles 31A and 31B were introduced remained inviolate.
It is trite knowledge that Golaknath was overruled in Kesavananda Bharati (supra) in which it was held unanimously that the power to amend the Constitution was to be found in Article 368 of the Constitution.
The petitioners produced before us a copy of the Civil Misc.
Petition which was filed in Kesavananda Bharati, (supra) by which the reliefs originally asked for were modified.
It appears thereform that what was challenged in that case was the 24th, 25th and the 29th Amendments to the Constitution.
The validity of the 1st Amendment was not questioned Khanna J., however, held while dealing with the validity of the unamended Article 31C that the validity of Article 31A was upheld in shukari Prasad,(supra) that its validity could not be any longer questioned because of the principle of stare decisis and that the ground on which the validity of Article 31A was sustained will be available equally for sustaining the validity of the first part of Article 31C (page 744).
Thus, the constitutional validity of Article 31A has been recognised in these four decisions, sometimes directly, sometimes indirectly and sometimes incidentally.
We may mention in passing, though it has 31 no relevance on the applicability of the rule of stare decisis, that in none of the three earlier decisions was the validity of Article 31A tested on the ground that it damaged or destroyed the basic structure of the Constitution.
That theory was elaborated for the first time in Kesavananda Bharati (supra) and it was in the majority judgment delivered in that case that the doctrine found its first acceptance.
Though Article 31A has thus continued to be recognised as valid ever since it was introduced into the Constitution, we find it somewhat difficult to apply the doctrine of stare decisis for upholding that Article.
In Ambika Prasad Mishra vs State of U.P. this very Bench delivered its judgment on May 9, 1980 rejecting the challenge to the validity of the 'Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960 '.
But, the question as to whether Article 31A can be upheld by applying the doctrine of stare decisis was not decided in that case.
In fact, the broad consensus among the members of the Court that the question of vires of Articles 31A, 31B & 31C (unamended) will be decided in the other cases, is reflected in the following observation specifically made by one of us, Brother Krishna Iyer, J., who spoke for a unanimous Court: "In this judgment, we side step the bigger issue of the vires of the Constitutional amendments in Articles 31A, 31B and 31C as they are dealt with in other cases disposed of recently".
(p. 721).
Since the question of vires of these three articles was not dealt with by Brother Krishna Iyer in his judgment on behalf of the Court, we are, as previously arranged amongst us, dealing with that question in this judgment.
At page 722 of the report (paragraph 5), Brother Krishna Iyer has reaffirmed this position in these words: "Thus we get the statutory perspective of agrarian reform and so, the constitutionality of the Act has to be tested on the touchstone of Article 31 A which is the relevant protective armour for land reform laws.
Even here, we must state that while we do refer to the range of constitutional immunity Article 31A confers on agrarian reform measures we do not rest our decision on that provision.
Independently of Article 31 A, the impugned legislation can withstand constitutional invasion and so the further challenge to Article 31 A itself is of no consequence".
32 Krishna Iyer J. has observed in the same paragraph that "The extreme argument that Article 31 A itself is void as violative of the basic structure of the Constitution has been negatived by my learned Brother, Bhagwati J., in a kindred group of cases of Andhra Pradesh".
the citation of that group of cases being Thumati Venkaiah vs State of A.P.
But, in that judgment too, one of us, Brother Bhagwati, who spoke for the unanimous Court, did not refer to the vires of Articles 31A, 31B and 31C.
It will thus be clear that neither the one or the other of us, that is to say neither Brother Bhagwati nor Brother Krishna Iyer, dealt with the question of vires of Articles 31A, 31B and 31C which we are doing by this judgment.
It has become necessary to make this clarification in view of an observation by Brother Krishna Iyer in the very same paragraph 5 of the aforesaid judgment in Ambika Prasad Mishra that the decision in Kesavananda Bharati (Supra) on the validity of Article 31A, "binds, on the simple score of stare decisis. " Brother Krishna Iyer clarified the position once again by a further caveat in the same paragraph to this effect: ". .as stated earlier, we do not base the conclusion on Article 31A".
The doctrine of stare decisis is the basis of common law.
It originated in England and was used in the colonies as the basis of their judicial decisions.
According to Dias, the genesis of the rule may be sought in factors peculiar to English legal history, amongst which may be singled out the absence of a Code.
The Normans forbore to impose an alien code on a half conquered realm, but sought instead to win as much wide spread confidence as possible in their administration of law, by the application of near uniform rules.
The older the decision, the greater its authority and the more truly was it accepted as stating the correct law.
As the gulf of time widened, says Dias, Judges became increasingly reluctant to challenge old decisions.
The learned author cites the example of Bracton and Coke who always preferred older authorities.
In fact, Bracton had compiled a Notebook of some two thousand cases as material for his treatise and employed some five hundred of them.
The principle of stare decisis is also firmly rooted in American Jurisprudence.
It is regarded as a rule of policy which promotes predictability, certainty, uniformity and stability.
The legal system, it is 33 said, should furnish a clear guide for conduct so that people may plan their affairs with assurance against surprise.
It is important to further fair and expeditious adjudication by eliminating the need to relitigate every proposition in every case.
When the weight of the volume of the decisions on a point of general public importance is heavy enough, courts are inclined to abide by the rule of stare decisis, leaving it to the legislature to change long standing precedents if it so thinks it expedient or necessary.
In Burnet vs Coronado Oil & Gas Co., Justice Brandeis stated that 'stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than it be settled right '.
While dealing with the subject of stare decisis, Shri H. M. Seervai in his book on 'Constitutional Law of India, has pointed out how important it is for judges to conform to a certain measure of discipline so that decisions of old standing are not overruled for the reason merely that another view of the matter could also be taken.
The learned author has cited an Australian case in which it was said that though the court has the power to reconsider its own decisions, that should not be done upon a mere suggestion that some or all of the members of the later court may arrive at a different conclusion if the matter were res integra.
The learned author then refers to two cases of our Supreme Court in which the importance of adherence to precedents was stressed.
Jagannadhadas J. said in the Bengal Immunity Case that the finality of the decisions of the Supreme Court, which is the Court of last resort, will be greatly weakened and much mischief done if we treat our own judgments, even though recent, as open to reconsideration.
B. P. Sinha J. said in the same case that if the Supreme Court were to review its own previous decisions simply on the ground that another view was possible, the litigant public may be encouraged to think that it is always worthwhile taking a chance with the highest Court of the land.
In I.T.O. Tuticorin vs T.S.D. Nadar, Hegde J. said in his dissenting Judgment that the Supreme Court should not overrule its decisions except under compelling circumstances.
It is only when the Court is fully convinced that public interest of a substantial character would be jeopardised by a previous 34 decision, that the Court should overrule that decision.
Reconsideration of the earlier decisions, according to the learned Judge, should be confined to questions of great public importance.
Legal problems should not be treated as mere subjects for mental exercise.
An earlier decision may therefore be overruled only if the Court comes to the conclusion that it is manifestly wrong, not upon a mere suggestion that if the matter were res integra, the members of the later court may arrive at a different conclusion.
These decisions and texts are of high authority and cannot be overlooked.
In fact, these decisions are themselves precedents on the binding nature of precedents.
It is also true to say that for the application of the rule of stare decisis, it is not necessary that the earlier decision or decisions of long standing should have considered and either accepted or rejected the particular argument which is advanced in the case on hand.
Were it so, the previous decisions could more easily be treated as binding by applying the law of precedent and it will be unnecessary to take resort to the principle of stare decisis.
It is, therefore, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision.
In other words, for the purpose of applying the rule of stare decisis, it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis.
Therefore, the reason why Article 31A was upheld in the earlier decisions, if indeed it was, are not germane for the purpose of deciding whether this is a fit and proper case in which to apply that rule.
But, there are four principal reasons why we are not disposed to invoke the rule of stare decisis for deciding upon the constitutionality of Article 31A.
In the first place, Article 31A breathes its own vitality, drawing its sustenance from the basic tenets of our Constitution.
Its unstated premise is an integral part of the very making of the Constitution and it holds, as it were, a mirror to the ideals which inspired the framing of the Constitution.
The second reason why we do not want to resort to the principle of stare decisis while determining the validity of Article 31A is that neither in Shankari Prasad(Supra) nor in Sajjan Singh(Supra), nor in Golak Nath(Supra) and evidently not in Kesavananda Bharati(Supra) was the question as regards the validity as such of Article 31A raised or decided.
As stated earlier, Shankari Prasad(Supra) involved the larger question as to whether constitutional amendments fall within 35 the purview of Article 13(2) of the Constitution.
It was held that they did not.
In Sajjan Singh (Supra), the demand for reconsideration of the decision in Shankari Prasad(Supra) was rejected, that is to say, the Court was not inclined to consider once again whether constitutional amendments are also comprehended within the terms of Article 13(2).
Golak Nath (Supra) raised the question as to where the amending power was located and not whether this or that particular amendment was valid.
In none of these decisions was the validity of Article 31A put in issue.
Nor indeed was that question considered and decided in any of those cases.
A deliberate judicial decision made after hearing an argument on a question which arises in the case or is put in issue may constitute a precedent, and the precedent by long recognition may mature into stare decisis.
But these cases cannot be considered as having decided, reasons apart, that the 1st Amendment which introduced Article 31A into the Constitution is valid.
Thirdly, the history of the World 's constitutional law shows that the principle of stare decisis is treated as having a limited application only.
Justice William Douglas said in New York vs United States that it is a wise policy to restrict the principle of stare decisis to those areas of the law where correction can be had by legislation.
Otherwise, the constitution loses the flexibility which is necessary if it is to serve the needs of successive generations.
It is for that reason again that Justice Frankfurter said in U.S. vs International Boxing Club that the doctrine of stare decisis is not 'an imprisonment of reason '.
Older the standing of a decision, greater the provocation to apply the rule of stare decisis.
A possible mischief arising out of this position was pointed out by Justice Benjamin Cardozo in MacPherson vs Buick Motor Co. by saying that precedents drawn from the days of travel by stage coach do not fit the conditions of travel today.
And alive to that possibility, Justice Brandeis said in State of Washington vs W. C. Dawson & Co. that stare decisis is merely a wise rule of action and is not a universal, inexorable command. "The instances in which the court has disregarded its admonition are many".
In fact, the full form of the principle, "stare decisis et non quieta movere" which means "to stand by decisions and not to disturb what is settled", was put by Coke in its classic English version as: "Those things which have been so often adjudged ought to rest in peace".
Such being the justification of the rule, it was said in James Monroe vs Frank Pape that the rele 36 vant demands of stare decisis do not preclude consideration of an interpretation which started as an unexamined assumption.
We have already pointed out how the constitutional validity of Article 31A has to be deemed to have been upheld in Shakari Prasad (supra) by a process of inferential reasoning, the real question therein being whether the expression 'law ' in Article 13(2) includes law made in the exercise of constituent power.
The fourth reason is the one cited by Shri Tarkunde that on principle, rules like stare decisis should not be invoked for upholding constitutional devices like Articles 31A, 31B and 31C which are designed to protect not only past laws but future laws also.
Supposing Article 31A were invalid on the ground that it violates the Constitution 's basic structure, the fact that its validity has been recognised for a long time cannot justify its protection being extended to future laws or to laws which have been recently passed by the legislature.
The principle of stare decisis can apply, if at all, to laws protected by these articles, if those laws have enjoyed the protection of these articles for a long time, but the principle cannot apply to the articles themselves.
The principle of stare decisis permits the saving of laws the validity of which has been accepted or recognised over the years.
It does not require or sanction that, in future too, laws may be passed even though they are invalid or unconstitutional.
Future perpetration of illegality is no part of the doctrine of stare decisis.
Our disinclination to invoke the rule of stare decisis for saving Article 31A does not really matter because we have upheld the constitutional validity of that Article independently on its own merits.
Coming to the validity of Article 31B, that article also contains a device for saving laws from challenge on the ground of violation of fundamental rights.
Putting it briefly, Article 31B provides that the Acts and Regulations specified in the Ninth Schedule shall not be deemed to be void or ever to have become void on the ground that they are inconsistent with or take away or abridge any of the rights conferred by Part III of the Constitution.
The provisions of the article are expressed to be without prejudice to the generality of the provisions in Article 31A and the concluding portion of the article supersedes any judgment, decree or order of any court or tribunal to the contrary.
This article was introduced into the Constitution by section 5 of the Constitution (First Amendment) Act 1951, Article 31A having been introduced by section 4 of the same Amendment.
37 Article 31B has to be read along with the Ninth Schedule because it is only those Acts and Regulations which are put in that Schedule that can receive the protection of that article.
The Ninth Schedule was added to the Constitution by section 14 of the 1st Amendment Act, 1951.
The device or mechanism which sections 5 and 14 of the 1st Amendment have adopted is that as and when Acts and Regulations are put into the Ninth Schedule by Constitutional amendments made from time to time, they will automatically, by reason of the provisions of Article 31B, received the protection of that article.
Items 1 to 13 of the Ninth Schedule were put into that Schedule when the 1st Amendment was enacted on June 18, 1951.
These items are typical instances of agrarian reform legislations.
They relate mostly to the abolition of various tenures like Maleki, Taluqdari, Mehwassi, Khoti, Paragana and Kulkarni Watans and of Zamindaris and Jagirs.
The place of pride in the Schedule is occupied by the Bihar Land Reforms Act, 1950, which is item No. 1 and which led to the enactment of Article 31A and to some extent of Article 31B. The Bombay Tenancy and Agricultural Lands Act, 1948 appears as item 2 in the Ninth Schedule.
Items 14 to 20 were added by the 4th Amendment Act of 1955, items 21 to 64 by the 17th Amendment Act 1964, items 65 and 66 by the 29th Amendment Act of 1972, items 67 to 86 by the 34th Amendment Act 1974, items 88 to 124 by the 39th Amendment Act 1975 and items 125 to 188 by the 40th Amendment Act 1976.
The Ninth Schedule is gradually becoming densely populated and it would appear that some planning is imperative.
But that is another matter.
We may only remind that Jawaharlal Nehru had assured the Parliament while speaking on the 1st Amendment that there was no desire to add to the 13 items which were being incorporated in the Ninth Schedule simultaneously with the 1st Amendment and that it was intended that the Schedule should not incorporate laws of any other description than those which fell within items 1 to 13.
Even the small list of 13 items was described by the Prime Minister as a 'long schedule '.
While dealing with the validity of Article 31A we have expressed the view that it would not be proper to invoke the doctrine of stare decisis for upholding the validity of that article.
Though the same considerations must govern the question of the validity of Article 31B, we would like to point out that just as there are significant similarities between Articles 31A and 31B, there is a significant dissimilarity too.
Article 31A enables the passing of laws of the description mentioned in clauses (a) to (e), in violation of the guarantees afforded by Article 14 and 19.
The Parliament is not required, in the exercise of its constituent power or otherwise, to undertake an examination of the laws 38 which are to receive the protection of Article 31A.
In other words, when a competent legislature passes a law within the purview of clauses (a) to (e), it automatically receives the protection of Article 31A, with the result that the law cannot be challenged on the ground of its violation of Articles 14 and 19.
In so far as Article 31B is concerned, it does not define the category of laws which are to receive its protection, and secondly, going a little further than Article 31A, it affords protection to Schedule laws against all the provisions of Part III of the Constitution.
No act can be placed in the Ninth Schedule except by the Parliament and since the Ninth Schedule is a part of the Constitution, no additions or alterations can be made therein without complying with the restrictive provisions governing amendments to the Constitution.
Thus, Article 31B read with the Ninth Schedule provides what is generally described as, a protective umbrella to all Acts which are included in the schedule, no matter of what character, kind or category they may be.
Putting it briefly, whereas Article 31A protects laws of a defined category, Article 31B empowers the Parliament to include in the Ninth Schedule such laws as it considers fit and proper to include therein.
The 39th Amendment which was passed on August 10, 1975 undertook an incredibly massive programme to include items 87 to 124 while the 40th Amendment, 1976 added items 125 to 188 to the Ninth Schedule in one stroke.
The necessity for pointing out this distinction between Articles 31A and 31B is the difficulty which may apparently arise in the application of the principle of stare decisis in regard to Article 31B read with the Ninth schedule, since that doctrine has been held by us not to apply to Article 31A.
The fourth reason given by us for not applying the rule of stare decisis to Article 31A is that any particular law passed under clauses (a) to (e) can be accepted as good if it has been treated as valid for a long number of years but the device in the form of the Article cannot be upheld by the application of that rule.
We propose to apply to Article 31B read with the Ninth Schedule the selfsame test.
We propose to draw a line, treating the decision in Kesavanda Bharati (supra) as the landmark.
Several Acts were put in the Ninth schedule prior to that decision on the supposition that the power of the Parliament to amend the Constitution, was wide and untrammeled.
The theory that the parliament cannot exercise its amending power so as to damage or destroy the basic structure of the Constitution, was propounded and accepted for the first time in Kesavananda Bharati (supra).
This is one reason for upholding the laws incorporated into the Ninth schedule before April 24, 1973, on which date the judgment in 39 Kesavananda Bharti (Supra) was rendered.
A large number of properties must have changed hands and several new titles must have come into existence on the faith and belief that the laws included in the Ninth schedule were not open to challenge on the ground that they were violative of Articles 14, 19 and 31.
We will not be justified in upsetting settled claims and titles and in introducing chaos and confusion into the lawful affairs of a fairly orderly society.
The second reason for drawing a line at a convenient and relevant point of time is that the first 66 items in the Ninth Schedule, which were inserted prior to the decision in Kesavananda Bharati, (Supra) mostly pertain to laws of agrarian reforms.
There are a few exceptions amongst those 66 items, like items 17, 18, 19 which relate to Insurance, Railways and Industries.
But almost all other items would fall within the purview of Article 31A (1)(a).
In fact, items 65 and 66, which were inserted by the 29th Amendment, are the Kerala Land Reforms (Amendment) Acts of 1969 and 1971 respectively, which were specifically challenged in Kesavananda Bharati (supra).
That challenge was repelled.
Thus, in so far as the validity of Article 31B read with the Ninth schedule is concerned, we hold that all Acts and Regulations included in the Ninth Schedule prior to April 24, 1973 will receive the full protection of Article 31B.
Those laws and regulations will not be open to challenge on the ground that they are inconsistent with or take away or abridge any of the rights conferred by any of the provisions of Part III of the Constitution.
Acts and Regulations, which are or will be included in the Ninth Schedule on or after April 24, 1973 will not receive the protection of Article 31B for the plain reason that in the face of the judgment in Kesavananda Bharati (supra) there was no justification for making additions to the Ninth schedule with a view to conferring a blanket protection on the laws included therein.
The various constitutional amendments, by which additions were made to the Ninth Schedule on or after April 24, 1973, will be valid only if they do not damage or destroy the basic structure of the Constitution.
That leaves for consideration the challenge to the constitutional validity of the unamended Article 31C. As we have stated at the beginning of this judgment, Article 31C was introduced by the Constitution (Twenty fifth Amendment) Act, 1971.
Initially, it sought to give protection to those laws only which gave effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution.
No such law could be deemed 40 to be void on the ground that it is inconsistent with or takes away or abridges the rights conferred by Articles 14, 19 and 31.
The concluding portion of the unamended article which gave conclusiveness to certain declarations was struck down in Kesavananda Bharati, (supra) Shri M. N. Phadke, who led the argument on behalf of the petitioners, built a formidable attack against the vires of Article 31C. But, with respect to the learned counsel, the effort is fruitless because the question as regards the validity of Article 31C is no longer res integra.
The opening clause of Article 31C was upheld by the majority in Kesavananda Bharati (Supra) and we do not quite see how the petitioners can be permitted to go behind that decision.
The learned counsel addressed to us an interesting argument on the principles governing the theory of precedent, and he argued that, in the welter of judgments delivered in Kesavananda Bharati, (Supra) it is impossible to discern a ratio because different learned Judges gave different reasons in support of the conclusions to which they came.
It is well known that six learned Judges who were in minority in Kesavananda Bharti (Supra) upheld the first part of Article 31C, which was a logical and inevitable consequence of their view that there were no inherent or implied limitations on the Parliament 's power to amend the Constitution.
Khanna, J. did not subscribe to that view but, all the same, he upheld the first part of Article 31C for different reasons.
The question of validity of the Twenty fifth Amendment by which the unamended Article 31C was introduced into the Constitution was specifically raised before the Court and the arguments in that behalf were specifically considered by all the six minority Judges and by Khanna, J.
It seems to us difficult, in these circumstances, to hold that no common ratio can be culled out from the decision of the majority of the seven Judges who upheld the validity of Article 31C. Putting it simply, and there is no reason why simple matters should be made complicated, the ratio of the majority judgments in Kesavananda Bharati (Supra) is that the first part of Article 31C is valid.
Apart from this, if we are right in upholding the validity of Article 31A on its own merits, it must follow logically that the unamended Article 31C is also valid.
The unamended portion of Article 31C is not like an unchartered ship.
It gives protection to a defined and limited category of laws which are passed for giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39.
These clauses of Article 39 contain directive principles which are vital to the well being of the country and the welfare of its people.
Whatever we have said in respect of the 41 defined category of laws envisaged by Article 31A must hold good, perhaps with greater force, in respect of laws passed for the purpose of giving effect to clauses (b) and (c) of Article 39.
It is impossible to conceive that any law passed for such a purpose can at all violate Article 14 or Article 19.
Article 31 is now out of harm 's way.
In fact, far from damaging the basic structure of the Constitution, laws passed truly and bona fide for giving effect to directive principles contained in clauses (b) and (c) of Article 39 will fortify that structure.
We do hope that the Parliament will utilise to the maximum its potential to pass laws, genuinely and truly related to the principles contained in clauses (b) and (c) of Article 39.
The challenge made to the validity of the first part of the unamended Article 31C therefore fails.
A small, though practically important, clarification seems called for at the end of this discussion of the validity of Article 31A, 31B and 31C.
We have held that laws included in the Ninth Schedule on or after April 24, 1973, will not receive the protection of Article 31B ipso facto.
Those laws shall have to be examined individually for determining whether the constitutional amendments by which they were put in the Ninth Schedule, damage or destroy the basic structure of the Constitution in any manner.
The clarification which we desire to make is that such an exercise will become otiose if the laws included in the Ninth Schedule on or after April 24, 1973 fall within the scope and purview of Article 31A or the unamended Article 31C. If those laws are saved by these Articles, it would be unnecessary to determine whether they also receive the protection of Article 31B read with the Ninth Schedule.
The fact that Article 31B confers protection on the schedule laws against "any provisions" of Part III and the other two Articles confer protection as against Articles 14 and 19 only, will make no real difference to this position since, after the deletion of Article 31, the two provisions of Part III, which would generally come into play on the question of validity of the relevant, laws, are Articles 14 and 19.
Apart from these challenges to the various constitutional amendments, the petitioners have also challenged the validity of the Constitution (fortieth Amendment) Act, 1976, by which the Amending Acts 21 of 1975, 41 of 1975 and 2 of 1976 were placed in the Ninth Schedule.
It may be recalled that the Principal Act was amended by these Amending Acts.
The normal term of five years of the Lok Sabha was due to expire on March 18, 1976 but, its life was extended for one year by the House of the People (Extension of Duration) Act, 1976.
Yet another Act was passed by the Parliament, The House of the People (Extension of Duration) Amendment Act, 1976, by which the 42 term of the Lok Sabha was further extended by another year.
The 40th Amendment was passed by the Lok Sabha on April 2, 1976 during its extended term.
Since by the aforesaid two Acts, the life of the Lok Sabha was extended while both the proclamations of emergency were in operation, the petitioners challenge the proclamations of the state of Emergency, dated December 3, 1971 and June 25, 1975 as also the two Acts by which the term of the Lok Sabha was extended.
The 42nd Amendment inserted clauses 4 and 5 in Article 368 with effect from January 3, 1975.
Which was also during the extended term of the Lok Sabha.
That Amendment too is challenged for that reason.
We have struck down that amendment unanimously by our judgment in Minerva Mills (supra) for the reason that it damages the basic structure of the Constitution.
Thus, we are now left to consider the validity of: (1) The Promulgation of the state of Emergency by the proclamations dated December 3, 1971 and June 25, 1975; (2) The House of the People (Extension of Duration) Act, 1976; (3) The House of People (Extension of Duration) Amendment Act, 1976, and (4) The Constitution (Fortieth Amendment) Act, 1976.
The validity of all these is inter connected and the focus of the challenge is the aforesaid proclamations of Emergency.
The validity of the proclamations of Emergency is challenged mainly by Shri A. K. Sen, Shri M. N. Phadke, Dr. N. M. Ghatate and by Shri P. B. Sawant who appeared in person in Writ Petition No. 63 of 1977.
It is contended by the learned counsel and Shri P. B. Sawant that the Courts have jurisdiction to enquire whether the power conferred on the President by Article 352 to proclaim an emergency is properly exercised as also the power to determine whether there are any circumstances justifying the continuance of the emergency.
There may sometimes be justification for declaring an emergency but if an emergency, properly declared, is allowed to continue without justification, the party in power, according to counsel, can perpetuate its rule and cling to power by extending the life of the Parliament from time to time.
The provisions of Article 352 should, therefore, be interpreted in a liberal and progressive manner so that the democratic ideal of the Constitution will be furthered and not frustrated.
It is urged that the threat to the security of India having completely disap 43 peared soon after the Pakistani aggression in December 1971, the continuance of the emergency proclaimed on December 3, 1971, must be held to be unjustified and illegal.
A list of dates has been furnished to us by counsel in support of their argument that the emergency declared on December 3,1971, could not legitimately be continued in operation for a period of more than six years.
On December 3,1971 the president issued the proclamation of emergency in face of the aggression by Pakistan, stating that a grave emergency existed whereby the security of the country was threatened by external aggression.
Both the Houses of Parliament approved the proclamation on the 4th, on which date the Defence of India Act, 1971, came into force.
The Defence of India Rules, 1971, framed under section 22 of the Defence of India Act, came into force on the 5th.
On December 16, 1971; the Pakistani forces made an unconditional surrender in Bangladesh and on the 17th the hostilities between India and Pakistan came to an end.
In February 1972, General Elections were held to the State Assemblies.
On August 28, 1972 the two countries entered into an agreement for the exchange of prisoners of war, and by April 30, 1974 the repatriation of the prisoners of war was completed.
On August 16, 1974 the Presidential Election was held in India.
On June 25, 1975 came the second proclamation of emergency; in the wake of which a notification was issued under Article 359 on June 27 suspending the enforcement of the fundamental rights under Articles 14, 21 and 22.
On February 16, 1976 the House of People (Extension of Duration) Act was passed.
The normal term of the Lok Sabha expired on March 18, 1976.
On April 2, 1976, the Lok Sabha passed the 40th Amendment Act by which the Maharashtra Land Ceiling Amendment Acts were put in the Ninth Schedule as Items 157, 159 and 160.
On November 24, 1976 the House of People (Extension of Duration) Amendment Act was passed extending the term of the Parliament for a further period of one year.
The 42nd Amendment Act was passed on November 12, 1976.
The Lok Sabha was dissolved on January 18, 1977 and both the emergencies were revoked on March 21, 1977.
The question as to whether a proclamation of emergency issued by the President under Article 352(1) of the Constitution raises a justiciable issue has been argued in this Court from time to time but, for some reason or the other, though the question has been discussed briefly and occasionally, there is no authoritative pronouncement upon it.
We do not propose to enter into that question in this case also partly because, there is good reason to hope that in future, there will be no occasion to bring before the Court the kind of grievance 44 which is now made in regard to the circumstances in which the proclamation of emergency was issued on June 25, 1975.
Section 48 of the Constitution (Forty second Amendment) Act, 1976, which came into force on January 3, 1977, has inserted clauses (2) to (8) in Article 352 which afford adequate insurance against the misuse of power to issue a proclamation of emergency.
By the newly added clause (3), the President cannot issue a proclamation under clause (1) unless the decision of the Union Cabinet of Ministers that such a proclamation may be issued has been communicated to him in writing.
Under clause (4), every proclamation issued under Article 352 has to be laid before each House of Parliament, and it ceases to operate at the expiration of one month, unless before the expiration of that period, it has been approved by a resolution of both the Houses of Parliament.
Clause (4) provides that the proclamation so approved shall, unless revoked, cease to operate on the expiration of a period of six months from the date of the passing of the second of the resolutions approving the proclamation.
The question as to whether the issuance of a proclamation of emergency is justiciable raises issues which are not easy to answer.
In any event, that question can more appropriately and squarely be dealt with when it arises directly and not incidentally as here.
In so far as the proclamation of December 3, 1971 is concerned, it is not disputed, and indeed it cannot be disputed, that there was manifest justification for that course of action.
The danger to the security of the country was clear and present.
Therefore, the attempt of the petitioners has been to assail the continuance of the state of emergency under that proclamation.
From the various dates and events mentioned and furnished to us, it may be possible for a layman to conclude that there was no reason to continue the state of emergency at least after the formality of exchanging the prisoners of war was completed.
But we are doubtful whether, on the material furnished to us, it is safe to conclude by way of a judicial verdict that the continuance of the emergency after a certain date became unjustified and unlawful.
That inference is somewhat non judicious to draw.
Newspapers and public men are entitled to prepare public opinion on the need to revoke a proclamation of emergency.
They have diverse sources for gathering information which they may not disclose and they are neither bound by rules of evidence nor to observe the elementary rule of judicial business that facts on which a conclusion is to be based have to be established by a preponderance of probabilities.
But Courts have severe constraints which deter them from undertaking a task which cannot judicially be performed.
It was suggested that the proclamation of June 25, 1975 was actuated by mala fides.
But there 45 too, evidence placed before us of mala fides is neither clear nor cogent.
Thus, in the first place, we are not disposed to decide the question as to whether the issuance of a proclamation of emergency raises a justiciable issue.
Secondly, assuming it does, it is not possible in the present state of record to answer that issue one way or the other.
And, lastly, whether there was justification for continuing the state of emergency after the cessation of hostilities with Pakistan is a matter on which we find ourselves ill equipped to pronounce.
Coming to the two Acts of 1976 by which the life of the Lok Sabha was extended, section 2 of the first of these Acts, 30 of 1976, which was passed on February 16, 1976, provided that the period of five years in relation to the then House of the People shall be extended for a period of one year "while the Proclamation of Emergency issued on the 3rd day of December, 1971 and on the 25th day of June, 1975, are both in operation".
The second Act of Extension continues to contain the same provision.
It is contended by the petitioners that the proclamation of December 3, 1971 should have been revoked long before February 16, 1976 and that the proclamation of June 25, 1975 wholly uncalled for and was mala fide.
Since the precondition on which the life of the Parliament was extended is not satisfied, the Act, it is contended, is ineffective to extend the life of the Parliament.
We find it difficult to accept this contention.
Both the proclamations of emergency were in fact in operation on February 16, 1976 when the first Act was passed as also on November 24, 1976 when the second Act, 109 of 1976, was passed.
It is not possible for us to accept the submission of the petitioners that for the various reasons assigned by them, the first proclamation must be deemed not be in existence and that the second proclamation must be held to have been issued mala fide and therefore non est.
The evidence produced before us is insufficient for recording a decision on either of these matters.
It must follow that the two Acts by which the duration of the Lok Sabha was extended are valid and lawful.
The 40th and the 42nd Constitutional Amendments cannot, therefore, be struck down on the ground that they were passed by a Lok Sabha which was not lawfully in existence.
These then are our reasons for the order which we passed on May 9, 1980 to the following effect: "(1) The Constitution (First Amendment) Act, 1951 which introduced Article 31A into the Constitution with retrospective effect, and section 3 of the Constitution (Fourth Amendment) Act, 1955 46 which substituted a new clause (1), sub clause (a) to (e), for the original clause (1) with retrospective effect, do not damage any of the basic or essential features of the Constitution or its basic structure and are valid and constitutional, being within the constituent power of the Parliament.
(2) Section 5 of the Constitution (First Amendment) Act 1951 introduced Article 31B into the Constitution which reads thus: "31B x x x x x x In keshvananda Bharati decided on April 24, 1973 it was held by the majority that Parliament has no power to amend the Constitution so as to damage or destroy its basic or essential features or its basic structure.
We hold that all amendments to the Constitution which were made before April 24, 1973 and by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are valid and constitutional.
Amendments to the Constitution made on or after April 24, 1973 by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them, are beyond the constituent power of the Parliament since they damage the basic or essential features of the Constitution or its basic structure.
We do not pronounce upon the validity of such subsequent constitutional amendments except to say that if any Act Regulation included in the 9th Schedule by a Constitutional amendment made on or after April 24, 1973 is saved by Article 31A, or by Article 31C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is put in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitutional or its basic structure as reflected in Articles 14, 19 or 31, will become otiose.
(3) Article 31C of the Constitution, as it stood prior to its amendment by section 4 of the Constitution (42nd Amendment), Act, 1976, is valid to the extent to which its constitutionality was upheld in Keshvananda Bharati.
Article 31C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure.
(4) All the Writ Petitions and Review Petitions relating to the validity of the Maharashtra Agricultural Lands Ceiling Acts are dismissed with costs.
The stay orders granted in these matters will 47 stand vacated.
We quantify the costs at Rs. five thousand which will be borne equally by the petitioners in Writ Petitions Nos.
656 660 of 1977; 512 533 of 1977; and 505 to 511 of 1977.
The costs will be payable to the Union of India and the State of Maharashtra in equal measure.
(5) Writ Petition No. 63 of 1977 (Baburao Samant vs Union of India) will be set down for hearing".
This Court made an Order on 9th May, 1980 disposing of the writ petitions challenging the constitutional validity of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 27 of 1961 as amended from time to time by various subsequent acts.
This Order was in the following terms: "(1) The Constitution (First Amendment) Act, 1951 which introduced Article 31A into the Constitution with retrospective effect, and section 3 of the Constitution (Fourth Amendment) Act, 1955 which substituted a new clause (1), sub clause (a) to (e), for the original clause(1) with retrospective effect, do not damage any of the basic or essential features of the Constitution or its basic structure and are valid and constitutional, being within the constituent power of the Parliament.
(2) Section 5 of the Constitution (First Amendment) Act 1951 introduced Article 31B into the Constitution which reads thus: "31B: x x x x x In Keshvananda Bharati decided on April 24, 1973 it was held by the majority that Parliament has no power to amend the Constitution so as to damage or destroy its basic or essential features or its basic structure.
We hold that all amendments to the Constitution which were made before April 24, 1973 and by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are valid and constitutional.
Amendments to the Constitution made on or after April 24, 1973 by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them, are beyond the constituent power of the 48 Parliament since they damage the basic or essential features of the Constitution or its basic structure.
We do not pronounce upon the validity of such subsequent constitutional amendments except to say that if any Act or Regulation included in the 9th Schedule by a constitutional amendment made on or after April 24, 1973 is saved by Article 31A, or by Article 31C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is put in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Articles 14, 19 or 31, will become otiose.
(3) Article 31C of the Constitution, as it stood prior to its amendment by section 4 of the Constitution (42nd Amendment) Act, 1976, is valid to the extent to which its constitutionality was upheld in Keshvananda Bharati.
Article 31C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure.
(4) All the writ petitions and Review Petitions relating to the validity of the Maharashtra Agricultural Lands Ceiling Acts are dismissed with costs.
The stay orders granted in these matters will stand vacated.
We quantify the costs at Rs. five thousand which will be borne equally by the petitioners in Writ Petitions Nos.
656 660 of 1977; 512 533 of 1977; and 505 to 511 of 1977.
The costs will be payable to the Union of India and the State of Maharashtra in equal measure.
(5) Writ Petition No. 63 of 1977 (Baburao Sawant vs Union of India) will be set down for hearing".
No reasons were given in support of this Order but it was stated that reasons would be given later.
While delivering my dissenting judgment in Minerva Mills Ltd. vs Union of India (1980)3 SCC 625 on 31st July 1980, I gave my reasons for subscribing to this Order.
It is therefore not necessary to reiterate those reasons over again but they may be treated as forming part of this judgment and a copy of my judgment in Minerva Mills case may be attached as an annexure to this judgment.
I may point out that pages 1 to 6 and pages 17 to 96 of the judgment in Minerva Mills case set out the reasons for the making of the order dated 9th May 1980 and I re affirm those reasons.
I have had the advantage of reading the judgment just delivered by the learned Chief Justice, but I find myself unable to agree with him that "it is somewhat difficult to apply the doctrine of stare decisis 49 for upholding "Article 31A and that it would not be proper to invoke the doctrine of stare decisis for upholding the validity of that Article.
" I have given reasons in my judgment for applying the doctrine of stare decisis for sustaining the constitutional validity of Article 31A, but apart from the reasons given by me in support of my view, I find that in Ambika Prasad Mishra vs State of U.P.(1) the same Bench which is deciding the present writ petitions has upheld the constitutional validity of Article 31A by applying the doctrine of stare decisis.
Krishna Iyer, J. speaking on behalf of a unanimous court said in that case: "It is significant that even apart from the many decisions upholding Article 31A, Golak Nath case decided by a Bench of 11 Judges, while holding that the Constitution (First Amendment) Act exceeded the constituent power still categorically declared that the said amendment and a few other like amendments would be held good based on the doctrine of prospective over ruling.
The result, for our purpose, is that even Golak Nath case has held Article 31A valid.
The note struck by later cases reversing Golak Nath does not militate against the vires of Article 31A. Suffice it to say that in the Kesavananda Bharati case Article 31A was challenged as beyond the amendatory power of Parliament and, therefore, invalid.
But after listening to the Marathon erudition from eminent counsel, a 13 Judge Bench of this Court upheld the vires of Article 31 A in unequivocal terms.
That decision binds, on the simple score of stare decisis and the constitutional ground of Article 141.
Every new discovery or argumentative novelty cannot undo or compel reconsideration of a binding precedent.
In this view, other submissions sparkling with creative ingenuity and presented with high pressure advocacy, cannot persuade us to reopen what was laid down for the guidance of the nation as a solemn proposition by the epic Fundamental Rights case." (Emphasis supplied.) These observations show beyond doubt that this very Bench held Article 31 A to be constitutionally valid "on the simple score of stare decisis".
It is true that Krishna Iyer, J. stated in the beginning of his judgment in Ambika Prasad Mishra 's case: "In this judgment, we side step the bigger issue of the vires of the constitutional amendments in Articles 31 A, 50 31B and 31 C as they are dealt with in other cases disposed of recently." This statement was made presumably because the learned Judge must have thought at the time when he prepared his judgment in this case that the judgment in the present writ petitions would be given before his judgment came to be delivered and on this assumption, the learned Judge did not consider it necessary to discuss the entire range of arguments relating to the constitutional validity of Articles 31 A, 31 B and 31 C.
But so far as Article 31A was concerned, the learned Judge did proceed to hold that Article 31A was constitutionally valid "on the simple score or stare decisis" and the other four learned Judges subscribed to this view.
It is also true that Krishna Iyer, J. did not rest his judgment entirely on the protective armour of Article 31A and pointed out that "independently of Article 31 A, the impugned legislation can withstand constitutional invasion" and sustained the validity of the impugned legislation on merits, but even so he did hold that Article 31 A was constitutionally valid on the principle of stare decisis and observed that "the comprehensive vocabulary of that purposeful provision obviously catches within its protective net the present Act, and broadly speaking, the undisputed effect of that Article is sufficient to immunise the Act against invalidation to the extent stated therein".
I cannot, therefore, despite the high regard and great respect which I have for the learned Chief Justice, agree with him that the doctrine of stare decisis cannot be invoked for upholding the validity of Article 31 A, since that would be in direct contradiction of what has been held by this very Bench in Ambika Prasad Mishra vs State of U.P. (supra).
KRISHNA IYER, J.
While I agree with the learned Chief Justice, I must state that certain observations regarding articles 31A, 31B and 31C are wider than necessary and I do not go that far despite the decision in Minerva Mills case.
I also wish to add a rider regarding the broader observations with the application of stare decisis in sustaining article 31A. I have expressly upheld article 31A by reliance on stare decisis and cannot practise a volte face without convincing juristic basis to convert me to a contrary position.
I know that Justice Holmes has said: "Don 't be" consistent, "but be simply true".
I also remind myself of the profound reflection of Ralph Waldo Emerson: 51 A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
With consistency a great soul has simply nothing to do.
He may as well concern himself with his shadow on the wall.
Speak what you think now in hard words and tomorrow speak what tomorrow thinks in hard words again, though it contradict every thing you said today. "Ah, so you shall be sure to be misunderstood.
" Is it so bad then to be misunderstood? Pythagoras was misunderstood, and Socrates, and Jesus, and Luther, and Copernicus, and Galileo, and Newton, and every pure and wise spirit that ever took flesh.
To be great is to be misunderstood.
And yet, I hold to what I have earlier stated in Ambika Prasad Misra.
(1) What the learned Chief Justice has in mind, if, with respect, I may venture to speak is that in constitutional issues over stress on precedents is inept because we cannot be governed by voices from the grave and it is proper that we are ultimately right rather than be consistently wrong.
Even so, great respect and binding value are the normal claim of rulings until reversed by larger benches.
That is the minimum price we pay for adoption of the jurisprudence of binding precedents.
I leave it at that because the learned Chief Justice has held the impugned Act good in its own right.
Enough unto the day is the evil thereof.
V.D.K. Petitions dismissed.
| The prosecution alleged that the petitioner, an Assistant Sub Inspector of Police, subjected one of the suspects in a theft case to severe flagellation which resulted in the death of the suspect.
Medical examination of the deceased revealed that death was due to asphyxiation.
On a study of the circumstances and the incontrovertible facts of flagellation and asphyxiation within police premises and the testimony of eye witnesses, the trial court found the petitioner guilty of the offence with which he was charged and sentenced him to imprisonment for life.
His explanation that death was due to suicidal hanging was rejected by the trial court as well as by the High Court.
Dismissing the petition, ^ HELD: There was no error either in the appreciation of evidence or the conclusion reached by the courts below.
[278 D] [It is disturbing to find diabolical recurrence of police tortures resulting in a terrible scare in the minds of common citizens that their lives and liberty are under a new peril when the guardians of the law gore human rights to death.
Police lock ups are becoming more and more awesome cells.
This development is disastrous to the human rights awareness and the humanist constitutional order.] [278 E]
|
Civil Appeal No. 34 of 1956.
Appeal from the judgment and order dated February 19, 1954 of the former Nagpur High Court, in Misc.
Appeal No. 164 of 1949, arising out of the judgment and decree dated November 22, 1949, of the First Additional District Judge, Akola, in Civil Suit No. 12 A of 1948.
C. B. Agarwala and Ganpat Rai, for the appellant.
section K. Kapur and B. P. Maheshwari, for the respondent.
January, 21.
The Judgment of the Court was delivered by KAPUR J.
KAPUR J.
This is an appeal against the judgment and order of the Nagpur High Court and arises out of proceedings under the Indian .
The appellant in this case is Champalal and the respondent is Samarath Bai, the widow of Lal Chand.
The parties who are Jains belong to Balapur in the district of Akola in the previous State of Madhya Pradesh.
The relationship of the parties is shown by the following pedigree table: 813 Phool Chand | | | | | | Nanak Chand Khushal Chand Sundarlal | | | Bulakhidas= Lalchand= Deolal jivanbai Samarathbai | | | | | | | | Babibai= Ratanbai= | Rasiklal Vijay Kumar | | | | | | | | Ishwardas Baglal Digamber Das | | Champalal | | | | | | | | Sakarchand Vinaychand Vimalchand On September 14, 1944, Lal Chand made a will by which he authorized his wife Samarath Bai to adopt Champalal and made certain disposition of his property.
Lal Chand died on September 26, 1944.
On October 20, 1944, the appellant made an application under section 192 of the Succession Act to the First Additional District Judge of Akola for the appointment of a Curator.
This was Misc.
No. 3 of 1944.
Notices were issued to the respondent, Samarath Bai and her daughters, The will was registered on December 29, 1944.
On January 10, 1945, an arbitration agreement was entered into between the appellant and the respondent and on January 16, 1945, both parties applied for stay of proceedings in the case (Misc.
No. 3 of 1944) and the case was adjourned to March 28, 1945, and then was adjourned to June 18, 1945.
On that date the arbitrators made an application to the First Additional District Judge for extension of time for four months for making the award.
This application was opposed by the appellant but the court gave three months ' time on July 26, 1946.
The award was made on October 18, 1946.
On October 21, it was filed by the arbitrators in the court of the First Additional District Judge who on October 30, gave to the parties ten days ' time for objections.
On November 15, 814 1946, the appellant filed objections to the award and on January 31, 1947, the respondent applied for a judgment in terms of the award and for a decree.
The award was unregistered and therefore at the request of the respondent it was handed over for getting it registered to Mithulal who was an attorney of two of the arbitrators Magandas and Sakarchand.
On February 7, 1947, he presented it for registration to the Sub Registrar but the Sub Registrar returned it as it was not accompanied by a list and particulars of the property covered by the award.
On February 15, 1947, the list and particulars signed by Mithulal were supplied and the award was represented for registration by Mithulal.
As he was an attorney of only two of the three arbitrators the Sub Registrar registered the document on March 26, 1947, in regard to said arbitrators and refused it qua the third arbitrator, Bhogilal.
But under the orders of the Registrar the document was registered in regard to Bhogilal also and it was refiled on July 21, 1948, in the Court of the First Additional District Judge.
He ordered the two proceedings one under section 192 of the Succession Act and the other under the to be separated and the proceedings under the were ordered to be registered as a suit on August 14, 1948, and on August 30, the court ordered a proper application as required under the High Court Rules to be filed.
On September 15, 1948, an application under section 14(2) of the was filed.
On October 14,1948, the appellant filed an application for setting aside the award and therein raised various objections which were rejected and on November 22, 1949, a judgment was passed in accordance with the terms of the award followed by a decree.
Against this order the appellant took an appeal to the High Court which was dismissed on February 19, 1954.
The High Court held that the application filed.
by the respondent dated September 15, '1948, under section 14(2) of the was not within time but the original application filed by the arbitrators on October 21.
, 1946, was within time; that no objection could be taken to the award on the ground that 815 there were two awards one by the arbitrators and the other by Mithulal who had added to the award by giving the list and particulars; that the First Additional District Judge was authorised to extend time for making an award an the application of the arbitrators and he was properly seized of the case; that no misconduct had been proved and that no illegality had been established and that the appellant did not get anything under the will except on adoption nor was he until then constituted an executor.
Against this judgment this appeal has been filed on a certificate by the High Court.
In appeal before us counsel for the appellant raised six points: (1) the filing of the award was not within time as no application was made under section 14 within the time allowed by the Limitation Act; (2) that the award required registration and was not registered in accordance with law and the mere fact that it was registered does not clothe it with legality ; (3) the First Additional District.
Judge had no jurisdiction to grant three months ' extension of time to the arbitrators for making the award which was granted on July 26, 1946 ; (4) that the arbitrators were guilty of mis conduct; (5) that the award is in excess of the power given to the arbitrators under the agreement of arbitration and (6) even if the award was proper and legal the respondent had refused to adopt the appelant and therefore the decree should have been as provided by the award on the happening of that contingency and in the alternative the First Addi tional District Judge who passed the decree had no jurisdiction to take subsequent events into consideration.
In our opinion points nos. 1, 2 and 3 are wholly without substance.
The award was made on October 18, 1946, and the arbitrators filed it in the court of the First Additional District Judge and they also gave notice to the parties by registered post informing them of the making of the award.
It has not been shown as to how the filing of the award is barred by Iimitation.
Article 178 of the Limitation Act which was 104 816 relied upon by the appellant applies to application,made by the parties and not to the filing of the award by the arbitrators.
The second question that the award required registration and could not be filed by the arbitrators before it was registered is equally without substance.
The filing of an unregistered award under section 49 of the Registration Act is not prohibited; what is prohibited is that it cannot be taken into evidence so as to affect immoveable property falling under section 17 of that Act.
That the award required registration was rightly admitted by both parties.
It was contended by counsel for the appellant that under section 21 of the Registration Act and the rules made tinder section 22 a description of the property was necessary and as that was supplied through Mithulal who, according to counsel, did not have the necessary authority to do so, the award must be taken to be an incomplete document which could not be registered.
The High Court has found that in the circumstances of this case lists were not necessary and therefore anything done by Mithulal whether authorised or not will not affect the legality of the registration.
The third point that the First Additional District Judge before whom the application was made for extending the time for making the award had no jurisdiction is also not sustainable.
It so happened that the court which had jurisdiction to entertain applications for the filing of awards was the same before whom the application under section 192 of the Succession Act had been filed.
If that court was the proper court in which such applications were to be made then no defect can be found in the application being made to that court or that court giving such extension.
The ground on which the charge of misconduct of the arbitrators was founded was that the arbitrators had before hearing the parties decided amongst themselves that they would give a particular award.
The High Court has found that this charge has not been proved.
It was based on a statement of the appellant that one of the arbitrators, Magandas, had suggested to him that he, the appellant, should agree to give to 817 the respondent an absolute estate in a portion of the property and if that was done the dispute would be settled, but he was agreeable only to giving a life estate and the arbitrators then told him that in that case they would give an absolute estate to the respondent.
As the High Court has pointed out this fact was not pleaded in the first application of objections filed by the appellant and it was in its opinion an after thought.
Reliance was also placed on the following statement of Magandas in cross examination as P.W. 3: " We had decided as to how the award was to be made by us, but as these two persons did not come we made the application to the Court for extension of time ".
But the explanation of the other arbitrators was that they wanted to bring about an amicable settlement and had gone to Balapur and then to Akola.
The appellant and his brother had promised to follow them there but as they did not turn up an application was made for extension of time.
There is nothing wrong in what the arbitrators did and it cannot be said that, any inference of misconduct can be drawn from this evidence.
It was then submitted that the award was in excess of the powers given to the arbitrators and was therefore invalid.
This point was divided into three points: (i) that the reference itself was invalid and therefore the award was a nullity; (ii) that the award was in excess of the powers given to the arbitrators and (iii) the award was contrary to law on the face of it.
In support of point No. (1) it was submitted that the appellant having accepted the office of an executor could not enter into an arbitration concerning the execution, authority to adopt or the property covered by the will.
It is unnecessary to decide the vitality of this point because according to the true construction of the will the appellant was not to become the executor till he had been adopted.
Paragraph 10 of the will was as follows: " I have this day, made as above the wilt of my estate.
Under this will, I am authorising the said 818 Champalal Ishwardas to execute the same.
I have appointed him the executor of this will.
Under the said will, the said Champalal alone shall be the full owner of my entire movable and immoveable property and the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him (after my death).
" The words " under the said will the said Champalal shall be the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him after my death " show that the appellant was to become executor after his adoption and as he was not adopted he cannot be the executor and therefore the argument that an executor cannot enter into arbitration does not arise and we do not think it necessary to decide this matter beyond saying that the appellant was not constituted an executor eo nominiee but was to be an executor if he was adopted.
Similarly the question whether the appellant after accepting the office of an executor had renounced it or a discharge was necessary under section 301 of the Succession Act does not arise.
Points (ii) and (iii) may be taken up together.
lt was argued that the award is in excess of the power given to the arbitrators because it determined the rights of the appellant as an executor and because it was in excess of para.
No. 1 of the arbitration agreement which provided that the arbitrators should maintain the gifts to charities and the gift in favour of the testator 's daughters and others.
lt is difficult to see how the award has lost sight of this paragraph.
As a matter of fact the arbitrators have maintained the gifts to charities and other gifts made by the testator in the will and they have clearly stated that the person becoming the owner of the deceased 's property, will have to provide for the maintenance of the persons named in the will and pay the charities therein enumerated.
Another objection raised was that according to the arbitration agreement the arbitrators had to enforce the will and, not to act outside it and also they could not impose a limit of time for adoption.
How they 819 have acted dehors the will has not been shown.
The contention raised was that according to the arbitration agreement the arbitrators had to decide in what proportion the parties to the dispute were to " enjoy " the estate of the testator and not that one of them will get nothing at all.
As we read paragraph 10 of the will, and the High Court also so construed it, the appellant could get the property of the testator only if he was adopted by the testator or his widow, the respondent.
It is not correct, therefore, to read the term of the arbitration agreement as meaning that the appellant was to get at least some portion of the property irrespective of his being adopted.
Paragraph 2 of the arbitration agreement shows that they had also to decide that in case the respondent adopted the appellant what should be the respective rights of the parties in the estate.
The arbitrators decided that the respondent should adopt the appellant according to Hindu Law within four months before February, 1947, and if the respondent failed so to do within the time above specified the appellant would be the heir and executor of the deceased 's entire property and the respondent would he entitled to Rs. 200 per mensem as maintenance.
But if in spite of the respondent 's readiness to adopt the appellant refused to be adopted within four months, he would not get any rights in the property of the deceased nor would he be the executor.
As it was specifically stated in the arbitration agreement that the consequences of the adoption or non adoption were to be decided by the arbitrators, they rightly laid down what was to happen if the adoption did not take place and also provided that if it was due(,, to the default of the appellant one consequence will follow and if it was the default of the respondent another consequence would follow.
The words of the agreement "In the same way the arbitrators may also decide that in case it is decided that the party No. 2 should adopt the party No. 1 and if that thing is accepted by the party No. 1 and in case the adoption takes place, what shall be the rights of both the parties and how they will stand in respect of the property . . . 820 mean that the power to limit the time was implicit because the happening of these events could not be left for a limitless period.
The courts below have found on the evidence that the appellant was not prepared to be adopted.
We have been taken through the evidence and we find no reason to differ from the opinion of the High Court that the appellant was not prepared to be adopted.
His attitude in regard to that matter is clear from ground No. 37 of the Grounds of Appeal taken by him in the High Court which was: " The lower Court erred in holding that Champalal was not within his rights in consenting to get adopted by Mt. Samarathbai within the time fixed by the arbitrators without prejudice to his objections against the award " and the courts have rightly come to that conclusion.
In this view of the matter the alternative argument of taking subsequent events into consideration does not arise.
It was also argued that by making the award the arbitrators had perverted the line of succession.
All that the award has stated is that in case the adoption takes place the respondent would receive I share of the property of the testator and it would form her stridhana.
How that has perverted the line of succession is difficult to understand.
There is no force in this appeal and it must there.
fore be dismissed with costs.
Appeal dismissed.
| A company dismissed from its service four of the appellants, for taking part and instigating others to join, in an illegal slowdown strike in the Hot Mill Section of its works, which were a public utility service.
On such dismissal the slow down strike however gained strength.
The company thereupon issued a notice dated April 8, 1953, to the workers of the Hot Mill that unless they voluntarily recorded their willingness to operate the plant to its normal capacity, before 2 p.m. of April 10, they would be considered to be no longer employed by the company.
As a result forty workers recorded their willingness, but the rest did not make any response at all.
The company then issued a second notice dated April 25, stating, inter alia, that the Workers who did not record their willingness to work the plant to its normal capacity in terms of the previous notice dated April 8, had been considered to be no longer in service and their formal discharge 320 from the company 's service had been kept pending in order to assure to the fullest that no one who wanted to work normally was being discharged on circumstantial assumptions and calling upon the workers to record their willingness by April 28, 1953, to operate the plant to its normal capacity, and further intimating that failing this their names would be removed from the company 's rolls and their discharge would become fully effective with all the implications of a discharge.
After this notice the entire body of workers of the works except those engaged in the essential services went on strike Thereafter, the company with the sanction of the Government filed a complaint under section 27 of the Industrial Disputes Act against the appellants for having instigated and incited others to take part in an illegal strike.
The appellants were convicted.
The appellants challenged the said conviction under section 27 of the Act contending that the strike was not illegal as the strike had been in consequence of an illegal lock out declared by the company by the said notices dated April 8 and April 25.
The appellants further contended that the notices did not effect a discharge, but declared a lock out and that even if the notices did effect a discharge, then also there was a lock out, for a discharge is equally a lock out.
Finally the appellants challenged the propriety of, the sanction under section 34(1) of the Act to make the complaint as the sanction did not on the face of it refer to the facts constituting the offence.
Held, that on a construction of the notices they bad the effect of discharging the workmen, and did not amount to a declaration The removal of the name of a worker from the Roll of the company was a formality which the notices said had been kept pending and this did not prevent the discharge having taken effect.
The words " refusal by an employer to continue to employ any number of persons employed by him " in section 2(1) do not include the discharge of an employee.
Held, further that sanction under s 34(1) of the Act would be good if it was proved by evidence that it had been granted after all the necessary facts had been placed before the sanctioning authority though the facts were not stated on the face of the sanction itself.
Presidency Jute Mills Co. Ltd. vs Presidency Jute Mills Co. Employees, Union, [1952] I.A.C. 62, approved Gokalchand Dwarkadas Morarka vs The King, (1948) L.R. 75 I.A. 30, discussed.
|
Civil Appeal No. 2860 of 1987.
From the Judgment and order dated 8.7.1987 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 1311 of 1983 and Suppl.
A. No. 1798 of 1987 BI.
Soli J. Sorabjee, S.R. Grover and K.J. John for the Appellant.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a statutory appeal from the decision and order of the Customs Excise and Gold (Control) Appellate Tribunal (briefly referred to as 'CEGAT ') under section 35L of the Central Excise and Salt Act, 1944 (hereinafter called 'the Act ').
It appears that the appellant is a manufacturer of Hospital and Pharmaceutical Appliances and Heavy Duty Industrial Canteen Equipment.
The following 14 items were classified by him under Tariff Item No. 68 of the said Act in his Classification List No. 106 dated 27:3.1979: "(1) Storage Tank, (2) Cooking Range (Electric opera 734 tion and gas operated), (3) Baking oven, (4) Deep Fat Fryer, (5) Bain Mafie, (6) Sterilizing Sink, (7) Expresso Coffee Machine, (8) Steam Jacketed Vessel (Steam operated), (9) Bread Toaster, (10) Bulk Cooker & Fryer, (11) Chappatty Plate/Chappatty Puffer and Chappatty Plate/Puffer, (12) Dish Washing Machine, (13) Potato Pooler and (14) Masala Grinder.
" The Assistant Collector held the view that products 2 to 14 were classifiable under Tariff Item No. 33C in view of the Explanation thereof.
After giving notice the Assistant Collector demanded differential duty amounting to Rs.1,91,622.20 for the period Ist of March, 1979 to 30th June, 1980.
The Assistant Collector confirmed the demand except in respect of Item No. 8, namely, Steam Jacketed Vessel.
Being aggrieved from these orders, the appellant filed appeals before the Collector.
The Collector accepted the appellant 's contentions and came to the conclusion that these were to be classified under Tariff Item No. 68 and not under Tariff Item No. 33C. Tariff Item 33C at the relevant time contained the Explanation I, which is as follows: "Explanation I 'Domestic electrical appliances ' means electrical appliances normally used in the household and similar appliances used in hotels, restaurants, hostels.
offices, educational institutions, hospitals, train kitchens.
aircraft or ship 's pantries, canteens, tailoring establish ments, laundary shops and hair dressing saloons".
The revenue went up in appeal before the CEGAT.
The Tribunal noted that the equipments in question were used in industrial canteens, Five Star Hotels, big hospitals etc.
The nature of the items such as deep fat fryer, Expresso coffee machine, bread toaster, chap patty plate, etc.
were all electrically operated machines.
The Tribunal further noted that Tariff Item 33C was in respect of "domestic electrical appliances not elsewhere specified".
According to the Tribunal the intention of the legislature in respect of "domestic electrical appliances" was clear from the Explanation.
It is apparent that the above named items are specially designed for use in big canteens attached to industrial units, big hotels, hospitals etc.
where food in bulk quantity for hundreds of people is required to be prepared and served.
These required electric power exceeding 230 volts in order to have considerable capacity for preparing and serving food.
Their prices ranged from 735 Rs.7,000 to Rs.1.5 lakhs.
It was submitted that these are important and relevant factors for distinguishing the said items as distinct and different from those appliances which are used normally in the household.
It was submitted that these heavy duty items fall outside the purview of Tariff Item No. 33C. The Tribunal was of the view that though considerable space is required for these items but space was not any criteria for determining this question.
According to the Tribunal that these items could not be classified under Tariff Item No. 68.
We are of the opinion that the Tribunal is right.
It is manifest that these equipments were electrical appliances.
There was no dispute on that.
It is also clear that these are normally used in household and similar appliances are used in hotels etc.
The expression "similar" is a significant expression.
It does not mean identical but it means corresponding to or resembling to in many respects; somewhat like; or having a general likeness.
The statute does not contemplate that goods classed under the words of 'similar description ' shall be in all respects the same.
If it did these words would be unnecessary.
These were intended to embrace goods but not identical with those goods.
If the items were similar appliances which are normally used in the household, these will be taxable under Tariff Item No. 33C.
It appears that the Gujarat High Court in the case of Viswa & Co. vs The State of Gujarat, (17 Sales Tax Cases 581) had occasion to consider whether electric fans are domestic electrical appliances for the purpose of Bombay Sales Tax Act, 1953.
Bhagwati, J. as the learned Chief Justice then was, speaking for the Gujarat High Court observed as follows: "A domestic electrical appliance, in our opinion, would be an electrical appliance of a kind generally used for domestic purposes.
It may also be used at places other than the home or the house, but that would not destroy the character of a domestic electrical appliance which attaches to it by reason of its being a kind of an electrical appliance generally used for the household.
There are several electrical appliances which are generally used in the household, such as electric irons, electrical sewing machines and electrical cooking ranges which are also used in other establishments.
But these electrical appliances do not therefore cease to be domestic electrical appliances.
It is of course not necessary that an electrical appliance, in order to 736 satisfy the description of a domestic electrical appliance, must be actually used in the home or the house.
What is necessary is that it must be of a kind which is generally used for household purposes and if that test is applied, there is no doubt that electric fans are domestic electrical appliances and the Tribunal was therefore right in holding that they fall within entry 52 of Schedule B." We agree that it is not necessary to be a domestic electrical appliance that it must be actually used in the home or the house.
It must be of a kind which is generally used for household purposes.
It appears to us that the types of items concerned in this appeal are generally used for household purposes and that is sufficiently good test for classification in the light of the explanation to Tariff Item No. 33C.
In view of the fact that the Tribunal recognised that the appellant had set out all the details in the classification list and the revenue had assessed him under Tariff Item 68, the Tribunal came to the conclusion that there was no intention to evade payment of duty.
Therefore, the Tribunal directed that the modification of the classification list could only be prospective and not retrospective.
The Tribunal was just and right in so doing.
The Tribunal was also right in holding that in the absence of any proof of suppression of fact, section 11 A of the said Act would not be applicable.
The show cause notice raising a demand of duty was issued on 8th of September, 1980 and the Tribunal sustained the demand for the period 9th March, 1980 to 30th June, 1980 in respect of items 3 to 7 and 9 to 14.
We are of the opinion that the Tribunal was right and the decision of the Tribunal therefore, does not call for interference.
In that view of the matter the appeal is rejected.
There will be no order as to costs N.P.V. Appeal dismissed.
| % Words and Phrases: 'Similar description ' meaning of.
The appellant, manufacturer of Hospital and Pharmaceutical Appliances and Heavy Duty Industrial Canteen Equipment, classified certain items like cooking range, deep fat fryer, express coffee machine, bread toaster etc.
, numbering 14, under Tariff Item No. 68 of the Central Excise and Salt Act, 1944.
The Assistant Collector held that products 2 to 14 were classifiable under Tariff Item No. 33C, in view of the Explanation thereof, and demanded differential duty for the period of 1st March, 1979 to 30th June, 1980.
The Collector, on appeal, held that these items were to be classified under Tariff item No. 68 and not under Tariff item 33C .
On appeal by the Revenue, the Central Customs Excise and Gold (Control) Appellate Tribunal, while noting that the equipment in question, some of which were electrically operated machines, were used in industrial canteens, five star hotels, big hospitals, etc.
held that the intention of the Legislature was clear from the Explanation to Tariff Item No. 33C, and the items in question could not be classified under Tariff Item No. 68.
Dismissing the appeal by the manufacturer.
^ HELD: The statute does not contemplate that goods classed under the words of "similar description" shall be in all respects the same.
If it did, these words would be unnecessary.
These were intended to embrace goods but not identical with those goods.
If the items were 732 similar appliances which are normally used in household, these will be taxable under Tariff Item No. 33C. [73CD] It is not necessary, to be a domestic appliance, that it must be actually used in the home or the house.
It must be of a kind that they are generally used for household purposes.
[736B] The types of items concerned in the instant case are generally used for household purposes and that is sufficiently good test for classification in the light of explanation to tariff item No. 33C.
The Tribunal was.
therefore, right in holding that these items could not be classified under Item 68.
[736C] Since the appellant had set out all the details and the Revenue had assessed the appellant under Tariff Item No. 68, the Tribunal was right in holding that there was no intention to evade payment of duty and in directing that the modification of the classification list could only be prospective and not retrospective.
In the absence of any proof of suppression of fact, it was also right in holding that section l 1 A of the Act would not be applicable.
[736D E]
|
iminal Appeal No.165 of 1967.
Appeal by special leave from the order dated April 27, 1967 of the Bombay High Court, Nagpur Bench in Criminal Appeal No. 74 of 1967.
W. section Barlingay and A. G. Ranaparkhi, for the appellant.
H. R. Khanna and section P. Nayar, for the respondent.
89 The Judgment of the Court was delivered by Vaidialingam, J.
The appellant, who was the second accused, in Sessions Case No. 9 of 1967, and accused No. 1, were found guilty, under section 195 and section 196 read with section 34, I.P.C. and each of them has been convicted and sentenced to undergo three years ' rigorous imprisonment, for these offences and the sentences have been directed to run concurrently.
The case of the first accused, is not before us, in these proceedings.
The appellant challenged his conviction and sentence, passed against him, before the High Court of Bombay, in Criminal Appeal No. 74 of 1967.
A Division Bench of the High Court has, by its order dated April 27, 1967, summarily dismissed the appeal, in one word 'dismissed '.
The appellant has come up, to this Court, by special leave.
But this Court, by its order dated September 7, 1967, has granted special leave, limited to the question as,to whether the High Court was justified in dismissing the appeal, summarily.
That is the only point, that arises for consideration, in this appeal.
It is necessary, to set out briefly, the circumstances under which the appellant, who was, a police Sub Inspector, along with one Dilawar, who was accused No. 1, came to be charged sheeted and tried, in Sessions Case No. 9 of 1967.
In connection with a dacoity, which is alleged to have taken place, on July 18, 1965, when the Bombay Howrah Mail was stopped, at the outer signal of Nagpur Railway Station, one Ambadas and Deorao, and certain others, were prosecuted before the Additional Sessions Judge, Nagpur, in Sessions Case No. 8 of 1966.
In that trial, the prosecution had to prove certain recoveries made, on the basis of three memos, which have been marked, in the present Sessions Trial, as Exhibits 7, 8 and 14.
Those memos had been attested by two Panch witnesses, Pochanna and Abdul Gani.
Pochanna turned hostile and, therefore, the prosecution tried to establish the recoveries made, under these memos, by the other Panch witness.
Abdul Gani.
The first accused, in the present Sessions trial, gave evidence, on June 10, 1966, in Sessions Case No. 8 of 1966, that he is Abdul Gani and that he has attested the recovery memos.
The appellant, before us, was examined in that trial, on June 11, 1966, and he has stated that the witness, who has spoken to the recovery memos, was Abdul Gani and that he has attested the recovery memos; but, later on, the accused in the dacoity case, appear to have entertained a suspicion that the first accused, in these proceedings, who claim to be Abdul Gani and spoke to having attested the recovery memos, is not the real Abdul Gani, but Dilawar.
This suspicion was brought to the notice of the Sessions Judge, trying the dacoity case, on June 14, 1966.
The Sessions Judge, Sri Waikar, caused the present first accused, to be L10Sup.
CI/68 7 90 brought before him and further examined him, in Sessions Case No. 8 of 1966.
The witness appears to have stated that he was not Abdul Gani, but really Dilwar, and that he had come to the Court, on June 10, 1966, and given evidence, as Abdul Gani, on the compulsion and threat of the present appellant.
On the same day, i.e., June 14, 1966, Mr. Waikar issued a notice to the appellant, to show cause why a complain+ should not be laid against him, for offences under sections 195, 196, and 205, I.P.C. By the said notice, the appellant was directed to appear before the Court, on June 16, 1966.
The appellant appeared and pleaded, on June 16, 1966, that he had not committed any offence and that he bona fide believed that the present 1st accused was Abdul Gani, and that he had never compelled one Dilawar to appear before the Court and give evidence, as Abdul Gani The, appellant was further examined, in the dacoity case, on Juno 17, 1966, and he was also cross examined, by the accused, in the dacoity case, on June 22, 1966, the teamed Sessions Judge, Nagpur, ac quitted all the accused, in the dacoity case.
In the said judgment, the learned Sessions Judge has stated that the present accused No. 1, intentionally gave false evidence, and the appellant intentionally fabricated false evidence with the intent to procure conviction of the accused, in the dacoity case, and that it was highly expedient, in the interest of justice and in the interest of eradication of the evil of perjury and the fabrication of false evidence, that both of them should be prosecuted.
Thereupon, the learned Sessions Judge filed the complaint, against the appellant and Dilawar, on July 8, 19669 in the, Court of the Joint Magistrate, First Class, IV Court, Nagpur.
The Joint Magistrate, by his order dated January 27, 1967, held that a prima facie case, against both the accused, under sections 195 and 196 read with section 34, I.P.C., has been made out; and, accordingly, after framing charges, he committed them to the Sessions Court, to face trial.
The learned Sessions Judge, Nagpur, by his judgment, dated March 31, 1967, has found each of the accused, guilty under section 195 and section 196 read with section 34, I.P.C., and sentenced them, as mentioned earlier.
In view of the, fact that special leave has been limited to the question, as to, whether the, High Court was justified, in dismissing the appeal, summarily, and, as we are satisfied, after hearing arguments, on behalf of the appellant, and the State, that the appeal will have to be remanded, for fresh consideration, by the High Court, we do not propose to deal with the matter very elaborately.
We will only advert to some of the material circumstances, that have been placed, before us, by the learned counsel, 91 for the appellant, to hold that this was certainly not a case in which the, High Court was justified in dismissing the appeal, summarily.
On behalf of the appellant, learned counsel, Dr. Barlingay.
raised two contentions: (i) that the learned Sessions Judge, in convicting the appellant, has relied, mainly, on the evidence, given by Dilawar, on June 14, 1966, in Sessions Trial No. 8 of 1966, and on the statements, made by Dilawar, as first accused, when he was examined, under section 342, Cr.P.C., in the present Sessions Trial; and (ii) that the provisions of section 479A, Cr.
P.C., have not been complied with, when Mr. Waikar filed the complaint, as against the appellant, on July 8, 1966.
Mr. H. R. Khanna, learned counsel, appearing for the State of Maharashtra, on the other hand, submitted that the learned Sessions Judge has considered the question of non compliance with the provisions of section 479A, Cr.
P.C., and he has rejected the appellant 's contention, in that regard.
Counsel also pointed out that, apart from the evidence of Dilawar, in Sessions Case No. 8 of 1966, and his answers, given as co accused, in the present Sessions Case, there is, on record, other evidence, which have also been taken into account, by the learned Sessions Judge, for convicting the appellant.
When the High Court dismissed the appeal, though summarily, it must be presumed that the High Court has agreed with the views, expressed by the learned Sessions Judge, in the present judgment.
Therefore, we understood counsel to urge that the High Court was perfectly justified, in dismissing the appeal, summarily.
There is no controversy, that the appellant, who has been convicted, on trial, by the Sessions Judge, had a right of appeal, to the High Court, under section 410, Cr P.C. The appellant was also entitled, under section 418 Cr.
P.C., to agitate, in his appeal, before the High Court, findings of fact, recorded against him, as also questions of law, available to him.
No doubt, under section 421 Cr.
P.C., the Appellate Court may dismiss an appeal, summarily, if, on a perusal of the petition of appeal, and a copy of the judg ment appealed from, it considers that there is no sufficient ground for interference.
This section, has come up for consideration, before this Court, in Mushtak Hussein vs The State of Bombay(1).
This Court has held, therein, that in a case, which, prima facie, raises no arguable issue, a summary dismissal of the appeal, may be justified, but, in arguable cases, a summary rejection order must give some indication of the views of the High Court, on the point,, raised.
Again, in a case, where the High Court summarily dismissed an appeal, in one word 'dismissed ', this Court, in Shreekantiah Ramayya Munipalli V. The State of Bombay(1) (1) 19.
(2) ; 92 again reiterated the views expressed in the earlier decision, referred to above, and stated that summary rejection of appeals, which raise issues of substance and importance, was not justified.
After adverting to the two decisions, noted above, this Court, again in Chittaranjan Das vs State of West, Bengal(1), laid down that there ,can be no doubt, whatever, that in dealing with criminal appeals, brought before them, the High Courts should not summarily reject them, if they raise arguable and substantial points.
Bearing these principles in view, the question naturally arises as to whether the appeal filed, by the appellant, before the High Court of Bombay, raised any arguable point, or whether the questioned raised were substantial and important.
In support of the first contention, Dr. Barlingay drew our attention to the discussion, contained in the judgment of the learned Sessions Judge, wherein he has placed strong reliance, upon the evidence, given by Dilawar, in Sessions Case No. 8 of 1966.
He has also.
drawn our attention, to the reliance, placed by the learned Sessions Judge, upon the answers given by Dilawar, as co accused, when he was examined, under section 342 Cr.
P.C. The evidence given by Dilawar, in the dacoity case, counsel points out, is inadmissible, in these proceedings.
The answers giver.
by him, as co accused, when examined, under section 342 Cr.
P.C., cannot be taken into account, as against the appellant, whatever the position may be, so far as Dilawar himself, is concerned.
There is no other evidence, counsel points out, on record, which has been taken into account, by the learned Sessions Judge.
In any ;event, counsel urged, after eliminating the evidence, given by Dilawar in the dacoity case, and the answers given by him, in this trial, the High Court had to consider whether there was any other evidence, on record, which would justify the Sessions Court finding the appellant guilty.
By the dismissal of the appeal, sum marily, counsel points out, the High Court has omitted to consider the serious illegality, contained in the judgment of the Sessions Judge, in relying upon the evidence and statement of Dilawar.
The contention of the learned counsel, that a gross illegality has been committed, by the learned Sessions Judge in relying upon the evidence, given by Dilawar, in the dacoity case, and using the answers given by him, as a accused, against the appellant, in our opinion, is well founded.
In paragraph 5 of its judgment, the Session 's Court has referred to the fact that Dilawar, accused No. 1, admits all the facts alleged, by the prosecution, and that he has explained that he gave evidence as Abdul Gani at the instance of the appellant.
In considering, again, the question as to whether the appellant knew accused No. 1 as Dilawar or Abdul Gani, the learned Sessions Judge, in (1) ; 93 paragraph 20, refers to the statement of Dilawar, wherein he.
refers to the circumstances, under which the appellant compelled him to come to, the Court and pose himself as Abdul Gani.
The learned Sessions Judge also refers, in paragraph 21 of his judgment, that Dilawar has made a very clean breast of the whole matter, when he, was examined by Mr. Waikar, on June 14, 1966, in the dacoity case.
The learned Sessions Judge also refers to the fact that Dilawar has given a consistent version throughout, inculpating the appellant, both in his evidence in Sessions Case No,. 8 of 1966, as well as in his statement given, in the present Sessions Trial.
We are not referring to the various other points, adverted to, by the learned Sessions Judge.
We have adverted to the above circumstances, only for the purpose of holding that the learned Sessions Judge, in coming to the conclusion that the appellant is guilty, has placed considerable reliance on the evidence of Dilawar, given in the dacoity case and to his statements, made: under section 342 Cr.
P.C., as co accused, in the present trial.
The legal position is quite clear, viz., that the evidence,, given by Dilawar, in the dacoity case, cannot be used as evidence against the appellant, who, had no opportunity to cross examining Dilawar, in the said case; and the statements of Dilawar, as co accused, made under section 342 Cr.
P.C., in the present trial, cannot be used against the appellant.
We are not certainly inclined to accept the contention of the learned counsel, for the State, that these very serious illegalities, committed by the learned Sessions Judge, must be considered to have been, approved, by the learned Judges of the High Court, when they dismissed the appeal, summarily.
In fact, we are inclined to think, that, by dismissing the appeal summarily, the learned Judges of the High Court have omitted to note these serious illegalities, contained in the judgment of the learned Sessions Judge.
As to whether there is other evidence, on record, which would justify the conclusion that the appellant has been rightly convicted, is not a, matter on which it is necessary for us to embark upon, in this,, appeal.
That is essentially for the High Court, as a Court of appeal, to investigate, and come to a conclusion, one way or the other.
The second contention, urged by the learned counsel, for the appellant, is also, in our opinion, a very substantial one.
According to the learned counsel, after the judgment was delivered, in the dacoity case, on June 22, 1966, and before the complaint was filed, by Mr. Waikar, on July 8, 1966, against the appellant, the appellant was not given an opportunity of being heard, as required under section 479A, Cr.
This contention has been raised,, even before the Committing Magistrate, as a perusal of the order of that Magistrate, will show.
This objection, was again taken.
before the.
learned Sessions Judge.
The learned Sessions Judge 94 has taken the view that the show cause notice, issued.
by Mr. Waikar, to the appellant, on June 14, 1966, is a sufficient compliance with the provisions of that section.
The learned Sessions Judge is also of the view that, under section 479A, Cr.
P.C., it does not matter whether a notice is given before the finding is recorded in the judgment, or whether the notice is given, after the findings are recorded in the judgment.
The question, as to whether the appellant has been given an opportunity, of being heard, under section 479A, is again, not only in our opinion, an arguable point, but also a substantial and important one.
The discussion, contained above, will clearly show that the appeal, filed by the appellant, before the High Court of Bombay was an arguable one, and it also raised substantial and important questions, for consideration at the hands of the High Court.
We are therefore satisfied that the High Court was not justified, in dismissing the appeal, filed by the appellant, summarily.
In view of this conclusion, the order of the High Court, dated April 27, 1967, dismissing Crl.
Appeal No. 74 of 1967, is set aside, and the said appeal is remanded to the High Court, for fresh disposal, in the light of the observations, contained in this judgment.
This appeal is allowed, accordingly.
V.P.S. Appeal allowed and remanded.
| The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
The positions of an agent, a servant and independent contractor are distinguished as under: An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not 9, servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant.
Held, that the position of the appellants in the light of the principles stated above and the terms of the Agency Agreement was that of the agents of the Dewan Bahadur Ram Gopal Mills Ltd., and they carried on the general management of the business of the company subject to the control and supervision of the Directors.
394 The control and supervision of the Directors was, however, a general control and supervision and within the limits of their authority the appellants as the agents of the company had perfect discretion as to how that work of general management was to be clone both in regard to the method and the manner of such work and therefore the circumstances of the case together with the of power of sub delegation reserved under the Articles of Association established beyond doubt that the appellants were the agents of the company and not merely the servants of the company remu nerated by wages or salary.
Held further, that various factors along with the fixity of tenure, the nature of remuneration and the assignability of their rights were sufficient to prove that the activities of the appellants as the agents of the company constituted a business and the remuneration which the appellants received from the company under the terms of the Agency Agreement was income, profits or gains from business and the appellants were rightly assessed under the provisions of Hyderabad Excess Profits Tax Regulation.
|
l Appeal No. 897 of 1963.
Appeal from the judgment and order dated October 4, 1962 of the Kerala High Court, Ernakulam, in Writ Appeal No. 17 of 1962.
188 A.V. Viswanatha Sastri, Arun B. Saharaya and Sardar Bahadur, for the appellant.
V.P. Gopalan Nambiar, Advocate General for the State Kerala and V.A. Seyid Muhammad, for the respondent.
The Judgment of the Court was delivered by Bachswat, J.
The short question in this appeal is whether the proposed acquisition of the electrical supply undertaking of the appellant by the State of Kerala in pursuance of the notice exhibit G, dated November 20, 1959 is authorised by section 6 of the .
The appellant is the holder of a license for the supply of electrical energy in Ernakulam and other places in Cochin.
The license was originally granted to the managing agents of the appellant under the Cochin Electricity Regulation III of 1902 then in force in Cochin and subsequently assigned to the appellant with the permission of the Cochin Government.
On the merger of Travancore Cochin with the Union of India, the was made applicable by the Part B States Laws Act, 1951 (Act III of 1951) to the Travancore Cochin area, and the Cochin Electricity Regulation stood repealed.
The (Act 54 of 1948) was also made applicable to the Travancore Cochin area by the Part B States Laws Act, 1951.
On March 31, 1957 the Kerala Electricity Board was constituted, and by s.71 of Act 54 of 1948, any right and option to purchase the undertaking of the licensee under the was transferred to and vested in the Board.
Now, the right or option to purchase the undertaking of a licensee under s.7(1) of the then in force was exercisable "on the expiration of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years as shall be specified in this behalf in the license.
" Sub section (4) of s.7 provided: "Not less than two years ' notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government, as the case may be." Clause 15(a) of the license held by the appellant provides: "The option of purchase given by Section 7, sub section (i) of the Regulation shall first be exercisable on the expiration of 25 years from the commencement of this license and on the expiration of every subsequent period of ten years during the continuance of this license." Section 7(1) of the corresponds to section 7(i) of the Regulation, that is to say, of the Cochin Electricity.
Regulation.
The date of the commencement of the license is December 3, 1935.
The period of 25 years mentioned in el.
15(a) of the license expired on December 2, 1930.
The last date for giving the two years notice of the election to purchase on, the try of ' December 2, 1960 required under section 7(4) of the Indian e electricity Act, 1910 expired on December 2. 1958.
On February 11, 1959, the State Electricity Board served on the appellant a notice, exhibit B, of its election to purchase the undertaking of, the appellant on the expiry of December 2, 1960, but this notice was not being in accordance with section 7,(4) was of no legal effect.
By the Indian Electricity (Amendment) Act, 1959 (Act 32 1959), s.6 now in force was substituted for the old s.7 of the , with effect from September 5, 1959.
Section 6 of the now in force reads: "6.
(1) Where a license has been granted to any person not being a local authority, the State Electricity Board shall, (a) in 'the case of a license granted ' before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiration of each such period as is specified in the license; and (b) in the case of a. license granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the license; have the option of purchasing the undertaking and such opt:on shall be exercised by the State Electricity Board serving upon the license a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub section.
(2) Where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking, the State Government shall have the like option to be exercised in the like manner of purchasing the undertaking.
(3)Where neither the State Electricity Board nor the Government elects to purchase the undertaking, any authority constituted for an area within which the area of supply is included shall have the like option to be exercised in the like manner of purchasing the undertaking.
(4) If the State Electricity Board intends to exercise the option of purchasing the undertaking under this it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in subsection (1) and if no such intimation as aforesaid is receiv 190 ed by the State Government the State Electricity Board shall be deemed to have.
elected not to purchase the undertaking.
(5) If the State GoVernment intends to exercise the option of purchasing the undertaking under this section.
shall send an intimation in writing of such intention to the local authority, if any, referred to in sub section (3) at least fifteen months before the expiry of the relevant period referred to in sub section (1) and if no such intimation as aforesaid is received by the local authority.
the State Government shall be deemed to have elected not to purchase the undertaking.
(6) Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this sect:on, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub section (1) pending the determination and payment of the purchase price.
(7) Where an undertaking is purchased under this section, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of sub section (4) of section 7A." On October 24, 1959, the State Electricity Board served upon the appellant a notice exhibit D, of its election to purchase the undertaking on the expiry of December 2, 1960.
On October 29, 1959, the State Electricity Board served upon the appellant another notice, exhibit E, of its election.
On November 20, 1959, the State Government served upon the appellant a notice, exhibit G, of its election to purchase the undertaking on the expiry of December 2. 1960.
On November 14, 1960, the appellant filed a writ petition in the High Court of Kerala impleading the State of Kerala and the Kerala State Electricity Board and asking for the issue of appropriate writs and orders restraining them from taking any action pursuant to the notices.
B,D,E and G.
On December 20.
1961, a learned single Judge of the High Court passed the following order : "In view of the representation made before me by both the learned Advocate General appearing for the State, the I st respondent, and Mr. Krishnaswami lIyengar, learned counsel appearing for the Kerala State Electricity Board.
the second respondent.
that for the purpose of this writ petition.
the notices issued by the Kerala State Electricity Board, Exs.
B. D and E can be ignored, it follows that neither the 1st respondent nor the 2nd respondent has any jurisdiction or power to take any action on the basis Exs.
B. D or E.
In view of the fact that I am uphold 191 ing the action of the State Government, who had issued the notice exhibit G, it follows that the 1st respondent alone is entitled to take further action under the Act.
in pursuance of the notice, exhibit G, issued and sent along with the covering letter, exhibit F on 20 1 1 1959.
It follows, subject to what is stated about Exs.
B, D and E, that the writ petition has to be dismissed.
There will be no order as to costs.
" The effect of this order was that the State Electricity Board waived and abandoned all its rights of purchase of the undertaking under the notices, Exs.
B, D and E, and neither the Kerala State Electricity Board nor the State of Kerala had any jurisdiction or power to take any action on the basis of those notices, and save as aforesaid, the writ petition was dismissed, and it was held that State Government was entitled to take further action under its notice, exhibit G. Aggrieved by this order, the appellant filed an peal in the Kerala High Court impleading the State Government only as the party respondent.
The State Electricity Board did not file any appeal from the order of the learned single Judge.
By its judgment dated October 4, 1962, a Division Bench of the High Court dismissed the appeal.
In paragraph 15 of its judgment, Bench observed: "In its petition the appellant asked for reliefs both against the State Government and the State Electricity Board.
However, in the course of the hearing of the petition, the Board gave up its claims under Exts.
B. D and E, and only the claim of the State Government under Ext.
G was canvassed.
The petition was, in effect, allowed: against the Board.
The Baord has not appealed and is not a party to the present appeal; and its notices may therefore be ignored except to the extent that they may affect the rights of the State Government.
" The appellant now appeals to this Court under a certificate granted by the High Court under articles 133(1)(a) and 133(1)(c) of the Constitution.
On half of the appellant, Mr. Vishwanath Sastry contended that (1) as the two years ' notice in writing of.
the election to purchase the undertaking on the expiry of December, 2, 1960 was not served on the appellant as required by the old section 7(4) of the . 1910.
the appellant acquired a vested right to hold the license until the expiry of a further period of ten years.that is to say, until December, 2, 1970.
and this vested right was not taken away either expressly or by necessary implication by the new s.6 of the introduced by the amending Act 32 of 1958; (2) the expression "on the expiration of each such period as is specified in the license" in the new s.6(1)(a) means a period which has not expired and on the expiry of which the option may be legally exercised.
and since in the absence of the two years ' notice required under the old s.7(4), the option of purchase on the expiry of December 2, 1960 could not be legally 192 exercised, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960 and the first option exercisable under the new s.6(1) would be on the expiry of December 2, 1970; (3) sub sections (4) and (5) of the new s.6 show that the period on the expiry of which the option under sub s(1)of s.6 is exercisable, is a period which would expire at least 18 months after the coming into force of the new s.6, that is to say, after September 5, 1959, and since the period expiring on December 2, 1960 is not such a period, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960; and (4) in any event, the State Electricity Board having duly elected to purchase the undertaking on the expiry of December 2, 1960, the State Government acquired no option of purchase under sub s(2) of s.7 of the .
On behalf of the respondent.
Mr. V.P. Gopalan Nambiar, the Advocate General of Kerala, contended (1) that the absence of two years ' notice under the old s.7(4) of the did not confer upon the appellant a vested right to hold the license until the expiry of December 2, 1970, and the immunity from compulsory purchase under the old s.7 arising from the non service of the requisite two years ' notice could be, and, in fact, was taken away by the new s.6, which required only one year 's notice of intention to purchase the undertaking; (2) assuming that the appellant acquired under the old s.7 a vested right to hold .the license until December 2, 1970, such vested right was taken away by the new s.6, which expressly applies to licenses granted before its commencement, and the period of 25 years is a period specified in as the license on the expiry of which the option of purchase was legally exercisable; (3) sub sections (4) and (5) of the new s.6 did not cut down the plain meaning of sub s(1) of the section and the option on the expiry of the period of 25 years was vested 'under sub s(1) of s.6, though this period did not expire 18 months after September 5. 1959; and (4) as the State Electricity Board did not send to the State Government any intimation in 'writing 'of ' its intention to exercise the option on the expiry of December 2, 1960 as required by sub s(4) of s.6, the Board must be deemed to have elected not to exercise this option, and consequently by sub S(2) of s.6.
the State Government is vested with the option We think that the fourth contention of Mr. Viswanatha Sastry is sound, and should be accepted.
Assuming, without deciding, that the option of purchasing the undertaking on the expiry of the period of 25 years specified in the license was available under sub s(1) of s.6, such option vested in the State Electricity Board, and as the Board duly elected to purchase the undertaking, the State Government acquired no right or option of purchasing the undertaking under s.6.
On this ground alone, the appeal should be allowed, and in this view of the matter, we do not think it necessary to express any opinion on the other contentions urged 193 before us.
As far as the State Electricity Board is concerned,.
it has abandoned and waived its option of purchase on the expiry of 25 years.
Sub section (1) of s.6 expressly vests in the State Electricity Board the option of purchase on the expiry of the relevant period specified in the license.
But the State Government claims that under sub s(2) of s.6 it is now vested with the option.
Now, under sub s(2) of s.6, the State Government would be vested with the option only "where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking.
" It is common case that the State Electricity Board was duly constituted.
But the State Government claims that the State Electricity Board did not elect to purchase the undertaking.
For this purpose, the State Government relies upon the deeming provisions of sub s(4) of s.6, and contends that as the Board did not send to the State Government any intimation in writing of its intention to exercise the option as required by the sub section, the Board must be deemed to have elected not to purchase the undertaking.
Now, the effect of sub s(4) read with sub s(2) of s.6 is that on failure of the Board to give the notice prescribed by sub s(4), the option vested in the Board under sub s(1) of s.6 was liable to be divested.
Sub section (4) of s.6 imposed upon the Board the duty of giving after the coming into force of s.6 a notice in writing of its intention to exercise the option at least 18 months before the expiry of the relevant period.
Section 6 came into force on September 5, 1959, and the relevant period expired on December 3. 1960.
In the circumstances, the giving of the requisite notice of 18 months in respect of the option of purchase on the expiry of December 2, 1960, was impossible from the very commencement of s.6.
The performance of this impossible duty must be excused in accordance with the maxim, lex non cogitate ad impossible (the law does not compel the doing of impossibilities), and sub s(4) of s.6 must be construed as not being applicable to a case where compliance with it is impossible.
We must therefore, hold that the State Electricity Board was not required to give the notice under sub s(4) of s.6 in respect of its option of purchase on the expiry of 25 years.
It must follow that the Board cannot be deemed to have elected not to purchase the undertaking under sub s(4) of s.6.
By the notice served upon the appellant, the Board duly elected to purchase the undertaking on the expiry of 25 years.
Consequently, the State Government never became vested with the option of purchasing the undertaking under sub s(2) of s.6.
The State Government must, therefore, be restrained from taking further action under its notice, exhibit G, dated November 20, 1959.
In the result, the appeal is allowed, and the respondent State of Kerala is restrained from taking any action under the notice, exhibit G, dated November 20, 1959.
The respondent shall pay to the appellant the costs in this Court.
We direct the parties to pay and bear their own costs in the Courts below.
Appeal allowed.
| The appellant held a licence for the supply of electrical energy in Kerala which was granted for a period of 25 years, and was subject to continuation for ten year terms in the absence of a notice by the local authority or State Government of an election to purchase the undertaking.
The first 25 year term of the licence expired on December 2, 1960, and prior to that, on October 24 and again on October 29, 1959, the State Electricity Board gave notice to the appellant under s.6(1) of the , to purchase the under taking on the expiry of the licence.
On November 20, 1959,the State Government also served notice on the appellant of its election to purchase the undertaking on December 2, 1960.
In November 1960, the appellant filed a writ petition in the High Court seeking orders restraining the State Electricity Board and the respondent State Government from taking any action pursuant to the notices given by them.
In the course of the hearing the petition the State Electricity Board waived and abandoned all its rights of purchase of the Undertaking.
The writ petition thereafter dismissed and it was held that the State Government was entitled to take further steps under its notice dated November 20, 1959.
An appeal against this decision to a Division Bench of the High Court was dismissed.
In the appeal to the Supreme Court, the appellant contended,inter alia, that the State Electricity Board having duly elected under 6(1) to purchase the undertaking on the expiry.
of the licence, the State Government acquired no option of purchase under section 6(2) the 1910 Act.
HELD: Any option of purchasing the undertaking on the expiry of the period of 25 years specified in the licence under section 6(1) vested in the State Electricity Board, and as the Board duly elected to purchase the undertaking by the notice served on the appellants, the State Government acquired no right or option of purchasing the undertaking under section 6.
[193 G H] As section 6 came into force less than eighteen months before December 2, 1960, it was impossible for the Board to have given notice to the State Government as required by section 6(4) of its intention to exercise the option.
On the principle of lex non cogit ad impossibil must therefore ' be construed as not being applicable in the that the Board could not be deemed circumstances of the case, so elected not to purchase the undertaking under section 6(4).[193 E F]
|
iminal Appeal No. 80 of 1953.
Appeal by Special Leave granted by the Supreme Court by its order dated the 9th February, 1953, from the Judgment and Order dated the 23rd September, 1952, of the High Court of Judicature at Bombay in Criminal Appeal No. 828 of 1952 arising out of the Judgment and Order dated the 27th March, 1952, of the Court of Stipendiary Magistrate, Ahmedabad, in Summary Case No. 3029 of 1954.
Rajni Patel and M. section K. Sastri for the appellant.
M. C. Setalvad, Attorney General of India, and (Porus A. Mehta and P. G.Gokhale, with him) for the respondent.
October 29.
The Judgment of the Court was delivered by BOSE, J.
This case is unimportant in itself, for a small fine of Rs. 50 (Rs. 25 on each of two counts) has been imposed for a couple of breaches under section 52 (f) of the Bombay Shops and Establishments Act, 1948, read with rule 18(5) and (6) of the Rules framed under 888 the Act.
But the question involved is of general importance in the State of Bombay and affects a large number of similar establishments, so in order to obtain a clarification of the law, this has been selected as a test case.
The appellant is the owner of a small establishbment called the Honesty Engineering Works situate in Ahmedabad in the State of Bombay.
He employs three workers.
He does business in a very small way by going to certain local mills, collecting orders from them for spare parts, manufacturing the parts so ordered in his workshop, delivering them to the mills when ready and collecting the money therefor.
No buying or selling is done on the premises.
The question is whether a concern of this nature is a "shop" within the meaning of section 2(27) of the Act.
The learned trying Magistrate held that it was not and so acquitted.
The High Court, on an appeal against the acquittal, held it was and convicted.
It is admitted that the appellant maintains no "leave registers" and gives his workers no "leave books" and it is admitted that the Government Inspector of Establishments discovered this on 12th January, 1951, when he inspected the appellant 's works.
If his establishment is a "shop" within the meaning of section 2(27) he is guilty under the Act; if it is not, he is not guilty.
"Shop" is defined as follows in section 2(27): " 'Shop ' means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store room, godown, warehouse or work place, whether in the same premises or otherwise, mainly used in connection with such trade or business but does not include a factory, a commercial establishment, 'residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment".
As we have said, it is admitted that no goods are sold on the premises and it is also admitted that no services are rendered to customers there, for the manufacture of spare parts for sale elsewhere cannot be regarded as "services rendered.
" 889 The learned Attorney General contends that the definition should be read as follows: Shop includes a work place mainly used in connection with such trade or business. " He says that the word "such" in the phrase "such trade or business" relates back to the opening words of the definition which read " any premises where goods are sold.
" He argues that the emphasis is on the words "goods are sold" and not on the word "premises" because a trade or business relates to the buying and selling of goods and is not confined to the premises where that occurs.
He admits that the main portion of the definition which relates to "premises where goods are sold" cannot exclude the "Premises" element and that unless there are premises on which goods are sold, the main portion of the definition cannot apply, e.g., in the case of a street hawker or of a man who totes his goods from house to house and sells them at the door.
But he contends that the main definition is extended by including in it matter which would not be there without the words of extension and in that portion the em phasis ceases to be on the "premises" and shifts to the nature of the business; provided there is a business of selling, any work place wherever situate "mainly used in connection with it" will fall within the definition.
The other side relies on the ejusdem generis rule.
The argument runs that the trade or business contemplated by the main portion of the definition is not any business of selling wherever and however conducted but only those trades where the selling is conducted on defined premises.
The learned counsel contends that the very idea of a shop in that connotation betokens a room or a place or a building where goods are sold.
The rest of the definition merely links on the main definition ancillary places, such as store rooms, godowns, work places, etc., which are mainly used in connection with the "business", and "business" means the kind of business defined in the earlier part of the definition, that is to say, not business in general, nor even the business of selling in general, but that portion of the business Of Selling which is confined to selling on,some defined premises.
To illustrate this graphically, the 890 business of selling in general may be regarded as a big circle and the business of selling on defined premises as a small portion which is carved out of the larger whole.
The second part of the definition is linked on to the carved out area and not to the circle as a whole.
The word "such" confines what follows to what has gone before and what has gone before is not the trade of selling in general but only that part of the trade of selling which is carried on defined premises.
Counsel argues that there is no justification for ignoring the limitation which the Legislature has placed on the main portion of the definition and holding that "such" relates to a much wider classification of "selling" which the main portion of the definition not only does not envisage but has deliberately excluded.
We think that as a matter of plain construction this is logical and right.
The learned Attorney General went on to contend that even if this is a possible view, his view is also tenable and therefore when we have two possible interpretations we must choose the one which best accords with the policy of the Act.
Taking us through the Act he pointed out that this is a piece of social legislation designed partly to prevent sweated labour and the undesirable employment of women and young children and partly to safeguard the health and provide for the safety of workmen and employees.
He con tended that this object would be partly frustrated if small establishments of this kind are placed outside the purview of the Act, for their number is very large and the persons employed in them are entitled to, and require, just as much protection as those more happily placed in larger concerns.
We have considered this carefully and are of the opinion that the fear is groundless because there is express provision in the Act for such contingencies.
Under section 5 the State Government can by mere notification in the Official Gazette extend the Act to any establishment or class of establishments or any person or class of persons to which or whom the Act or any of its provisions does not for the time being apply In our opinion, the Legislature did not intend to rope 891 in small establishments of this kind in the first place but reserved power to the State Government to do that when desirable by the very simple process of notification in the Official Gazette.
In reaching this conclusion we are influenced by the policy of the Central Legislature on an allied topic.
We do not intend to break the general rule that points to the undesirability of interpreting the provisions of one Act by those of another passed by a different Legislature, but as we have already decided the question of construction and interpretation and are now considering only the general policy of the State Legislature, we deem it right to view the matter in its larger aspect for the special reasons we shall now enumerate.
Now the Central Act, the Factories Act of 1948, was passed on the 23rd of September, 1948.
The Bombay Act, though entitled Act LXXIX of 1948, was not passed till the following year, namely, on 11th January, 1949.
The Bombay Legislature had the Central Act in mind when it passed its own legislation because section 2(27) says that a "shop" shall not include a "factory" and section 2(9) defines a " factory " as any premises which is a factory within the meaning of section 2 of the Central Act or which is deemed to be a factory under section 85 of that Act.
Under the Central Act (section 2(m) no establishment can be a factory unless it employs more than ten workmen or unless it is artificially converted into a " factory " within the meaning of this definition by a notification in the Official Gazette.
Had it not been for the fact that the appellant employs less than ten workmen, his concern would have been classed as a factory under the Central Act and would then have been excluded from the definition of "shop" in the Bombay Act, for the appellant carries on a manufacturing process in his workshop with the aid of power: that is not disputed.
The Central Legislature undoubtedly had the intention of excluding small concerns like this from the purview ,of the Central Act except where Government decided otherwise, and as there is this reference to the Central Act.
on this very point in section.2(27) we think.
, in view of the way that section 2(27) is worded, that ,Was also the intention of the Bombay Legislature, 892 Therefore, even on the assumption of the learned Attorney General that two interpretations of section 2(27) are possible, we prefer the one which, in our opinion, better accords with the logical construction of the words used.
The learned High Court Judges were influenced by matters which we consider inconclusive.
The appellant applied for registration under the Bombay Act and in the statement made under section 7 he called his establishment a "workshop" and described the nature of his business as a " factory ".
The learned Judges considered that this imported an admission that his establishment was a " shop " because of the use of the word "shop" in "workshop".
This might have raised an inference of fact against the appellant had nothing else been known but when the facts are fully set out as above and admitted, the appellant 's opinion about the legal effect of those facts is of no consequence in construing the section.
No estopped arises.
The appellant explained that the matter seemed doubtful, so, to be on the safe side and avoid incurring penalties for non registration should it turn out that his concern was hit by the Act, he applied for registration.
It is to be observed that though he applied on 12th April, 1949, he was not registered till 4th May, 1950, and the certificate was not given to him till 8th January, 1951.
The present prosecution was launched on 4th April, 1951.
Government itself seems to have been in doubt.
However, that is neither here nor there.
What we think was wrong was placing of the burden of proof on the appellant, in a criminal case, because of a so called admission.
The learned High Court Judges also advert to the fact that though the appellant 's concern was registered as a "shop" he made no protest and did not have recourse to section 7(3) of the Act.
We do not think section 7(3) has any application.
The appeal is allowed.
The conviction and sentence are set aside and the judgment of the learned trying Magistrate acquitting the appellant is restored.
The fines, if paid, will be refunded.
| The appellant, the owner of a small establishment in Ahmedabad, employs three workers, does business in a very small way by going to certain local mills, collecting orders from them for spare parts, manufacturing the parts so ordered in his workshop, delivering them to the mills when ready and collecting the money therefor.
No buying or selling is done on the premises.
Hold, that a concern of this nature is not a shop within the meaning of section 2(27) of the Bombay Shops and Establishments Act, 1948,
|
l Appeal No. 4803 of 1984 From the Judgment and Order dated 7.8.84 of the Allahabad High Court in Civil Misc.
Application No. 10968 of 84 & S.A. No. 2182.
K.K. Venugopal, R N. Karanjawala & Mrs. Manik Karanjawala for the appellant.
R.Parasaran, Attorney General of India.
K section Cooper, Csril section Shroff ', section section Shroff and section A. Shroff for the respondents.
Ashok Desai, Anil Diwan Pinaki Mishra and Praveen Kumar for respondent No. 1,.
Dr. Y. section Chitale, V.D. Mehta V. A. Bobde, S Swarup K.J. John for respondent No. 2.
Soli J. Sorabjee, Y. D. Mehta, S Swarup and K, J. John for respondents Nos.
Anil Dewan, R. Karanjawala, Mrs. Manik Karanjawala and Arun Jetly for the Intervenor.
Miss Bina Gupta for the Intervenor.
T section Krishnamurthi and Vineet Kumar for the Intervenor.
The Judgment of the Court was delivered by 862 VENKATARAMIAH, J.
This appeal by special leave is filed against the order dated August 7, 1984 passed by the High Court of Allahabad in Civil Misc.
Application No. 10968 of 1984 in Special Appeal No. 2 of 1982 on its file.
The dispute involved in this case relates to the validity of an extraordinary general meeting of the Swadeshi Polytex Ltd. (hereinafter referred to as 'the Polytex Company '), a company governed by the (hereinafter referred to as 'the Act ') held pursuant to a notice dated February 11, 1984 issued under section 169 of the Act by some of its members.
The controlling interest in the Swadeshi Cotton Mills Company Ltd. (hereinafter referred to as 'the Cotton Mills Company ') which is also governed by the Act was acquired by Mangturam Jaipuria and his family in 1946.
Sitaram Jaipuria is the adopted son of Mangturam Jaipuria.
After his adoption Mangturam Jaipuria got a natural son, Rajaram.
In or about the year 1964, Sitaram Jaipuria became the Chairman and Managing Director of the Cotton Mills Company.
In 1970, the Jaipuria family decided to promote another company and accordingly the Polytex Company was established.
In 1970, Rajaram became the Managing Director of the Cotton Mills Company and Sitaram continued as its Chairman.
Sitaram became the Chairman and Managing Director of the newly established Polytex Company in which the Cotton Mills Company had acquired 10 lakhs shares of Rs. 10 each.
From about 1975 76 on account of a very serious set back in its financial position the Cotton Mills Company could not meet the wage bill, the dues of the U.P. Electricity Board and several other monetary claims against it.
There were serious labour troubles in its factory and its work virtually became paralysed.
The total liability of the Cotton Mills Company was in the order of Rs. 2 34 crores in the year 1977.
On October 27, 1977, the Collector of Kanpur passed an order under section 128 A of the U.P. Land Revenue Act, 1901 (hereinafter referred to as 'the Land Revenue Act ' read with section 5 of the Uttar Pradesh Government Electrical Undertakings (Dues Recovery) Act, 1958 appointing a Receiver in respect of the Cotton Mills Company for a period of six months with various powers specified therein and in particular to seize I lakh of shares of the Polytex Company of the face value of Rs 10 lakhs held by the Cotton Mills Company and to pledge them in favour of the State Government of Uttar Pradesh against a loan for the purpose of meeting the dues payable to the employees of the Cotton Mills Company and he made a further order under section 149 of the Land Revenue Act read with section 5 of the U. P. Government Electrical Undertakings (Dues Recovery) Act, 1958 863 attaching the remaining 9 lakhs shares of the Polytex Company held by the Cotton Mills Company and empowering the receiver to seize them Both the order appointing the Receiver and the order attaching 9 lakhs shares were incorporated in the same document, the relevant part of which read thus: ORDER "Whereas electricity dues are payable by M/s Swadeshi Cotton Mills Co. Ltd., Kanpur, to the U.P. State Electricity Board and recovery certificates for the amount enumerated below have been received for realisation of the dues above mentioned from the said consumer: Recovery certificates dated 29.9.76, 31.12.76, 16 12.76, 29.12.76, 16.7.76, 17.9.76 and 3.10.77 1,06,22,423.17 Less amount paid 19,00,000.00 Balance 87,22,423.17 Add: Collection charges 10,62,242.31 TOTAL RECOVERABLE 97,84,665.48 And whereas, for the expeditious recovery of the dues outstanding as above, without affecting adversely the running of the mills, it is just and proper that a Receiver be appointed over the mills at Kanpur, belonging to M/s Swadeshi Cotton Mills Co. Ltd. Now, therefore, I, K.K. Baksi, Collector, Kanpur, in exercise of the power under sub section (1) of section 182 A of U.P. Land Revenue Act of 1901 read with section 5 of U.P. Government Electrical Undertakings (Dues Recovery) Act, 1958, do hereby appoint Shri L.N. Batra, A.D.M. Kanpur as Receiver of the said mills belonging to M/s Swadeshi Cotton Mills Co. Ltd., for a period of six months with immediate effect and direct that the Receiver shall exercise the following powers: 1.
The Receiver shall exercise supervision over the sales of products of the said mills and the disbursement of receipts from day to day.
That the receiver shall ensure that the receipts of the said mills are, after the payment of labour dues and 864 other essentials for the running of the Mill, appropriated towards recoverable arrears against M/s Swadeshi Cotton Mills Co. Ltd. as Land Revenue.
That the receiver shall, if necessary, for the running of the said mills borrow money from State Government or other financial institutions and other appropriate arrangement in this behalf for the repayment of the amount and the recovery thereof as arrears of land revenue.
That the Receiver shall seize the shares held by M/s. Swadeshi Cotton Mills Co. Ltd., of M/s. Swadeshi Polytex Ltd.
Of the face value of Rs. 10 lacs (Ten lacs) and shall be competent to pledge, the same by way of security for the borrowings referred to above.
That the Receiver shall be competent also to make payment to the Punjab National Bank against the guarantee dated 16.12.1976 and relieve the State Government of its liabilities thereunder correspondingly.
That in the event of Guarantee furnished by the State Government in favour of Punjab National Bank dated.
16.12.76.
being invoked, the Receiver shall be competent to make the payment to the State Government against the liability accruing therefrom 7.
That the Receiver shall have access to all books of accounts.
ledger, cash books, Stock books and all other documents kept or maintained by M/s Swadeshi Cotton Mills Co. Ltd. in course of business.
That the Receiver shall be competent for the reasons to be recorded also to put a restraint against any transaction being entered into by M/s. Swadeshi Cotton Mills Co. Ltd., involving the business and assets of the mills and which are not in the interest thereof or may be detrimental to the same in his opinion.
That the Receiver shall have all powers incidental or ancillary for Carrying out of the functions and the powers referred to above.
That subject to the above and to any directions that I may, hereafter issue from time to time,the 865 present management of the said mills shall continue to run A the mill and business.
In view of the urgency the order is being made expert with the direction, however, that a notice to show cause shall issue to M/s. Swadeshi Cotton Mills Company Ltd. for November 15, 1977.
And further, in exercise of the power under section 149 of U.P. Land Revenue Act 1901 read with section 5 of U.P. Government Electrical Undertakings (Dues Recovery) Act of 1958, I hereby direct attachment and sale of shares held by M/s. Swadeshi Cotton Mills Co. Ltd. in M/s. Swadeshi Polytex of the face value of Rs. 90 lacs (Ninety lacs) and hereby empower the Receiver to seize the same.
Sd/ K.K. Baksi Dated : Kanpur Collector, kanpur October 27, 1977.
" On the same date i.e. On October 27, 1977 the Receiver pledged 1 lakh of shares as per the order of the Collector in favour of the Government of Uttar Pradesh against a loan of Rs. 13.5 Lakhs.
i he Receiver also took possession of 9 Lakhs shares as per the order made under section 149 of the Land Revenue Act.
Subsequently the Receiver pledged on November 9, 1977, 1 lakh shares out of the above 9 lakhs shares in favour of the Government of Utter Pradesh against a loan of Rs. 15 lakhs and on January 4, 1977, 1.5 lakhs shares against a further loan Thus out of the 10 lakhs shares of the Polytex Company of the face value of Rs. 1 crore held by the Cotton Mills Company, 3.5 Lakhs shares stood pledged in favour of the Government of Uttar Pradesh and the remaining 6.5 lakhs shares of the face value of Rs. 65 lakhs remained with the Receiver.
The events which have led to this appeal are, however, these: In the year 1976, the Cotton Mills Company filed a petition under sections 397 and 398 of the Act against the Polytex Company alleging oppression and mismanagement of the Polytex Company by Sitaram Jaipuria and other directors of the Polytex Company in Company Petition No. 20 of 1976 on the file of the Allahabad High Court.
That petition was dismissed by the Company Judge of the High Court on April 19, 1982.
Against his decision an appeal was filed by the Cotton Mills Company in August, 1982 in Special Appeal No. 2 866 of 1982 before the Division Bench of the High Court.
That appeal is still pending.
On February 11, 1981, the Cotton Mills Company and four others, namely, Rajaram Jaipuria, Mahabir Prasad Dalmia, Siyaram Sharma and K.B. Agarwal who together held 10, 01, 950 shares of the value of Rs. 10 each sent a notice to the Polytex Company which was received by it on February 15, 1984 under section 169 of the Act requiring the Board of Directors of the Polytex Company to call an extraordinary general meeting of the Polytex Company to consider and, if thought fit, to pass with or without modification the following as ordinary resolutions: "1. "RESOLVED that the appointment of Shri Sitaram Jaipuria as Managing Director of Swadeshi Polytex Ltd., be and is hereby terminated prior to the expiry of his term, in exercise of the powers conferred by Article 110 of the Articles of Association of the Company.
" 2. "RESOLVED further that Shri Sitaram Jaipuria be and is hereby removed from the office of Director and consequently from the office of the Managing Director of the Swadeshi Polytex Ltd." 3. "RESOLVED further that resolution passed at the 13th Annual General Meeting of Swadeshi Polytex Ltd. in respect of item 7 "Special Business" of the Notice dated 31st January, 1983 of the said 13th Annual General Meeting for the remuneration of Shri Sitaram Jaipuria as Managing Director be and is hereby rescinded".
4. "RESOLVED that Shri Ashok Jaipuria be and is hereby removed from the office of Director of Swadeshi Polytex Ltd." 5. "RESOLVED that in the vacancy caused by the a removal of Shri Ashok Jaipuria, Shri Sitaram Singhania, be and is hereby appointed as a Director of Swadeshi Polytex Ltd. and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri Sitaram Singhania as a Director of the Company." 867 6. "RESOLVED that Shri B.M. Kaul be and is hereby removed from the office of Director of Swadeshi Polytex Limited.
" 7. "RESOLVED that in the vacancy caused by the removal of Shri B.M. Kaul, Dr. Rajaram Jaipuria be and is hereby appointed as a Director of Swadeshi Polytex Ltd. and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Dr. Rajaram Jaipuria as a Director of the Company.
" 8. "RESOLVED that Shri P.B. Menon be and is here removed from the office of Director of Swadeshi Polytex Ltd." 9. "RESOLVED that in the vacancy caused by the removal of Shri P.B. Menon, Shri R D. Thapar, be and is hereby appointed as a Director of Swadeshi Polytex Ltd., and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri D.R. Thapar as a Director of the Company." " The requisitionists of the meeting also asked the Polytex Company to treat the said notice as a special notice under section 284 (2) and (5) read with section 190 of the Act for appointment of Sitaram Singhania, Rajaram Jaipuria and R.D. Thapar in place of Ashok Jaipuria, B.M. Kaul (who was also the Chairman of the Cotton Mills Company) and P.B. Menon respectively as directors of the Polytex Company.
They enclosed an explanatory statement as required by section 173 of the Act to the notice containing reasons for moving the aforeaid resolutions.
On receipt of the notice, an emergent meeting of the Directors of the Polytex Company was held on February 23, 1984 to consider the above said notice issued under section 169 of the Act.
the following is the material part of the minutes of the said meeting: "REQUISITION NOTICE" The Board was informed that a notice had been received at the Registered Office of the Company on 15th February 1984 from Swadeshi Cotton Mills Co. Ltd. 868 (SCM) and four other shareholders requestioning an Extraordinary General Meeting of the Company under Section 169 of the .
The requisition notice received from SCM was read before the Board.
The Board considered the motives behind the requisition and took serious note of the false and baseless allegations made in the explanatory note enclosed to the notice of requisition.
The Secretary pointed out few technical defects in the requisition notice.
The draft notice and the explanatory statement was placed before the meeting.
The same was perused and discussed and the following resolutions were passed: "RESOLVED that an Extraordinary General Meeting of the Company, pursuant to the requisition received by the Company on 15th February, 1984 under Section 169 of the from Swadeshi Cotton Mills Co. Ltd. & others be held at the Registered Office of the Company on Wednesday, the 28th March 1984 at 10.30 A.M." "RESOLVED further that the Secretary be and is hereby authorised to issue notice for convening the aforesaid meeting, as per draft placed before the Board and initialed by the Chairman for the purposes of indentification and to take such other steps as may be required in this regard.
" The Board was of the view that the financial institutions should be informed of this development and the directors who wish to make their representation to the shareholders may be requested to do so.
The Secretory was directed to take necessary steps in this regard.
" The Board of Directors also prepared and circulated an explanatory statement pursuant to section 173 of the Act along with the notice issued to the shareholders calling the extraordinary general meeting to be held on March 28, 1984.
The requisitionists of the meeting filed an application before the Division Bench in special Appeal No. 2 of 1982 for appointing a Chairman of the meeting.
section Jagannathan who was a member of the Board of Directors as the nominee of I.F.C.I. was appointed as the chairman of the meeting by the Division Bench on March 23, 1984.
The meeting was, however, adjour.
869 ned as a shareholder had obtained an order of temporary injunction A restraining the holding of the meeting in a suit filed by him at the court of the Munsif,Alipore (West Bengal).
When the requistionists applied to the High Court of Allahabad to fix a fresh date of the meeting, the High Court declined to do so by its order dated May 22, 1984 because the temporary injunction order had been issued by a court not subordinate to it.
It appears that another shareholder applied for injunction in a suit filed in the Civil Judge 's court at Gwalior and a third shareholder moved the City Civil Court, Madras for a similar relief.
Then the requisitionists filed two special Leave Petitions before this Court against the order of the Allahabad High Court passed the following order on the said petitions which were numbered as Civil Appeals Nos.
2597 98 of 1984: "Special league granted.
The High Court of Allahabad shall make a fresh order directing the holding of the meeting of the Company and that meeting shall be held in accordance with the order of the High Court notwithstanding any order of injunction etc.
issued by any other court or authority in India or to be issued hereafter.
If any person has any grievance about the holding of the meeting he shall approach the High Court of Allahabad for appropriate directions.
If the requisitionists or the Company wish to held the meeting early they may approach the vacation Judge of the High Court of Allahabad who has all the powers of the Company Judge to make fresh orders.
The appeals are disposed of accordingly." Again on July 4, 1984 a further order was passed by this Court as follows: "Mr. Sorabjee and Mr. Mridul state that the extra ordinary general meeting may be called on any day to be fixed by the High Court in the second week of August, 1984.
They also state that the venue of the meeting shall be determined by the Chairman, Shri Jagannathan, appointed by the High Court.
No further orders are necessary on prayer b and c in the application dated 25th June, 19 i l made before the Allahabad High Court by the petitioner.
" Accordingly the meeting W3S fixed to be held on August 14, 1984.
Since there was a motion for the adjournment of the meeting 870 this Court was again approached by the parties by an application for a further direction which was disposed of on September 4, 1984.
In the meanwhile the appellant No. I Balkrishan Gupta had filed an application before the High Court of Allahabad in Special Appeal No. 2 of 1982 questioning the right of the requisitionists issue notice under section 169 of the Act to call the extraordinary general meeting.
His contention was that since a Receiver had been appointed by the Collector in respect of the shares held by the Cotton Mills Company and they had also been attached, the shares held by the Cotton Mills Company could not be taken into consideration for determining the required qualification to issue the notice under section 169 of the Act requisitioning the extraordinary general meeting and that if those shares were omitted from consideration then the shares held by the other requisitionists would not be sufficient to issue the said notice.
That application was dismissed by the High Court by its order dated August 7, 1984.
This appeal by special leave is filed against the said order of the High Court.
In this appeal this Court passed the following order on September 14, 1984: "All the learned counsel for the parties in this petition agree that the meeting which is now adjourned to 24.9.84 should be held on that day and the agenda of the meeting should be discussed and voted upon.
We make an order accordingly.
The result of the voting shall be reported to this Court by the Chairman within one week after it is ascertained The resolutions passed at the meeting shall not come into effect until further orders by this Court.
The matter may be listed in the third week of October, 1984.
" After the report submitted by the Chairman of the meeting was received by this Court, this Court passed a further order on October, 12, 1984 which reads as follows: "The report of the Chairman of the extraordinary general meeting which has been submitted to this Court in a sealed cover is opened and perused by the Court.
The report states that all the resolutions other than the resolution for adjournment have been lost.
The photostat copies of the report along with the enclosures may be made avail able to the parties at their expense.
List the matter on 29.10.1984 before this Bench.
" After the above order was passed, the Industrial Development Bank of India and the Industrial Finance Corporation of India WHO 871 were aggrieved by the result of the counting of votes given on the taking of poll at the meeting filed applications before this Court questioning the correctness of ' the report of the Chairman as regards the result of the meeting They contended that the Chairman had wrongly rejected the votes cast on their behalf and if these votes had been taken into consideration the resolutions would have been duly passed.
Some shareholders who were opposed of the removal of the sitting Directors also filed an application for being impleaded.
All these applications were allowed on November 19, 1984 and all parties agreed that the validity of the meeting and of its result reported to the court should be decided by this Court During the hearing a writ petition filed in the High Court of Bombay was also withdrawn to this Court for being heard along with these cases.
At the conclusion of the hearing of the above cases, the parties filed a compromise petition requesting the Court to make an order in terms thereof.
On the basis of the said compromise the Court passed an order on February 1, 1985, the material part of which reads thus: 1.
The Board of Directors of Swadeshi Polytex Ltd. (hereinafter referred to as 'SPL ') shall be re constituted pending the holding of the next Annual General Meeting of SPL as under: (a) Four nominees of Financial Institutions (including one to be selected and communicated by IDBI/ IFCI to SPL) including the representative of the U.P. State Industrial Development Corporation.
(b) Four nominees of Shri Sitaram Jaipuria (herein after referred to as 'SRJ ') including SRJ.
(c) Four nominees of Dr. Rajaram Jaipuria(herein after referred to as 'RRJ ' ') including RRJ.
All nominations under sub clauses (b) and (c) above shall be made by February 9, 1985.
Nominations under sub clause (a) (except the nominee of the U. P. State Industrial Corporation) shall be made within ten days of the date of this order.
The re constituted Board shall start functioning from February I 1, 1985.
The Secretary of SPL is directed to convene the re constituted Board meeting within 15 days of the order.
872 2(a) SRJ and RRJ shall designate one nominee each out of their respective nominees directors as Executive Directors.
The said Executive Directors shall jointly carry on the management of SPL and will have all the powers of the Managing Director and control of finance.
If any difference of opinion arises it shall be referred to the Board of Directors.
2 (b) All committees of the Board shall stand dissolved.
SRJ shall continue as the Managing Director of the Company and he voluntarily undertakes not to exercise any powers or functions of the Managing Director till his re election at the next Annual General Meeting of SPL.
SRJ will continue to be the Chairman of the Company and as such will preside over the Board meetings of SPL.
He voluntarily undertakes not to have any second or casting vote.
All minutes of the Board meetings shall be prepared by a nominee of the Financial Institutions and shall be signed by the Chairman, 6.
The next Annual General Meeting of the SPL shall be called and held on May 15, 1985.
Th, Chairman of the said Annual General Meeting shall be appointed by this Court.
All the Members of the re constituted Board appointed pursuant to clause 1 above (excluding nominees mentioned in clause 1 (a) ) including non rotational Directors i. e. SRJ and/or Shri F. R. Beshania shall resign and a new Board shall be elected at the said Annual General Meeting.
All shareholders of SPL (including SRJ and RRJ shall be entitled to propose names of any persons for appointment as Directors of SPL at the said Annual General Meeting.
Members of the re constituted Board may if they so desire seek re election at the said Annual General Meeting.
All pending matters before this Court including the Transfer Case No. I of 1985 and all Civil Misc.
Petitions in Civil Appeal No. 4803 of 1984 save and except Civil 873 Appeal No. 4803 of 1984 (Balkrishan Gupta & Ors.
vs Swadeshi Polytex Ltd & Ors.) shall stand withdrawn and all questions raised in all such withdrawn proceedings are expressly left open.
All allegations against the Financial Institutions, the Chairman of the IDBI and the Government in Transfer Case No. 1 of 1985 and Civil Misc.
Petitions Nos.
39900 of 1984 and 340 of 1985 shall stand withdrawn.
Votes cast by the Financial Institutions at the next Annual General Meeting of SPL to be held on May 15, 1985 shall not be questioned by the parties hereto an any ground.
The Civil Appeal No. 4803 of 1984 (Balkrishan Gupta & Ors.
vs Swadeshi Polytex Ltd. & Ors.) shall be disposed of on merits.
Notice of Board meeting to all members of the re constituted Board shall be sent by Registered Post Acknowledgment due.
It shall be open to the Board of Directors if it so chooses to review any delegation of powers.
There shall be no disciplinary action by way of victimization of any employee.
SRJ shall obtain the resignation of the present members of the Board of Directors (excluding the nominees of Financial Institutions).
Liberty is reserved to the parties to apply to this Court.
The undertakings that have to be filed in accordance with the above order shall be filed in this Court within one week from today.
The next Annual General Meeting which is ordered to be held on May 15.
1985 shall be held notwithstanding any order, direction or injunction of any other Court in India.
The parties are at liberty to apply to this Court for nominating a Chairman for the next Annual General Meeting.
Judgment in Civil Appeal No. 4803 of 1984 is reserved.
All the other cases referred to above stand disposed of 874 in terms of this order.
" The parties, however, requested the Court to decide the question relating to the right of the Cotton Mills Company to join as a requisitionist of a meeting under section 169 of the Act or to vote at a meeting of the company since it was likely that one or the other member might raise it as an issue at the next meeting.
We shall, therefore, proceed to decide the said question by this judgment.
The principal ground urged on behalf of the appellants is that the extraordinary general meeting had not been validly called since the Cotton Mills Company had ceased to enjoy the privileges of a member of the Polytex Company by reason of the appointment of a Receiver by the Collector of Kanpur in respect of the ten lakhs shares in the Polytex Company held by the Cotton Mills Company, the attachment of the 9 lakhs shares out of the said 10 lakhs shares and also the pledge of 3,50,000 shares out of the said 10 lakhs shares with the Government of Uttar Pradesh as security for the loans advanced by it.
The total paid up equity share capital of the Polytex Company is Rs. 3,90,00,000 (39,00,000 shares of Rs. 10 each) and it is not disputed that if the 10 lakhs shares held by the Cotton Mills Company are omitted from consideration, the remaining requisitionists would not have sufficient voting strength to issue a notice under section 169 of the Act.
The appellants contend that the Cotton Mills Company could not, therefore, join the other requisitionists in issuing the notice under section 169 of the Act calling upon the Polytex Company to call the extraordinary general meeting and without the support of the shares held by the Cotton Mills Company, the remaining requisitionists would not have been eligible to requisition the meeting.
The material part of section 169 r.f the Act reads: "Calling of extraordinary general meeting on requisition. 169.
(1) The Board of directors of a company shall, on the requisition of such member or members of the company as is specified in sub section (4), forthwith proceed duty to call an extraordinary general meeting of the company.
(2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company.
875 (3) The requisition may consist of several documents in like form, each signed by one or more requisitionits.
(4) The number of members entitled to requisition a meeting in regard to any matter shall be: (a) in the case of a company having a share capital.
such number of them as held at the date of the deposit of the requisition, not less than one tenth of such of the paid up capital of the company as at that date carries the right of voting in regard to that matter;. " We have already referred to the order of the Collector appointing the Receiver in respect of the shares in question, attaching them and ordering that 3,50,000 shares be pledged in favour of the Government of Uttar Pradesh.
Section 150 of the Act requires every company to keep a register of members containing the names, address and the occupation, if any, of each member and other particulars mentioned therein.
Section 153 of the Act provides that no notice of any trust, express, implied or constructive, shall be entered on the register of members.
Section 153B of the Act, however, provides that notwithstanding anything contained in section 153, where any shares in a company are held in trust by any person, he (the trustee) shall within such time and in such form as may be prescribed make a declaration to the public trustee appointed under section 153A of the Act in accordance with and subject to the rest of the provisions of section 153B of the Act.
It is clear from the relevant provisions of the Act which are referred to hereafter that a member can participate and exercise his vote at the meetings of a company in accordance with the Act and the articles of association of the company.
Section 41 of the Act defines the expression "member" of a company.
The subscribers of the memorandum of association of a company shall be deemed to have agreed to become members of the company and on its registration shall be entered as members in its register of members.
A subscriber of the memorandum is liable as the holder of shares which he has undertaken to subscribe for.
Any other person who agrees to become a member of a company and whose name is entered in its register of members shall be a member of the company.
In his case the two conditions namely that there is an agreement to become a member and that his name is entered in the register of 876 members of the company are cumulative.
Both the conditions have to be satisfied to enable him to exercise the rights of a member.
Subject to section 42 of the Act, a company or a body corporate may also become a member.
When once a person becomes a member, he is entitled to exercise all the rights of a member until he ceases to be a member in accordance with the provisions of the Act.
The voting rights of a member of a company are governed by section 87 of the Act.
Section 87 of the Act says that subject to the provisions of section 89 and sub section (2) of section 92 of the Act every member of a company limited by shares and holding any equity share capital therein shall have a right to vote, in respect of such capital, on every resolution placed before the company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the company.
Regulations 8 and 86 (a) of the Articles of the PolYtex Company read: "8.
Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not, except as ordered by a court of competent jurisdiction or as by law required, be bound to recognise any trust, be nami or equitable or other claim to or interest in any such share or any fractional part of such share on the part of any other person whether or not it shall have express or other notice thereof.
(a) On show of hands every holder of Equity shares entitled to vote and present in person or by proxy shall have one vote and upon a poll every holder of equity shares entitled to vote and present in person or by proxy shall have one vote for every Equity share held by him.
" A person ceases to be a member by transferring his share to another person, by transmission of his share by operation of law, by forefeiture of share, by death, or by any other reason known to law.
In the case before us therefore three points arise for consideration at this stage.
They are: (i) Whether by reason of the appointment of the Receiver under the Land Revenue Act in respect of the shares of the Polytex Company held by the Cotton Mills 877 Company, the Cotton Mills Company had ceased to have the rights of a member under section 169 of the Act ? (ii) Whether by the attachment of the shares under section 149 of the Land Revenue Act, the Cotton Mills Company suffered any diminution or curtailment in its rights as a shareholder in respect of the shares so attached ? (iii) Whether by the pledge of certain shares, the Cotton Mills Company suffered any such diminution or curtailment ? In the Act, the expressions 'a member ', 'a share holder ' or 'holder of a share ' are used as synonyms to indicate the person who is recognised by a company as its owner for its purposes.
What does ownership of a share connote? 'Ownership in it most comprehensive signification; says Salmond, 'denotes the relation between a person and any right that is vested in him.
That which a man owns in this sense is a right.
The right of ownership comprises benefits like claims, liberties, powers, immunities and privileges and burdens like duties, l abilities, disabilities.
Whatever advantages a man may have as a result of the ownership of a right may be curtailed by the disadvantages, in the form of burdens attached to it.
As observed by Dias, an owner may be divested of his claims etc.
arising from the right owned to such an extent that he may be left with no immediate practical benefit.
He remains the owner nonetheless because his interest will outlast that of other persons in the thing owned.
The owner possesses that right which ultimately enables him to enjoy all rights in the thing owned by attracting towards himself those rights in the thing owned which for the time being belong to others, by getting rid of the corresponding burdens.
An owner of a land may get rid of the interest of a mortgagee in it by redeeming the mortgage, may get physical possession of land by terminating a lease and may get rid of an attachment by discharging the debt for which it is attached.
A Receiver appointed by a court or authority in respect of a property holds it for the benefit of the true owner subject to the orders that may be made by such court or authority.
the different kinds of rights of ownership flowing from the ownership of a right depend upon the nature of the right owned.
A person who is a shareholder of a company has many rights under the Act.
Some 878 of them, with which we are concerned in this appeal principally, are (i) the right to vote at all meetings (Section 87), (i;) the right to requisition an extraordinary general meeting of the company or to be a joint requisitionist (Section 169), (iii) the right to receive notice of a general meeting (Section 172), (iv) the right to appoint proxy and inspect proxy registers (Section 176), (V) in the case of a body corporate which is a member, the right to appoint a representative to attend a general meeting on its behalf (Section 187) and (vi) the right to require the company to circulate his resolution (Section 188).
The question for consideration is when does a shareholder cease to be entitled to exercise any of these rights ? Section 182 A of the Land Revenue Act which provides for the appointment of a Receiver in respect of the assets of a defaulter who is liable to pay an arrear of revenue or any other sum recoverable as an arrear of revenue reads thus: "182 A. Appointment of Receiver (1) Notwithstanding anything in this Act, when an arrear of revenue or any other sum recoverable as an arrear of revenue is due, the Collector may, in addition to or instead of any of the processes hereinbefore specified, by order (a) Appoint, for such period as he may deem fit, a Receiver of any movable or immovable property of the defaulter: (b) Remove any person from the possession or ousted of the property: (c) Commit the same to the possession, custody or management of the Receiver; (d) Confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents, as the defaulter himself has or such of those powers as the Collector thinks fit.
(2) Nothing in this Section shall authorise the Collector to remove from the possession or custody of property any person whom the defaulter has not a present right to remove.
879 (3) The Collector may from time to time extend the A duration of appointment of the Receiver.
(3 A) No order under sub section (1) or sub section (3) shall be made except after giving notice to the defaulter to show cause, and after considering any representations that may be received by the Collector in response to such notice: Provided that an interim order under sub section (1) or sub section (3) may be made at any time before or after the issue of such notice: Provided further that where an interim order is made before the issue of such notice the order shall stand vacated if no notice is issued within two weeks from the date of the interim order.
(4) The provisions of Rules 2 to 4 of Order XL, contained in the First Schedule to the Code of Civil Procedure, 1908, shall apply in relation to a Receiver appointed under this section as they apply in relation to a Receiver appointed under this section as they apply in relation to a Receiver appointed under the Code with the substitution of references to the Collector for references to the Court.
" Section 149 of the Land Revenue Act which provides for the attachment and sale of movable property belonging to a defaulter reads thus: "149.
Attachment and sale of movable property I`he Collector may, whether the defaulter has been arrested or not, attach and sell his movable property.
Every attachment and sale ordered under this section shall be made, according to the law in force for the time being for the attachment and sale of movable property under the decree of a Civil Court.
In addition to the particulars mentioned in clauses (a) to (c) of the proviso to Section 60 of the Code of Civil Procedure, 1908 (Act V of 1908), articles set aside exclusively for the use of religious endowments shall be exempted from attachment and sale under this section.
The costs of the attachment and sale shall be added to the arrear of revenue, and shall be recoverable by the same procedure.
" 880 We shall first consider the effect of appointment of a Receiver in respect of the shares in question.
A perusal of the provisions of section 182 A of the Land Revenue Act shows that there is no provision in it which states that on the appointment of a person as a Receiver the property in respect of which he is so appointed vests in him similar to the provision in section 17 of the Presidency Towns Insolvency Act, 109 where on the making of an order of adjudication the property of the insolvent wherever situate would vest in the official assignee, or in section 28 (2) of the which states that on the making of an order of adjudication, the whole of the property of the insolvent would vest in the court or in the Official Receiver.
Sub section (4) of section 182 A of the Land Revenue Act provides that Rules 2 to 4 of Order XL of the Code of Civil Procedure, 1908 shall apply in relation to a Receiver appointed under that section.
A Receiver appointed under Order XL of the Code of Civil Procedure only holds the property committed to his control under the order of the court but the property does not vest in him.
The privileges of a member can be exercised by only that person whose name is entered in the Register of Members.
A Receiver whose name is not entered in the Register of Members cannot exercise any of those rights unless in a proceeding to which the company concerned is a party and an order is made therein.
In Mahathalone vs Bombay Life Assurance Co. Ltd 1 it has been laid down clearly that a Receiver appointed by 3 court in respect of certain shares which had not been duly entered in the Register of Members of the company concerned as belonging to him could not acquire certain newly issued shares which could be obtained by the members of the company.
This Court observed at page 143 thus: "Mr. Pathak argued that the plaintiff was entitled to reliefs A and B, both in his suit as well as in the receiver 's suit and that the receiver 's suit was wrongly dismissed by the High Court.
We ate unable to agree.
In our opinion, the High Court rightly held that the receiver appointed in the suit of Sir Padampat could not acquire the newly issued shares in his name.
that privilege was conferred by section 105 only on a person whose name was on the register of members.
The receiver 's name admittedly was not in the register and the company was not bound to entertain that application.
Mr. Pathak argued that may be so but the ceiver was not making an application in his individual (1) ; 881 right but he had been armed by the court with power to A apply in the right of the defendant Reddy.
The fact how ever is that the receiver made the application in his own name.
Even if Mr. Pathak 's contention is right the company was no party to the suit filed by Sir Padampat against Reddy and that being so, no order could be issued to the company in that suit to recognize the receiver as a shareholder in place of Reddy.
" Even where the holder of a share whose name is entered in the Register of Members hands over his shares with blank transfer forms duly singed, the transferee would not be able to claim the rights of a member as against the company concerned until his name is entered in the Register of Members.
This Court in Messrs Howrah Trading Co. Ltd. vs The Commissioner of Income tax, Calcutta has observed at pages 453 454 thus: "The position of a shareholder who gets dividend when his name stands in the register of members of the company causes no difficulty whatever.
But transfers of shares are common, and they take place either by a fully executed document such as was contemplated by Regulation 18 of Table A of the Indian Companies Act, 1913, or by what are known as 'blank transfers ' In such blank Transfers, the name of the transferor is entered, and the transfer deed signed by the transferor is handed over with the share scrip to the transferee, who, if he so chooses, complete s the tarns for by entering his name and then applying to the company to register his name in place of the previous holder of the share.
The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable.
Of course, between the transferor and the transferee, certain equities arise even on the execution and handing over of 'a blank transfer ', and among these equities is the right of the transferee to claim the dividend declared and paid to the transferor who is treated as a trustee on behalf of the transferee.
These equities, however, do not touch the company, and no claim by the transferee whose name is not in the register of members can be made against the company, if the transferor retains the money in his own hands and fails to pay it to him.
(1) [1959] Supp. 2 S.C.R. 448 882 A Glance at the scheme of the Indian Companies Act,1913, shows that the words "member", "shareholder" and "holder of a share" have been used interchangeably in that Act.
Indeed, the opinion of most of the writers on t e subject is also the same.
Buckley on the Companies Act, 12th Edition, Page 803 has pointed out that the right of a transferee is only to call upon the company to register his name and no more.
No rights arise till such registration takes place.
" In this case this Court followed the dictum of Chitty, J. in re: Wala Wynaad Indian Gold Mining Company(1) which emphasised that the entry of the name of person in the Register of Members was an essential condition for exercising voting rights at the meeting of the company concerned.
In "Buckley on the Companies Acts" (14th Edn.), Vol.
I, page 972 it is stated thus: "Company cannot enquire into beneficial ownership As between the shareholder and the company, the person entitled to exercise the right of voting is the person legally entitled to the shares, the member whose name is on the register.
" In Kurapati Venkata Mallayya & Anr.
vs Thondepu Ramaswami & Co. & Anr.(2) this Court had occasion to consider the validity of a suit instituted by a Receiver to collect debts due to a party to a suit in his own name.
The Count upheld the right of the Receiver to maintain the suit observing that a Receiver invested with full powers to administer the property which is Custodian legis or who is expressly authorised by the court to institute a suit for collection of debts was entitled to institute a suit in his own name provided he did so in his capacity as a Receiver.
But in the course of the said decision this Court approved the decision of the Calcutta High Court in Jagat Tarini Dasi vs Naba Gopal Chaki( ') in which it had been stated: "On the whole, we are disposed to take the view that, although a Receiver is not the assignee or beneficial owner of the property entrusted to his care, it is an incomplete and inaccurate statement of his relation to the property to say that he is merely its custodian" (Underlining by us).
Thus whatever may be the other powers of a Receiver dealing with the property which is in custodian legis while in his custody, he is not to be construed as either an assignee or beneficial owner of such property.
(1) (2) [1963] Supp. 2 S.C.R. 995.
(3) [1907] .
, 883 In Wise vs Lansdell(1) it was held that in the case of a bankrupt A whose name was still on the Register of Members of a company as between himself and the company, the bankrupt, so long as his name remained on the register was entitled to vote in respect of the shares, though as between himself and the mortgagees he could vote only as they dictated.
But the right to vote was held to be unimpaired as long as his name appeared on the Register.
In a later case, Morgan & Anr.
vs Gray & Ors (2) after referring to the decision in Wise vs Lansdell (supra) Danckwerts 1.
Observed: "It seems to me that, unless there is some provision in the company 's articles or in the Companies Act which empowers me to say that the bankrupt is no longer a member of the company, and is, therefore, unable to vote, expressly.
I must come to the conclusion that the bankrupt still remains a member as long as he is on the register, notwithstanding that by taking appropriate steps under the appropriate provisions the trustee in bankruptcy may be able to secure registration of himself as the proprietor of the shares.
Unless and until that is done, and as long as the bankrupt remains on the register of the company, he remains a member in respect of those shares and is entitled, as it seems to me, to exercise the votes which are attribute able to that states, notwithstanding that he has no longer any beneficial interest in the shares and that the company is entitled to pay any dividends to his trustee in bankruptcy.
" The following statement in Kerr on Receivers (13th Edn.) at page 310: "the power of the company and its directors to deal with the property comprised in the appointment (both property subject to a floating charge and property subject to a fixed charge), except subject to the charge, are paralysed" which was relied on by the appellants is not of much use to them.
it only means that the authority competent to appoint a Receiver may give directions regarding the property It does not imply that the right of the company to exercise the right to vote on the basis of the shares of another company held by it at the meeting of such other company becomes automatically suspended.
Under section 51 of the Code of Civil Procedure, 1908 a (1)[1921] I Ch.
(2)[1953] I Ch. 83 at p. 87. 884 Receiver may be appointed by a civil court on the application of a A decree holder in execution of a decree for purposes of realising the decree debt.
This is only a mode of equitable relief granted ordinarily when other modes of realization Or the decretal amount are impracticable.
A Receiver appointed under that section will be able to realise the amounts due from a garnishee and his powers are taking to the powers of a Receiver appointed under Order 40 rule 1 of the Code of Civil Procedure, 1908.
But he would not have any beneficial interest in the assets of the judgment debtor.
He collects the debts not as his own but as an officer of the court.
We do not also find any substance in the contention of the appellant based on section 137 of the Act.
Section 137 of the Act provides that if any person obtains an order for the appointment of a Receiver of, or of a person to manage, the property of a company, or if any person appoints such Receiver under any powers contained in any instrument he shall, within thirty days from the date of the passing of the order or of the making of the appointment under the said powers, give notice of the fact to the Registrar, and the Registrar shall, on payment of the prescribed fee, enter the fact in the register of charges maintained under section 130 of the Act.
It is not clear in this case whether any entry had been made in the register of charges of the order Or appointment of Receiver in this case.
Even granting that such an entry had been made, it would not have the effect of taking away the right of the Cotton Mills Company to exercise the right to vote in respect of the shares in question.
We do not also find any substance in the argument based on sections 153B, 187B and 187C of the Act.
Section 153 of the Act states that no notice of any trust, express, implied or constructive, shall be entered in the register of members or of debenture holders.
Section 153B of the Act requires that notwithstanding anything contained in section 153, well any shares in, or debentures of, a company are held in trust by any person, the trustee shall, make a declaration to the public trustee.
Section 187B of the Act provides that save as otherwise provided in section 153B but notwithstanding anything contained in any other provisions of the Act or any other law or any contract, memorandum or articles, where any shares in a company are held in trust by a person as trustee, the rights and powers (including the right to vote by proxy) exercisable at any matinee of ' the company or at any meeting of any class of members of the company by the trustee as a member of the company cease to be exercisable by the trustee as such member and become exercisable l l by the public trustee.
Section 187C of the Act makes it incumbent 885 upon a person whose name is entered in the Register of Members of a company but who does not hold the beneficial interest in the share in question in such form as may be prescribed specifying the name and other particulars of the person who holds the beneficial interest in such share.
The Companies (Declaration of Beneficial Interest in Shares) Rules, 1975 are made in this connection.
it is obvious from the foregoing that none of the provisions referred to above has any bearing on the question before us.
Mere appointment of a Receiver in respect of certain shares of a company without more cannot, therefore, deprive the holder of the shares whose name is entered in the Register of Members of the company the right to vote at the meetings of the company or to issue a notice under section 169 of the Act.
The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under section 149 of the Land Revenue Act is more or less the same.
The effect of an order of attachment is what section 149 of the Land Revenue Act itself says.
Such attachment is made according to the law in force for the, time being for the attachment and sale of movable property under the decree of a civil court.
Section 60 of the Code of Civil Procedure, 1908 says that except those items of E property mentioned in its proviso, lands.
houses, or other buildings, goods money, banknotes, cheques, bills of exchange, hands, promissory notes, Government securities, bonds or other securities of money, debts, shares in a corporation and all other saleable property, movable or immovable, belonging to a judgment debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment debtor, or by another person in trust for him or on his behalf, is liable for attachment and sale in execution of a decree against him.
Section 64 of the Code of Civil Procedure, 1908 states that where an attachment of a property is made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment.
What is forbidden under section 64 of the Code of Civil Procedure is a private transfer by the judgment debtor of the property attached contrary to the attachment, that is, contrary to the claims of the decree holder under the decree for realisation of which the attach 886 ment is effected.
A private transfer under section 64 of the Code of Civil Procedure is not absolutely void, that is, void as against all the world but void only as against the claims enforceable under the attachment.
Until the property is actually told, the judgment debtor retains title in the property attached.
Under Rule 76 of Order 21 of the Code of Civil Procedure, 1908, the shares in a Corporation which reattached may sold through a broker.
In the alternative such shares may be sold in public auction under Rule ?7 thereof.
On such sale ' either under Rule 76 or under Rule 77, the purchaser acquires title.
Until such sale is effected, all other rights of the judgment debtor remain unaffected even if the shares may have been seized by the officer of the count under Rule 43 of Order 21 of the Code of Civil Procedure, 1908 for the purpose of effecting the attachment, or through a Receiver or though an order in terms of Rule 46 of Order 21 of the Code of Civil Procedure may have been served on the judgment debtor or on the company concerned.
On behalf of the appellants, relying upon the decision in Hawks vs Mc. Arthur & Ors(1) it is contended that the order of the Collector attaching the hare was in the nature of a charging order which 'deprived the Cotton Mills Company of its rights in them.
Having carefully gone through the said decision, we find that it has not much relevance to the case In that case the Chairman and the Manager of a company had purchased certain shares of the company held by one of its members in two separate lots after paying consideration therefore contrary to Article 13 of the Company 's Articles of Association which granted a right of pre emotion to all the other members in respect of the shares in question.
Immediately after the said purchases were made another member of the company obtained a money decree against the transferor of the shares and also a charging order over the shares standing in the name of the transferor but which had been sold earlier either to the Chairman or the Manager.
He claimed that since the transfer of the shares was contrary to Article 13 of the company 's Articles of Association, the transfer was void and hence he was entitled to enforce the charging order against those shares for realising his decretal amount.
The Court negatived his claim holding that notwithstanding the complete failure to comply with the company 's articles in regard 'to the procedure to be followed before shares could be transferred, the transferees having paid to the transferor the full consideration for the shares had obtained equitable rights therein and as their rights accrued earlier than the equitable right (1)[1951] 1 A 887 of the plaintiff under the charging order, their rights must prevail over his claim.
It was argued before us that the order of the Collector being an order in the nature of a charging order the Receiver had obtained an equitable right in the shares in question and there being no other legal or equitable right which would prevail over it, the Cotton Mills Company had lost its right to the shares The statement of facts of the above decision itself shows that it has no bearing on the case before us.
it is to be noted that a charging order under the English Law is not the same as an attachment of property or appointment of a Receiver under the Land Revenue Act.
We may here state that charging orders under the English Law are made under Order 50 of the English Supreme Court Practice under which the English court may for the purpose of enforcing a judgment or order of that court under which a debtor is required to pay a sum of money to a creditor, make an order imposing on any such property of the debtor as may be specified in the order, a charge for securing the payment of any money due or to become due under the judgment or order Such an order is referred to as the 'charging order '.
A charging order on the property or assets of the debtor is one of the modes of enforcement of a judgment or order for the payment of money to the creditor.
It is, however, not a direct mode of enforcement in the sense that the creditor can immediately proceed to recover the fruits of his judgment, but it is rather an indirect mode of enforcement in the sense that it provides the creditor with security, in whole or in part, over the property of the debtor.
It makes the creditor a secured creditor who having obtained his charging order must proceed, as may be necessary according to the nature of the property charged, to enforce his charge in order to obtain the actual proceeds of his charge to satisfy his judgment, in whole or in part.
Subject to the other p provisions of law, a charge imposed by a charging order will have effect and will be enforceable in the same court and in the same manner as an equitable mortgage created by the debtor by writing under his hand.
A short passage in Mull 's Code of Civil Procedure (14th Edn), Vol.
II at page 1510 is instructive and it reads thus: "There is no provision in the Code for charging orders, but on the Original Side of the High Courts, which has inherited the older jurisdiction of the Court of Chancery, it is the practice in cases where it is considered undesirable to grant immediate execution to make a charging order in the form made in the case of Kewny vs Attril When the a8sets require nursing, the advantage of a 888 charging order is that it enables the Court on the one hand to gain time and on the other hand to protect the decree holder.
It also avoids the confusion that might ensue if the Court were to allow a direct attachment while it is administering the assets of the partnership.
The effect of a charging order is to constitute the decree holder a secured creditor although he undertakes to deal with the charge subject to the further orders of the Court.
" An order of attachment cannot, therefore, have the effect of depriving the holder of the shares of his title to the shares.
We are of the view that the attachment of the shares in the Polytex Company held by the Cotton Mills Company had not deprived the Cotton Mills Company of its right to vote at the meeting or to issue the notice under section 169 of the Act The fact that 3,50,000 shares have been pledged in favour of the Government of Uttar Pradesh also would not make any difference Sections 172 to 178 A of the deal with the contract of pledge.
A pawn is not exactly a mortgage.
As observed by this Court in Lallan Prasad vs Rahamat Ali & Anr.(l) the two ingredients of a pawn are: "(1) that it is essential to the contract of pawn that the property pledged should be actually or constructively delivered to the Pawnee and (2) a Pawnee has only a special pore party in the pledge but the general property therein remains in the pawner and woolly reverts to him on discharge of the debt.
A pawn therefore is a security, where, by contract a deposit of goods is made as security for a debt.
The right to property vests in the pledge only so far as is necessary to secure the debt .
The pawner however has a right to redeem the property pledged until the sale.
" In Bank of Bihar vs State of Bihar and Ors.
(2) also this Court has reiterated the above legal position and held that the pawnee had a special property which was not of ordinary nature on the goods pledged and so long as his claim was not satisfied no other creditor of the pawner had any right to take away the goods or its price.
Beyond this no other right was recognised in a pawnee in the above decision.
Under section 176 of the if the pawner makes default in payment of the debt, or performance, at the stipulated time, of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon (1)[1967] 2 S.C.R. 233 at p. 238 239.
(2)1971] Supp, S.C.R. 299.
889 the debt or promise, and retain the goods pledged as a collateral A security, or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
in the case of a pledge, however, the legal title to the goods pledged would not vest in the pawnee.
The pawnee has only a special property.
A pawnee has no right of foreclosure since he never had the absolute ownership at law and his equitable title cannot exceed what is specifically granted by law.
In this sense a pledge differs from a mortgage.
In view of the foregoing the pawnee in the instant case i. e. the Government of Uttar Pradesh could not be treated as the holder of the shares pledged in its favour.
the Cotton Mills Company continued to be the member of the Polytex Company in respect of the said shares and could exercise its rights under section 169 of the Act.
It may be stated here that the Government of Uttar Pradesh and the Collector who are parties to this appeal have not questioned the correctness of the judgment of the High Court.
One other subsidiary contention urged on behalf of the appellants relates to the effect of an order made by the Central Government on April 13,1978 under section 18 AA (1) '(a) of the Industries (Development and Regulation (Act, 1951 taking over the management of Sideshow Cotton Mills along with five other industrial units belonging to the Cotton Mills Company which was the subject matter of dispute in Sideshow Cotton Mills vs Union of India(l) and the order of extensions passed by the Central Government on November 26,1983 which is the subject matter of dispute in a case now pending before this Court.
It is urged on behalf of the appellants that on the passing of the above said orders the Cotton Mills Company lost its right to exercise its voting rights in respect of the shores in question.
There is no substance in this contention.
What was taken over under the above said orders was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company.
The shares belong to the company and the orders referred to above cannot have any effect on them.
The Department of Company Affairs, Government of India rightly expressed its view in the letter written by C. Khushaldas, Director in the Department of Company Affairs on April 9, 1979 to B. M. Kaul, Chairman of the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company and the manner in which those voting rights were to be exercised was to be determined by the Board of Directors (1) 11981]2 S.C.R.533 890 of the Cotton Mills Company.
Hence the passing of the orders under section 18AA (1) (a) of the Industries (Development and Regulation) Act, 1951 has no effect on the voting rights of the Cotton Mills Company.
It is also significant that the Directors of the Polytex Company who what that a Receiver had been appointed in respect of the shares in question, that they had been attached by the Collector, that a part of them had also been pledged in favour of the Government of Uttar Pradesh and that orders had been passed under section 18AA (1) (a) of the Industries (Development and regulation) Act, 1951 taking over six industrial units of the Cotton Mills Company did not question the validity of the notice.
The Polytex Company had in this case rightly treated the registered holder i.e. the Cotton Mills Company as the owner of the shares in question and to call the meeting in accordance with the notice issued under section 169 of the Act.
The appellant cannot, therefore, be allowed to raise any dispute about the validity of the meeting on any of the grounds referred to above.
In the result the appeal fails and it is dismissed with costs.
The costs of all the parties to the above appeal and other connected cases shall, however, be borne by the Polytex Company.
Subject to the above order, the order passed by this Court on February 1, 1985 shall remain in force.
M.L.A. Appeal dismissed.
| Section 3 (2) (d) Whether regulating includes in the context prohibiting.
Interpretation of statutes Whether some words may be used in different senses in the Same sentence.
Words and phrases Regulation and Prohibiting Meaning and scope of.
Due to failure of monsoon in the years 1981 82, there was a steep fall in production of paddy and it became necessary for the State Government of Tamil Nadu to build up its buffer stocks for distribution through the public distribution system throughout the State.
ID the circumstances, the State Government had no other alternative but to introduce a monopoly procurement scheme with a view to procure the maximum stock of paddy by banning purchase by traders.
This was in addition to compulsory levy on dealers of paddy and rice to the extent of 50% under cl. 5 (1) of the Tamil Nadu Paddy & Rice (Regulation of Trade) Order, 1974.
1029 In exercise of the powers conferred under section 3 of the read with the Government of India, Ministry of Agriculture (Department or Food) Order GSR 800 dated Juno 9, 1978 issued under section 5 of the Act with the prior concurrence of the Government of India, the State Government accordingly promulgated the Tamil Nadu Paddy (Restriction on Movement) Order, 1982 on October 22, 1982.
Clause 3 (1A) of the Order prohibited transport, movement or otherwise carrying of paddy outside the State by road or rail or otherwise except under and in accordance with the conditions of a permit issued by an officer authorised in that behalf.
By GOMS No. 293 dated May 11, 1982 the State Government introduced sub cl.
(IA) to cl. 3 of the Order which prohibited transport; movement or otherwise carrying of paddy outside places notified by cl. 3 of the Order by road or rail or otherwise.
Thereafter, on June 20, 1983, the State Government made a further amendment to the newly inserted cl. 3 (IA) which clamped a complete ban on transport, movement or otherwise carrying of paddy outside the Thanjavur District, Chidambaram and Kattumannarkoil Taluks in South Arcot District and Musiri, Kulithalai, Lalgudi and Tiruchirapalli Talulks in Tiruchirapalli District.
The appellant along with other traders assailed the constitutional validity of cl. 3 (IA) of the Order, as amended, which placed a complete ban on transport, movement or otherwise carrying of paddy outside the Thanjavur district and the aforesaid Taluks in South Arcot and Tiruchirapalli districts as being violative of articles 14, 19(1)(g) and 301 of the Constitution The High Court repelled the contentions and dismissed the writ petitions.
In the appeal, the appellant contended that the impugned cl. 3 (IA) of the Order was ultra vires the State Government on two grounds, namely: (1) The delegation of a specific power under s 3 (2) (d) of the Act to State Government by the aforesaid notification dated June 9, 1978 issued by the Central Government under section 5 of the Act to regulate storage, transport, distribution, disposal etc.
Of an essential commodity, in relation to foodstuffs, does not carry with it The general power of the Central Government under sub section
(1) of section 3 to regulate or prohibit the production, supply and distribution thereof and trade and commerce therein.
And (2) That the word regulating ' in cl.
(d) of section 3 (2) of the Act does not take in 'prohibiting ' and as such there cannot be a total prohicition on transport, movement or otherwise carrying of paddy out of the areas in question under (d) but only regulation of such activities in the course of trade and commerce by grant of licences or permits.
Dismissing the appeal, ^ HELD: 1.
Sub s (2) of section 3 of the offers no fresh powers but is merely illustrative of the general poweres by sub section
(1) of section 3 without exhausting the subjects in relation to such powers can be exercised.
Although cl.
(d) of sub section
(2) of section 3 with a specific power, the general power to issue the impugned 1030 order flows from the provisions of sub section
(1) of s.3 which stands delegated to the State Government by virtue of the notification issued under section S of the Act.
[1042H; 1043B] Santosh Kumar Jain vs The State, [I951] SCR 303, and Emperor vs Sibnath Banerjee, LR [1945]] 72 IA 241, followed.
Nanalal Navalnathji Yogi vs Collector of Bulsar & Ors.
AIR 1981 Guj.
approved.
Atulya Kumar vs Director of Procurement & Supply, AIR 1953 Cal.
548, approved.
_ Tarakdas Mukherjee vs State of West Bengal, and Lila Biswas vs State of West Bengal, , approved.
Sujan Singh vs State of Haryana, AIR 1998 Pun, 363, State of Uttar Pradesh vs Suraj Bhan, AIR 1972 All. 401 and Bejoy Kumar Routrai vs State of Orissa AIR [1976] Orr.
138, overruled.
The word 'regulation ' cannot have any rigid or inflexible meaning as to exclude 'prohibiting '.
It is difficult to define the word 'regulate ' as having any precise meaning.
It has different shades of meaning and must take its colour from the context in which it is used having regard to the purpose and object of the legislation, and the Court must necessarily keep in view the mischief which the legislature seeks to remedy.
The question essentially is one of degree and it is impossible to fix any definite point at which 'regulation ' ends and prohibition ' begins.
The power to regulate does not necessarily include the power to prohibit, and ordinarily the word 'regulate ' is not synonymous with the word 'prohibit '.
This is true in a general sense and in the sense that mere regulation is not the same as absolute prohibition.
But the power to regulate carries with it full power over the thing subject to regulation and in obsence of restrictive words, the power must be regarded as plenary over the entire subject.
It implies the power to rule, direct and control and involves the adoption of a rule or guiding principle to be followed or the making of a rule with respect to the subject to be regulated.
The power to regulate implies the power to check and may imply the power to prohibit under certain circumstances, as where the best or only efficatious regulation consists of suppression.
[1045G H; 1046E F Narendra Kumar vs Union of India, Slaitery vs Naylor, LR [1888] AC 446 and Municipal Corporation of the City of Toronto vs Virgo, LR , Corpus Juris Secundum, vol.
76 at p. 611 and Webster s Third New International Dictionary, vol II, p 1913 and Thorter Oxford Dictionary, vol.
II, 3rd edn., p. 1784, referred to State of Mysore vs H. Sanjeeviah, ; , distinguish and limited.
1031 The source of power to issue an order under cl.
(d) of sub section
(2) of A section 3 of the Act being relatable to the general powers of the Central Government under sub section
(1) of section 3, there is no justification for giving a restricted meaning to the word 'regulating, ' in cl.
(d) of sub section
(2) of section 3 of the Act so as not to take in 'prohibiting '.
A word may be used in two different senses in the same section.
[1050B C] The Act is a piece of socio economic legislation and its predominant object is to provide in the interests of general public, for the control of the production, supply and distribution of, and trade and commerce in, certain essential commodities.
Such control can be exercised in a variety of ways otherwise than by placing compulsory levy on the producers, for example, by fixing a controlled price for foodstuffs, by placing a limit on the stock of foodstuffs to be held by a wholesale dealer, commission agent or retailer by placing sales except in certain specified manners etc.
All these arc nothing but regulatory measures.
Placing a ban on inter State or inter State movement or export of foodstuffs is one of the ways to regulate and control and such ban prevents the spiral rise in prices of such foodstuffs by artificial creation of shortage by unscrupulous traders.
The various Control Orders issued by the Central Government under sub section
(1) of s 3 of the Act or by the State Governments under section 3 read with section 5 have introduced a system of checks and balances to achieve she object of the legislation i.e. to ensure equitable distribution and availability of essential commodities at fair prices.
Special public interest in an industry e. g. that it is engaged in the production of a commodity vitally essential to the community, may justify the regulation of its production, supply and distribution and its trade and commerce, provided such regulation is not arbitrary and has a rational nexus with the object sought to be achieved.
[1048C D; 1047F H; 1048A] If one part of the country or of a State is faced with a famine or even acute shortage of foodstuffs.
it is not unreasonable for the Government to acquire foodstuffs from the surplus areas and distribute the same in areas where they are most needed.
Since there was steep fall in production of paddy due to failure of monsoons the State Government of Tamil Nadu was justified not only to reimpose compulsory levy on the producers of paddy to the extent of 50% but also to introduce a scheme for a monopoly purchase of paddy by the Government with a view to build up its buffer stock for distribution through the public distribution system throughout: the State.
[1049E G] State of Tamil Nadu vs Hind Stone & Ors.
[19811 2 SCC 205, C. K Krishnan vs State of Tamil Nadu [1975] 2 SCR 715, Krishan Lal Praveen kumar & Ors.
vs State of Rajasthan & Ors., , Suraj Mal Kailash Chand & Ors, vs Union of India & Ors., and Bishamber Dayal Chandra Mohan & Ors.
vs State of U.P. & Ors.
, ; , relied on. 1032
|
Civil Appeal No. 216 of 1953.
On appeal from the judgment and decree dated the 8th March, 1951 of the Mysore High Court in Regular Appeal No. 123 of 1947 48 arising out of the decree dated the 23rd June 1947 of the Court of District Judge, Bangalore in Original Suit No. 84 of 1945 46.
K. section Krishnaswami Iyengar and M. section K. Sastri for the appellants.
R. Ganapathy Iyer and K. R. Krishnaswamy for the respondent No. 1. 1956.
April 26.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This appeal arises out of a suit instituted by one Krishna Rao, since deceased, and now represented by his son and heir, the respondent herein, for a declaration of his title to certain building sites situate in Bangalore in the State of Mysore, and for consequential reliefs.
These properties belonged to one Munuswami, who died leaving him surviving his third wife Chellammal.
, three sons by his predeceased wives, Keshavananda, 454 Madhavananda and Brabmananda, and three minor daughters, Shankaramma, Srikantamma and Devamma.
On 1 9 1918 the three brothers executed a usufructuary mortgage for Rs. 16,000 in favour of one Abdul Huq over a bungalow and vacant sites in cluding the properties concerned in this litigation.
A period of three years was fixed for redemption.
There was a lease back of the properties by the mortgagee to the mortgagors on 3 9 1918, and it was also for a period of three years.
On 6 9 1918 the three brothers effected a partition under a deed, Exhibit K, which provided inter alia that they were to pay each a sum of Rs. 8 per mensem to their step mother, Chellammal, for her maintenance, and that their step sisters should be under their protection.
On 6 6 1919 Chellammal presented a plaint in forma pauperis claiming maintenance and praying that it might be charged on the properties specified in the plaint.
That was Miscellaneous Case No. 377 of 1918 19.
At the same time, she also presented as the next friend of her minor daughters, Srikantamma and Devamma, two plaints in forma pauperis, Miscellaneous Cases Nos. 378 and 379 of 1918 19 claiming maintenance and marriage expenses for them, and praying that the amounts decreed might be charged on the schedule mentioned properties.
The properties which are involved in this suit are included in item 8 in schedule A annexed to all the three plaints.
On 17 6 1920 permission to sue in forma pauperis was granted in all the three cases, and they were registered as Suits Nos. 98 to 100 of 1919 20.
We are concerned in this appeal with only one of them, the suit of Devamma which was Miscellaneous Case No. 379 of 1918 19, subsequently registered as Suit No. 100 of 1919 20.
The suits were contested, and decreed after trial on 12 12 1921.
The decree in 0.
section No. 100 of 1919 20 directed the defendants each to pay to the plaintiff a sum of Rs.6 per mensem for maintenance until her marriage and Rs. 1,500 for marriage expenses, and the payment of the amount was made a first charge on the properties.
In execution of this decree, the 455 properties with which we are now concerned, were sold on 2 8 1928 and purchased by Devamma, the decree holder.
A sale certificate was issued to her on 21 11 1930 (Exhibit J 5).
Proceedings were also taken in execution of the decrees obtained by Chellammal and Srikantamma and of one Appalaraju, and all the properties comprised in the mortgage were sold and purchased by third parties.
It must be mentioned that all the three brothers were adjudicated insolvents on their own application, Brahmananda by an order dated 23 3 1923 in Insolvency Case No. 7 of 1921 22 and Keshavananda and Madhavananda by an order dated 19 2 1926 in Insolvency Case No. 4 of 1925 26.
It also appears from the evidence of D.W. 5 that at about this time all of them left the place.
While these proceedings were going on, Abdul Huq, the mortgagee, filed on 16 8 1921, O.S. No. 27 of 192122 against Keshavananda and his two brothers for recovery of arrears of rent due by them under the lease deed, and obtained a decree on 21 10 1921 but was unable to realise anything in execution thereof, and the execution petition was finally dismissed on 22 1 1926.
He then filed a second suit against the mortgagors, O.S. No. 86 of 1931 32, for arrears of rent for a period subsequent to that covered by the decree in O.S. No. 27 of 1921 22 and for possession of the properties on the basis of the lease dated 3 9 1918, and obtained a decree on 22 3 1932 but was unable to get possession, as the properties were in the occupation of third parties under claims of right.
Abdul Huq died on 20 3 1933, and thereafter, his legal representatives filed on 30 8 1933 O.S. No. 8 of 1933 34 to enforce their rights under the mortgage deed dated 1 9 1918.
Among the defendants who were impleaded in this suit were the mortgagors Keshavananda and Madhavananda, Gururaja, son of Brabmananda who bad died, the Official Receiver and the purchasers of the mortgaged properties in execution of the maintenance decrees and the decree of Appalaraju.
Devamma was the third defendant in this action.
The plaint alleged that the mortgagors had failed to 456 pay rent as provided in the lease deed dated 3 9 1918, and had suffered collusive decrees to be passed against them in the maintenance suits and other actions, and that properties had been sold fraudulently in execution of those decrees.
On the basis of these allegations, the plaintiffs prayed for a decree for possession as against the purchasers including Devamma, and for a sum of Rs. 5,000 as damages.
In the alternative, they prayed for a decree for sale of the mort gaged properties for the amount due under the mortgage.
The suit was contested, and issues raised as to whether the sales were collusive, and whether the plaintiffs were entitled to possession and damages, and alternatively, as to what amounts were payable under the mortgage and to what reliefs the plaintiffs were entitled.
At the trial, the plaintiffs abandoned the relief as to possession and damages, and it accordingly became unnecessary to go into the question as to the collusive character of the maintenance decrees and the execution sales.
On 26 9 1935 a decree was passed determining the amount payable to the plaintiffs on redemption, providing for payment thereof on or before 26th January 1936, and in default, directing the sale of the properties.
In execution of this decree, the properties were sold in court auction sometime in 1936, and purchased by one Chapman, and possession was taken by him through court on 18 2 1937.
On 25 1 1938, Saldhana, who was the agent of Chapman, and became his executor on his death, sold the building sites now in dispute and forming part of the properties purchased in court auction, to Krishna Rao, the plaintiff in the present action.
When Krishna Rao attempted to take possession of the sites, he was obstructed by one Garudachar, claiming title under a sale deed dated 1 12 1932 executed by one Lokiah, the husband of Srikantamma, sister of Devamma, and be accordingly filed O.S. No. 92 of 1938 39 in the court of the Subordinate Judge, Bangalore for establishing his title to the suit properties, and for an injunction restraining Garudachar from interfering with his possession.
The 457 suit was decreed on 23 7 1940, and the matter having been taken in appeal to the High Court by Garudachar, the parties entered into a compromise, and a decree, Exhibit E 1, was passed in terms thereof on 18 9 1942.
Under this decree.
, the title of the plaintiff to the suit properties was recognised.
After obtaining this decree, Krishna Rao started building on the sites, when he met with fresh obstruction, this time from the appellants who set up that they were in possession under a claim of title.
Under the partition deed entered into by the mortgagors on 6 9 1918 (Exhibit K), Keshavananda was allotted two plots, Nos. 3 and 4 to the west of East Lal Bagh Road in the plan, Exhibit G. These are the very plots, which form the subject matter of the present suit.
On 30 1 1920 Keshavananda con veyed these properties to Dr. Nanjunda Rao under a deed of sale, Exhibit VI.
There was on the same date a sale by Brahmananda of plots Nos. 1 and 2 to Dr. Nanjunda Rao, but those properties are not involved in this litigation.
On the death of Dr. Nanjunda Rao, his sons partitioned the properties, and in the division the suit properties fell to the share of one Raghunatha Rao, and on his death in 1938) his estate devolved on his widow, Nagubai, who is the first appellant.
On 28 5 1939 she executed a trust deed settling a moiety of these properties on the Anjaneyaswami Temple at Karaikal, and the trustees of that institution are the other appellants in this appeal.
In view of their obstruction, Krishna Rao instituted the suit out of which the present appeal arises, for a declaration of his title to the sites in question, and for an injunction restraining the defen dants from interfering with his possession, or in the alternative, for a decree in ejectment if they were held to be in possession.
The claim made in the plaint is a simple one.
It is that the title of Chapman as purchaser in execution of the decree passed on the mortgage dated 1 9 1918 prevailed against all titles created subsequent to that date, and that accordingly Dr. Nanjunda Rao and his successors acquired under the sale deed dated 30 1 1920 no title which could be 458 set up as against that of the plaintiff.
The defendants contested the suit on the ground, firstly, that as they were not impleaded as parties in the suit on the mortgage, O.S. No. 8 of 1933 34, their right of redemption remained unaffected by the decree passed therein or the sale in execution thereof; and secondly, that the suit was barred by limitation, because the plaintiff was not in possession within 12 years of the suit, and also because the defendants had acquired title to the suit properties by adverse possession for over 20 years.
The District Judge of Bangalore, who tried the suit, held that the title of Dr. Nanjunda Rao to the suit properties under the sale deed dated 30 1 1920 was, under section 52 of the Transfer of Property Act, subject to the result of the maintenance suit of Devamma (O.S. No. 100 of 1919 20), and was in consequence extinguished by the purchase by her in execution of the charge decree in that suit.
On the ques tion of limitation, the learned Judge held that the plaintiff had established possession of the properties within 12 years of the suit, and that the defendants had failed to establish title by adverse possession.
In the result, he granted a decree in favour of the plaintiff for possession of the suit properties.
The defendants appealed to the High Court, Mysore and by their judgment dated 8 3 1951 the learned Judges agreed with the District.
Judge that by reason of section 52 of the Transfer of Property Act, the title of Dr. Nanjunda Rao based on the deed dated 30 1 1920 came to an end when Devamma purchased the proper ties in execution of her maintenance decree, and dismissed the appeal, but granted a certificate under article 133(1) of the Constitution, and that is how the appeal comes before us.
Notwithstanding the tangle of legal proceedings extending over 30 years, which forms the background of the present litigation, the single and sole question that arises for decision in this suit is whether the sale deed dated 30 1 1920 under which the appellants claim is subject to the result of the sale dated 2 8 1928 in execution of the decree in O.S. No.100 of 459 1919 20 by reason of the rule of lis pendens enacted in section 52 of the Transfer of Property Act.
If it is, it is not in dispute that it becomes avoided by the purchase by Devamma on 2 8 1928.
If it is not, it is equally indisputable that the appellants as purchasers of the equity of redemption from Keshavananda have a right to redeem the mortgage dated 1 9 1918, and not having been impleaded in O.S. No. 8 of 1933 34 are not bound either by the decree passed therein or by the sale in execution thereof.
On this question, as the plaint in O.S. No. 100 of 1919 20 praying for a charge was presented on 6 6 1919, the sale to Dr. Nanjunda Rao subsequent thereto on 30 1 1920 would prima facie fall within the mischief of section 52 of the Transfer of Property Act, and would be hit by the purchase by Devamma on 2 8 1928 in execution of the charge decree.
Sri K. section Krishnaswami Ayyangar, learned counsel for the appellants, did not press before us the contention urged by them in the courts below that when a plaint is presented in forma pauperis the lis commences only after it is admitted and registered as a suit, which was in this case on 17 6 1920, subsequent to the sale under Exhibit VI a contention directly opposed to the plain language of the Explanation to section 52.
And he also conceded and quite rightly, that when a suit is filed for maintenance and there is a prayer that it be charged on specified properties, it is a suit in which right to immovable property is directly in question, and the lis commences on the date of the plaint and not on the date of the decree, which creates the charge.
But he contends that the decision of the courts below that the sale deed dated 30 1 1920 is hit by section 52 is bad on the following three grounds: (1) The question of lis pendens was not raised in the pleadings, and is not open to the plaintiff.
(2 The suit for maintenance, O.S. No. 100 of 1919 20 and the sale in execution of the decree passed therein are all collusive, and section 52 has accordingly no application.
(3) The purchase by Devamma in execution of the decree in O.S. No. 160 of 1919 20 on 2 8 1928 is void and inoperative, as the Official Receiver in whom 60 460 the estate of Keshavananda had vested on 19 2 1926 was not a party to the sale proceedings.
The e contentions must now be considered.
We see no substance in the contention that the plea of lis pendens is not open to the plaintiff on the ground that it had not been raised in the pleadings.
It is true that neither the plaint nor the reply statement of tile plaintiff contains any averment that the sale is affected by the rule of lis pendens.
Nor is there any issue specifically directed to that question.
It is argued for the respondent that the allegations in para 4 of the plaint and in.
para 5 of the reply statement that Dr. Nanjunda Rao being a transferee subsequent to the mortgage could claim no right "inconsistent with or superstar to those of the mortgagee and the auction purchaser" are sufficiently wide to embrace this question, and reference was made to issue No. 3 which is general in character.
Even if the plaintiff meant by the above allegations to raise the plea of lis pendens, he has not expressed himself with sufficient clearness for the defendants to know his mind, and if the matter had rested there, there would be much to be said in favour of the appellant 's contention.
But it does not rest there.
The question of lis pendens was raised by the plaintiff at the very commencement of the trial on 8 3 1947 when he went into the witness box and filed in his examination in chief Exhibit J series, relating to the maintenance suits, the decrees passed therein and the proceedings in execution thereof, including the purchase by Devamma.
This evidence is relevant only with reference to the plea of lis pendens, and it is significant that no objection was raised by the defendants to its reception.
Nay, more.
On 13 3 1947 they cross examined the plaintiff on the collusive character of the proceedings in Exhibit J series, and filed documents in proof of it, The trial went on thereafter for nearly three months, the defendants adduced their evidence, and the bearing was concluded on 2 6 1947.
In the argument before the District Judge, far from objecting to the plea of lis pendens being permitted to be raised, the defendants argued 461 the question on its merits, and sought a decision on the evidence that the proceedings were collusive in character, with a view to avoid the operation of section 52 of the Transfer of Property Act.
We are satisfied that the defendants went to trial with full knowledge that the question of lis pendens was in issue, had ample opportunity to adduce their evidence thereon, and fully availed themselves of the same, and that, in the circumstances, the absence of a specific pleading on the question was a mere irregularity, which resulted in no prejudice to them.
It was argued for the appellants that as no plea of lis pendens was taken in the pleadings, the evidence bearing on that question could not be properly looked into, and that no decision could be given based on Exhibit J series that the sale dated 30 1 1920 was affected by lis; and reliance was placed on the observations of Lord Dunedin in Siddik Mahomed Shah vs Mt. Saran and others(1) that "no amount of evidence can be looked into upon a plea which was never put forward".
The true scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they bad no opportunity of adducing evidence.
But that rule has no application to a case where parties go to trial with knowledge that a particular question is in issue,tbough no specific issue has been framed thereon, and adduce evidence relating thereto.
The rule applicable to this class of cases is that laid down in Rani Chandra Kunwar vs Chaudhri Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(2).
There, the defendants put forward at the time of trial a contention that the plaintiff had been given away in adoption, and was in consequence not entitled to inherit.
No such plea was taken in the written statement; nor was any issue framed thereon.
Before the Privy Council, the contention was raised on behalf of the plaintiff that in view of the pleadings, the question of adoption was not open to the defendants.
It was (1) A.I.R. 1930 P.C. 57.
(2) [1906 07] L.R. 34 I A. 27.
462 held by Lord Atkinson overruling this objection that as both the parties had gone to trial on the question of adoption, and as the plaintiff had not been taken by surprise, the plea as to adoption was open to the defendants, and indeed, the defendants succeeded on that very issue.
This objection must accordingly be overruled.
2.It is next contended that section 52 of the Transfer of Property Act does not operate to extinguish the title of Dr. Nanjunda Rao and his successors under the sale dated 30 1 1920, because the proceedings which resulted in the decree in 0.
section No. 100 of 1919 20 and the sale in execution thereof on 2 8 1928 were all collusive.
Whether they were so or not is essentially a question of fact, and both the courts below have concurred in answering it in the negative.
It is contended for the appellants that this finding is the result of an error into which the learned Judges of the High Court fell as to the incidence of burden of proof, and it should not therefore be accepted.
The argument is that Abdul Huq, his legal representatives and the plaintiff himself bad admitted again and again in judicial proceedings taken with reference to the suit properties that the decree and sale in 0.
section No. 100 of 1919 20 were collusive, and that, in consequence, even if the initial onus of establishing this fact was on the defendants, that was shifted on to the plaintiff on proof of the abovementioned admissions, and as there was no evidence worth the name on his side to explain them, he must fail.
We must now examine the several statements which are relied on by the appellants as admissions, ascertain what their true import is, and determine what weight should be attached to them.
On 27 6 1932 Abdul Huq moved the insolvency court for a direction to the Official Receiver to take possession of the mortgaged properties, which were stated to be in the occupation of one Lokiah.
This Lokiah, it has been already mentioned, is the husband of Srikantamma, the sister of Devamma, he having married her after the maintenance suits had been decreed and sometime 463 prior to the court auction in 1928.
In his petition, Abdul Huq alleged that Lokiah conducted proceedings in execution of the decree in O.S. No. 100 of 1919 20 in collusion with the insolvents and without notice to the Official Receiver, and purchased the properties in court auction on 2 8 1928 on behalf of the decree holder.
The decree itself was not attacked as collusive, and as for the sale dated 2 8 1928 it was distinctly alleged in para 3 of the petition that the purchase by Lokiah was for the benefit of Devamma.
The substance of the complaint of Abdul Huq was that the execution proceedings and the sales were fraudulent, and intended to defeat his rights to the rents and profits from the properties.
In other words, the ground of attack on the sale dated 2 8 1928 was not that it was unreal and collusive, but that it was real but fraudulent.
Now, there is a fundamental distinction between a proceeding which is collusive and one which is fraudulent.
"Collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose".
(Wharton 's Law Lexicon, 14th Edition, page 212).
In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties.
But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising fraud on the court.
Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties.
While in collusive proceedings the combat is a mere sham, in a fraudulent suit it is real and earnest.
The allegations in the petition of Abdul Huq set out above show that the suit itself was not attacked as collusive, but that the execution 464 proceedings were impeached as fraudulent.
It should be mentioned that on this petition the District Judge passed an order on 30 6 1932 directing the Official Receiver to take the necessary steps and report.
But nothing came out of this.
We next come to a petition filed after the death of Abdul Huq by his legal representatives asking for permission of the insolvency court to institute a suit on the mortgage dated 1 9 1918 impleading the Official Receiver as party.
The allegations made in the petition are on the same lines as those made by Abdul Huq in his petition dated 27 6 1932, and they do not carry the matter any further.
This petition was ordered, and on 30 8 1933 O.S. No. 3 of 1933 34 was instituted.
In this suit, as already stated, the plaintiffs sought to recover possession of the properties on foot of the usufructuary mortgage, and ancillary to that relief, they claimed damages from the defendants who were in possession, on the ground that the execution proceedings under which they got into possession were collusive and fraudulent.
Thus far, the allegations are a mere repetition of what bad been stated in the prior proceedings.
But the plaint in the suit went further, and stated for the first time that the proceedings in O.S. No. 100 of 1919 20 and the decree passed therein were collusive.
But these allegations were made only as the basis of the claim for damages for non payment of rent under the lease deed dated 3 9 1918 and non surrender of possession of the properties, and their true import is that the suit was fraudulent and intended to deprive the mortgagee of the rents and profits to which be was entitled.
At the trial, as already stated, the relief for possession and damages was given up, the question as to the collusive character of the sale was abandoned, and a decree for sale was passed.
These proceedings are open to the same comment as was made on the petition of Abdul Huq, and do not assist the defendants.
It remains to deal with a proceeding to which the present plaintiff was a party.
It will be remembered that after his purchase be was obstructed in his 465 possession by one Garudachar, and he had to file O.S. No. 92 of 1938 39 to establish his title against him.
In his plaint in that suit he stated, obviously adopting what Abdul Huq and his legal representatives had previously alleged, that the decree in O.S. No. 100 of 1919 20 and the execution sale on 2 8 1928 were collusive.
On behalf of the appellants, a contention is urged that as the plaintiff obtained a decree in O.S. No. 92 of 1938 39 on the strength of the above allegations, it is not open to him in these proceedings to go back on them, and plead the contrary.
That is a contention which will be presently considered.
But apart from that, the statements of the plaintiff in his plaint in O.S. No. 92 of 1938 39 considered purely as admissions, do not carry the matter beyond the point to which the statements made by Abdul Huq and his legal representatives in the prior proceedings take us.
The question then is, what is the effect to be given to these statements? An admission is not conclusive as to the truth of the matters stated therein.
It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made.
It can be shown to be erroneous or untrue, SO long as the person to whom it was made has not acted upon it to his detriment, when it might become conclusive by way of estoppel.
In the present case, there is no question of estoppel, as the title of Dr. Nanjunda Rao arose under a purchase which was long prior to the admissions made in 1932 and in the subsequent years.
It is argued for the appellants that these admissions at the least shifted the burden on to the plaintiff of proving that the proceedings were not collusive, and that as he gave no evidence worth the name that these statements were made under a mistake or for a purpose and were, in fact, not true, full effect must be given to them.
Reliance was placed on the well known observations of Baron Park in Slatterie vs Pooley(1) that "what a party himself admits to be true may reasonably be presumed to be so", and on the decision in Rani Chandra Kunwar vs Chaudhri (1) ; , 669; ; , 581.
466 Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(1), where this statement of the law was adopted.
No exception can be taken to this proposition.
But before it can be invoked, it must be shown that there is a clear and unambiguous statement by the opponent, such as will be conclusive unless explained.
It has been already pointed out that the tenor of the statements made by Abdul Huq, his legal representatives and the plaintiff was to suggest that the proceedings in 0.
section No. 100 of 1919 20 were fraudulent and not collusive in character.
Those statements would not, in our opinion, be sufficient, without more, to sustain a finding that the proceedings were collusive.
But assuming that they are sufficient to shift the burden on to the plaintiff of proving that the decree and sale in 0.
section No. 100 of 1919 20 were not collusive, the evidence adduced by him is, in our opinion, ample to discharge that burden.
He has filed Exhibit J series, which give a complete picture of the proceedings in 0.
section No. 100 of 1919 20.
Under the partition deed, Exhibit K,it will be remembered, the brothers agreed to pay a monthly maintenance of Rs. 8 each to their step mother, Chellammal.
This, however, was not charged on the family properties.
With reference to their step sisters, Srikantamma and Devamma, the provision was simply that the brothers should protect them.
It will also be remembered that under the partition Keshavananda and Brahmananda each got two vacant sites in full quit of their shares.
It appears from Exhibit J 10, paragraph 2, that the two brothers were contemplating the disposal of their plots, in which case the claim of Chellammal and the step sisters to maintenance would be defeated.
It became accordingly necessary for them to safeguard their rights, and for that purpose, to file suits for maintenance and claim a charge therefor on the family properties.
That the apprehensions of Chellammal were well founded is established by the fact that the two brothers entered into agreements for the sale of their vacant sites to Dr. Nanjunda Rao on 20 10 1919, and sale deeds were actually executed (1) [1906 07] L.R. 34 I.A. 27.
467 pursuant thereto on 30 1 1920.
There cannot be any doubt, therefore, that the suits were bona fide.
This conclusion is further reinforced when regard is had to the conduct of the litigation.
Two of the brothers contested the suit.
It underwent several adjournments, and was heard finally in December 1921.
At the trial, a number of witnesses were examined on either side, and the judgment, Exhibit J 6, shows that the contest centred round the quantum of maintenance payable to the plaintiffs, and it was keen, even bitter.
When at last the plaintiffs obtained decrees, they had no easy time of it in realising the fruits thereof.
The troubles of a creditor, it has been said, begin after he obtains a decree, and so it was with the plaintiffs.
Exhibit J 4 shows that Devamma had to file several applications for execution, before she could finally bring the properties to sale and in view of the heavy encumbrances to which they were subject, she had herself to purchase them on 2 8 1928.
The sale was confirmed on 21 11 1930, and the sale certificate, Exhibit J 5, was issued, and she got into possession.
To sum up, the claim on which the suit was laid was true and honest; it was hotly contested by the defendants, and prolonged proceedings in execution had to be taken for realising the fruits of the decree.
These are facts which are eloquent to show that the suit in O.S. No. 100 of 1919 20 and the sale on 2 8 1928 were not collusive.
The plaintiff also went into the box, and stated in cross examination that though when he filed 0. section No. 92 of 1938 39 he had thought that the proceedings were collusive, he now thought otherwise.
Counsel for the appellants strongly criticised this evidence, and contended that in the absence of facts as to why he chanced his mind, the statement of the plaintiff that he now thought otherwise was worthless.
But then, the plaintiff as also Abdul Huq and his legal representatives were utter strangers, and their statement about the collusive character of the proceedings, in O.S. No. 100 of 1919 20 could only be a matter of inference.
If on the materials then before him the plaintiff could have thought that those proceedings 468 were collusive, there is no reason why on the materials now before him he could not think otherwise.
It was open to the defendants to have further crossexamined him about the materials which led him to change his opinion, but they chose not to pursue the matter.
Both the courts below have, on a careful consideration of the record, come to the conclusion that the proceedings in O.S. No. 100 of 1919 20 were not collusive, and we do not see sufficient grounds for disturbing that finding, which must be affirmed.
We shall now deal with the contention of the appellants that in view of what happened in O.S. No. 92 of 1938 39 it is not open to the plaintiff to plead in these proceedings that the decree and sale in O.S. No. 100 of 1919 20 are not collusive.
It is argued that in his plaint in O.S. No. 92 of 1938 39 the plaintiff alleged that the proceedings in O.S, No. 100 of 1919 20 were collusive, adduced evidence in proof of these allegations, persuaded the court to give a finding to that effect, and obtained a decree on the basis of that finding, and he cannot therefore be permitted in this litigation to change his front and plead that the pro ceedings in O.S. No. 100 of 1919 20 are not collusive and succeed on it.
This bar arises, it is argued, on the principle that a person cannot both approbate and reprobate.
Now, the facts relating to the litigation in O.S. No. 92 of 1938 39 are that Garudachar set up title to the suit properties under a purchase dated 1 12 1932 from Lokiah, and it was the truth and validity of this sale that was really in question in that suit.
Lokiah purchased these and other properties in execution of the money decree of one Appalaraju, and therefore his title cannot prevail as against that of Devamma under the purchase under the charge decree on 2 8 1928.
In his plaint in O.S. No. 92 of 1938 39, the plaintiff attacked the purchases of both Devamma and of Lokiah as fraudulent and collusive.
But, in fact, as Garudachar did not claim any title under Devamma, there was no need to attack the purchase by her on 2 8 1928.
The suit was contested, 469 and in the judgment that was given, Exhibit E, the title of the plaintiff was upheld and a decree granted in his favour.
There was an appeal against the decree by Garudachar, R.A. No. 101 of 1940 41, and that was disposed of on a compromise by the parties, under which the title of the plaintiff to the suit properties was affirmed and Garudachar was granted some other vacant sites in satisfaction of his claim.
It is difficult to say on these facts that the allegation of the plaintiff that the proceedings in O.S. No. 100 of 1919 20 were collusive was either the foundation of his claim, or that he obtained any benefit under the decree on that basis.
Counsel for the appellants sought to rely on the findings in Exhibit E, as establishing that the proceedings in O.S. No. 100 of 191920 were collusive.
But as that judgment was not inter parties, the findings therein are inadmissible in this litigation, and, moreover, there having been an appeal against that judgment, the findings in Exhibit E lost their finality, and when the parties settled their claim by granting to Garudachar another property in substitution, they ceased to possess any force even inter parties.
But it is argued by Sri Krishnaswami Ayyangar that as the proceedings in 0.
section No. 92 of 1938 39 are relied on as barring the plea that the decree and sale in 0.
section No. 100 of 1919 20 are not collusive, not on the ground of resjudicata or estoppel but on the principle that a person cannot both approbate and reprobate, it is immaterial that the present appellants were not parties thereto, and the decision in Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd.(1), and in particular, the observations of Scrutton, L.J., at page 611 were quoted in support of this position.
There, the facts were that an agent delivered goods to the customer contrary to the instructions of the principal, who thereafter filed a suit against the purchaser for price of goods and obtained a decree.
Not having obtained satisfaction, the principal next filed a suit against the agent for damages on the ground of negligence and (1) (1921] 2 K B. 608.
470 breach of duty.
It was held that such an action was barred.
The ground of the decision is that when on the same facts, a person has the right to claim one of two reliefs and with full knowledge he elects to claim one and obtains it, it is not open to him thereafter to go back on his election and claim the alternative relief.
The principle was thus stated by Bankes, L. J.: "Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery.
To do so would be to approbate and reprobate the same act".
The observations of Scrutton, L. J. on which the appellants rely are as follows: "A plaintiff is not permitted to 'approbate and reprobate '.
The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election namely, that no party can accept and reject the same instrument: Ker vs Wauchope(1): Douglas Menzies vs Umphelby(2).
The doctrine of election is not however confined to instruments.
A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage.
That is to approbate and reprobate the transaction".
It is clear from the above observations that the maxim that a person cannot 'approbate and reprobate ' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto.
The law is thus stated in Halsbury 's Laws of England, Volume XIII, page 454, para 512: "On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here.
Thus a party cannot, after taking advantage under an order (e.g. payment of costs), (1) , 21.
(2) , 232, 471 be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it".
The plaintiff obtained no advantage against the appellants by pleading in 0.
section No. 92 of 1938 39 that the proceedings in 0.
section No. 100 of 1919 20 were collusive; nor did they acting on those pleadings acquire rights to the suit properties.
Nor is there any question of election, because the only relief which the plaintiff claimed in 0.
section No. 92 of 1938 39 and which he now claims is that he is entitled to the suit properties.
Only, the ground on which that relief is claimed is different and, it is true, inconsistent.
But the principle of election does not forbid it, and there being no question of estoppel, the plea that the proceedings in 0.
section No. 100 of 1919 20 are not collusive is open to the plaintiff.
3.It was finally contended that the purchase by Devamma in execution of the decree in 0.
section No. 100 of 1919 20 was void and conferred no title on her, because the Official Receiver in whom the estate of Keshavananda, the mortgagor, had vested on his adjudication as insolvent on 19 2 1926 had not been made a party to those proceedings, and that, in conse quence, the title of Dr. Nanjunda Rao and his successors under the sale deed dated 30 1 1920 continued to subsist, notwithstanding the court auction sale on 2 8 1928.
The obvious answer to this contention is that the properties which were sold on 2 8 1928 did not vest in the Official Receiver on the making of the order of adjudication on 19 2 1926.
, as they had been transferred by the mortgagor, long prior to the presentation of Insolvency Case No. 4 of 1925 26 under the very sale deed dated 30 1 1920, which forms the root of the appellants ' title.
That sale was no doubt pendente lite, but the effect of section 52 is not to wipe it out altogether but to subordinate it to the rights based.
on the decree in the suit.
As between the 472 parties to the transaction, however, it was perfectly valid, and operated to vest the title of the transferor in the transferee.
Under section 28(2) of the Insolvency Act, what vests in the Official Receiver is only the property of the insolvent, and as the suit properties had ceased to be his properties by reason of the sale deed dated 30 1 1920, they did not vest in the Official Receiver, and the sale held on 2 8 1928 is not liable to be attacked on the ground that he bad not been impleaded as a party thereto.
But it is argued for the appellants that having regard to the words of section 52 that pendente lite "the property cannot be transferred", such a transfer must, when it falls within the mischief of that section, be deemed to be non est, that in consequence Keshavananda must, for purposes of lis pendens, be regarded as the owner of the properties, notwithstanding that he bad transferred them, and that the Official Receiver who succeeded to his rights had a right to be impleaded in the action.
This contention gives no effect to the words "so as to affect the rights of any other party thereto under any decree or order which may be made therein", which make it clear that the transfer is good except to the extent that it might conflict with rights decreed under the decree or order.
It is in this view that transfers pendente lite have been held to be valid and operative as between the parties thereto.
It will be inconsistent to bold that the sale deed dated 30 1 1920 is effective to convey the title to the properties to Dr. Nanjunda Rao, and that, at the same time, it was Keshava nanda who must be deemed to possess that title.
We are, therefore, unable to accede to the contention of the appellants that a transferor pendente lite must, for purposes of section 52, be treated as still retaining title to the properties.
But assuming that Keshavananda had still some interest in the properties left even after he had sold them on 30 1 1920 and that it would vest in the Official Receiver on the making of the order of adjudication on 19 2 1926, what is its effect on the title of Devamma as purchaser in court auction in execu 473 tion of her charge decree? It has been held by the Privy Council in Kala Chand Banerjee vs Jagannath Marwari(1) that when in execution of a mortgage decree properties are sold without notice to the Official Receiver in whom the equity of redemption had vested prior to the sale, such sale would not be binding on him.
But here, it is not the Official Receiver, who impeaches the sale as bad.
In fact, he was a party to O.S. No. 8 of 1933 34 and would be bound by the sale in execution of the decree therein, under which the plaintiff claims.
It is the purchaser pendente lite in the charge suit, O.S. No. 100 of 1919 20, that now attacks the sale held on 2 8 1928 as null and void.
Is he entitled to do so? Counsel for the respondent has invited our attention to the decision in Wood vs Surr(2).
There, the mortgagor filed a suit for redemption in 1838.
A preliminary decree for accounts was passed in 1843 and pursuant thereto, a final decree was made in 1848 declaring the amount payable, and time for payment was given till 1849.
The amount not having been paid, the mortgage became foreclosed.
During the pendency of these proceedings, the mortgagor was adjudicated bankrupt in 1844, but the Official Assignee, in whom the equity of redemption had vested, was not impleaded in the mortgage action.
In 1841, the mortgagor bad created a further mortgage in favour of one Mrs. Cuppage, and she was not made a party in the redemption suit.
After the foreclosure of the mortgage in 1849, one Mr. Wood claiming in the rights of Mrs. Cuppage instituted an action to redeem the mortgage.
The question was whether being transferee pendente lite he was bound by the foreclosure proceedings.
The contention on his behalf was that as the official assignee was not a party to those proceedings, there had been no proper foreclosure, and that the whole matter was at large.
In negativing this contention, Sir John Romilly, M. R. observed: "There can be no question but that the suit (Davis 's suit) was defective by reason of no notice having been taken of the insolvency.
The proceeding (1) [1927] L, R. 54 T.A. 190, (2) ; ; , 474 having gone on exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion, be wholly inoperative against the assigneein insolvency and if he thought fit to contest the validity of the decree of foreclosure against Davis, it could not be held to be binding on such assignee.
But that does not conclude the question, which really is, whether the plaintiff who, but for this, would in truth have been bound, can take advantage of this objection.
I am of opinion that although the suit was undoubtedly defective, by reason of this insolvency, the assignee alone could take advantage of this defect.
It is obvious that Davis himself could not take advantage of it, or if from any subsequent cause, or any subsequent circumstance, the insolvency or bankruptcy had been superseded or annulled, he could not have said that the foreclosure was not absolute against him".
These observations directly cover the point now in controversy, and they embody a principle adopted in the law of this country as to the effect of a sale in execution of a decree passed in a defectively constituted mortgage suit.
Such a sale, it has been held, does not affect the rights of redemption of persons interested in the equity of redemption, who have not been impleaded as parties to the action as they should have been under Order 34, Rule 1, Civil Procedure Code but that it is valid and effective as against parties to the action.
This rule has been affirmed even when the person in whom the equity of redemption had vested is the Official Receiver, and he had not been made a party to the proceedings resulting in sale.
Vide Inamullah Khan vs Shambhu Dayal(1) and Subbaiah vs Ramasami Goundan(2).
We should accordingly hold that even assuming that the equity of redemption in the suit properties vested in the Official Receiver on the adjudication of Keshavananda, his non joinder in the execution proceedings did not render the purchase by Devamma a nullity, and that under the sale she acquired a good and impeccable title, subject to any right which the Official Receiver (1) A.I.R. 1931 All.
(2) I.L.R. 475 might elect to exercise, and it is not open to attack by the transferee pendente lite under the deed dated 30 1 1920 and his representatives, the present appellants.
In the result, we agree with the courts below that the title of the appellants has been extinguished under section 52 of the Transfer of Property Act, by the court sale dated 2 8 1928.
It must be mentioned that the appellants also pleaded that the suit was barred by limitation under article 142 on the ground that the plaintiff and his predecessors had not been in possession within 12 years of the suit, and that further the defendant had acquired title by adverse possession commencing from 1920.
The learned District Judge, found on both the issues in favour of the plaintiff, and though the correctness of these findings was attacked in the grounds of appeal to the High Court, there is no discussion of the question in the judgment of the learned Judges, and we must take it that the point had been abandoned by the appellants.
We accordingly declined to hear them on this question.
We may add that the question of limitation cannot really arise on the facts of this case, inasmuch as the possession which is claimed to be adverse is stated to have commenced in 1920, and it is well settled that such possession cannot affect the right of a prior mortgagee to bring the properties to sale, and adverse possession against the purchaser under that sale cannot commence prior to the date of that sale, and the present suit was instituted on 8 1 1945 within 12 years of the sale, which took place in 1936.
The appeal fails, and is dismissed with costs.
| The appellants as defendants in a suit for declaration of title to certain building sites sought to resist the respondents ' claim, arising by purchase from a purchaser in a sale in execution of a mortgage decree passed on a mortgage deed of 1918, by a counter claim based on a purchase of the same lands made in 1920 by their pre decessor in interest from one of the mortgagors against whom was then pending a suit for maintenance and for declaration of a charge on the land in suit.
That suit was decreed in 1921 and the lands were purchased by the decreeholder in execution of her decree in 1928.
The mortgagor had been adjudged an insolvent in 1926 and the Official Receiver in whom his estate vested was not made a party to the execution proceeding.
Suit to enforce the mortgage deed of 1918 was brought in 1933 impleading the Official Receiver and the purchaser in execution of the maintenance and charge decree but not the appellants.
In execution of the decree passed in this suit, the lands in suit were sold to a third party in 1936 and in 1938 the respondent 's father purchased them.
The respondent did not specifically raise the question of lis pendens in his pleading nor was an issue framed on the point, but he raised the question at the very commencement of the trial in his deposition, proved relevant documents which were admitted into evidence without any objection from the appellants who filed their own documents, cross examined the respondent and invited the court to hold that the suit for maintenance and a charge and the connected proceedings evidenced by these documents were collusive in order to avoid the operation of section 52 of the Transfer of Property Act.
The District Judge held that the appellants ' title acquired by the purchase of 1920 was extinguished by the sale held in execution of the charge decree by the operation of section 52 of the Transfer of Property 59 452 Act and decreed the suit and his decision was affirmed by the High Court in appeal.
Hold, that the decisions of the courts below were correct and must be affirmed.
That in the facts and circumstances of the case the omission of the respondent to specifically raise the question of lis pendens in his pleading did not take the appellants by surprise and was a mere irregularity which resulted in no prejudice to them.
Rani Chandra Kunwar vs Chaudhri Narpat Singh ([1906] L.R. 34 I.A. 27), applied.
Siddik Mahomed Shah vs Mt. Saran and Others (A.I.R. , explained and held inapplicable.
That section 52 of the Transfer of Property Act did not prevent the vesting of title in a transferee in a sale pendente lite but only made it subject to the rights of other parties as decided in the suit and subsequent insolvency of the transferor could not, therefore, vest any title in the Official Receiver or make the title of the execution purchaser liable to attack on the ground that the Receiver was not made a party to the execution proceeding.
That even assuming that title could not wholly pass by a transfer pendento lite and some interest would still subsist in the transferor to vest in the Receiver, the lands in suit having been sold in execution of a charge decree, the sale would at the most be not binding on him and he could, if he so chose, move to set it aside; but the transferee pendente lite or his representative could not be allowed to make his non joinder a ground for attacking the sale.
Wood vs Surr ([1854) ; , applied.
Inamullah Khan vs Shambhu Dayal (A.I.R. 1931 All. 159), Subbaiah vs Ramasami Goundan (I.L.R. and Kala Chand Banerjee vs Jagannath Marwari ([1927] L.P. 54 I.A. 190), referred to.
That no question of limitation or adverse possession really arose in the case.
It was well settled that a claim of adverse possession could not affect the right of a prior mortgagee to bring the properties to sale and adverse possession against the purchaser under that sale could not commence prior to the date of sale.
Held further, that there was a fundamental distinction bet ween a collusive and a fraudulent proceeding in that while the former was the result of an understanding between the parties, both the claim and the contest being fictitious, and the purpose to confound third parties, in the latter the contest was real, though the claim was untrue, and the purpose to injure the defendant by a verdict of the court obtained by practising fraud in it; that an admission was a mere piece of evidence and could not be conclusive except by way of estoppel when it had been acted 453 upon to his detriment by the person to whom it was made, the weight to be attached to it depending on the circumstances of each case, and the onus of proving that it was not true could not shift to the maker of it unless it was so clear and unambiguous as to be conclusive in absence of any explanation from him.
Slatterie vs Pooley, ([1840] ; and Rani Chandra Kunwari vs Choudhri Narpat Singh ([1906] L.R. 34 I.A. 27), referred to.
That the maxim that 'a person could not approbate and repro bate ' had its origin in the doctrine of election and was confined to reliefs arising out of one and the same transaction and against the parties to it.
Where, however, there was no question of election, as the relief claimed was one and the same, although based on different and inconsistent grounds, the maxim had no application.
Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd. ([1921] 2 K.B. 608), considered and distinguished.
|
ivil Appeal No. 2378 of 1977.
804 From the Judgment dated 3.2.1977 of the Gujarat High Court in Special Civil Application No. 551 of 1972.
B. Datta, L.B. Kolekar, Ms. Chetna Anand and P.H. Parekh (NP) for the Appellant.
S.K. Kholakia, R.B. Haribhakti and P.C. Kapoor (NP) for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
The facts relevant to the controversy are as under: The appellant had taken on lease, about 55 years ago, an extent of 2 acres, 6 gunthas of agricultural lands situated in Akote village from Vishwas Rao.
The Bombay Tenancy and Agricultural Lands Act 67 of 1948 for short `the Act ' applies to the lease.
By operation of section 32(1) the appellant became a deemed purchaser from tillers ' day i.e., April 1, 1957.
Section 32 G provides the procedure to determine purchase price.
Since the landlord was insane, the right to purchase was statutorily deferred under section 32 F till date of its cessation or one year after death.
Under section 88(1)(b) of the Act certain areas abutting Baroda Municipality were notified as being reserved for non agricultural or industrial purpose with effect from May 2, 1958.
By another notification published in the Gujarat State Gazette dated July 2, 1964, certain lands including those situated in Akote and of the appellant 's lease hold lands were reserved for industrial purpose.
Consequently Ss. 1 to 87 of the Act do not apply to the exempted area.
While the landlord was continuing under disability, his son Vasant Rao sold the land to the respondent under registered sale deed dated August 19, 1964.
By another notification under Section 88(1)(b) published in the Gazette dated October 29, 1964, the Government restricted the operation of the exemption to the area originally notified on May , 1958 i.e., Ss. 1 to 87 do not apply to the lands in question.
This notification was rescinded by further notification published in the Gazette dated August 23, 1976.
The Bombay Tenancy and Agricultural Lands(Gujarat) Amendment Act 36 of 1965, section 18(1) and 18(2) thereof introduced two provisos to section 88(1)(b) of the Act which was published in the Gazette on December 29, 1965 which are relevant for purpose of the case.
Section 88(1)(b) with amendments reads thus: "(1) Save as otherwise provided in sub section (2) 805 nothing in the following provisions of this Act shall apply (a) to lands belonging to, or held on lease form the Government; (aa) to lands held or leased by a local authority; (b) to any area which the State Government may, from time to time, by notification in th official Gazette, specify as being reserved for non agricultural or industrial development; Provided that if after a notification in respect of any area specified in the notification is issued under this clause, whether before or after the commencement of the Bombay Tenancy and Agricultural Lands (Gujarat Amendment) Act, 1965, the limits of the area so specified are enlarged on account of the addition of any other area thereto, then merely by reason of such addition, the reservation as made by the notification so issued shall not apply and shall be deemed never to have applied to the area so added, notwithstanding anything to the contrary contained in any judgment, or order of any court, Tribunal or any other authority.
Provided further that if any land in the area so added has been transferred or acquired after the issue of notification referred to in the first proviso but before the 9th day of October, 1964, such transfer or acquisition of land shall have effect as if it were made in an area to which this clause applies".
Vishwash Rao died in September 1965.
The appellant became entitled to purchase the land on and from August 19, 1966.
He filed an application before Mamlatdar to fix the price.
He fixed on enquiry at Rs.4,925.65 paise which was paid by the appellant.
In the enquiry, the respondent contended that he purchased the property from Vasantrao, son of the landlord.
By operation of second proviso to section 88(1)(b) the lands stood exempted from operation of Ss. 1 to 87 of the Act.
So the Mamlatdar had no jurisdiction to decide the 806 price of the land.
The appellant raised the contention that Vasantrao has no right to sell during the life time of the father, the Karta of the Hindu Joint Family.
The sale is invalid and does not bind him.
He acquired statutory right of deemed purchaser and its exemption under section 88(1)(b) does not divest his statutory right.
The Mamlatdar accepted the appellant 's contention and allowed the petition.
On appeal to the Collector and revision to the Revenue Tribunal the decision was reversed.
The Division Bench of the High Court by order dated February 3, 1977 dismissed the writ petition.
The appellant had leave of this Court by article 136.
Thus this appeal.
From these admitted facts the question emerges whether the operation of the second proviso to section 88(1)(b) has retrospective effect depriving the appellant of the statutory right of `deemed purchaser '.
section 88 of the Act empowers the government to exempt certain other lands from the purview of Ss. 1 to 87 of the Act.
The State Government exercised their power from time to time under section 88(1)(b) and issued notification and published in the official Gazette specifying certain areas as being reserved for non agricultural or industrial development i.e., urban development.
Consequently the first proviso gets attracted which say that notwithstanding any judgment or order of any court, tribunal or any other authority under the Act to the contrary, once the notification was issued either before or after commencement of the Amendment Act reserving the area so added for non agricultural or industrial development i.e. expansion for urbanisation, to the extent of the area covered under the first proviso, the provisions of Ss. 1 to 87 were not applied and shall be deemed never to have been applied.
The second proviso which is material for the purpose of the case further postulates that: "Provided further that if any land in the are so added has been transferred or acquired after the issue of the notification referred to in the first proviso but before the 29th day of October, 1964, such transfer or acquisition of the land shall have effect as if it was made to an area to which this clause applies".
(emphasis supplied) What is the effect of the second proviso to the facts is the question? Mr. Dutta, the learned counsel for the appellant contended that the first proviso has the effect of excluding Ss. 1 to 87 of the Act only to those areas which were initially reserved for non agricultural or industrial development and has no application to the land added to it by a 807 subsequent notification though it would become part thereof.
Any alienation in violation of the Act would not attract the operation of the second proviso.
The Act is an agrarian reform which created a vested right in the tenant as a deemed purchaser with effect from Tillers ' day which cannot be divested retrospectively.
The proviso should be construed to inhere in the tenant the vested rights created under the Act.
The Withdrawal of the notification dated Oct. 29, 1964 renders the right of the appellant uneffected.
It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the filed, which is covered by the main provision.
It carves out an exception to the main provision to which it has been enacted by the proviso and to no other.
The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is to confine to that case.
Where the language of the main enactment is explicit and unambiguous, the proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms.
The scope of the proviso, therefore, it to carve out an exception to the main enactment and it excludes something which otherwise would have been within the rule.
It has to operate in the same field and it the language of the main enactment is clear, the proviso cannot be torn apart from the main enactment nor can it be used to nullify by implication what the enactment clearly says nor set at naught the real object of the main enactment, unless the words of the proviso are such that it is its necessary effect.
The effect of the notification issued under section 88(1)(b) was the subject of consideration in several decisions of this Court.
In Sukharam @ Bapusaheb Narayan Sanas & Anr.
vs Manikchand Motichand Shah and Anr., [196] SCR 59 Sinha, CJ., held that the provisions of section 88 are entirely prospective and apply to such lands as are described in clauses (a) to (d) of section 88(1) from which the Act came into operation, namely, December 28, 1948 and are not a confiscatory in nature so as to take away from the tenant the status of a protected tenant already accrued to him.
In Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli, ; a Constitution Bench speaking through Sinha, CJ. held that Clauses (a) to (c) of section 88(1) applies to things as they were on the date of the commencement of the Act of 1948 whereas clause (d) authorised the State Govt.
to specify certain areas as being reserved for urban non agricultural or industrial development, by notification in the official Gazette, from 808 time to time.
It was specifically provided in clauses (a) to (c) that the Act, from its inception, did not certain areas then identified, whereas clause (d) has reference to the future.
The State Govt, could take out of the operation of the Act such areas as in its opinion should be reserved for urban non agricultural or industrial development.
Clause (d) would come into operation only upon such a notification being issued by the State Govt.
In Sukhram 's case, this Court never intended to lay down that the provisions of clause (d) are only prospective and have no retrospective operation.
Unlike clauses (a) to (c) which are clearly prospective, clause (d) has retrospective operation in the sense that it would apply to land which would be covered by the notification to be issued by the government from time to time so as to take that land out of the operation of the Act of 1948, granting the protection.
(emphasis supplied) So far as clauses (a) to (c) are concerned, the Act of 1948 would not apply at all to lands covered by them, but that would not take away the rights covered by the Act of 1939 which was repealed by the Act of 1948.
Therefore, it was held that by operation of section 89(2) the rights acquired under the Act of 1939 would be available to the tenant.
When a doubt was expressed of the correctness of the above views on reference, another Constitution Bench in Sidram Narsappa Kamble vs Sholapur Borough Municipality & Anr., ; , held at p. 65 thus: "New there is no doubt that section 88 when it lays down inter alia that nothing in the foregoing provisions of the 1948 Act shall apply to lands held on lease from a local authority, it is an express provision which takes out such leases from the purview of sections 1 to 87 of the 1948 Act.
One of the provisions therefore which must be treated as non existent where lands given on lease by a local authority is in section 31. .but the effect of the express provision contained in section 88(1)(a) clearly is that section 31 must be treated as non existent so far as lands held on lease from a local authority are concerned and in effect therefore section 88(1)(a) must be held to say that there will be no protection under the 1948 Act for protected tenants under the 1939 Act so far as lands held on lease from a local authority are concerned . . 809 the appellant cannot claim the benefit of section 31; nor can it be said that his interest as protected tenant is saved by section 89(2)(b).
This in our opinion is a plain effect of the provisions contained in section 31, section 88 and section 89(2)(b) of the 1948 Act".
In Parvati & Ors.
vs Fatehsinhrao Pratapsinhrao Gaekwad, ; the facts were that the Government issued a notification on May 21, 1958 under section 88(1)(b) of the 1948 Act reserving the land within the municipal limits of the city of Baroda for non agricultural and industrial development.
The appellant 's husband had taken possession of certain lands situated in the city of Baroda on lease from the respondent trustee.
The respondent laid the suit against the appellant for recovery of arrears of rent.
The defence was that the suit was not maintainable.
Dealing with the effect of the notification issued under section 88(1)(b), this Court held that the notification had retrospective operation and subject to certain exceptions provided in sub section (2) of section 88 all rights, title, obligations etc.
Accrued or acquired under the said Act ceased to exist.
Therefore, section 89(2)(b) was inapplicable to protect such right, title or interest, acquired under the Act except as provided in s 89A owing to express provision made in section 88 of the Act.
Accordingly it was held that the Civil Court was legally competent to determine the reasonable rent payable by the tenant.
In Navinchandra Ramanlal vs Kalidas Bhudarbai & Anr., ; this court was to consider a case that the notification under section 88(1)(b) was issued on May 30, 1959 by which date the tenant acquired the statutory right of a deemed purchaser with effect from April 1, 1957.
This Court held that the tenant cannot be divested of his deemed purchase by a subsequent notification issued thereunder.
It would be seen that the effect of the second proviso was not considered therein.
The above interpretation would equally apply to the interpretation of the notification issued under the proviso to section 88(1)(b) adding to the area reserved for non agricultural or industrial development.
Its effect is that notwithstanding any judgment or order of any court or Tribunal or any other authority, the provisions of Ss. 1 to 87 shall not apply and shall be deemed never to have applied to such added area as well.
If any land in the newly added area has been transferred or acquired between the date of the notification issued under first proviso and October 9, 1964, such transfer or acquisition of land shall have the effect as if it was made in an area to which the main part of the proviso and section 88(1)(b) would apply.
The necessary consequence would be that the provisions of sections 1 to 87 shall not apply and shall be 810 deemed never to have applied to such added area.
It is implicit that such transfer or acquisition made, to bring within the net of second proviso, must be valid and bona fide one and not colourable, fraudulent, fictitious or nominal.
The Legislature appears to relieve hardship to the bona fide purchasers.
The title acquired by such transfer is not effected by the provisions of the Act.
The Legislature advisedly used the words `acquired or transferred '.
The respondent 's own case is that Vishwesh Rao, Karta of the Hindu Joint Family was under disability due to lunacy.
The tenant acquired statutory right as deemed purchaser under section 32.
The Act, by necessary implication, divests the landlord of his right to alienate the land held by the tenant.
The statutory right topurchase the land under section 32 as deemed purchaser was postponed by operation of section 32 F of the Act till the cessation of the disability or one year after the death of the landlord.
In such situation can the son during the life time of the father, has right to sell the same property to the respondents, and whether such a sale made on August 19, 1964 to the respondents was valid and binds the appellant.
In Raghavachariar 's Hindu Law Principles and Precedents, Eighth Ed., 1987 in section 275 at p. 39 stated thus: "So long as the joint family remains undivided, the senior member of the family is entitled to manage the family properties, and the father, and in his absence, the next senior most male member of the family, as its manager provided he is not incapacitated from acting as such by illness or other sufficient cause.
The father 's right to be the manager of the family is a survival of the patria potastas and he is in all cases, naturally, and in the case of minor sons necessarily the manager of the joint family property.
In the absence of the father, or if he resigns, the management of the family property devolves upon the eldest male member of the family provided he is not wanting in the necessary capacity to manage it".
Regarding the management of the Joint Family Property or business or other interests in a Hindu Joint Family, the Karta of the Hindu Joint Family is a prima inter pares.
The managership of the Joint Family Property goes to a person by birth and is regulated by seniority and the Karta or the Manager occupies a position superior to that of the other members.
A junior member cannot, therefore, deal with the joint family property as Manager so long as the Karta is available except where the Karta relinquishes his right expressly or by necessary impli 811 cation or in the absence of the Manager in exceptional and extra ordinary circumstances such as distress or calamity effecting the whole family and for supporting the family or in the absence of the father whose whereabouts were not known or who was away in remote place due to compelling circumstances and that is return within the reasonable time was unlikely or not anticipated.
No such circumstances are available here to attract the facts of the case.
Vasantrao, the vendor, son of the Karta of the Hindu Joint Family per se has no right to sell the property in question as Manager so long as the father was alive.
When father was under disability due to lunancy, an order from the Court under Indian Lunancy Act IV of 1912 was to be obtained to manager the joint family property.
No proceedings were taken under sections 39, 43 and 45 of the Indian Lunacy Act to have the inquisition made by a competent District Court to declare him as insane and to have him appointed as Manager of the Joint Family.
In P.K. Gobindan Nair & Ors.
vs P. Narayanan Nair & Ors., [1912] 23 M.L.J. 706=17 Indian Cases 473 a division Bench of the Madras High Court held that a guardian cannot be appointed as Manager under the Guardian and Wards Act on an adjudication of Karnavan of an undivided Malabar Tarwad as a lunacy.
In A. Ramacharlu vs Archakan Ananthacharlu & Anr., A.I.R. 1955 A.P. 261 a division Bench consisting of Subba Rao, C.J. and Satyanarayana Raju, J. (as they were) considered the question of appointment of a son as the Manager of the Mitakshara family whose father was alleged to be a lunatic.
Subba Rao, C.J. speaking for the Bench, held that in view of the finding that the Karta, though was mentally not sound, but was capable to manage the property, the application for appointment of a son as manager of the joint family property was not be ordered.
Since Vasantrao did not obtain any order from the competent court under the Lunacy Act to have him appointed as Manager of the joint family to alienate the property, the sale is per se illegal.
The sale, therefore, appears to be to defeat the statutory right of the appellant.
The rigour of the second proviso to section 88(1)(b) is thus inapplicable.
Thereby the right and interest as a deemed purchaser acquired by the appellant has not been effected by a subsequent notification issued under section 88(1)(b).
The High Court, therefore, committed manifest error in holding that the appellant is not entitled to the relief.
The appeal is accordingly allowed and the orders of the High court, The Tribunal and District Collector are set aside and that of the Mamlatdar is confirmed, but in the circumstances parties are directed to bear their own costs.
Y.Lal.
Appeal Allowed.
| The appellant took on lease some agricultural lands from one Viswas Rao and by operation of Section 32(1) of the Bombay Tenancy and Agricultural Lands Act 67 of 1948, which was applicable to the lease, he became a deemed purchaser from tillers ' day i.e. 1.4.1957.
Since the landlord was insane, the right to purchase was statutorily deferred under section 32 F till date of its cessation or one year after death.
Pursuant to the notification issued under Section 88(1)(b) of the Act, certain lands including those of the appellant 's lease hold lands were reserved for industrial purpose; thereby making sections 1 to 87 of the Act inapplicable to the exempted area.
During the subsistence of disability of the landlord, his son Vasant Rao sold the land to the respondent under registered sale deed.
Vishwas Rao died in September 1965.
The appellant became entitled to purchase the land on and from August 19, 1966.
He therefore filed an application before Mamlatdar to fix the price.
He fixed on enquiry at Rs.4,95/65 P. which was paid by the appellant.
In the enquiry, the respondent contended that he purchased the property from Vasantrao, son of the landlord and by operation of the second proviso to Section 88(1)(b), the lands stood exempted from the operation of Section 1 to 87 of the Act.
So the Mamlatdar had no jurisdiction to decide the price of the land.
The appellant 's contention was that Vasantrao had no right to sell the lands during the life time of his father, the Karta of the Hindu Joint Family.
The sale was invalid and did not bind him.
He had acquired statutory right of `deemed purchaser ' and its exemption under section 88(1)(b) did not divest his statutory right.
The Mamlatdar accepted the appellant 's contention and allowed the petition.
On appeal to the Collector and revision to the Revenue Tribunal, the decision of Mamlatdar was reversed.
The Division Bench of the High Court dismissed the writ petition.
Hence this appeal by the appellant, after obtaining special leave.
On the question: whether the operation of the second proviso to Section 88(1)(b) of the tenancy Act, 1948 has retrospective effect depriving the appellant of the statutory right? 803 Allowing the appeal, this Court HELD: Section 88 of the Act empowers the government to exempt certain other lands from the purview of Sections 1 to 87 of the Act.
The State Governments exercised their power from time to time under Section 88(1)(b) and issued notification and punished in the official Gazette specifying certain areas as being reserved for non agricultural or industrial development i.e., urban development.
[806C D] It any land in the newly added area has been transferred or acquired between the date of the notification issued under first proviso and October 9, 1964, such transfer or acquisition of land shall have the effect as if it was made in an area to which the main part of the proviso and Section 88(1)(b) would apply.
The necessary consequence would be that the provisions of Sections 1 to 87 shall not apply and shall be deemed never to have applied to such added area.
It is implicit that such transfer or acquisition made, to bring within the net of second proviso, must be valid and bona fide one and not colourable, fraudulent, fictitious or nominal.
[809G 810B] In the instant case, since Vasantrao did not obtain any order from the competent court under the Lunacy Act to have him appointed as Manager of the joint family to alienate the property, the sale is per se illegal, The sale, therefore, appears to be to defeat the statutory right of the appellant.
The rigour of the second proviso to Section 88(1)(b) is thus inapplicable.
Thereby the right and interest as deemed purchaser acquired by the appellant has not been affected by subsequent notification issued under section 88(1)(b).
[811F G] Sukharam @ Bapusaheb Narayan Sanas & Anr.
vs Manikchand Motichand Shah & Anr., [196] 2 S.C.R. 59; Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli, ; ; Sidram Narsappa Kamble vs Sholapur Borough Municipality & Anr., ; ; Parvati & Ors vs Fatehsinhrao Pratapsinghrao Gaekwad, ; ; Navinchandra Ramanlal vs Kalidas Bhudarbai & Anr., ; ; P.K. Gobindan Nair & Ors.
vs P. Narayanan Nair & Ors., Indian Cases 743; and A. Ramacharlu vs Archakan Ananthacharlu & Anr., A.I.R. 1955 A.P. 261, referred to.
|
Civil Appeal No. 814 of 1964.
Appeal by special leave from the judgment and order dated October 24, 1961 of the Madhya Pradesh High Court in Misc.
Petition No. 125 of 1958.
I.N. Shroff, for the appellants.
C.B. Agarwala and C. P. Lal, for the respondent.
The Judgment of the Court was delivered by Subba Rao, J.
This appeal by special leave raises the question of the intepretation of Item No. 39 of the Notification 753 No. 58, dated October 24, 1953, hereinafter called the 'Notification ', issued by the Government of Madhya Bharat under the Madhya Bharat Sales Tax Act, Samvat 2007 (Act No. 30 of 1950), hereinafter called the Act.
The facts are as follows : Hiralal, the respondent, is the: manager of a joint Hindu family carrying on business in the name and style of "Messrs. Tilokchand Kalyanmal".
The joint family owns a re rolling mill situated in Indore City called the Central India Iron and Steel Company.
The said family purchases scrapiron locally and imports iron plates from outside and after converting them into bars, flats and plates in the Mills sells them in the market.
The respondent made a default in furnishing the returns prescribed by section 7(i) of the Act for the period April 1, 1954, to March 31, 1955.
On February 27, 1956, the Sales tax.
Officer, Indore, determined the taxable turnover at Rs. 2,26,000and the sales tax payable thereon at Rs. 8,000; and he also imposed a penalty of Rs. 1,000 under section 14 (1) (c) of the Act.
On the same day he issued demand notices to the respondent for the payment of the said sales tax and the penalty.
On September 10, 1956, the respondent filed a petition in the High Court of Madhya Bharat (afterwards Madhya Pradesh) under articles 226 and 227 of the Constitution for the issue of appropriate writs quashing, the assessment of tax and penalty and to restrain the State from giving effect to the said orders of the Sales tax Officer.
A Divi sion Bench of the High Court held that the iron bars, flats and ' plates sold by the respondent were exempted from sales tax under the Notification.
In that view, the orders of the Sales tax Officer were quashed.
The state has filed the present appeal, by special ' leave.
The only question in this appeal is whether the said iron bars, flats and plates are not iron and steel within the meaning of ' Item No. 39 of the Notification.
Parliament enacted Essential Goods (Declaration and Regulation of Tax on Sales or Purchases) Act, 1952 (Act No. 52 of ' 1952), which came into force on August 9, 1952.
In Schedule I of the said Act, iron and steel were declared essential for the life of the community.
Thereafter, the Government of Madhya.
Bharat, in exercise of the powers conferred by section 5 of the Act, issued the Notification as also Notification No. 59, dated October 24, 1953.
The material part of Schedule I of Notification 58 reads 754 "No tax shall be payable on the sale of the following goods S.No.
Description of goods.
39 Iron and steel.
Notification No. 59 described the goods sales of which were taxable at particular rates.
Schedule IV thereof reads : "List of articles under section 5 of the Madhya Bharat Sales Tax Act, 1950, on the assessable sale proceeds of which sales tax at the rate of Rs. 3/2/ per cent.
shall be payable, showing the nature of articles on which the tax is payable.
Name of article Stage of sale in Madhya Bharat at which the tax is payable.
9 . goods prepared from any Sale by imported or pro metal sale by importer or producer.
ducer.
other than gold and silver. .
Learned counsel for the State contends that the expression "iron and steel" means iron and steel in the original condition : and not iron and steel in the shape of bars, flats and plates.
In our view, this contention is not sound.
A comparison of the said two Notifications brings out the distinction between rawmaterials of iron and steel and the goods prepared from iron and steel : while the former is exempted from tax, the latter is taxed. 'Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the respondent was merely re rolled into bars,flats and plates.
They were processed for convenience of sale.
The raw materials were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
The conclusion arrived at by the High Court is ,correct.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The respondent factory used to purchase raw tobacco and after processing it, sell it as chewing tobacco.
Excise duty was paid by the factory in respect of raw tobacco purchased by it.
In sales tax proceedings the factory contended that the excise duty so paid to the Central Government must be deducted to arrive at the net turnover under r. 5(1)i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939.
The assessing officer as well as the Appellate Assistant Commissioner rejected the contention but it was accepted by the Tribunal.
The revision filed by the.
State in the High Court was dismissed, whereupon the State appealed to this Court by special leave.
It was contended on behalf of the appellant that the raw tobacco was converted by a manufacturing process into chewing tobacco, a different commodity and that, therefore, under r. 5(1)(i) of the Rules, as excise duty was paid only in respect of raw tobacco and not chewing tobacco the said duty was not deductible from the turnover of the assesses.
HELD : 'Me object of the concession in r. 5(1)(i) is presumably to avoid payment of tax on tax in respect of the same goods.
This concession would have no relevance if the goods subjected to excise duty were different from the goods sold.
Tobacco when converted by a process of manufacture into chewing tobacco becomes a different marketable product.
Duty on raw tobacco cannot therefore be said to be paid in respect of the manufactured product.
[82 B D] The expression "in respect of the goods" in r. 5(1)(i) means only on the goods", and cannot take in the raw material out of which the goods were made.
[83 E] Inland Revenue Commissioners vs Court & Co. [1963] 2 All.
E.R. 722 and Asher vs Seaford Court Estates Ltd., L.R. , considered.
The excise duty paid by the respondent was only on the raw tobacco and not on the goods sold by it, and therefore, the said duty could not be deducted from its turnover under r. 5(1) (i).
[83 E F]
|
: Criminal Appeal No. 18 of 1953.
Appeal under article 134(1)(c) of the Constitution of India from the Judgment and Order dated the 18th February, 1953, of the High Court of Judicature at Bombay in Criminal Appeal No. 592 of 1952 arising out of the Judgment and Order dated the 21st May, 1952, of the Court of the Presidency Magistrate, 19th Court, Bombay, in Case No. 147/P/ 1951.
B. H. Lulla and Rajinder Narain for the appellants.
Porus A. Mehta for the respondent.
May 13.
The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J.
The appellants were charged under section 18(1) of the Bombay Rent I Restriction Act, 1947, for receiving from Shankar Das Gupta through Mathra Das, accused No. 3, on 23rd November, 1950, a sum of Rs. 2,400 as premium or 160 pugree in respect of the grant of lease of Block No. 15 in a building under construction.
The magistrate found 'the appellants guilty of the charge and sentenced each of them to two months ' R.I. and a fine of Rs. 1,200.
Mathra Das was convicted and sentenced to one day 's S.I. and a fine of Rs. 100.
The fourth accused, Roshanlal Kanjilal, was acquitted.
Mathra Das preferred no appeal against his conviction and sentence.
The appellants preferred an appeal to the High Court against their conviction.
This was heard by Gajendragadkar and Chainani JJ.
on the 8th of October, 1952.
It was contended, inter alia, that even if it were held that the appellants had accepted the sum of Rs. 2,400 they could not be said to have committed an offence under section 18(1) of the Act inasmuch as the amount could not in law be held to be a premium in respect of the grant of a lease.
On this point the learned Judged said as follows : " In the present case the work regarding the building which still remained to be done was so important that both the parties agreed that the complainant should get into possession after the said work was completed.
In such a case unless the building is completed the tenant has no right which can be enforced in a Court of law.
If the landlord finds it impossible for any reason to complete the building, what is the right which an intending tenant can enforce against him.
Therefore, in our opinion, there is considerable force in the contention urged by Mr. Lulla that in the present case even if it be held that the accused had received Rs. 2,400 in the circumstances to which we have already referred that would not bring them within the mischief of section 18(1) because there has been no grant of a lease at all.
There is only an agreement that the landlord would lease to the complainant a particular flat after the building has been fully and properly completed.
It does appear that section 18 1 does not bring within its mischief executory agreements of this kind." A contrary view had been expressed in Criminal Revision No. 1178 of 1949, by another Bench of the High Court on the construction of section 18(1).
The 161 matter was therefore referred to the Full Bench.
The question framed for the consideration of the Full Bench was in these terms: If as owners of an in complete building the appellants accepted Rs. 2,400 from the complainant in respect of an agreement between them that the appellants were bound to give and the complainant was entitled to take possession of flat No. 15 in the said building as soon as the said building was completed on the agreed rent of Rs. 75 per month, did the acceptance of Rs. 2,400 by the appellants fall within the mischief of section 18 of Bombay Act LVII of 1947 This question, if answered in the negative by the Full Bench, would have concluded the case.
The Full Bench answered the question referred in the affirmative.
It held that the oral agreement did not constitute a lease but it amounted to an agreement to grant a lease in future, and that the receipt of consideration for an executory agreement was within the mischief of section 18(1) of the Act.
The Full Bench Expressed its opinion in these terms: " What the Legislature has penalized is the receipt of a premium by the landlord and the Legislature has also required a nexus between the receipt by the landlord of a premium and the grant of a lease of any premises.
Therefore a receipt alone by a landlord would not constitute an offence, but that receipt must be connected with the grant of the lease of any premises.
Unless that connection is established no offence would be committed.
The contention of Mr. Lulla on behalf of the accused is that the receipt of the premium must be simultaneous with the grant of the lease.
If the lease comes into existence at a future date, then the receipt of a premium according to him is not "in respect of " the grant of a lease.
Therefore the key words according to us in this section are " in respect of.
" It is relevant to observe that the Legislature has advisedly not used the expression "for" or "in consideration of" or " as a condition of " the grant of a lease.
It has used an expression which has the widest connotation and 21 162 means in its plain meaning " connected with or attributable to," and therefore it is not necessary that there must be simultaneous receipt by the landlord with the grant of the lease.
So long as so 'me connection is established between the grant of the lease and the receipt of the premium by the landlord, the provisions of the section would be satisfied.
In our opinion it is impossible to contend that in the present case there was no connection whatever between the landlord receiving the premium and his granting the lease of the premises.
It is true that when he received the premium he did not grant a lease.
It is true that all that he did when he received the premium was to enter into a contract with his tenant to grant a lease in future.
But the object of the landlord in receiving the premium and the object of the tenant in paying the premium was undoubtedly on the part of the landlord the letting of the premises and oh the part of the tenant the securing of the premises.
Therefore the object of both the landlord and the tenant was the grant of the lease of the premises concerned and that object was achieved partly and to start with by an oral agreement being arrived at between the landlord and the tenant with regard to the granting of this lease, the lease being completed when delivery of possession of the premises would be given.
Therefore, in our opinion, on the facts of this case it is not possible to contend that the payment of the premium received by the landlord was unconnected with the grant of a lease of any premises.
The fact that no grant was made at the time when the premium was received, the fact that there was merely an agreement to grant a lease, the fact that the lease would come into existence only at a future date, are irrelevant facts so long as the connection between the receiving of the premium and the granting of the lease is established.
" On return from the Full Bench, the Division Bench considered the other contentions raised on behalf of the appellants and held that there were no merits in any one of those points and in the result the appeal was dismissed.
It was certified that the case involved a substantial question of law and was a fit one for appeal to this Court.
This appeal is before us on that certificate, 163 The principal question to decide in the appeal is whether the answer given by the Full Bench to the question referred to it is right, and whether receipt of a sum of money by a person who enters into an executory contract to grant a lease of a building under construction falls within the mischief of section 18(1) of the Act Section 18(1) provides: " If any landlord either himself or through any person acting or purporting to act on his behalf receives any fine, premium or other like sum or deposit or any consideration, other than the standard rent. " in respect of the grant, renewal or continuance of a lease of any premises such landlord or person shall be punished " in the manner indicated by the section Under the section the money must be received by the landlord in respect of the grant of a lease.
The section refers to the " grant, renewal or continuance of a lease.
" Prima facie, it would not cover an executory agreement to grant a lease.
The words " renewal or continuance of a lease " clearly suggest that there must be a renewal or continuance of a subsisting lease.
In the context, grant of tenancy means the grant of new or initial tenancy; renewal of tenancy means the grant of tenancy after its termination; and continuance seems to contemplate continuance of a tenancy which is existing.
Whether or not an executory agreement for grant of a lease comes within the ambit of the section by reason of the use of the words " in respect of " would be examined hereinafter.
Before doing so it may be stated that an instrument is usually construed as a lease if it contains words of present demise.
It is construed as an executory agreement, notwithstanding that it contains words of present demise, where certain things have to be done by the lessor before the lease is granted, such as the completion or repair or improvement of the premises, or by the lessee, such as the obtaining of sureties.
(Vide Halsbury 's Laws of England, Second Edition, Vol. 20, pp. 37 39).
On the facts of this case therefore the Full Bench very rightly held that the 164 oral, agreement made between the parties did not constitute a lease but it amounted to an agreement to grant a lease in future.
It may further be pointed out that, in fact, in this case the lease never came into existence.
Moreover, in view of the provisions contained in the Bombay Land Requisition Act XXXIII of 1948, as amended, the appellants could not let out the building even after its completion unless on a proper notice being given the Controller of Accommodation did not exercise his powers under that Act.
It so happened that as soon as the building was completed the Controller of Accom modation requisitioned it, and thus no occasion arose for giving effect to the executory contract.
The question that needs our determination in such a situation is Whether section 18(1) makes punishable receipt of money at a moment of time when the lease had not come into existence, and when there was a possibility that the contemplated lease might never come into existence.
It may be here observed that the provisions of section 18(1) are penal in nature and it is a well settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty.
It if; not competent to the Court to stretch the meaning of an expression used by the Legislature in order to carry out the intention of the Legislature.
As pointed out by Lord Macmillan in London and North Eastern Railway Co. vs Berriman(1), " where penalties for infringement are imposed it is not legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and ordinary meaning of its language.
" The High Court took the view that without stretching the language of section 18(1) beyond its fair and ordinary meaning, the very comprehensive expression " in respect of " used by the Legislature could lead to only one conclusion, that the Legislature wanted the (1) , 295, 165 penal consequences of section 18(1) to apply to any nexus between the receipt by a landlord of a premium and the grant of the lease.
In our judgment, the High Court laid undue emphasis on the words "in respect of" in the context of the section.
Giving the words " in respect of " their widest meaning, viz., " relating to " or " with reference to", it is plain that this relationship must be predicated of the grant, renewal or continuance of a lease, and unless a lease comes into existence simultaneously or near about the time that the money is received, it cannot be said that the receipt was " in respect of " the grant of a lease.
The relationship of landlord and tenant does not come into existence till a, lease comes into existence; in other words, there is no relationship of landlord and tenant until there is a, demise of the property which is capable of being taken possession of If the Legislature intended to make receipts of money on executory agreements punishable, the section would have read as follows: " receives any fine, premium or other like sum or deposit or any consideration other than the standard rent in respect of the lease or an agreement of lease of the premises, such landlord or person shall be punished " in the manner indicated in the section.
The section does not make the intention punishable; it makes an act punishable which act is related to the existence of a lease.
It does not make receipt of money on an executory contract punishable; on the other hand it only makes receipt of money on the grant, renewal or continuance of the lease of any premises punishable and unless the lease come into existence no offence can be said to have been committed by the person receiving the money.
It is difficult to hold that any relationship of 'landlord and tenant comes into existence on the execution of at agreement executory in nature or that the expression " premium " can be appositely used in connection with the receipt of money on the occasion of the executor of such an agreement, It may well be that if a leas( actually comes into existence then any receipt of money which has a nexus with that lease may fall within the mischief of section 18(1), but it is unnecessary to ex press any final opinion on the question as in the present 166 case admittedly no lease ever came into existence and the relationship of landlord and tenant was never created between the parties.
The landlord never became entitled to receive the rent from the tenant and the tenant never became liable to pay the rent.
There was no transfer of interest in the premises from the landlord to the tenant.
On its plain, natural, grammatic meaning, the language of the section does not warrant the construction placed upon it by the Full Bench merely by laying emphasis on the words " in respect of.
" In our opinion the language of the section ; 'in respect of the grant, renewal or continuance of a lease " envisages the existence of a lease and the payment of an amount in respect of that lease or with reference to that lease.
Without the existence of a lease there can be no reference to it.
If the Legislature intended to punish persons receiving pugree on merely executory contracts it should have made its intention clear by use of clear and unambiguous language.
The construction we are placing on the section is borne out by the circumstance that it occurs in Part I of the Act.
Section 6 of this Part provides that " in areas specified in Schedule I, this Part shall apply to premises let for residence, education, business, trade or storage.
" This Part relates to premises let, in other words, premises demised or given on lease and not to premises that are promised to be given on lease and of which the lease may or may not come into being.
The definition of the expression " landlord" also suggests the same construction.
Landlord " as defined in section 5 of the Act means any person who is for the time being receiving, or entitled to receive, rent in respect of any premises whether on his own account or on account, or on behalf, or for the benefit, of any other person, or as a trustee, guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant. .
It is obvious that on the basis of an executory agreement the appellants would not be entitled to receive any rent.
They would only be entitled to receive rent after the lease is executed and actual 167 demise of the premises or their transfer is made in favour of the complainant.
The definition of the expression tenant" also suggests the same construction.
Mr. Mehta for the State, besides supporting the emphasis placed by the High Court on the words " in respect of," contended that that construction could be supported in view of the provisions of sub section (3) of section 18 which is in these terms: " 18(3) Nothing in this section shall apply to any payment made under any agreement entered into before the first day of September, 1940, or to any payment made by any person to a landlord by way of a loan, for the purpose of financing the erection of the whole or part of a residential building or a residential section of a building on the land held by him as an owner, a lessee or in any other capacity, entitling him to build on such land, under an agreement which shall be in writing and shall, notwithstanding anything contained in the Indian , be registered.
Such agreement shall inter alia include the following conditions, namely, (1) that the landlord is, to let to 'such person the whole or part of the building when completed for the use of such person or any member of his family. .
It was suggested that but for this exception the executory agreement would be included within the mischief of section 18(1) and that unless such agreements were within the mischief of the section there would have been no point in exempting them from its provisions.
In our view, this contention is not sound.
In the first place, the exception was added to the section by Act 42 of 1951, subsequent to the agreement in question, and for the purposes of this case section 18(1) should ordinarily be read as it stood in the Act, at the time the offence is alleged to have been commit ted.
Be that as it may, it appears that sub section (3) was added to the section by reason of the fact that some Courts construed section 18(1) in the manner in which it has been construed by the Full Bench in this case, and the Legislature by enacting clause (3) made it clear that agreements of the nature indicated in the 168 subjection were never intended to be included therein.
In our opinion, the language of that section is not of much assistance in construing the main provisions of section 18(1).
The result therefore is that in our view the receipt of money by the appellants from the complainant at the time of the oral executory agreement of lease was not made punishable under section 18(1) of the Act and is outside its mischief, and the Presidency Magistrate was in error in convicting the appellants and the High Court was also in error in upholding their conviction.
We accordingly allow this appeal, set aside the conviction of the appellants and order that they be acquitted.
Appeal allowed.
| Appellant No. 1 filed a petition challenging the election of the first respondent from the Lambi Assembly Constituency ( 'reserved seat) in the district of Ferozepur, Punjab, at the 1967 general election.
It was urged in the petition that the nomination paper of appellant No. 2 had been wrongly rejected by the Returning Officer who had held that appellant No. 2 was a mochi and as such not a member of the chamar caste mentioned in item 9 of the Constitution (Scheduled Castes) Order, 1950 issued under article 341 of the Constitution.
It was also urged that the Returning Officer had at first accepted the nomination paper but had subsequently reviewed his own order.
The High Court dismissed the petition, whereupon an appeal was filed in this Court.
HELD: (i) On the evidence it was not possible to hold that the Returning Officer had after announcing his decision accepting the nomination paper reviewed his own order afterwards.
(ii) No ground had been made out for disturbing the conclusion of the trial court on the evidence that appellant No. 2 was a mochi and not a member of the chamar caste.
(iii) It was not open to this Court to scrutinise whether a person properly described as a mochi also fell within the caste of chamars and could describe himself as such.
The question was one the determination of which lay within the exclusive power of the President under article 341 of the Constitution.
[1003 B C] , Basavalingappa v.D. Munichinnappa & Ors. ; and Bhaiya Lal vs Harikrishen Singh & Ors., ; , applied.
Article 341 empowered the President to specify not only entire castes races or tribes but also parts or groups within castes, races or tribes which were to be treated as Scheduled Castes in relation to a particular State or Union Territory.
So far as chamars and mochis are concerned, a reference to the Constitution (Scheduled Castes) Order, 1950 shows that the President was not of opinion that they were to be considered to belong to the same caste in all the different States.
In several States chamars and mochis were put on the same footing but not so in the State of Punjab.
Even after the Reorganisation of the Punjab Act, 1966 when the question of specification of Scheduled Castes in the territories created came up for his consideration the President did not take the view that mochis should be classed with chamars in so far as the States of Haryana, Punjab and the Union Territory of Chandigarh were concerned though he directed that in the Union Territories of Delhi and Himachal Pradesh mochis and chamars were to be placed in the same group.
[1000 E, H; 1001 A D]
|
Appeal No. 136 of 1964.
415 Appeal from the judgment and order dated February 24, 1961 of the Bombay High Court in Misc.
Application No. 333 of 1960.
A. V. Viswanatha Sastri, T. A. Ramachandra, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the appellant.
R. Ganapathy lyer, R. H. Dheber and R. section Sachthey, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This is an appeal on a certificate granted by the High Court of Bombay against its judgment dated February 24, 1961, dismissing the petition filed by the appellant under article 226 of the Constitution of India.
This appeal raises a short question as to the construction of section 49E of the Indian IncomeTax Act, 1922, hereinafter referred to as the Act.
Before we deal with this question, it is necessary to set out the relevant facts.
The appellant, at the material time, carried on business not only in India but also outside India, i.e. Ceylon, the former States of Kolhapur and Kapurthala and other places.
It is not necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real controversy between the appellant and the Revenue.
We may mention that it is common ground that the facts relating to Ceylon income and Kolhapur income are substantially similar.
On July 9, 1954, the appellant wrote a letter to the Income Tax Officer, Companies Circle, Bombay, stating that for the assessment year 1949 50, it was entitled to refund on the income taxed in Kapurthala State.
It attached an original certificate for tax showing payment of Rs. 37,828/11/ , and requested that a refund order be passed at an early date.
On June 27, 1956, the Income Tax Officer rejected the claim on the ground that the claim filed by the appellant was not within the time limit of four years laid down in r. 5 of Income Tax (Double Taxation Relief) (Indian States) Rules 1939 hereinafter called the Indian States Rules.
On December 18, 1956, the appellant filed a revision, under section 33A of the Act, against the said order, before the Com missioner of Income Tax, Bombay.
The appellant stated in the petition that "unfortunately the Company 's assessment for the year in question was completed by the Income Tax Officer on 416 the last day of the financial year 1953 54, i.e., 31 3 1954 being the last date on which their claim for double income tax relief should have been lodged.
In absence of the assessment order being received by the Company it was not physically practicable for the assessee to lodge its claim for double income tax relief and as such the time prescribed under Section 50 had already expired when the assessment order was received by the company.
" The Commissioner made some enquiries.
The appellant, in its letter dated June 30, 1958, replied that no provisional claim for double income tax relief was made by the appellant within the time prescribed.
The appellant reiterated its own plea that it was not "physically practicable" for the assessee to lodge its claim for double tax relief within the time prescribed.
The Commissioner, however, rejected the petition.
He observed that "the assessment in the Kapurthala State was made on 20 3 1950, i.e., much before the assessment was completed by the Bombay Income tax Officer.
Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over.
At least, it should have made such a claim before the Income Tax Officer at the time of assessment.
I regret I cannot condone the delay in filing the claim as there is no provision under Section 50 for such condonation.
" The appellant then approached the Central Board of Revenue.
The Central Board of Revenue, by its letter dated December 31, 1958, declined to interfere in the matter.
The appellant did not take any steps to apply to the High Court under article 226 for quashing the above orders of the Commissioner of Income Tax or the Central Board of Revenue.
On August 28, 1959, the Income Tax Officer issued three notices of demand under section 29 of the Act in respect of the Assessment years 1949 50, 1950 51 and 1951 52.
The appellant then wrote a letter dated September 4, 1959, requesting the IncomeTax Officer to set off the refunds to which the appellant was entitled pursuant to the Provisions of Income Tax (Double Taxation Relief) (Ceylon) Rules, 1942, and read with the provisions of sections 49A and 48 of the Income Tax Act, in respect of the assessment years 1942 43, 1943 44 and 1944 45, relating to Ceylon, and the assessment year 1947 48 and 1949 50 relating to Kolhapur and Kapurthala, against the said demands.
In this letter the appellant gave arguments in support of its request.
In short, the argument was that although the applications claiming those refunds were submitted beyond the prescribed time limit, nevertheless the appellant had a right still, pursuant to the the provisions of section 49E, to call upon the Income Tax Officer to 417 set off the refunds found to be due to the appellant against the tax demands raised by the Income Tax Officer on the appellant.
The appellant also approached the Central Board of Revenue,.
urging similar points.
The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter.
The appellant then on October 7, 1960, filed a petition under article 226 of the Constitution.
After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of Mandamits or a writ, direction or order under article 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955 56.
It appears that in the meantime the petitioner had paid tax for the assessment years 1949 50 and 1950 51, and the demand for Rs. 89,000.58 for the assessment year 1951 52 was kept in abeyance, and later when the assessment for 1955 56 was completed, the Income Tax Officers had agreed to keep in abeyance Rs. 79,430.19 out of the total demand relating to the assessment year 1955 56, till the decision of the Central Board of Revenue.
The second prayer was that the High Court be pleased to issue writs in the nature of Prohibition or other direction or order under article 226 of the Constitution prohibiting the respondents, their officers, servants and agents from demanding or recovering from the petitioner the tax payable by it for the assessment year 195556 without first setting off against that tax the refunds due to the petitioner under the aforesaid double tax relief rules.
It will be noticed that no prayer was made for quashing the order of the Commissioner, dated August 23, 1958, and the order of the Central Board of Revenue dated December 31, 1958.
It was indeed contended by Mr. section P. Mehta, the learned counsel for the appellant before the High Court that the appellant was not challenging the orders of the Income Tax Officer rejecting his application for refund, but was only challenging the orders made by them rejecting its application for grant of set off.
Mr. Viswanatha Sastri, the learned counsel for the appellant first urged that as compliance with r. 5 of the Indian States Rules, 1939 was physically impossible, r. 5 did not apply, and consequently the refund due to the appellant notwithstanding r. 5.
But we cannot go into the question whether r. 5 was rightly or wrongly applied by the Income Tax authorities.
The 418 orders dated August 23, 1958 and December 31, 1958, cannot be attacked in these proceedings.
Therefore, we must proceed on the basis that those orders were validly passed.
We express no opinion whether the view of the Income Tax authorities that r. 5 was applicable in the circumstances of the case was correct or not.
This takes us to the construction of section 49E. Section 49E reads thus : "49E. Power to set off amount of refunds against tax remaining payable.
Where under any of the provisions of this Act, a refund is found to be due to any person, the Income tax Officer, Appellant Assistant Commissioner or Commissioner, as the case may be may, in lieu of payment of the refund, set off the amount to be refunded, or any part of that amount against the tax, interest or penalty if any, remaining payable by the person to whom the refund is due.
" The High Court held that section 49E of the Act did not give :any assistance to the appellant because, according to it, there ,must be prior adjudication in favour of the appellant.
The High Court observed that "the expression found to be due" clearly means that there must, prior to the date set off is claimed, be an adjudication whereunder an amount is found due by way of refund to the person claiming set off." Mr. Sastri contends that it is not necessary that there should be a prior adjudication to enable a person to claim set off.
He says that the Income Tax Officer can decide the question whether refund is due or not when an application for refund is made to him.
On the facts, he says that it is clear that the appellant is entitled to refund under r. 3 of Indian States Rules, 1939, and the Income Tax Officer has only to calculate the relief due and then set it off.
The learned counsel for the respondent, Mr. Ganapath lyer, on the other hand, contends that the orders of the Commissioner and the Central Board of Revenue having become final, there was no obligation on the Income Tax Officer to make any payment of refund, and he says that it is a condition precedent to the applicability of section 49E that the Income Tax Officer must be under an obligation to make a payment.
He points out that the expression "in lieu of payment of the refund ' clearly indicates that the Income Tax Officer must be under an obligation to make a payment of refund.
He further contends 419 that the refund is not due under the Act but under the said Rules, and therefore, section 49E does not apply.
There is no difficulty in refuting the contention of the learned counsel for the Revenue that the refund, if due, was due under the provisions of the Act.
Section 59(5) provides that the rules made under this section shall have effect as if enacted under this Act.
This provision thus makes the Indian State Rules, 1939, part of the Act, and consequently if a refund is due under the Rules, it would be refund due under the Act within the meaning, of section 49E.
The question then arises as to whether there should be a prior adjudication existing before a set off can be allowed under 49E, and whether there is any other condition which is necessary to be fulfilled before the section becomes applicable.
We are of the opinion that it is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E.There is nothing to debar the Income Tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E.
The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication.
But this is not enough to sustain the claim of the, appellant.
It must ,till show that a refund is due to it.
The words "found to be due" in section 49E may possibly cover a case where the claim to refund has been held barred under r. 5 of the Indian State Rules but that this is not the correct meaning is made clear by the expression "in lieu of payment".
This expression, according to us, connotes that payment is outstanding, i.e. that there is subsisting obligation on the Income Tax Officer to pay.
If a claim to refund is barred by a final order, it cannot be said that there.
is a subsisting obligation to make a payment.
The expression "in lieu of" was construed in Stubbs vs Director of Public Prosecutions(1).
It was held there that where a liability has to be discharged by, A in lieu of B, there must he a binding obligation on B to do it before A can be charged with it.
In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set off under section 49E.
In this case in view of the orders of the Commissioner and the Central Board of Revenue mentioned above there was no subsisting obli gation to pay, and therefore, the claim of the appellant must (1) 420 Therefore, agreeing with the High Court, we hold that section 49E of the Act is of no assistance to the appellant and that the petition was rightly dismissed by the High Court.
The appeal accordingly fails and is dismissed, but in the circumstances of the case there will be no order as to costs.
Appeal dismissed.
| The appellant took an electric motor from an electrical Works in which the respondent was employed.
Dispute arose about the terms on which the motor had been taken.
The appellant wrote a letter to the Works that he had purchased the motor after paying its full price; on behalf of the works it was said that it had only been given on hire.
The Works, through the respondent, filed a complaint against the appellant alleging breach of trust.
The complaint was dismissed by the trying magistrate but in appeal under section 417(3) Criminal Procedure Code the High Court held that the claim of ownership made by the appellant in his letter was not bona fide and that by writing the said letter he had sought to cause wrongful gain to himself and wrongful loss to the works in violation of the entrustment, which made him guilty under section 406 of the Indian Penal Code.
In appeal to the Supreme Court by special leave, HELD:The appeal must succeed.
Clearly section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion to the offender 's own use, or its use or disposal in violation of the contract express or implied.
But when as in the present case nothing was done with respect to the use of the property which was not in accordance with the hiring agreement between the parties it cannot be said there was misappropriation or conversion of the property or its use or disposal in violation of the contract.
The appellant did not part with the possession of the motor to any body else; he put it to his own use the purpose for which he had taken it.
The use of the motor remained the same after the letter in question as before it.
The said letter merely raised a dispute of a civil nature between the parties and there was no question of any criminal breach of trust punishable under section 406 with respect to the matter on the basis of that letter.
[401 D F; 402 E]
|
Appeal No. 1709 of 1969.
Appeal by Special Leave from the judgment and Decree dated April 10, 1969 of the Punjab & Haryana High Court in Letters Patent Appeal No. 70 of 1964.
J. C. Talwar and R. C. Kohil, for the appellant.
V. C. Mahajan, for the respondent.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, is directed against the judgment and order dated April 10, 1969 of the Full Bench of the Punjab & Haryana High Court in Letters Patent Appeal No. 70 of 1964, dismissing Civil Writ Petition No. ' 22 of 1963 filed by the appellant to quash the order of the respondent dated September 1 1, 1962.
94 The circumstances that led to the filing of the Civil Writ Petition No. 22 of 1963 may be briefly stated : In the elections held in October, 1959, the appellant was elected as a Member of the Municipal Committee, Phagwara.
On June 20, 1960, a meeting was held for the election of the President and Vice President of the Committee.
The meeting was presided over by the Sub Divisional Officer (Civil).
According to the Appellant the Presiding Officer conducted the elections of the President and the Vice President in an irregular and illegal manner and was favouring the, party led by another committee member Bhag Ram.
When the appellant and another member Om Prakash Agnihotri protested against this conduct of the Sub Divisional Officer (Civil), the group led by Bhag Ram brought into the Town Hall some unruly elements from outside who created panic and confusion and manhandled Om Prakash Agnihotri, who was also a candidate for the presidential office.
It may be stated at this stage that according to the respondent, Om Prakash Agnihotri created a scene in the meeting and the appellant who was a staunch supporter of Om Prakash Agnihotri brought into the Town Hall, a number of outsiders with a view to cause chaos and confusion in the meeting and that the appellant did not maintain decorum and did_not care to obey the directions of the Chairman.
Ultimately, Bhag Ram was elected as the President.
The appellant and certain other members of the Committee filed Writ Petition No. 1095 of 1960 in the High Court challenging the election of Bhag Ram as the President.
But the said writ petition was dismissed on the ground that the disputed facts involved therein could not be gone into by the High Court in proceedings under article 226 of the Constitution.
While the writ petition No. 1095 of 1960 was pending in the High Court, the respondent State on December 5, 1960 served a notice on the appellant under the proviso to section 16(1) of the Punjab Municipal Act, 1911 (Punjab Act III of 1911) (hereinafter to be referred as the Act) calling upon,him to show cause within 21 days why he should not be removed from the membership of the Committee under section 16 (1 ) (e) of the Act.
The said notice charged the appellant of having brought outsiders into the Town Hall on June 20, 1960 to cause disturbance to the meeting that was being then held and, that he did not maintain decorum nor did he care to obey the rulings of the Chairman.
In consequence the appellant was charged of having flagrantly abused his position as a member of the Committee.
The appellant sent a reply on December 12, 1960 controvert ing the allegations made in the notice.
In turn he averred that the, 95 Sub Divisional Officer (Civil) who presided over the meeting, was actively helping the party led by Bhag Rain and it was the latter who brought in outsiders to create confusion and disorder.
He denied having brought any outsiders into the hall as alleged in the notice.
He further stated that the crowd that was ' brought into the hall by Bhag, Ram manhandled Om Prakash Agnihotri.
He .further denied the allegation that he did not maintain decorum and that he did not obey the Chair.
On the other hand, he stated that he was quite obedient to the Chair and that he was not responsible for the confusion that prevailed at the meeting.
Finally he stated that even if all the allegations made in the show cause notice were true, they will not bring the matter under section 16(1) (e) of the Act justifying action being taken against him by way of removing him from the Committee.
On September 11, 1962 the Governor of Punjab passed an order section 16 ( 1 ) (e) read with proviso to section 1 6 (1 ) of the Act removing the appellant from the membership of the Municipal Committee, Phagwara.
By the same order the appellant was also disqualified for a period of three years under sub section
(2) of section 16 of the Act.
The appellant challenged the above order of the State Government before the High Court in Civil Writ No. 22 of 1963.
The main plea that was taken in the writ petition appears to be that even if all the allegations contained in the show cause notice of December 5, 1960 are true, the appellant cannot be considered to have "flagrantly abused his position as a member of the Committee" so as to attract the penal consequences under section 16 ( 1 ) (e) of the Act.
According to the appellant the allegations made against him regarding his conduct at the meeting of the Committee held on June 20, 1960 have, no relevancy for invoking the powers conferred on the State Government under section 16(1) (e).
In consequence he alleged that the order dated September 11, 1962 removing him from the membership of the Committee and disqualifying him was null and void and was an abuse of the power vested in the Government under section 16 of the Act.
The State contested the writ petition on the ground that when it was found at the Committee meeting that Om Prakash Agnihotri could not secure support for being elected as the President, the appellant who was his ardent supporter went out and deliberately brought some hooligans into the Town Hall and created trouble at the meeting.
Further the appellant behaved in a very disorderly manner and did not obey the rulings given by the Sub Divisional Officer (Civil) who was then presiding over the meeting for the purpose of conducting the election of the President and the Vice President.
As the appellants conduct Was such as to attract the penal provisions of section 16 (1 ) (e) of the Act, the show cause notice 96 was issued under the proviso to the said section for which the appellant sent a very elaborate reply.
As the explanation sent by the appellant was not found to be acceptable the state went passed the order dated September 11, 1962 and it was well within its powers.
The learned Single Judge who dealt with the writ petition was of the view that the allegations made against the appellant in the show cause notice, even if true, will not attract section 16 (1) (e) of the Act.
According to the learned Judge it is only when a member of the Committee has shown favour or indulged in self aggrandisement by virtue of his position as a member that the said provision Will apply.
On this reasoning, the learned Judge held that the grounds which led to the making of the order dated September 11, 1962 were neither germane nor relevant for the purpose of attracting section 16(i) (e).
However, deplorable the conduct of the appellant as alleged may have been at the meeting held on June 20, 1960, that by itself will not enable the State Government to take action under section 16 (1) (e) of the Act.
Ultimately, by his judgment dated September 18, 1963, the learned Judge quashed the order of the Government dated September 11, 1962 as being illegal and void.
The State carried the matter in Letters Patent Appeal No. 70 of 1964.
The said appeal was heard, in the first instance, by a Division Bench.
The Division Bench was not inclined to agree with the views of the learned Single Judge regarding the interpretation placed on section 16 ( 1 ) (e) of the Act.
The view of the Division Bench is that the conduct of the appellant, as alleged in the show cause notice amount to his having "flagrantly abused his position as a member of the Committee ' so as to attract the penal provisions of section 16 (1) (e) of the Act.
Another point appears to have been taken before the Division Bench, namely, that the order dated September 11, 1962 suffers from the vice of not giving reasons for the action taken by the State Government and on that ground it has to be struck down.
The Division Bench felt that this aspect of the matter is a fairly important one and as such it required consideration by a larger bench.
In the end by order dated August 7, 1968 the Division Bench referred the appeal to a Full Bench for consideration of all aspects.
The appeal came up before the Full Bench of three Judges.
The Full Bench agreed with the view of the Division Bench regarding the applicability of section 16 (1) (e) of the Act and held that the conduct of the Appellant amounted to "flagrantly abusing, his position as, a member of the Committee".
Regarding the question whether the order dated September 11, 1962 has to be 97 struck down on the ground that it does not give any reasons, the Full Bench felt that the said question should be considered by a larger bench of five Judges.
Accordingly by its order dated February 20, 1969, the Full Bench directed the appeal to be heard before a Full Bench of five Judges.
The Letters Patent appeal in consequence was heard by a bench of five Judges.
Three questions were posed for consideration: (a) Whether the decision and order of the State removing the appellant herein from his membership of the Committee under section 16(1 ) (e) of the Act are quasi judicial; (b) If they are quasi judicial, whether the State was required by law to state reasons for its decision; and (c) if the State was bound to give reasons, whether as a fact reasons have been, given for its decision by the State in the order dated September 11, 1962.
After a fairly elaborate consideration of the matter the learned Judges held on points Nos.
(a) and (b) that the order of the State removing a Municipal.
Committee member under section 16 (1) (e) of the Act is a quasi judicial order and as such the State was bound to give its reasons for arriving at a decision.
Regarding point No. (c) the learned Judges, after a thorough examination of the note file produced before them by the State, ultimately held that the State had considered the explanation offered by the appellant and after applying its mind to, the materials: before, it was justified in passing the order removing the appellant from his membership of the Committee and also disqualifying him for a period of three years.
In the result, the Full Bench of five Judges by its order dated April 10, 1969 allowed Letters Patent appeal filed by the State and set aside the order of the learned Single Judge.
The result was that the writ petition filed by the appellant herein was dismissed.
Before we advert to the contentions urged before us by the learned counsel, it is necessary to refer to the relevant provisions of the Act as well as the show cause notice issued by the State as also the final order passed by it.
We will of course refer also to the substance of the reply sent by the appellant to the show cause notice.
98 The relevant provision is section 16 (1 ) (e), its proviso and sub section
(2) of section 16.
They are as follows: "16(1) The State Government may, by notifica tion, remove any member of committee.
(e) if, in the opinion of the State Government he has flagrantly abused his position as a member of the committee or has through negligence or misconduct been responsible for the loss, or misapplication of any money or property of the committee.
Provided that before the State Government notifies the removal of a member under this section, the reasons for his proposed removal shall be communicated to the member concerned, and he shall be given an opportunity of tendering an explanation in writing.
(2) A person removed under this section or whose election or appointment has been deemed to be invalid under the provisions of sub section (2) of section 24, or whose election has been declared void for corrupt practices or intimidation under the provisions of section 255, or whose election the State Government or the Deputy Commissioner has under section 24 refused to notify, shall be disqualified for election for a period not exceeding five years Provided that a person whose election or appointment has been deemed to be invalid under the provisions of sub section (2) of section 24, shall not be disqualified for election or appointment for a period exceeding two years from the date of, disqualification." No rules framed under the Act, having any bearing on the manner in which the Government has to deal with the matter have been brought to our notice.
The show cause notice issued by the State on December 5, 1960 was as follows : "It has been brought to the notice of the Government that on the 20th June, 1960 the Sub Divisional Officer (Civil) Phagwara, convened a meeting of the newly elected members of the Municipal 'Committee, Phagwara, after the election of the Committee, held on 17 10 1959 in order to administer oath of allegiance 99 and to conduct the election of the President of the Committee to enable the new Committee to take over the charge, you also attended that meeting at the time of election of the office of the President.
You were sup porter of the group headed by Shri Om Parkash Agnihotri, member of the Committee whose candidature was proposed for this office.
During the course of the meeting when Shri Om Parkash Agnihotri became unruly and began to tear his clothes, beat his chest and create a row you managed to bring some outsiders in the Town Hall to cause disturbance at the meeting.
More over you did not maintain decorum or care to obey the chair.
By your aforesaid action you have flagrantly abused your position as a member of the Committee within the meaning of section 16(1) (e) of the Punjab Municipal Act 1911.
I am directed to call upon you to show cause under proviso to section 16(1) ibid why you should not be removed from the membership of the Committee under section 16(1) (e) ibid.
You should tender your explanation to the Deputy Commissioner Kapurthala with an advance copy to, Government together with copy (copies) of documents, if any, so as to reach there within a period of twenty days from the date of despatch of this letter.
In case no explanation is submitted by you within the stipulated period, it will be considered that you have no explanation to offer and government may proceed ahead to notify your removal.
" The appellant sent a reply on December 16, 1960.
No copy of the reply sent by the appellant has been placed in the record available before us.
But the nature of the reply can be gathered in the summary given by the High Court.
In his reply the appellant had denied the allegations made against him in the show cause notice.
On the other hand, he averred that the Sub Divisional Officer (Civil) who was presiding over the meeting was taking sides with Bhag Ram and it was the latter who brought hooligans in the Town Hall and created chaos and confusion.
He also denied the allegation that he did not obey the rulings given by the Chair and that he behaved in a disorderly manner.
He further averred that the hooligans who were.
brought into the Town Hall by hag Ram manhandled Om Parkash Agnihotri and created confusion at the meeting.
He further averred that even assuming that all the allegations made against him in the show cause notice are true, section 16 (1 ) (e) of the Act was not attracted as he has not "flagrantly abused his position as a member of the Committee".
The order of the State dated September 11, 1962 was a , follows: 100 "Whereas the Governor of Punjab after giving an opportunity to Shri Bhagat Ram Patanga member Municipal Committee Phagwara of tendering an explanation under the proviso to section 16 of the Punjab Municipal Art 1911 is satisfied that the said Shri Bhagat Ram Patanga has flagrantly abused his position as a member of the aforesaid committee, now, therefore, in exercise of the powers vested in him under clause (e) of, sub section 1 of section 16 ibid, the Governor of Punjab is pleased to remove the said Shri Bhagat Ram Patanga from the membership of the Municipal Committee Phagwara from the date of Publication of this notification in the official Gazette and is further pleased.
to disqualify the said Shri Bhagat Ram Patanga for a period of three years from the aforementioned date under Sub section (2) of Section 16 ibid.
" It will be seen that section 16(1) of the Act gives power to the State Government to remove any member of a committee if he is guilty of one or other of the acts mentioned in cls.
(a) to (g).
In particular we are, concerned with cl.
To attract that provision the State Government must form an opinion that the appellant has "flagrantly abused his.
position as a member of the Committee".
We are not concerned with the other grounds mentioned in cl.
(e) for which also the removal of a member can be ,ordered.
But before notifying the removal of a member from the ,Committee, there is an obligation on the State Government by virtue of the proviso to section 16(1) to communicate to the member concerned the reasons for his proposed removal.
There is also a further obligation to give the concerned member an opportunity of tendering an explanation in writing.
Sub section (2) gives power to the authority concerned when removing a member to disqualify him for election for a period not exceeding five years.
In view of the proviso to section 16(1) the show cause notice was issued ' on December 5, 1960.
The grounds for the action proposed to, be taken were also indicated therein as coming within section 16(1) (e) of the Act.
The appellant was given an opportunity of tendering his explanation in writing.
As mentioned earlier, he also availed himself of the said opportunity.
But the point to be noted is that in order to attract section 16 (1) (e) of the Act, the appellant should be found to have flagrantly abused his position as a member of the committee.
In the case before us the State Government has coming to a finding that the conduct attributed to the appellant at, the meeting held on June 20 ' 1960 amounted to having "flagrantly abused his position as a member of the Committee" and it was on this basis that he was removed from the committee This conclusion arrived at by the Government, though ,not approved by the learned Single Judge, has been accepted as 101 correct by the Division Bench in its order dated August 7, 1968 in the Letters Patent appeal.
The view of the Division Bench has been approved by the Full Bench of three Judges as also of five Judges.
On behalf of the appellant Mr. J. C. Talwar, learned counsel, raised two contentions : (1) The allegations made against the appellant in the show cause notice dated December 5, 1960, even if true, are not such as to attract section 16 ( 1 ) (e) on the ground that the appellant has "flagrantly abused his position as a member of the committee"; and (2) The larger bench of five Judges having held that the proceedings, initiated by the State against the appellant are, quasi judicial and that the State was bound to give reasons, erred in holding that the files produced before it disclosed that there has been a consideration of the appellant 's explanation by the State.
This view of the High Court is erroneous.
Mr. V. C. Mahajan, learned counsel for the State, has not challenged the finding of the High Court in the Letters Patent appeal regarding the proceedings initiated against the appellant being of a quasi judicial nature and the State being bound to give reasons for the order.
But the counsel urged that the appellant has no where raised the contention that there has been no consideration by the State Government of the explanation offered by him before the order dated September 11, 1962 was passed.
He also pointed out that there has been district compliance of the provisions of the statute by the State Government before passing the order dated September 11, 1962.
The counsel further urged that the conduct of the appellant as disclosed by the. events 'that took place at the meeting of June 20, 1960 constitute a flagrant abuse by the appellant of his position as a member of the committee so as to, attract section 16 (1) (e) of the Act.
We are not inclined to accept the contention of Mr. Talwar that the allegations made against the appellant regarding his conduct at the meeting of June 20, 1960 do not amount to his having flagrantly abused his position as a member of the committee .Mr.
Talwar 's contention appears to be that it is only when a abuses his position as a member of the committee and shows favour to others or gains undue, advantage to him that he, can be considered to have flagrantly abused his position as a member of the committee.
No doubt, such a contention has found favour at the hands of the learned Single Judge.
But, in our opinion, the Division Bench was right when it differed from this view of the learned Single Judge.
The nature of the allegations made against the appellant is self evident from averments contained in the show cause notice, extracted above.
The allegations clearly show that the appellant had brought in outside elements in order 102 to create confusion and chaos at the meeting.
The expression "flagrantly" means glaringly, notoriously, scandalously.
A position is said to be abused when it is put to a bad use or for wrong purpose.
No doubt it may vary with the circumstances.
When a meeting of the members of the committee was being held, the appellant had no doubt a right to participate in the proceedings as a member of the committee.
But he had no business, as a member participating in the meeting of the committee, to go outside and bring in hooligans for the purpose of creating confusion and chaos.
This behaviour of the appellant was to, say the least scandulous.
If he had not been a member of the committee, he would not be entitled to be present inside the Town Hall.
at the time of the meeting.
The appellant did flagrantly abuse his position as a member of the Committee while participating in the meeting of the committee, when he brought in rowdies for creating disturbance so that the Committee meeting may not be held peacefully and properly.
Therefore, the State Government was perfectly Justified in coming to the conclusion that action has to be taken 'against the appellant under section 16(1) (e) of the Act.
Therefore the first contention of the learned counsel for the appellant will have to be rejected.
Coming to the second contention, it has to be noted that the appellant does not appear to have raised this contention before the learned Single Judge, nor even in his writ petition.
It was only when the State went up in appeal, that the appellant raised the 'Contention that the proceedings initiated against him are quasi judicial and as such the State was bound to give reasons in its order.
To this limited extent the Full Bench has agreed with the appellant.
The appellant raised in consequence the further contention that the order dated September 11, 1962 has to be struck, down inasmuch as it does not give any reasons.
far as this last aspect is concerned, we have already referred to the fact that the Fall Bench of five Judges went through the file produced before it by the State and has come to the conclusion that there is a clear indication that the representations of the appellant were taken into account and considered by the Government before the order dated September 11, 1962 was passed.
At this stage we may say that inasmuch as very severe penal consequences: result by removing a person from the membership of a committee, to which he: has, been duly elected and as no appeal is provided ' under the statute against an order so, removing him, it is not only desirable but also essential that the State Government should indicate its reasons for forming the opinion as required under section 16 (1 ) (e) of the Act.
When such an order is challenged, the State must place before the Court the necessary materials which were avail able before it and which were taken into consideration for forming ,an opinion to remove the person concerned as a member of the 103 committee.
In this case, it is not possible for us to, know whether the State referred in its counter affidavit in the writ petitioN to the various matters contained in the relevant file, as the, appellant has not Placed before us either a copy of his writ petition or the counter affidavit of the State.
Therefore it is not possible for us to know the actual avertments made by the appellant and the answers given by the State in the writ petition.
The facts given by us, in the earlier part of the judgment regarding the plea of the appellant and the defence raised by the State were all gathered by us from the judgments of the learned Single Judge and of the Letters Patent Bench.
When once the Letters Patent Bench has held that the order passed by the State Government is of a quasi judicial nature, it is obligatory on the part of the State Government to make available to the member concerned the materials available before it and on the basis of which the show cause notice is issued.
Even if those materials are not referred to in the show cause notice in any great detail, it is open to the member concerned to request the State Government to furnish him the materials on which the show cause notice has been issued so that he may give an effective answer not only to the averments, contained in the show cause notice but also to the materials, on the basis of which the show cause notice has been issued.
For instance, in the case before us, the High Court has referred to the information contained in the relevant file before it that there was the report of the Sub Divisional Officer, who presided over the meeting held on June 20, 1960, giving his version of the part played by the appellant.
In his answer to the show cause notice the appellant had denied that he ever brought any outsider into the Town Hall and that, on the other hand, it was Bhag Rain, who had brought outsiders in the Town Hall and created the confusion.
This raises a disputed question of fact on which the Government is not entitled to take view rejecting the plea of the appellant without having disclosed to him the actual allegations made in the report.
But it is unnecessary for us t pursue this aspect further because the appellant has not made a grievance either before the High Court or before us that the proceedings initiated against him suffer from the infirmity of not having made available to him the materials that were before the Government when it passed the order removing him from the membership of the committee.
As pointed out earlier, the only other contention in this regard raised by him and that too at the stage of Letters Patent Appeal was that the order of the Government does not show that his representations have been taken into account by the State.
Again there is also the possibility that the term of the office of the appellant, who was elected to the committee, as early as 1959 may have expired long ago.
If disputed questions of fact arise for consideration by the Government, there 104 is, no provision, so far as we could see, in the Act as to how the State is to deal with the matter.
Further no Rules also have been brought to our notice laying down the Procedure to be a by the, state under such circumstances.
These are all matters of considerable importance which should attract the attention of the State Government, so that suitable provisions may be made either in the Act or in the Rules made by virtue of the rule making power.
In the particular circumstances of this case, we are in agreement with the High Court that the, file produced by the, Government does disclose that the State has considered the appellants representations as also the other relevant materials before it when passing the order dated September 11, 1962.
The 'various reports that were before the State Government, notes made by the concerned department on the basis of the said reports and on the explanation furnished by the appellant as well as the jottings made from time to time by the Minister concerned, have all been very elaborately dealt with by the Full Bench of five Judges.
We do not think it necessary to cover the ground over again.
The learned Judges after a consideration of all those materials contained in the file, produced before them, have recorded a finding that the State Government was justified in rejecting the explanation offered by the appellant and passing the order under attack accepting the reports of the officers concerned. 'We are in entire agreement with the views expressed in this regard by the learned Judges in the Letters Patent Appeal.
From what is stated above, it is clear that there has been a proper consideration of the explanation furnished by the appellant and that there has been no violation of the principles of natural Justice.
The second contention of the learned counsel for the appellant also fails.
In the result, the judgment and order of the High Court in the Letters Patent Appeal are confirmed and the appeal dismissed.
However, there wilt be no order as to costs.
V.P.S. Appeal dismissed.
| The respondent State served a notice on the appellant, who was a member of the Municipal Committee, under the proviso to section 16(1) of the Punjab Municipal Act, 1911 calling upon him to show cause why he should not be removed from the membership of the committee under section 16(1)(e).
The notice charged the appellant with having brought outsiders into the ball where a meeting was being held for the election of the President and Vice President of the Committee and caused disturbance to the meeting that he did not maintain decorum, and t hat he did not obey the rulings of the Chairman of the meeting.
The appellant denied the allegations and averred that it was the Chairman who was actively helping the opposite party and that it was he who brought in outsiders to create confusion and disorder.
The Governor of Punjab passed an order under section 16(1) (e) read with the proviso, removing the appellant from the membership of the Committee and also disqualifying him for a period of three years under section 16(2).
The appellant challenged the order before the High Court and the trial judge held that the allegations against the appellant in the show cause notice, even if true, would not attract section 16(1)(e) of the Act, and, therefore, quashed the order.
The appellate Court, held, after examining the note file produced by the State that the State had considered the explanation offered by the appellant and the other materials before it, and that the State was justified in passing the order.
Dismissing the appeal to this Court, HELD : (1) Section 16(1) of the Act gives power to the State Government to remove any member of the Committee if he is guilty of one or other of the acts mentioned in clauses(a) to (g).
To attract clause (e), the State Government must form an opinion that the appellant had "flagrantly abused his position as a member of the Committee".
The evression 'flagrantly ' means glaringly, notoriously, scandalously; and a position is said to be abused when it is put to a bad use or for a wrong purpose depending upon the circumstances of the case.
When a meeting of the membership of the Committee was being held the appellant had a right to participate in the proceedings as a member of the Committee.
if he had not been a member of the committee he would not be entitled to be present at the time of the meeting.
But he had no business to go outside and bring in hooligans for the purpose of creating confusion and chaos.
The appellant thus flagrantly abused his position as a member of the Committee while participating in the meeting of the Committee, and therefore the State Government was, justified in passing the order.
[100D H] 93 (2) The High Court was justified in holdingthat the State Government had considered the appellant 's representations as also the other relevant materials before it passed the impugned Order.
since there had been a proper consideration of the explanation furnished by the appellant there was no violation of theprinciples of natural justice.
[1104C F] (3) In as much as very severe penal consequences result by removing a person from the membership of a committee and appeal is provided under the Act it is not only desirable but essential that the State Government should indicate its reasons for forming the opinion as required under section 16(1)(e) of the Act.
It is obligatory on the part of the ' State Government to make available to the member concerned the materials available before it and on the basis of which the show cause notice is issued, and it is open to the member concerned, to request the State Government to furish him the materials, so, that, be may love an effective answer to the averments contained in the show cause notice and to the materials on the basis of which it had, been issued.
When such an order is challenged the State must place before the Court the.
necessary materials which were available before it and which were taken info consideration for forming the opinion to, remove the person concerned from membership of 'the committee.
in the present case, however, the appellant had not made a grievance either before the High Court or before this Court that the proceedings initiated against him suffered from the infirmity of not having been made available to him the materials that were before the Government when it passed, the order removing him from the membership of the Committee.
[102F H; 103A E; 104,B C] The averments of the appellant and the Chairman of the meeting raised a disputed question of fact on which Government was not entitled to take a view rejecting the plea of the appellant without having disclosed to him the alleg ations made in the report.
If disputed questions ' of fact arise for the consideration of the Government there is no provision as to how the State has to deal with the matter.
Therefore, suitable provision may be made either in the Act or in the Rules for dealing with such disputed question of fact.
[1O4A B]
|
vil Appeal Nos.
1052 53 of 1990.
90 From the Judgment and Order dated 4,7.1986 of the Orissa High Court in OJC.
1007 and 1008 of 1983.
A.K. Panda for the Appellants.
Kundan Lal Jagga and K.K. Gupta for the Respondents.
The following Order of the Court was delivered: ORDER Special leave granted.
Agruments heard.
These two appeals on special leave arise out of the common judgment of the High Court of Orissa made in O.J.C. Nos.
1007 and 1008 of 1983 decided on July 4, 1986 whereby the High Court set aside and quashed the impugned orders made by the Special Officer, Land Reforms, Central Division, Cuttack in O.L.R. Revision No. 131 of 1982 as well as O.L.R. No. 142 of 1982.
The matrix of the case in O.J.C. No. 1007 of 1983 is that on July 30, 1977, the respondent No. 2, Paramanand Sethi filed case No. 85 of 1977 under section 22 of the Orissa Land Reforms Act, against S/Shri B. Mohapatra, Pra fulla Kumar Pati and Gadadhar Pati (Respondent Nos. 1, 3 and 4) for restoration of lands sold to respondent Nos. 1, 3 and 4 on the ground that respondent No. 2 was a member of the Scheduled Caste (Dhoba Community) and the sales in question were hit by the provisions contained in section 22 of the Orissa Land Reforms Act, 1960.
The respondent No. 2 filed a caste certificate of the Additional Tehasildar, Betanoti wherein the respondent No. 2 was shown as belonging to 'Dhoba ' by caste which is recognised as a Scheduled Caste.
He also filed the record of rights in the name of Arjun Sethi, father of respondent No. 2 which showed the caste of Arjun Sethi as 'Dhoba '.
The respondent No. 5, Smt.
Nilamani Sethi, wife of Late Bhanu Sethi also filed O.L.R. Misc.
Case No. 21 of 1979 under Section 22 of the Orissa Land Reforms Act stating inter alia that the sale made by her in favour of respondent No. 1 who admittedly belonged to Brahmin Caste is void as the said sale was made without the permission of the Revenue Officer as mandatorily required under the provisions of the aid Act.
She produced the Caste certificate issued by tile Tehasildar, Betanoti which showed that she belonged to 'Dhoba ' caste 91 which is recognised as a scheduled caste.
She further filed two caste certificates issued by the two M.L.As.
which certified that she belonged to a scheduled caste, (Dhoba).
The Revenue Officer, vide his order dated March 19, 1979 rejected the case No. 85 of 1977 filed by the respondent No. Paramanand Sethi.
The respondent No. 2 filed O.L.R. Appeal No. of 1979 in the court of Additional District Magistrate, Mayutbhanj and the same was allowed vide judgment and order dated December 1980.
The Additional District Magistrate while allowing the appeal observed as follows: "It is a known fact that there is no community called 'Raj aka ' community which is different from Dhoba community.
Rajaka is only a literary word for the common term Dhoba.
While mentioning his caste as 'Rajaka ' the appellant has not ceased to be a 'Dhoba '.
The certificate given by the Addl.
Tehasildar, Betanoti and the entry in the R.O.R. confirm the assertion of the petitioner that he is a Dhoba by caste.
In the circumstances, the petitioner must be held to be a S.C, person and for that matter, his brothers and mother are also the members of a S,C, According to Section 22 of the Orissa Land Reforms Act previous permission from the Revenue Offi cer should have been obtained by them before transferring their lands to the respondents.
Since this statutory re quirement has not been met, the transfers are illegal.
The suit land must, therefore, be restored to the transferors.
" Against the said judgment and order, the respondent No. 1 filed O.L.R. Revision No. 131 of 1982 before the Special Officer, Land Reforms, Central Division, Cuttack, The said Revision Case was dismissed vide judgment and order dated March 4, 1983 on the finding that there were records of competent authorities like Addl.
Tehasildar, Betanoti and the record of rights showing that the caste of Paramanand Sethi is 'Dhoba '.
it has been further observed that: "As per the Oriya Bhasakosha the definition of 'Dhoba ' is 'Rajaka Washerman '.
Hence, there is no conflict regarding what is the meaning of 'Rajaka '.
It is merely a synonym of the word 'Dhoba '.
The Sanskrit lot 'Dhoba ' is 'Rajaka '.
Just because the word 'Rajaka ' does not find mention in the Presidential Order does not exclude it from the purview 92 of such an order. 'Dhobas ' are Scheduled Castes and 'Rajaka ' is a synonym of 'Dhoba '.
Now, that the High Court has so eloquently laid down the law in this regard, there is no reason to deny protection to the weaker sections on a mere technicality. 'This denial would be contrary to the spirit of the Orissa Land Reforms Act, itself." O.L.R. Misc.
Case No. 21 of 1979 filed by the respondent No. 5, Smt.
Nilamani Sethi was allowed vide order dated March 10, 1980 by the Revenue Officer directing the restora tion of the suit lands to respondent No. 5 under Section 23 of the Orissa Land Reforms Act.
The respondent No. 1 filed O.L.R. Appeal No. 42 of 1980 in the Court of Additional District Magistrate, Mayurbhanj. 'The said appeal was dis missed vide judgment and order dated February 21, 1981 holding that the transferor had amply proved that she was Dhoba which is a Scheduled Caste by producing documentary evidence.
She, therefore, does not cease to be a Dhoba even if she has described herself in the various deeds as Rajaka.
Since the transfer of the suit lands had been made to the respondent No. 1, Prafulla Kumar Pati who is a brahmin by caste without obtaining prior written permission of the Revenue Officer as required under Section 22 of the Orissa Land Reforms Act, the transactions had been rightly declared as void by the Revenue Officer. 'The suit lands must there fore, be restored to the possession of the respondent No. 5.
Against this order, respondent No. 1 filed O.L.R. Revi sion No. 142 of 1982 before the Special Officer, Land Re forms, Central Division, Cuttack and the same was dismissed vide judgment and order dated February 2, 1983.
The respondent No. 1 thereafter filed two writ petitions called O.J.C. Nos. 1007 and 1008 of 1983 against the judg ments and orders dated March 4, 1983 and February 2, 1983 respectively passed by the Special Officer, Land Reforms, Central Division, Cuttack.
Both these writ petitions were heard and disposed of by a common judgment impugned in these two appeals on special leave whereby the High Court, Orissa set aside and quashed the judgments and orders passed by the Special Officer, I.and Reforms, Central Division, Cuttack and allowed the writ petitions observing inter alia that: "Considering the cases in hand in the light of the above discussions, I have no hesitation to come to the conclusion that the Revenue Authorities have committed a serious 93 error of law in coming to the conclusion that 'Rajaka ' caste was included within the notified caste/community of 'Dhoba ' as their nature of work was similar.
Although it is unneces sary to make any further discussion, I must point out that even on a reference to the Bhashakosha it could not be categorically said that 'Rajaka ' was a caste which could not be said to be a class of washerman as the Bhashakosha itself gives other meanings of this word.
" Against this judgment and order, the instant appeals on special leave have been filed.
Before proceeding to decide the question whether the respondent Nos. 2 and 5, the trans ferors belonged to the scheduled caste Dhoba Community as mentioned in item No. 26 of the List of Scheduled Castes in the Scheduled Caste Order, 1950 in the State of Orissa, it is relevant to refer to the provisions of Section 22 and Section 23 of the Orissa Land ,Reforms Act, 1960 (Orissa Act 16 of 1960): Section 22: Restriction on alienation of land by Scheduled 'Tribes.
(1) Any transfer of a holding or part thereof by a raiyat, belonging to a Scheduled Tribe shall be void except where it is in favour of (a) a person belonging to a Scheduled Tribe; or (b) a person not belonging to a Scheduled 'Tribe when such transfer is made with the previous permission in writing of the Revenue Officer: Provided that in case of a transfer by sale the Revenue Officer shall not grant such permission unless he is satis fied that a purchaser belonging to a Scheduled Tribe willing to pay the market price for the land is not available, and in case of a gift unless he is satisfied about the bona fides thereof.
(2) The State Government may having regard to the law and custom applicable to any area prior to the date of commence ment of this Act by notification direct that the restric tions provided in sub section (1) shall not apply to lands situ ated in such area or belonging to any particular tribe throughout the State or in any part of it.
94 (3) Except with the written permission of the Revenue Offi cer, no such holding shall be sold in execution of a decree to any person not belonging to a Scheduled Tribe.
(4) Notwithstanding anything contained in any other law for the time being in force where any document required to be registered under the provisions of Cl.
(a) to Cl.
(e) of sub section (1) of section 17 of the (16 of 1908) purports to effect transfer of a holding or part thereof by a raiyat belonging to a Scheduled Tribe in favour of a person not belonging to a Scheduled Tribe, no register ing officer appointed under that Act shall register any such document, unless such document is accompanied by the written permission of the Revenue Officer for such transfer.
(5) The provisions contained in sub Ss. 1 to 4 shall apply, mutatis mutandis, to the transfer of a holding or part thereof of a raiyat belonging to the Scheduled Castes.
(6) Nothing in this section shall apply (a) to any sale in execution of a money decree passed, or to any transfer by way of mortgage executed, in favour of any scheduled bank or in favour of any bank to which the Orissa Co operative Societies Act, 1962 (Orissa Act 33 of 1962) applies; and (b) to any transfer by a member of a Scheduled Tribe within a Scheduled Area.
Section 23: Effect of transfer in contravention of section 22.
(1) In the case of any transfer in contravention of the provi sions of sub section (1) of section 22 the Revenue Officer on his own information or on the application of any person interest in the land may issue notice in the prescribed manner calling upon the transferor and transferee to show cause why the transfer should not be declared invalid.
Section 22 clearly enjoins that a person belonging to Scheduled Tribe can not make a valid transfer of his lands in favour of a person not belonging to the Scheduled Tribe without obtaining the previous 95 permission in writing of the Revenue Officer to such trans fer.
Subsection 5 of the said section further provides that the provisions contained in sub section 1 to 4 shall apply, mutatis mutandis to the transfer of a holding or part there of a raiyat belonging to the Scheduled Castes.
Section 23 B of the said Act further provides that if the validity of the transfer of any holding or part thereof is in question, the burden of proof that the transfer was valid shall, notwith standing anything contained in any other law for the time being in force, lie on the transferee.
In this case, the transfers made by the respondent Nos. 2 and 5 in favour of respondent No. 1, Prafulla Kumar Pati who admittedly belongs to Brahmin caste are hit by the provisions of Section 22 of the said Act in as much as the previous permission in writing of the Revenue Officer had not been obtained to the alleged transfers.
It has been submitted on behalf of the respondent Nos. 2 and 5 that they belong to Dhoba (Dhobi) community which is one of the Sched uled Caste in the State of Orissa under the Scheduled Caste Order, 1950.
It has been further contended that the father of the respondent No. 2 has been recorded as belonging to Dhoba community in the finally published record of rights which has been annexed as Annexure 'B ' to these appeals.
It has also been submitted on behalf of the respondent Nos. 2 and 5 that the caste certificates granted by the Tehsildar, Betanoti as well as by the two local M.L.As.
clearly estab lished that the respondent Nos. 2 and 5 belong to Dhoba community and as such they are Scheduled Castes.
Much argu ment has been advanced on the mentioning of the caste of these two respondents as 'Rajaka ' in the alleged deeds on the ground that the caste 'Rajaka ' as mentioned in the sale deeds did not find place in the List and instead the Caste 'Dhoba ' appears in Item 26 of the List of Scheduled Castes in the State of Orissa under the Constitution of Scheduled Caste Order, 1950 as made under Article 341 of the Constitu tion of India.
It has been urged in this connection that the Caste 'Rajaka ' as mentioned in the deeds can not be taken to be synonym of caste 'Dhoba ' and no evidence can be adduced to that effect to prove that 'Rajaka ' included within the notified caste, commentary of 'Dhoba ' as held by the High Court.
We are unable to accept this contention advanced on behalf of the respondent Nos. 1, 3 and 4 on the ground that the caste of the respondent No. 2 and 5 was mentioned in the caste certificates granted by the Tehsildar, Betanoti as 'Dhoba '.
Moreover, in the finally published record of rights the caste of the father of respondent No. 2 had been record ed also as 'Dhoba ' which undoubtedly is a Scheduled 96 Caste under the Scheduled Castes Order, 1950 issued under the provisions of Article 341 of the Constitution of India.
It is also pertinent to mention that 'Rajaka ' is the literal synonym for the word 'Dhoba ' and according to the Puma Chandra Oriya Bhasakosha which is a recognised authority, the definition of 'Dhoba ' is Rajaka washerman.
As such, the submission that the caste 'Rajaka ' is different from caste 'Dhoba ' is not at all sustainable.
It is pertinent to refer in this connection to the observations of the Supreme Court in B. Basavalingappa vs D. Munichinnappa, ; at 320 wherein it has been observed that: "Ordinarily therefore it would not have been open in the present case to give evidence that the Voddar caste was the same as the Bhovi caste specified in the Order for Voddar caste is not mentioned in brackets after the Bhovi caste in the Order.
But that in our opinion does not conclude the matter in the peculiar circumstances of the present case.
The difficulty in the present case arises from the fact (which was not disputed before the High Court) that in the Mysore State as it was before the re organisation of 1956 there was no caste known as Bhovi at all.
The Order refers to a scheduled caste known as Bhovi at the Mysore State as it was before 1956 and therefore it must be accepted that there was some caste which the President intended to include after consultation with the Rajpramukh in the Order, when the Order mentions the caste Bhovi as a scheduled caste.
It cannot be accepted that the President included the caste Bhovi in the Order though there was no such caste at all in the Mysore State as it existed before 1956.
But when it is not disputed that there was no caste specifically known as Bhovi in the Mysore State before 1956, the only course open to courts to find out which caste was meant by Bhovi is to take evidence in that behalf.
" In the instant case, referring to this decision even though the respondent Nos. 2 and 5 i.e. the transferors mentioned in the deeds of transfer their caste as 'Rajaka ', there is no such caste mentioned in the Constitution of Scheduled Caste Order, 1950.
In such circumstances, relying on the aforesaid observation of this Court, it is necessary and also incumbent on the Court to consider as to what caste the respondent Nos. 2 and 5 belong to.
Moreover, considering the record of 97 rights as well as the various certificates issued by the revenue authorities and the local M.L.As.
referred to here inbefore wherein the transferors have been described as belonging to 'Dhoba ' community, the irresistible conclusion that follows is that the respondents transferors belong to 'Dhoba ' caste which is one of the Scheduled Caste in the State of Orissa.
In the premises aforesaid the judgment and order of the High Court referred to in O.J.C. Nos. 1007 and 1008 of 1983 are liable to be set aside.
We, therefore, set aside the same and affirm the order of the Special Officer, Land Reforms, Central Division, Cuttack passed in O.L.R. Revision No. 131 of 1982 and O.L.R. No. 142 of 1982.
The respondent Nos. 1, 3 and 4 are directed to restore the lands in ques tion to the possession of the respondent Nos. 2 and 5 forth with.
The appeals are allowed without any order as to costs.
T.N.A. Appeals allowed.
| The respondents claimed to be the owners of the suit property by virtue of a registered sale deed in their favour by one Navinchand, who had purchased the property from his predecessor in interest Smt.
Raj Rani on 11.8.1952.
The appellant 's father Misri Lal was her tenant.
In 1959 a suit was filed by Navinchand for eviction of Misri Lal, which was resisted by the tenant on the ground that Smt.
Raj Rani had earlier transferred the house to a Trust and as such she could not later convey any title to Navinchand.
The Trial Court rejected the defence, and passed a decree against Misri Lal.
Misri Lal filed an appeal.
During its pendency, the parties resolved their dispute, by entering into a compromise.
A deed Ext.
P. 20 creating a fresh lease in favour of Misri Lal under Navinchand as lessor, was executed w.e.f. 1.12.1962.
A compromise petition exhibit P. 21 was filed and the case decreed in terms of the compromise exhibit P. 22 Misri Lal continued to occupy the house till he died in 1972 leaving behind his son, the appellant.
A fresh dispute started after Navinchand sold the suit property to the respondents plaintiffs on 4.1.73, who gave notice of the sale to the appellant on 14.3.73.
As the appellants refused to recognise them as owners, the respond ents terminated the tenancy and filed a suit for ejectment against the appellants.
This suit was resisted on the same old plea that Smt.
Raj Rani having transferred the suit property to a Trust was not competent to retransfer the property to Navinchand the vendor of the respondents.
The trial court disbelieved the defence version holding that although Smt.
Raj Rani had executed a trust deed in 1936, but the same was not acted upon and that the trust did not appear to have come into existence.
The suit was accordingly decreed.
535 On appeal, the first appellate court reversed the above finding and held that the defendant could not be estopped from challenging the title of the plaintiffs.
In second appeal, the High Court reversed the decree of the First Appellate Court, and held that the defendants were estopped from challenging the decree, Ext.
P. 22 which would bind the parties since it was founded on a compromise, and not on an adjudication by the court on the question of title.
It also observed that the statement made in the compromise petition exhibit P. 21 in the earlier suit supported the case of the plaintiffs independently of the compromise decree and that the defence plea had to be rejected in view of the deed Ext.
P. 20 creating a fresh lease.
In the appeal to this Court, it was contended on behalf of the appellant that having regard to the limited scope of a second appeal under section 100 C.P.C., the High Court was not justified in setting aside the finding of the Appellate court on the question whether the property had been alienat ed in 1936 in favour of the trust or not, that having reached a conclusion against the defendant on the basis of the lease deed exhibit P. 20, the compromise petition exhibit P. 21 and the compromise decree Ext.
P. 22, it should not have proceeded to decide the dispute relating to title on merits on the basis of evidence.
It was further contended that the appellant/tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them.
Dismissing the appeal, the Court, HELD: 1.
The doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plain tiff.
Where the landlord had not himself inducted the tenant into the disputed property and his rights are founded on a derivative title, for example, as an assignee, donee, vend ee, heir, etc., the position is a little different.
[539D] 2.
A tenant already in possession can challenge the plaintiff 's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by section 116 of the Evidence Act, which does not permit the tenant during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenan cy a title to the property.
The rule is not confined in its application to cases where the original landlord brings on action for eviction.
[539E] 536 3.
A transferee from such a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in.
So far as claim of having derived a good title from the original landlord is concerned, the same does not come under the protection of the doctrine of estoppel and is vulnerable to a challenge.
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason, which renders the transfer to be non existent in the eye of law.
[539F G] 4.
In a case where the original landlord had the right of possession and was, therefore, entitled to induct a tenant in the property but did not have any power of dispo sition, the tenant can attack the derivative title of the transferee plaintiff but not on the ground that the trans feror landlord who had initially inducted him in possession did not have the right to do so.
Since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced, he is not forbidden to plead that subsequently the landlord lost this right.
These exceptions, however, do not relieve the tenant of his duty to respect the title of the original landlord at the time of the beginning of the tenancy.
[539H; 540A B] 5.
The tenancy under section 116 does not begin afresh every time the interest of the tenancy or of the landlord devolves upon a new individual by succession or assignment.
[541E] 6.
In the instant case, the acquisition of title by the plaintiffs from Navinchand, if he be presumed to be the rightful owner, is not impugned, that is, the derivative title of the plaintiffs is not under challenge.
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which he is not entitled to do.
[540D] 7.
The appellant in the instant case does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plain tiffs.
His defence is that Navinchand did not own the property at all at any point of time, and this he cannot be allowed to do.
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext.
P. 20.
[541F] Kumar Krishna Prasad Lal Singha Deo vs Baraboni Coal Concern Ltd. & Ors., ; Mangat Ram and Another vs Sardar Meharban Singh and Others, ; D. Satyanara 537 yana vs
P. Jagdish; , and Tej Bhan Madan vs 11 Addl.
District Judge & Ors., ; , distin guished.
|
ivil Appeal Nos.
490 and 2228 (N) of 1970.
Appeals by certificate from the Judgment and order dated 9 10 1969 & 14 1 1970 of the Punjab and Haryana High Court in Letters Patent Appeal Nos.
553 of 1968 & 570 of 1969 respectively.
332 Hardev Singh and R.S. Sodhi for the Appellants (In both the Appeals.) K C. Bhagat and R.N. Podar for the Respondent (in both the Appeals) The Judgment of the Court was delivered by FAZAL ALI, J.
These two appeals by certificate are directed against judgments dated 9.10.69 and 14.1.1970 of the Punjab and Haryana High Court in Letters Patent Appeals Nos.
553 of 1968 and 570 of 1969 by which the contentions raised by the appellants in the two appeals were rejected.
After the matter came up in this Court the two appeals were consolidated as they arose out of almost the same subject matter and involved identical points.
The facts which have given rise to these appeals lie within a very narrow compass and may be briefly summarised thus.
The appellants were refugees from Pakistan and Sant Singh Nalwa was allotted 63 standard acres and 8/1/4 units in village Marghain and another area of 19 standard acres and 5 units in Garden Colony in Jundla which were entered as sailab land in the revenue records.
The other appellant, Kartar Kaur, was allotted 96 acres, 3 bighas and 13 biswas in the same district.
These lands were given to the appellants as they were displaced persons.
After the appellants had become owners of the lands, the State of Punjab passed the Punjab Security of Land Tenures Act, 1953, (hereinafter referred to as the 'Act ') which later applied to Haryana also, under which every land owner whether a displaced person allottee or otherwise could not retain any area of land which fell beyond the extend prescribed by sub section (3) of section 2 of the Act.
After the coming into force of the Act the revenue authorities proceeded to determine the permissible area of the land of both the appellants so that the area which was found to be in excess may be taken over by the State after paying the compensation as provided in the Act and the Rules made thereunder, viz., The Punjab Security of Land Tenures Rules, 1953 (hereinafter called the 'Rules ').
In order to determine the permissible area the Act contains certain provisions by which the entire area held by a land owner has to be converted into standard acres on the basis of a formula contained in sub section (5) of section 2 of the Act which defines 'standard acre ' thus: " 'Standard acre ' means a measure of area convertible into ordinary acres of any class of land according to the 333 prescribed scale with reference to the quantity of yield and quality of soil.
" Similarly, the relevant portion of sub section 5 a which defines 'Surplus Area ' may be extracted thus: " 'Surplus Area ' means the area other than the reserved area, and, where no area has been reserved, the area in excess of the permissible area selected (under section 5 B or the area which is deemed to be surplus area under sub section (1) of section 5C) (and includes the area in excess of the permissible area selected under section 19 B) but it will not include a tenant 's permissible area;. " So far as the appellant, Sant Singh Nalwa, was concerned, the revenue authorities held that he was entitled to retain 50 (fifty) standard acres being the permissible area and the balance of 13 standard acres and odd units was declared as surplus.
Similarly, in the case of the other appellants, Kartar Kaur, she was allowed to retain 50 standard acres and about 15 standard acres of land was taken over being surplus.
In the instant appeals, there is no dispute that the formula by which the extent of the land in possession of the appellants had been converted into standard acres was not in accordance with the provisions of the Act.
The only point that was canvassed before the revenue authorities as also in the High Court centered round the question of the nature of the land and the valuation thereof for the purpose of assessing compensation.
The appellants case was that as the lands which had been declared surplus or for that matter the entire lands/allotted to them as displaced persons fell in a portion of District Karnal which was sailab and Adna sailab and therefore according to the classification made under the Rules they did not carry any valuation.
Sant Singh Nalwa challenged before the Collector the validity of declaration of the surplus area and contested the valuation put by the Collector.
The Collector dismissed the application by his order dated 13.3.1963 and held that 13 standard acres and 6 units of the land had to be declared surplus.
Against this order, Sant Singh filed an appeal before the Additional Commissioner, Ambala Division where the only point raised by him was that the area was not correctly evaluated.
His main grievance was that the area in question was equated with Barani land and valuated at the rate of unirrigated area as given in the valuation statement of the Karnal District under Annexure 'A ' of the Rules.
The main contention of 334 the appellants before the Commissioner as also before us was that as the surplus area does not fall under any of the categories mentioned in Annexure 'A ' it carried no valuation at all.
The Commissioner, however, dismissed the appeal holding that the collector was right in treating the surplus area as an unirrigated area and valuing the same at 9 annas per standard acre.
Thereafter, the appellant filed a writ petition before the High Court which was allowed by the Single Judge by his order dated July 23, 1963.
The Single Judge set aside the orders of revenue courts and accepted the contention of the appellant.
Against this order, the Financial Commissioner filed an appeal under Letters Patent before a Division Bench of the High Court which by its judgment dated 9.10.69 allowed the appeal and dismissed the writ petition filed by the appellant before the High Court.
Similarly, Kartar Kaur, the other appellant also filed an appeal before the Additional Commissioner, Ambala Division regarding the surplus land and having failed there, filed a writ petition in the High Court on 10.2.1965 which was ultimately dismissed on 10.10.69 and the appeal under Letters Patent against the said order of the Single Judge was also dismissed on 14.1.70.
Thus, the position is that both the appellants failed to get any redress from the High Court which ultimately confirmed the orders of the Revenue courts.
The learned counsel for the appellants raised two contentions before us.
In the first place, it was argued that the Revenue courts as also the High Court were in error in holding that the surplus area was rightly evaluated in as much as the classification made under the Rules was ultra vires as being in direct disobedience to the mandate contained in sub section (5) of section 2 of the Act.
In other words, it was argued that whereas sub section (5) directed the Government to frame Rules after considering the quantity of the yield and quality of soil, in the Rules framed by the Government under its rule making power given to it by the Statute the main guidelines laid down by sub section (5) were not followed and the classification made by the Rules under Annexure 'A ' was arbitrary without determining the quantity of the yield and the quality of the soil.
We might mention here that this contention appears to have found favour with the Single Judge in the writ petition filed by the appellant, Sant Singh Nalwa but the judgment of the Single Judge ' 335 as already indicated, was reversed by the Division Bench in the Letters Patent appeal.
Secondly, it was contended that even if the classification made in Annexure 'A ' was valid, the Revenue courts as also the High Court committed an error of Law in misconstruing the classification and in arbitrarily placing the surplus area in the category of unirrigated land.
Coming now to the first point raised by the appellants regarding the constitutionality of the Rules framed under the Act, after hearing the counsel for the parties we find no merit in this contention.
Sub section (5) of section 2 of the Act merely requires that the Rule should classify the land according to the quantity of the yield and quality of the soil.
The Rules have classified the land by preparing a schedule consisting of various Annexures which divide the lands according to the quantity of yield and quality of the soil into various categories.
A perusal of the Annexures to the Rules clearly shows that the valuation statement and the class of land has been described not only as being applicable to one place or the other but in view of the entire topography of every district or tehsil, it is manifest that in a peculiar State like Punjab and Haryana diverse factors, namely, the situation or position of the land, its nearness to the river, the irrigation facilities, the ravages of flood, the fertility of the land and its produce and various other similar circumstances have to be taken into consideration in determining the nature and character of the land.
As far back as 1952, a Land Resettlement Manual was prepared by Tarlok Singh, which was relied upon by the judgment of the Single Judge and at p. 287 the land has been classified in following categories: "Chahi and Abi Chahi Nehri Unirrigated Nehri Non Perennial or other Nehri or Nehri Inundation" This classification varies from District to District and Tarlok Singh has also given the approximate value of the land.
After going through the Land Resettlement Manual we find that the classification has been made in a very scientific manner after taking into consideration the relevant factors.
Even Sir James M. Douie in his Punjab Settlement Manual (4th Edition), which is undoubtedly a work of 336 unimpeachable authenticity, as pointed out by the Single Judge, had made a classification which is almost similar to the one made by Tarlok Singh.
It is, however, obvious that the Punjab Settlement Manual by Sir Douie was made long ago and since then there have been great changes resulting from various steps taken by the Government for improving the nature and character of the land and the irrigation facilities.
It is, therefore, not possible for us to rely on the Manual prepared by Sir Douie as the Single Judge had done because that would not be an objective assessment.
Even so, the classification made by Sir James Douie has been adhered to broadly and basically by Tarlok Singh in his Manual which forms the pivotal foundation for the schedule containing Annexure 'A ' framed under the Rules.
The classification of land like barani, sailab, abi, nehri, chahi, etc., are clearly mentioned in para 259 of Sir James 's Punjab Settlement Manual which Sarkaria, J., as he than was, rightly classed as the Bible of Land Revenue Settlement.
The point, however, that has to be considered in this case is whether the rule making authority has in any way departed from the mandate given or the guidelines contained in the Act.
There does not appear to be any material to show that the Rule Making Authority has in any way either departed from the principles mentioned in sub section (5) of section 2 of the Act or violated the guidelines contained therein.
The appellants were not able to show that the classification made under the Rules has not been made according to the quantity of the yield or the quality of the soil.
Neither any affidavit nor any document has been produced before the courts below to prove this fact.
In this state of the evidence the Single Judge was not justified in striking down the Rules as being ultra vires.
Moreover, it is obvious that the Rules were made under section 27 of the Act which authorises the Government to make rules for carrying out the purposes of the Act.
If the dominant object of the Act was to take over the surplus area according to the formula contained in various provisions of the Act particularly sub sections (3) and (5) of s.2, there is no material on the record to show that the Rules do not fulfil or carry out the object contained in the Act.
Moreover, in Jagir Singh and Ors.
vs The State of Punjab and Ors.
a Division Bench of the Punjab High Court while considering a similar contention rejected the argument that the Annexure framed under the Rules was bad as it did not consider the nature 337 and quality of the Soil.
In this connection, the Division Bench observed thus: "It is thus clear that the formation of an assessment circle necessarily takes into consideration the various factors mentioned by the learned author and those include the nature of soil and its quality apart from various other factors affecting the yield.
The circumstance therefore, that in the Annexure the State of Punjab has been split up into assessment circles, as determined at the time of the Settlement, is highly significant, and leaves no doubt that Settlement, is highly significant and leaves no doubt that the nature and the quality of the soil inherent in the formation of an assessment circle have been taken into consideration for valuing the land for purposes of its conversion into standard acres.
At the same time, the existing sources of irrigation have all been taken into consideration.
It is, in the circumstances, impossible to agree that the Annexure in any manner violates the direction contained in the Punjab Security of Land Tenures Act.
We are, in the circumstances, unable to agree that the disputed rule and Annexure 'A ' attached to the Rules are ultra vires the Punjab Security of Land Tenures Act.
" We find ourselves in complete agreement with the observations made by the High Court and endorse the same.
With due respect, the view taken by Sarkaria J., as he then was (the single Judge in the instant case) is not at all in consonance with the scheme and spirit of the Rules framed under the Act and is based on a wrong interpretation of the nature extent and ambit of the classification made in annexure 'A '.
We therefore fully agree with the Division Bench judgment of the High Court that the classification is in accordance with the provisions of sub section (5) of section 2 of the Act and is therefore, constitutionally valid.
The first contention put forward by the counsel for the appellants is therefore overruled.
Coming now to the second contention that even if the classification is correct, the revenue authorities were wrong in treating the surplus land in dispute as unirrigated area.
We find no substance in this argument.
The relevant Annexure which gives the surplus land in District Karnal is to be found at page 308 of the compilation of Punjab & Haryana Local Acts (vol VII) where while lands 338 classified as Chahi, Abi, Nehri, Unirrigated and Nehri/Non perennial are mentioned, there is no mention of sailab or adna sailab lands.
Whereas at page 306 in the same volume there is no sailab land except in tehsil Sonepat.
Thus, it appears that so far as Karnal District is concerned there was no sailab land at the time when the Rules were framed and the classification was made.
Even if the land in question could be treated as sailab and equated with the land in Sonepat then the valuation would have been at 12 annas as shown at p. 306 of the aforesaid compilation, in which case this would be more detrimental to the interests of the appellants.
The Collector and the Commissioner have therefore rightly treated the land as unirrigated which is almost the lowest category and whose valuation is given as 9 annas per acre.
We, therefore, find no error in the classification made by the revenue authorities.
We are unable to agree with the counsel for the appellants that as the land in question did not fall in any of the heads of classification made in District Karnal they will carry no value at all because this is directly opposed to the various schemes of the classification made under the Rules.
A subsidiary contention in this very argument was that the land should have been valued in accordance with Rule 2, provisos (a) to (c), which may be extracted thus: "2.
Conversion of ordinary acres into standard acres.
The Equivalent, in standard acres, of one ordinary acre of any class of land in any assessment circle, shall be determined by dividing by 16, the valuation shown in Annexure 'A ' to these rules for such class of land in the said assessment circle; Provided that the valuation shall be (a) in the case of Banjar Qadim land, one half of the value of the class previously described in the records and in the absence of any specific class being stated, one half of the value of the lowest barani land.
(b) in the case of Banjar Jadid land, seven eighth of the value of the relevant class of land as previously entered in the records, or in the absence of specified class in the records of the lowest barani land; and (c) in the case of cultivated thur land subject to waterlogging, one eighth of the value of the class of land shown in the records or in the absence of any class, of the lowest barani land.
" 339 The three categories given in clauses (a), (b) and (c) as extracted above do not at all cover the land of the appellants which is sailab or adna sailab and therefore they cannot be given the benefit of any of these three sub clauses of the proviso.
For these reasons, the second contention is overruled.
The result is that we find no merit in the appeals which are accordingly dismissed but in the circumstances without any order as to costs.
N.V.K. Appeals dismissed.
| Allowing the petitions, the Court ^ HELD: The supply to the detenus of the grounds of detention in the English language with which they were not conversant could not be considered to be effective communication to them so as to afford to them a real opportunity of making a representation against the order of detention.
Their detention is repugnant to the provisions of Article 22 (5) of the Constitution.
The complicated nature or the length of the document, is not a sine qua non for the fulfilment of the requirement that the grounds must be supplied to the detenu in a language which he understood before the service on him of such grounds could be considered a communication thereof to him.
[206C D, 208E G] Harikisan vs The State of Maharashtra & Ors.
[1962] Suppl.
2 SCR 918; Habibandhu Das vs District Magistrate, Cuttack and Anr, ; ; Nainmal Pratap Mal Shah vs Union of India and Ors. , followed.
|
minal Appeals Nos.
95 to 97 and 106 of 1954.
1151 Appeal by Special Leave from the Judgment and Order dated the 24th August 1953 of the High Court of Judicature for the State of Punjab (Circuit Bench, Delhi) in Criminal Revision Nos.
109 D, 122 D and 123 D of 1953 arising out of the Judgment and Order dated the 25th May 1953 of the Court of Special Judge,Delhi, in Corruption Case No. 14 of 1954; from the Judgment and Order dated the 27th August 1954 of the High Court of Judicature for the State of Punjab (Circuit Bench, Delhi) in Criminal Miscellaneous No. 131 D of 1954.
H. J. Umrigar and Rajinder Narain, for appellant No. 1.
C. K. Daphtary, Solicitor General of India (G. N. Joshi, P. A. Mehta and P. G. Gokhale, with him), for the respondent.
December 14.
The Judgment of the Court was delivered by JAGANNADHADAS J.
These are appeals by special leave against the orders of the Punjab High Court made in exercise of revisional jurisdiction, reversing the orders of the Special Judge, Delhi, quashing certain criminal proceedings pending before himself against these appellants for alleged offences under the Penal Code and the Prevention of Corruption Act, 1947.
The Special Judge quashed the proceedings on the ground that the investigations on the basis of which the appellants were being prosecuted were in contravention of the provisions of sub section (4) of section 5 of the Prevention of Corruption Act, 1947, and hence illegal.
In Appeal No. 95 of 1954 the appellants are two persons by name H.N. Risbud and Indar Singh.
In Appeals No. 96 and 97 of 1954 H.N. Risbud above mentioned is the sole appellant.
These appeals raise a common question of law and are dealt with together.
The appellant Risbud was the Assistant Development Officer (Steel) in the office of the Directorate General, Ministry of Industry and Supply, Government of India and the appellant Indar Singh was the Assistant Project Section Officer (Steel) in the office of the Direc 1152 torate General, Ministry of Industry and Supply, Government of India.
There appear to be a number of prosecutions pending against them before the Special Judge, Delhi, appointed under the Criminal Law Amendment Act., 1952 (Act XLVI of 1952).
We are concerned in these appeals with Cases Nos.
12,13 and 14 of 1953.
Appeals Nos. 95, 96 and 97 arise respectively out of them.
The cases against these appellants are that they along with some others entered into criminal conspiracies to obtain for themselves or for others iron and steel materials in the name of certain bogus firms and that they actually obtained quota certificates, on the strength of which some of the members of the conspiracy took delivery of quantities of iron and steel from the stock holders of these articles.
The charges, therefore, under which the various accused, including the appellants, are being prosecuted are under section 120 B of the Indian Penal Code, section 420 of the Indian Penal Code and section 7 of the Essential Supplies (Temporary Powers) Act, 1946.
In respect of such of these accused as are public servants, there are also charges under section 5(2) of the Prevention of Corruption Act, 1947.
Under section 5(4) of the Prevention of Corruption Act, 1947, a police officer below the rank of a Deputy Superintendent of Police shall not investigate any offence punishable under sub section (2) of section 5 without the order of a Magistrate of the First Class.
The first information reports in these cases were laid in April and June, 1949, but permission of the Magistrate, for investigation as against the public servants concerned, by a police officer of a rank lower than a Deputy Superintendent of Police, was given in March and April, 1951.
The charge sheets in all these cases were filed by such officers in August and November, 1951, i.e. subsequent to.
the date on which permission as above was given.
But admittedly the investigation was entirely or mostly completed in between the dates when the first information was laid and the permission to investigate by an officer of a lower rank was accorded.
It appears from the evidence taken in this behalf that such investigation was con 1153 ducted not by any Deputy Superintendent of Police but by officers of lower rank and that after the permission was accorded little or no further investigation was made.
The question, therefore, that has been raised is, that the proceedings by way of trial initiated on such charge sheets are illegal and require to be quashed.
To appreciate the argument it is necessary to notice the relevant sections of the Prevention of Corruption Act, 1947 (Act II of 1947) (hereinafter referred to as the Act.
Section 3 of the Act provides that offences punishable under section 161 or 165 of the Indian Penal Code shall be deemed to be cognizable offences.
Section 4 enacts a special rule of evidence against persons accused of offences under section 161 or 165 of the Indian Penal Code, throwing the burden of proof on the accused.
Broadly stated, this section provides that if it is proved against an accused that lie has accepted or obtained gratification other than legal remuneration, it shall be presumed against him that this was so accepted or obtained as a motive or reward.
, such as is mentioned in section 161 of the Indian Penal Code.
Sub sections (1) and (2) of section 5 create a new offence of "criminal misconduct in discharge of official duty" by a public servant punishable with imprisonment for a term of seven years or fine or both.
Sub section (3) thereof enacts a new rule of evidence as against a person accused of the commission of offences under section 5(1) and (2).
That rule, broadly stated,.
is that when a person so accused, or any other person on his behalf, is in possession of pecuniary resources or property disproportionate to the known sources of his income and for which he cannot satisfactorily account, the Court shall presume him to be guilty of criminal misconduct unless he can displace that presumption by evidence.
The offence of criminal misconduct which has been created by the Act, it will be seen, is in itself a cognizable offence, having regard to item 2 of the last portion of Schedule 11 of the Code of Criminal Procedure under the bead "offences against the other laws".
In the normal course, therefore, an investi 1154 gation into the offence of criminal misconduct under section 5(2) of the Act and an investigation into the offence under sections 161 and 165 of the Indian Penal Code which have been made cognizable by section 3 of the Act would have to be made by an officer incharge of a police station and no order of any Magistrate in this behalf would be required.
But the proviso to section 3 as well as sub section (4) of section 5 of the Act specifically provide that "a police officer below the rank of a Deputy Superintendent of Police shall not investigate any such offence without the order of a Magistrate of the First Class or make any arrest there for without a warrant".
It may be mentioned that this Act was amended by Act LIX of 1952.
The above mentioned proviso to section 3 as well as sub section (4) of section 5 have been thereby omitted and substituted by section 5 A, the relevant portion of which may be taken to be as follows: "Notwithstanding anything contained in the Code of Criminal Procedure, no police officer below the rank of a Deputy Superintendent of Police (elsewhere than in the presidency towns of Calcutta, Madras and Bombay) shall investigate any offence punishable under sections 161, 165 or 165 A of the Indian Penal Code or under section 5(2) of this Act without the order of a Magistrate of the First Class".
This amendment makes no difference.
In any case the investigation in these cases having taken place prior to the amendment, what is relevant is section 5(4) as it stood before the amendment.
It may also be mentioned that in 1952 there was enacted the Criminal Law Amendment Act, 1952 (Act XLVI of 1952) which provided for the appointment of Special Judges to try offences under sections 161, 165 and 165 A of the Indian Penal Code and under sub section (2) of section 5 of the Act such offences were made triable only by such Special Judges.
Provision was also made that all pending cases relating to such offences shall be forwarded for trial to the Special Judge.
That is how the present cases are all now before the Special Judge of Delhi appointed under this Act.
On the arguments urged before us two points arise 1155 for consideration.
(1) Is the provision of the Prevention of Corruption Act, 1947, enacting that the investigation into the offences specified therein shall not be ' conducted by any police officer of a rank lower than a Deputy Superintendent of Police without the specific order of a Magistrate, directory or mandatory.
(2) Is the trial following upon an investigation in contravention of this provision illegal.
To determine the first question it is necessary to consider carefully both the language and scope of the section and the policy underlying it.
As has been pointed out by Lord Campbell in Liverpool Borough Bank vs Turner(1), "there is no universal rule to aid in determining whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience.
It is the duty of the Court to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed".
(See Craies on Statute Law, page 242, Fifth Edition).
The Code of Criminal Procedure provides not merely for judicial enquiry into or trial of alleged offences but also for prior investigation thereof.
Section 5 of the Code shows that all offences "shall be investigated, inquired into, tried and otherwise dealt with in accordance with the Code" (except in so far as any special enactment may provide otherwise).
For the purposes of investigation offences are divided into two categories 'cognizable ' and 'non cognizable '.
When information of the commission of a cognizable offence is received or such commission is suspected, the appropriate police officer has the authority to enter on the investigation of the same (unless it appears to him that there is no sufficient ground).
But where the information relates to a non cognizable offence, he shall not investigate it without the order of a competent Magistrate.
Thus it may be seen that according to the scheme of the Code, investigation is a normal preliminary to an accused being put up for trial for a cognizable offence (except when the Magistrate takes cognizance other (1) 148 1156 wise than on a police report in which case he has the power under section 202 of the Code to order investigation if he thinks fit).
Therefore, it is clear that when the Legislature made the offences in the Act cognizable, prior investigation by the appropriate police officer was contemplated as the normal preliminary to the trial in respect of such offences under the Act.
In order to ascertain the scope of and the reason for requiring such investigation to be conducted by an officer of high rank (except when otherwise permitted by a Magistrate), it is useful to consider what "investigation" under the Code comprises.
Investigation usually starts on information relating to the commission of an offence given to an officer in charge of a police station and recorded under section 154 of the Code.
If from information so received or otherwise, the officer in charge of the police station has reason to suspect the commission of an offence, he or some other subordinate officer deputed by him, has to proceed to the spot to investigate the facts and circumstances of the case and if necessary to take measures for the discovery and arrest of the offender.
Thus investigation primarily consists in the ascertainment of the facts and circumstances of the case.
By definition, it includes "all the proceedings under the Code for the collection of evidence conducted by a police officer".
For the above purposes, the investigating officer is given the power to require before himself the attendance of any person appearing to be acquainted with the circumstances of the case.
He has also the authority to examine such person orally either by himself or by a duly authorised deputy.
The officer examining any person in the course of investigation may reduce his statement into writing and such writing is available, in the trial that may follow, for use in the manner provided in this behalf in section 162.
Under section 155 the officer in charge of a police station has the power of making a search in any place for the seizure of anything believed to be necessary for the purpose of the investigation.
The search has to be conducted by such officer in person.
A subordinate officer may be deputed by him for the 1157 purpose only for reasons to be recorded in writing if he is unable to conduct the search in person and there is no other competent officer available.
The investigating officer has also the power to arrest the person or persons suspected of the commission of the offence under section 54 of the Code.
A police officer making an investigation is enjoined to enter his proceedings in a diary from day to day.
Where such investigation cannot be completed within the period of 24 hours and the accused is in custody he is enjoined also to send a copy of the entries in the diary to the Magistrate concerned.
It is important to notice that where the investigation is conducted not by the officer in charge of the police station but by a subordinate officer (by virtue of one or other of the provisions enabling him to depute such subordinate officer for any of the steps in the investigation) such subordinate officer is to report the result of the investigation to the officer in charge of the police station.
If, upon the completion of the investigation it appears to the officer in charge of the police station that there is no sufficient evidence or reasonable ground, he may decide to release the suspected accused, if in custody, on his executing a bond.
If, however, it appears to him that there is sufficient evidence or reasonable ground, to place the accused on trial, he is to take the necessary steps therefore under section 170 of the Code.
In either case, on the completion of the in vestigation he has to submit a report to the Magistrate under section 173 of the Code in the prescribed form furnishing various details.
Thus, under the Code investigation consists generally of the following steps:(1) Proceeding to the spot, (2) Ascertainment of the facts and circumstances of the case, (3) Discovery and arrest of the suspected offender, (4) Collection of evidence relating to the commission of the offence which may consist of (a) the examination of various persons (including the accused) and the reduction of their statements into writing, if the officer thinks fit, (b) the search of places of seizure of things considered necessary for the investigation and to be produced at the trial, and (5) Formation of the opi 1158 nion as to whether on the material collected there is a case to place the accused before a Magistrate for trial and if so taking the necessary steps for the same by the filing of a charge sheet under section 173.
The scheme of the Code also shows that while it is permissible for an officer in charge of a police station to depute some subordinate officer to conduct some of these steps in the investigation, the responsibility for every one of these steps is that of the person in the situation of the officer in charge of the police station, it having been clearly provided in section 168 that when a subordinate officer makes an investigation he should report the result to the officer in charge of the police station.
It is also clear that the final step in the investigation, viz. the formation of the opinion as to whether or not there is a case to place the accused on trial is to be that of the officer in charge of the police station.
There is no provision permitting delegation thereof but only a provision entitling superior officers to supervise or participate under section 551.
It is in the light of this scheme of the Code that the scope of a provision like section 5(4) of the Act has to be judged.
When such a statutory provision enjoins that the investigation shall be made by a police officer of not less than a certain rank, unless specifically empowered by a Magistrate in that behalf, notwithstanding anything to the contrary in the Code of Criminal Procedure, it is clearly implicit therein that the investigation (in the absence of such permission) should be conducted by the officer of the appropriate rank.
This is not to say that every one of the steps in the investigation has to be done by him in person or that he cannot take the assistance of deputies to the extent permitted by the Code to an officer in charge of a police station conducting an investigation or that he is bound to go through each of these steps in every case.
When the Legislature has enacted in emphatic terms such a provision it is clear that it had a definite policy behind it.
To appreciate that policy it is relevant to observe that under the Code of Criminal Procedure most of the offences relating to public 1159 servants as such, are non cognizable.
A cursory perusal of Schedule II of the Code of Criminal Procedure discloses that almost all the offences which may be alleged to have been committed by a public servant, fall within two chapters, Chapter IX "Offences by, or relating to, public servants", and Chapter XI "Offences against public justice" and that each one of them is non cognizable.
(Vide entries in Schedule II under sections 161 to 169, 217 to 233, 225 A as also 128 and 129).
The underlying policy in making these offences by public servants non cognizable appears to be that public servants who have to discharge their functions often enough in difficult circumstancesshould not be exposed to the harassment of investigation against them on information levelled, possibly, by persons affected by their official acts, unless a Magistrate is satisfied that an investigation is called for, and on such satisfaction authorises the same.
This is meant to ensure the diligent discharge of their official functions by public servants, without fear or favour.
When, therefore, the Legislature thought fit to remove the protection from the public servants, in so far as it relates to the investigation of the offences of corruption comprised in the Act, by making them cognizance, it may be presumed that it was considered necessary to provide a substituted safeguard from undue harassment by requiring that the investigation is to be conducted normally by a police officer of a designated high rank.
Having regard therefore to the peremptory language of sub section (4) of section 5 of the Act as well as to the policy apparently underlying it is reasonably clear that the said provision must be taken to be mandatory.
It has been suggested by the learned SolicitorGeneral in his arguments that the consideration as to the policy would indicate, if at all, only the necessity for the charge sheets in such a case having to be filed by the authorised officer, after coming to his own conclusion as to whether or not there is a case to place the accused on trial before the Court, on a. perusal of the material previously collected, and that at best this might extend also to the requirement of arrest of the 1160 concerned public servant by an officer of the appropriate rank.
There is, however, no reason to think that the policy comprehends within its scope only some and not all the steps involved in the process of investigation which, according to the scheme of the Act, have to be conducted by the appropriate investigating officer either directly or when permissible through deputies, but on his responsibility.
It is to be borne in mind that the Act creates two new rules of evidence one under section 4 and the other under section 5(3), of an exceptional nature and contrary to the accepted canons of criminal jurisprudence.
It may be of considerable importance to the accused that the evidence in this behalf is collected under the responsibility of the authorised and competent investigating officer or is at least such for which such officer is prepared to take responsibility.
It is true that the result of a trial in Court depends on the actual evidence in the case but it cannot be posited that the higher rank and the consequent greater responsibility and experience of a police officer has absolutely no relation to the nature and quality of evidence collected during investigation and to be subsequently given in Court.
A number of decisions of the various High Courts have been cited before us bearing on the questions under consideration.
We have also perused the recent unreported Full Bench judgment of the Punjab High Court(1).
These disclose a conflict of opinion.
It is sufficient to notice one argument based on section 156(2) of the Code on which reliance has been placed in some of these decisions in support of the view that section 5(4) of the Act is directory and not mandatory.
Section 156 of the Code of Criminal Procedure is in the following terms: "156(1).
Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XV relating to the place of inquiry or trial.
(1) Criminal Appeals Nos.
25 D and 434 of 1953 disposed of on 3rd May,1954.
1161 (2).
No proceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one which such officer was not empowered under this section to investigate.
Any Magistrate empowered under section 190 may order such an investigation as above mentioned".
The argument advanced is that section 5(4) and proviso to section 3 of the Act are in substance and in effect in the nature of an amendment of or proviso to section 156(1) of the Code of Criminal Procedure.
In this view, it was suggested that section 156(2) which cures the irregularity of an investigation by a person not empowered is attracted to section 5(4) and proviso to section 3 of the 1947 Act and section 5 A of the 1952 Act.
With respect, the learned Judges appear to have overlooked the phrase "under this sec tion" which is to be found in sub section (2) of section 156 of the Code of Criminal Procedure.
What that sub section cures is investigation by an officer not empowered under that section, i.e. with reference to sub sections (1) and (3) thereof.
Sub section (1) of section 156 is a provision empowering an officer in charge of a police station to investigate a cognizable case without the order of a Magistrate and delimiting his power to the investigation of such cases within a certain local jurisdiction.
It is the violation of this provision that is cured under sub section (2).
Obviously sub section (2) of section 156 cannot cure the violation of any other specific statutory provision prohibiting investigation by an officer of a lower rank than a Deputy Superintendent of Police unless specifically authorised.
But apart from the implication of the language of section 156(2), it is not permissible to read the emphatic negative language of sub section (4) of section 5 of the Act or of the proviso to section 3 of the Act, as being merely in the nature of an amendment of or a proviso to sub section (1) of section 156 of the Code of Criminal Procedure.
Some of the learned Judges of the High Courts have called in aid sub section (2) of section 561 of the Code of Criminal Procedure by way of analogy.
It 1162 is difficult to see how this analogy helps unless the said sub section is also to be assumed as directory and not mandatory which certainly is not obvious on the wording thereof We are, therefore, clear in our opinion that section 5(4) and proviso to section 3 of the Act and the corresponding section 5 A of Act LIX of 1952 are mandatory and not directory and that the investigation conducted in violation thereof bears the stamp of illegality.
The question then requires to be considered whether and to what extent the trial which follows such investigation is.
vitiated.
Now, trial follows cognizance and cognizance is preceded by investigation.
This is undoubtedly the basic scheme of the Code in respect of cognizable cases.
But it does not necessarily follow that an invalid investigation nullifies the cognizance or trial based thereon.
Here we are not concerned with the effect of the breach of a mandatory provision regulating the competence or procedure of the Court as regards cognizance or trial.
It is only with reference to such a breach that the question as to whether it constitutes an illegality vitiating the proceedings or a mere irregularity arises.
A defect or illegality in investigation, however serious, has no direct bearing on the competence or the procedure relating to cognizance or trial.
No doubt a police report which results from an investigation is provided in section 190 of the Code of Criminal Procedure as the material on which cognizance is taken.
But it cannot be maintained that a valid and legal police report is the foundation of the jurisdiction of the Court to take cognizance.
Section 190 of the Code of Criminal Procedure is one out of a group of sections under the beading "Conditions requisite for initiation of proceedings.
The language of this section is in marked contrast with that of the other sections of the group under the same heading, i.e. sections 193 and 195 to 199.
These latter sections regulate the competence of the Court and bar its jurisdiction in certain cases excepting in compliance therewith.
But section 190 does not.
While no doubt, in one sense, clauses (a), (b) and (c) of section 190(1) are conditions requisite for taking of cogni 1163 zance, it is not possible to say that cognizance on an invalid police report is prohibited and is therefore a nullity.
Such an invalid report may still fall either under clause (a) or (b) of section 190(1), (whether it is the one or the other we need not pause to consider) and in any case cognizance so taken is only in the nature of error in a proceeding antecedent to the trial.
To such a situation section 537 of the Code of Criminal Procedure which is in the following terms is attracted: "Subject to the provisions herein before contained, no finding, sentence or order 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 complaint, summons, warrant, charge, proclamation, order, judgment or other proceedings before or during trial or in any enquiry or other proceedings under this Code, unless such error, omission or irregularity, has in fact occasioned a failure of justice".
If, therefore, cognizance is in fact taken, on a police report vitiated by the breach of a mandatory provision relating to investigation, there can be no doubt that the result of the trial which follows it cannot be set aside unless the illegality in the investigation can be shown to have brought about a miscarriage of justice.
That an illegality committed in the course of investigation does not affect the competence and the jurisdiction of the Court for trial is well settled as appears from the cases in Prabhu vs Emperor(1) and Lumbhardar Zutshi vs The King(2).
These no doubt relate to the illegality of arrest in the course of investigation while we are concerned in the present cases with the illegality with reference to the machinery for the collection of the evidence.
This distinction may have a bearing on the question of prejudice or miscarriage of justice, but both the cases clearly show that invalidity of the investigation has no relation to the competence of the Court.
We are, therefore, clearly, also, of the opinion that where the cognizance of the case has in fact been taken and the case has proceeded to termi (1) A.I.R. 1944 P.C. 73.
149 (2) A.I.R. 1950 P C. 26, 1164 nation.
, the invalidity of the precedent investigation does not vitiate the result, unless miscarriage of justice has been caused thereby.
It does not follow, however, that the invalidity of the investigation is to be completely ignored by the Court during trial.
When the breach of such a mandatory provision is brought to the knowledge of the Court at a sufficiently early stage, the Court, while not declining cognizance, will have to take the necessary steps to get the illegality cured and the defect rectified, by ordering such reinvestigation as the circumstances of an individual case may call for.
Such a course is not altogether outside the contemplation of the scheme of the Code as appears from section 202 under which a Magistrate taking cognizance on a complaint can order investigation by the police.
Nor can it be said that the adoption of such a course is outside the scope of the inherent powers of the Special Judge, who for purposes of procedure at the trial is virtually in the position of a Magistrate trying a warrant case.
When the attention of the Court is called to such an illegality at a very early stage it would not be fair to the accused not to obviate the prejudice that may have been caused thereby, by appropriate orders, at that stage but to leave him to the ultimate remedy of waiting till the conclusion of the trial and of discharging the somewhat difficult burden under section 537 of the Code of Criminal Procedure of making out that such an error has in fact occasioned a failure of justice.
It is relevant in this context to observe that even if the trial had proceeded to conclusion and the accused had to make out that there was in fact a failure of justice as the result of such an error, explanation to section 537 of the Code of Criminal Procedure indicates that the fact of the objection having been raised at an early stage of the proceeding is a pertinent factor.
To ignore the breach in such a situation when brought to the notice of the Court would be virtually to make a dead letter of the peremptory provision which has been enacted on grounds of public policy for the benefit of such an accused.
It is true that the peremptory pro 1165 vision itself allows an officer of a lower rank to make the investigation if permitted by the Magistrate.
But this is not any indication by the Legislature that an investigation by an officer of a lower rank without such permission cannot be said to cause prejudice.
When a Magistrate is approached for granting such permission he is expected to satisfy himself that there are good and sufficient reasons for authorising an officer of a lower rank to conduct the investigation.
The granting of such permission is not to be treated by a Magistrate as a mere matter of routine but it is an exercise of his judicial discretion having regard to the policy underlying it.
In our opinion, therefore, when such a breach is brought to the notice of the Court at an early stage of the trial the Court have to consider the nature and extent of the violation and pass appropriate orders for such reinvestigation as may be called for, wholly or partly, and by such officer as it considers appropriate with reference to the requirements of section 5 A of the Act.
It is in the light of the above considerations that the validity or otherwise of the objection as to the viola tion of section 5(4) of the Act has to be decided and the course to be adopted in these proceedings, determined.
The learned Special Judge before whom the objection as to the violation of section 5(4) of the Act was taken took evidence as to the actual course of the investigation in these cases.
In the cases out of which Criminal Appeals Nos. 96 and 97 of 1954 arise, the first information report which in each case was filed on 29 6 1949 was in terms on the basis of a complaint filed by the Director of Administration and Co ordination,, Directorate of Industry and Supply.
This disclosed information constituting offences including that under section 5(2) of the Act.
The cases were hence registered under various sections including section 5(2), of the Act.
The investigation that was called for on the basis of such a first information report was to be by an officer contemplated under section 5(4) of the Act.
The charge sheets in these two cases were filed on 11 8 1951 by a Sub Inspector 1166 of Police, R. G. Gulabani and it appears that he applied to the Magistrate for permission to investigate into these cases on 26 3 1951.
His evidence shows that so far as the case relating to Criminal Appeal No. 97 of 1954 is concerned, he did not make any investigation at all excepting to put up the chargesheet.
All the prior stages of the investigation were conducted by a number of other officers of the rank of Inspector of Police or Sub Inspector of Police and none of them had taken the requisite permission of the Magistrate.
In the case out of which Criminal Appeal No. 96 of 1954 arises the evidence of R. G. Gulabani shows that he took up the investigation after he obtained permission and partly investigated it thereafter but that the major part of the investigation was done by a number of other officers who were all below the rank of Deputy Superintendent of Police without having obtained from the Magistrate the requisite sanction therefor.
Both these are cases of clear violation of the mandatory provisions of section 5(4) of the Act.
In the view we have taken of the effect of such violation it becomes necessary for the Special Judge to reconsider the course to be adopted in these two cases.
As regards the case out of which Criminal Appeal No. 95 of 1954 arises it is to be noticed that the first information report which was filed on 30 4 1949 disclosed offences only against Messrs Patiala Oil Mills, Dev Nagar, Delhi, and others, and not as against any public servant.
The case that was registered was accordingly in respect of offences punishable under section 420 of the Indian Penal Code and section 6 of the Essential Supplies (Temporary) Powers Act, 1946, and not under any offence comprised within the Pre Vention of Corruption Act.
The investigation proceeded, therefore, in the normal course.
The evidence shows that the investigation in this case was started on 2 5 1949 by Inspector Harbans Singh and that on 11 7 1949 he handed over the investigation to Inspector Balbir Singh.
Since then it was only Balbir Singh that made all the investigation and it appears from his evidence that he examined as many 1167 as 25 witnesses in the case.
It appears further that in the course of this investigation it was found that, the two appellants and another public servant were liable to be prosecuted under section 5(2) of the Act.
Application was then made to the Magistrate by Balbir Singh for sanction being accorded to him under section 5(4) of the Act and the same was given on 20 3 1951.
The charge sheet was filed by Balbir Singh on 15 11 1951.
He admits that all the investi gation by him excepting the filing of charge sheet was prior to the obtaining the sanction of the Magistrate for investigation.
But since the investigation prior to the sanction was with reference to a case registered under section 420 of the Indian Penal Code and section 6 of the Essential Supplies (Temporary) Powers Act, 1946, that was perfectly valid.
It is only when the material so collected disclosed the commission of an offence under section 5(2) of the Act by public servants, that any question of taking the sanction of the Magistrate for the investigation arose.
In such a situation the continuance of such portion of the investigation as remained, as against the public servants concerned by the same officer after obtaining the permission of the Magistrate was reasonable and legitimate.
We are, therefore, of the opinion that there has been no such defect in the investigation in this case as to call for interference.
In the result, therefore, Criminal Appeal No. 95 of 1954 is dismissed.
Criminal Appeals Nos.96 and 97 of 1954 are allowed with the direction that the Special Judge will take back the two cases out of which these appeals arose on to his file and pass appropriate orders after reconsideration in the light of this judgment.
Criminal Appeal No. 106 of 1954.
This is an appeal by special leave against a common order of the High Court of Punjab relating to Cases Nos. 19 to 25 of 1953 before the Special Judge, Delhi.
It raises the same questions which have been disposed of by our judgment in Criminal Appeals Nos. 95 to 97 of 1954.
Since the appeal is, in form, one 1168 against the order of the High Court refusing to grant stay of the proceedings then pending, it is sufficient to dismiss this appeal with the observation that it will be open to the appellants to raise , the objections before the Special Judge.
| Held, that section 5(4) and proviso to section 3 of the Prevention of Corruption Act, 1947 (II of 1947) and the corresponding section 5 A of the Prevention of Corruption (Second Amendment) Act, 1952 (LIX of 1952) are mandatory and not directory and that an investigation conducted in violation thereof is illegal.
If cognizance is in fact taken on a police report in breach of a mandatory provision relating to investigation, the results which follow cannot be set aside unless the illegality in the investigation can be shown to have brought about a miscarriage of justice.
It is well settled that an illegality committed in the course of an investigation does not affect the competence and the jurisdiction of the court for trial and where cognizance of the case has in fact been taken and the case has proceeded to termination the invalidity of the preceding investigation does not vitiate the result unless miscarriage of justice has been caused thereby When any breach of the mandatory provisions relating to investigation is brought to the notice of the Court at an early stage of the trial the Court will have to consider the nature and extent of the violation and pass appropriate orders for such reinvestigation as may be called for, wholly or partly, and by such officer as it considers appropriate with reference to the requirements of section 5 A of the Prevention of Corruption (Second Amendment) Act, 1952.
Liverpool Borough Bank vs Turner ([1861] ; , Prabhu vs Emperor (A.I.R. and Lumbhardar Zutshi vs The King (A.I.R. , referred to.
|
Civil Appeal Nos.
68 of 1974 and 936 of 1975.
Appeals by Special Leave from the Judgment and order dated 5 11 1973 of the Punjab & Haryana High Court in Sales Tax Reference Nos. 12 and 11 of 1969.
Desai, (In CA No. 936/75), P. C. Bhartari, R. Narain, K. J. John, O. C. Mathur for the Appellants.
B. Sen, (In CA No. 68/74), and R. N.Sachthey for the Respondent.
P. C. Bhartari for Applicant/Interveners (In CA No.68/74).
The Judgment of the Court was delivered by RAY, C.J.
This appeal by special leave is on the question whether the appellant is exempt from inter State tax on the sales of poles and cables to the Delhi Electric Supply Undertaking by reason of the provisions contained in section S(2)(a)(iv) of the Punjab Sales Act hereinafter referred to as the State Act.
Section 5(2) (a) (iv) of the State Act is as follows: "5(2) In this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the , of goods for use by it in the generation or distribution of such energy.
" Under section 8 of the hereinafter referred to as the Central Act, every dealer, who in the course of inter State 994 trade or commerce sells to the Government any goods; or sells to a registered dealer other than the Government goods of the description referred to in sub section (3) shall be liable to pay tax under this Act, which shall be three per cent of his turnover.
The provisions in section 8(2A) of the Central Act are as follows : "Notwithstanding anything contained in sub section (1A) of section 6 or sub section (1) or sub section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than three per cent, (whether called a tax of fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
EXPLANATION: For the purposes.
, of, this sub section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the ' appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods.
" The contention on behalf of the appellant is that by reason of the Explanation to section 8(2A) of the Central Act read with section 5(2)(a)(iv) of the State Act the appellant is exempt from payment of inter State sales tax.
The words "goods for use by it in the gene ration or distribution of such energy" occurring in section S (2) (a) (iv) of the State Act are said by counsel for the appellant to be descriptive of the goods.
In short, the appellant 's contention is that goods for use by the undertaking supplying electrical energy are generally exempt from taxation, and, therefore, they should not be included in the turn over.
The contention on behalf of the State is that the exemption granted under section 5(2)(a)(iv) of the State Act is exemption in specified circumstances and under specified conditions.
The specified circumstances are said to be sales to an undertaking supplying electrical energy to the public under the .
The specified conditions are that the goods are for use by the undertaking in the generation or distribution of such energy.
The answer to the question in this appeal is whether the exemption mentioned in section 5(2) (a) (iv) of the State Act is in specified cir circumstance or under specified conditions, as the Case may be, or it is a general exemption as the appellant contends in cases of sales of goods to an Electric Supply Undertaking for use by it in the generation or distribution of such energy.
995 The appellant referred to Schedule read with section 6 of the State Act and in particular Items 33 and 46 to illustrate what would be exemption under specified circumstances or specified conditions.
In Schedule there are two columns.
The first column describes the goods.
The second column describes the conditions which make the goods tax free.
In Item 33 in Schedule "Photographs including Xrays photographs" mentioned in the first column are tax free "when sold by photographers and radiologists preparing them" as mentioned in the second column.
In Item 46 "hand spun yarn" mentioned in the first column becomes tax free "when sold by one who deals in hand spun yarn exclusively" as mentioned in the second column Section 5(2) of the State Act deals with taxable turnover.
There is no dispute that electricity poles and cables sold to the undertaking supplying electric energy are exempt under the State Act from being included within the taxable turnover.
The question is whether such sales made in the course of inter State trade are also exempt from the levy of Central Sales Tax.
The appellant contends that the exemption in the State Act is general because exemption applies in respect of goods without any enumeration or classification of goods.
Further, it is said that exemption is general because the sales are for use in generation and distribution of electrical energy.
According to the appellants sales of all goods to the undertaking supplying electrical energy are exempt from being included in the taxable turnover as long as the goods answer the description that they are for use in the generation or distribution of electrical energy.
The appellant relied on the decision of the Madhya Pradesh High Court in Commissioner of Sales Tax, Madhya Pradesh vs Kapoor Dori Niwar & Co., Gwalior(1) tn support of the meaning of the expression "exempt from tax generally".
In the Madhya Pradesh case (supra) the State Government issued a notification in the year 1959 exempting from the payment of sales tax for a period of one year sales of niwar by a dealer registered under the 1958 relevant State Act.
The exemption was later on extended up to 31 March, 1963.
The assessee a registered dealer claimed exemption on inter State sales of niwar.
The Madhya Pradesh High Court held that during the period of the exemption, the sales of niwar by a registered dealer were exempt from tax generally within the meaning of section 8(2A) of the Central Act, and, therefore, the assessee 's inter State sales of niwar were exempt from tax under the Central Act.
The expression "exempt only in specified circumstances or under specified conditions" occurring in the Explanation to section 8(2A) of the Central Act was held to mean such circumstances or conditions the non existence or non performance of which precludes the grant of exemption.
In other words, if those circumstances do not exist or those conditions are not performed then the sales of goods cannot be exempted from tax even if they are effected by a class of dealers to whom exemption is granted and during the period for which exemption is granted.
996 In the Madhya Pradesh case (supra) there was no dispute that the sales effected by the assessee fell under section 8(1) of the Central Act.
The State Act granted exemption from sales tax on sales of niwar effected by a registered dealer.
The exemption granted to sales by a registered dealer under the notification was without any restriction or limitation so far as sales by a registered dealer were concerned.
Though the period of exemption was fixed, it was not regarded as a condition imposed in relation to the exemption.
It was also contended there that because the exemption was granted to the registered dealers the exemption was granted to a class of dealers, and, therefore, it should be construed to be an exemption in specified circumstances or under specified conditions.
The Court repelled the contention by stating that the exemption was to all registered dealers without any restriction or condition.
The other decision on which the appellant relied is of the Allahabad High Court in Hindustan Safety Glass Works (P.) Ltd. vs The State of Uttar Pradesh & Anr.(1) In the Safety Glass Works case (supra) the company manufactured toughened glasses and mirrors in its factories.
Under a notification issued by the State Government under the State Act sales of mirrors and safety glasses were liable to sales tax either at the point of sale by the importer of such goods or at the point of sale by the manufacturer thereof.
Subsequently, a notification was issued by the State Government exempting toughened glasses and mirrors manufactured by the company at Allahabad from payment of sales tax for a period of three years.
The company claimed that the turnover of sales of toughened glasses and mirrors manufactured by it, being generally exempt from tax under the State Act, was also not liable to Central Sales Tax because of the provisions contained in section 8(2A) of the Central 'Act.
It was held that for purposes of section 8(2A) of the Central Act, sale of mirrors and toughened glasses manufactured by the company was under no condition and in no circumstance liable to be taxed in the hands of the company.
The reasons given were that normally it will be taken that the sale of mirrors and toughened glasses by the company was exempt from to the generally unless it could be shown that such goods belonged to the class specified in the Explanation to section 8(2A) of the Central Act.
As the toughening glasses and mirrors manufactured by the company did not fall in such a category the turnover of the sales of those goods in the hands of the company was not liable to tax under the Central Act.
The stipulation in the notification in the Safety Glass Work case (supra) that the turnover of such sales would for a period of three years be exempt from payment of sales tax did not amount to exempting the turnover of such goods from tax under specified circumstances or specified conditions.
Section 6 of the State Act does not speak of exemption, but deals with tax free goods.
In other words, section 6 deals with specified goods on which no tax is payable.
Section S of the State Act deals with what has to be excluded from the taxable turnover of the dealer.
997 Both the sections deal with goods which do not suffer from sales tax.
A Section 8(2A) of the Central Act exempts goods from inter State sales tax where a tax law of the State has exempted them from sales tax.
The Explanation to section 8(2A) of the Central Act takes away the exemption where it is not general and has been granted in specified circumstances or under specified conditions.
The provisions contained in section 5 (2) (a) (iv) of the State Act exclude sales which are made under specified circumstances or specified conditions.
The specified circumstances are that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence or sanction granted under the .
The specified condition is that the goods purchased by the undertaking must be used for the generation or distribution of electrical energy.
If the circumstances do not exist or if the conditions are not performed then the sales of goods cannot be exempted from tax.
General exemption means that r the goods should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available.
Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally.
The contention of the appellant that the words "in the generation or distribution of such energy" in section 5(2)(a)(iv) of the State Act are descriptive of goods is unacceptable.
The expression "generation or distribution of such energy" specifies the condition under which exemption is granted.
For these reasons we are of opinion that the High Court was correct in holding that the sales by the undertaking supplying electrical energy were not exempt from tax generally within the meaning of section 8(2A) of the Central Act read with section 5(2)(a)(iv) of the State Act.
The appeal is dismissed.
In view of the fact that the High Court directed the parties to pay and bear their own costs, similar order is made here.
S.R. Appeal dismissed.
| Under section 5(2)(a)(iv) of the Punjab Sales Tax Act "taxable turnover" meant that part of a dealer 's gross turnover during any period which remains after deducting therefrom, his turnover during that period on sales to any undertaking supplying electrical energy to the public under a licence or sanction granted under the , of goods for use by it in the generation or distribution of such energy.
Under section 8 of the Central Sales Tax, every dealer.
who in the course of inter state trade or commerce sells to the Government any goods: or sells to a registered dealer other than the Government goods of the description referred to in sub section (3) shall be liable to pay tax under the Act, which shall be three per cent of his turnover.
Section 8(2A) reads as follows: "Notwithstanding anything contained in sub section (1A) of section 6 or sub section (1) or sub section (2) of this section, the tax pay able under this Act by a dealer on his turnover in so far as the turn over or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate state, exempt, from tax generally, or subject to tax generally at a rate which is lower than three per cent.
(whether called a tax or fee or by any other name), shall be nil or, as the case may be shall be calculated at tho lower rate.
Explanation: For the purpose of this sub section or sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate state, if under the law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods.
" The appellants were suppliers of poles and cables to the Delhi Electric Supply Undertaking and the sales were in the course of inter state trade or commerce and admittedly exempt under the state sales tax u/s 5(2) (a) (iv).
The state assessed tax u/s 8 of tho on the ground that the exemption granted u/s 5(2)(a)(iv) of the state Act fell under Explanation to section 8(2A) of the .
The High Court held that the sales by the undertaking supplying electrical energy were not exempt from tax generally within the meaning of section 8(1A) of the Central Act read with Section 5(2)(a)(iv) of the State Act.
Dismissing the appeal, by special leave, the Court.
^ HELD: (I) General exemption means that goods should be totally exempt from tax before similar exemption from the levy of central sales tax can become available.
Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally.
Section 6 of the State Act does not speak of exemption but deals with tax free goods.
Section 6 deals with specified goods on which no tax is payable.
993 Section 5 of the State Act deals with what has to be excluded from taxable turnover of the dealer.
Both the sections deal with goods which do not suffer from Sales tax.
Section 8(2A) of the Central Act exempts goods from inter State Sales tax where a tax law of the state has exempted them from sales tax.
The explanation to section 8(2A) of the Central Act takes away the exemption where it is not general and has been granted in specified circumstances or under specified conditions.
The provisions contained in section 5(2) (a) (iv) of the state Act exclude sales which are made under specified circumstances or specified conditions.
The specified circumstances are that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence or sanction granted under the .
The specified condition is that the goods purchased by the undertaking must be used for the generation or distribution of electrical energy.
If the circumstances do not exist or if the conditions are not performed then the sales of goods cannot be exempted from tax.
The expression "generation or distribution of such energy" specifies the condition under which exemption is granted.
[996H, G97A D] Commissioner of Sales Tax, M.P. vs Kapoor Dari Niwar & Co., Gwalior 22 STC p. 152; Hindustan Safety Glass Works (P) Lrd.
vs The State of U.P. and Anr.
34 STC 209, discussed.
|
titions Nos.
6890, 7204 of 1982 and 3491 of 1983.
Under article 32 of the Constitution of India Ram Jethmalani, V.M. Tarkunde and R. Dwivedi for the Petitioner.
M.K. Ramamurthi, D.P. Mukherjee and G.S. Chatterjee for the Respondents State of West Bengal.
K.K. Venugopal, M/s. Inderjit Sen and G.S. Chatterjee for the Respondent.
Danial A. Latiffi and R.S. Sodhi for the Intervener, All India Lawyers Union.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The petitioner in Writ Petition No. 6890/82, a monk of the Ananda Marga and currently General Secretary, Public Relations Department of the Ananda Marga Pracharak Sangh, has filed this petition under Article 32 of the Constitution for a direction to the Commissioner of Police, Calcutta and the State of West Bengal to allow processions to be carried in the public streets and meetings to be held in public places by the followers of the Ananda Marga cult accompanied by the performance of Tandava dance within the State of West Bengal.
There are two connected writ petitions being Writ Petition Nos.
7204/82 & 3491/83 by the Diocese Secretary of West Bengal Region and another follower of Ananda Marga.
All these Petitions raise this common question and have been heard at a time.
For convenience the petition by the General Secretary, Public Relations Department of the Ananda Marga Pracharak Sangh has been treated as the main petition and references in the judgment have been confined to it.
451 In the original petition certain factual assertions have been made and after counter affidavits were filed several further affidavits have been placed before the Court on behalf of the petitioner and counter affidavits too have been filed.
Shorn of unnecessary details, the averments on behalf of the respective contenders are as follows: Shri Pravat Ranjan Sarkar otherwise known as Shri Ananda Murti, founded a socio spiritual organisation claimed to have been dedicated to the service of humanity in different spheres of life such as physical, mental and spiritual, irrespective of caste, creed or colour, in the year 1955.
In the initial period the Headquarters of this organisation was located near Ranchi in the State of Bihar but later it has been shifted to a place within the City of Calcutta in West Bengal.
It has been pleaded that Ananda Marga contains no dogmatic beliefs and teaches the yogic and spiritual science to every aspirant.
In order to realise the Supreme, Ananda Marga does not believe that it is necessary to abandon home, profession or occupation and spiritual sadhana is possible at any place and concurrently with fulfilling all duties and responsibilities of family life.
It has been pleaded that Ananda Marga shows the way and explains the methods for spiritual advancement and this helps man to practice his dharma.
According to the petitioner Lord Shiva had performed Tandava Dance in 108 forms but Shaivite literature has given details of 64 kinds only.
Seven forms out of these 64 appear to have been commonly accepted and they are called Kalika, Gouri, Sandhya, Sambhara, Tripura, Urdhava and Ananda.
The first of these forms elaborates the main aspects of shiva while the seventh, i.e. the Ananda Tandava portrays all the manifold responsibilities of the Lord.
Ananda Tandava is claimed to have taken place at Tillai, the ancient name of Chidambaram now situated in the State of Tamil Nadu.
It is the petitioner 's stand that the word Tandava is derived from the root Tandu which means to jump about and Shiva was the originator of Tandava about 6500 years ago.
Ananda Murtiji, as the petitioner maintains, is the Supreme Father of the Ananda Margis.
It is customary for every Ananda Margi after being duly initiated to describe Ananda Murtiji as his father.
One of the prescriptions of religious rites to be daily performed by an Ananda Margi is Tandava Dance and this is claimed to have been so introduced from the year 1966 by the preceptor.
This dance is to be performed with a skull, a small, symbolic knife and a Trishul.
It is also customary to hold a lathi and a damroo.
It is explained that the knife or the sword symbolises the force which cuts through the fetters of the mundane world and 452 allows human beings to transcend towards perfection; the trishul or the trident symbolises the fight against static forces in the three different spheres of human existence spiritual, mental and physical; the lathi which is said to be a straight stick stands out as the symbol of straightforwardness or simplicity; the damroo is the symbol to bring out rhythmic harmony between eternal universal music and the entitative sound; and the skull is the symbol of death reminding every man that life is short and, therefore, every moment of life should be utilised in the service of mankind and salvation should be sought.
The petitioner has further maintained that Ananda Margis greet their spiritual preceptor Shri Ananda Murti with a dance of Tandava wherein one or two followers use the skull and the symbolic knife and dance for two or three minutes.
At intervals processions are intended to be taken out in public places accompanied by the Tandava dance as a religious practice.
Though in subsequent affidavits and in the course of argument an attempt was made by Mr. Tarkunde to assert that Ananda Marga is a new religious order, we do not think there is any justification to accept such a contention when it runs counter to the pleadings in paragraphs 4 and 17 of the writ petition.
In paragraph 4 it was specifically pleaded that "Ananda Marga is more a denomination than an institutionalised religion", and in paragraph 17 it was pleaded that "Ananda Margis are Shaivites. " We shall, therefore, proceed to deal with this petition on the footing that, as pleaded by the petitioner, Ananda Marga is a religious denomination of the Shaivite order which is a well known segment of Hindu religion.
Though the petitioner had pleaded that Tandava dance has been practiced and performed by every Ananda Margi for more than three decades, it has been conceded in the course of the hearing that Tandava Dance was introduced for the first time as a religious rite for Ananda Margis in or around 1966.
Therefore, by the time of institution of this writ petition the practice was at best prevalent for about 16 years.
The Commissioner of Police, respondent 1 before us is alleged to have made repetitive orders under section 144 of the Code of Criminal Procedure, 1973 ( 'Code ' for short) from August 1979, directing that "no member of a procession or assembly of five or more persons should carry any fire arms, explosives, swords, spears, knives, tridents, lathis or any article which may be used as weapon of offence or any article likely to cause annoyance to the 453 public, for example skulls. " A petition was filed before the Calcutta High Court under Article 226 of the Constitution by the General Secretary of Ananda Marga for a writ of mandamus against the respondents for a direction not to interfere with or place restraints on the freedom of conscience and free profession, practice and propogation of their religion, including Tandava Dance, in matter No. 903 of 1980.
The Calcutta High Court rejected the said petition on September 23, 1980 and observed: "It is open to any one in this country to practice any religion but the religious practice must not be inconsistent with the susceptibility or sensibility or fairness or public order.
Tandava dance as such may not be objectionable.
In the streets of Calcutta all kinds of demonstrations and procession are being held every day which may on many occasions cause disturbance to others and interrupt the free flow of traffic.
In spite of the same, such demonstrations and processions are allowed to take place particularly every day by the authority concerned.
If the petitioners or any member of their group want to hold a procession or reception or demonstration accompanied by any dance or music, that by itself may not be objectionable.
However, brandishing fire torches or skulls or daggers in the public places including streets cannot come under the same category.
Here other things are involved.
The interests of other members of the public are involved, the sense of security of the others is also involved.
The authorities concerned have to keep in mind the question of the feelings of other members of the public and the question of the possibility of any attempt to retaliate or counter act to the same are also to be considered.
Taking into consideration all these factors I am of the opinion that the petitioners do not have any legal right and they have not established any legal right to carry fire torches, skulls and daggers in public places or public streets and do not intend to pass any order entitling the petitioners to do so.
However, the petitioners shall be entitled to go in procession or hold any demonstration without any such fire tourches, daggers or skulls.
However, this would be subject to prevailing law of the land in the particular area.
For example, in the High Court, Dalhousie Square and Assembly order under section 144 454 of the Criminal Procedure Code is promulgated from time to time.
This order would not entitle the petitioners to hold any such procession, demonstration in violation of such promulgation, if any.
This order would also not entitle the petitioners to hold any procession or demonstration without the permission of the authority concerned when such permission is required for such purposes under any existing law.
" On March 29, 1982, respondent 1 made a fresh order under s.144 of the Code wherein the same restraints as mentioned in the earlier order were imposed.
An application for permission to take out a procession on the public street accompanied with Tandava dance was rejected and that led to the filing of this petition.
The petitioner asserts that tandava dance is an essential part of the religious rites of the Ananda Margis and that they are entitled to practise the same both in private as also in public places and interference by the respondents is opposed to the fundamental rights guaranteed under Articles 25 and 26 of the Constitution.
The order under s.144 of the Code has been assailed mainly on the ground that it does not state the material facts of the case though the statute requires such statement as a condition precedent to the making of the order.
Repetitive orders under s.144 of the Code, it has been contended, are not contemplated by the Code and, therefore, making of such orders is an abuse of the law and should not be countenanced.
Two separate returns have been made to the rule nisi.
Respondent 1 has filed a counter affidavit alleging that Ananda Marga is an organisation which believes in violence and if Ananda Margis are permitted to carry open swords or daggers in public processions it is bound, or likely, to disturb public peace and tranquillity and is fraught with the likelihood of breach of public order and would affect public morality.
Carrying of human skulls and indulging in provocative dances with human skulls is not only repulsive to public taste and morality, but is bound, and is likely, to raise fears in the minds of the people particularly children thereby affecting public order, morality, peace and tranquility.
It has been further pleaded that the petitioner, or for the matter of that, Ananda Margis can have no fundamental right to carry weapons in the public, in procession or otherwise, nor have they any right to perform tandava dance with daggers and human skulls.
It is stated that Ananda 455 Marga is a politico religious organisation started in 1961 by Shri Pravat Ranjan Sarkar alias Sri Ananda Murti, who is a self styled tantrik yogi.
Reference has been made to an incident of 1971 which led to prosecution of Sri Ananda Murti and some of his followers.
It is stated that militancy continues to be the main feature of the organisation.
Prior to promulgation of the prohibitory orders, it has been pleaded, Ananda Margis took out processions carrying lethal weapons like tridents, lathis as well as human skulls and knives from time to time and caused much annoyance to the public in general and onlookers in particular, and this tended to disturb public peace, tranquillity and public order.
In spite of the prohibitory orders in force from August 10, 1979, a procession was taken out on the following day within the city of Calcutta by Ananda Margis with lathis, tridents, Knives, skulls, and the procession became violent.
The assembly was declared unlawful and the police force was obliged to intervene.
The police personnel on duty including a Deputy Commissioner of Police received injuries.
Reference to several other incidents has also been made in the counter affidavit of the Police Commissioner.
The State Government has supported the stand of the Police Commissioner in its separate affidavit.
We have already indicated that the claim that Ananda Marga is a separate religion is not acceptable in view of the clear assertion that is was not an institutionalised religion but was a religious denomination.
The principle indicated by Gajendragadkar, CJ, while speaking for the Court in Sastri Yagnapurushadji & Ors.
vs Muldas Bhudardas Vaishya & Anr., also supports the conclusion that Ananda Marga cannot be a separate religion by itself.
In that case the question for consideration was whether the followers of Swaminarayan belonged to a religion different from that of Hinduism.
The learned Chief Justice observed: "Even a cursory study of the growth and development of Hindu religion through the ages shows that whenever a saint or a religious reformer attempted the task of reforming Hindu religion and fighting irrational or corrupt practices which had crept into it, a sect was born which was governed by its own tenets, but which basically subscribed to the fundamental notions of Hindu religion and Hindu philosophy. ' 456 The averments in the writ petition would seem to indicate a situation of this type.
We have also taken into consideration the writings of Shri Ananda Murti in books like Carya Carya, Namah Shivaya Shantaya, A Guide to Human Conduct, and Ananda Vachanamritam.
These writings by Shri Ananda Murti are essentially founded upon the essence of Hindu philosophy.
The test indicated by the learned Chief Justice in the case referred to above and the admission in paragraph 17 of the writ petition that Ananda Margis belong to the Shaivite order lead to the clear conclusion that Ananda Margis belong to the Hindu religion.
Mr. Tarkunde for the petitioner had claimed protection of Article 25 of the Constitution but in view of our finding that Ananda Marga is not a separate religion, application of Article 25 is not attracted.
The next aspect for consideration is whether Ananda Marga can be accepted to be a religious denomination.
In The Commissioner Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, Mukherjee, J. (as the learned Judge then was), spoke for the Court thus: "As regards article 26, the first question is, what is the precise meaning or connotation of the expression 'religious denomination ' and whether a Math could come within this expression.
The word 'denomination ' has been defined in the Oxford Dictionary to mean 'a collection of individuals classed together under the same name: a religious sect or body having a common faith and organisation and designated by a distinctive name '.
" This test has been followed in The Durgah Committee, Ajmer & Anr.
v, Syed Hussain Ali & Ors.
In the majority judgment in section P. Mittal etc.
vs Union of India & Ors reference to this aspect has also been made and it has been stated: "The words 'religious denomination ' in Article 26 of the Constitution must take their colour from the word 'religion ' and if this be so, the expression 'religious denomination ' must also satisfy three conditions: 457 (1) It must be a collection of individuals who have a system of beliefs or doctrines which they regard as conducive to their spiritual well being, that is, a common faith; (2) common organisation, and (3) designation by a distinctive name." Ananda Marga appears to satisfy all the three conditions, viz., it is a collection of individuals who have a system of beliefs which they regard as conducive to their spiritual well being; they have a common organisation and the collection of these individuals has a distinctive name.
Ananda Marga, therefore, can be appropriately treated as a religious denomination, within the Hindu religion.
Article 26 of the Constitution provides that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to manage its own affairs in matters of religion.
Mukherjea, J. in Lakshmindra Thirtha Swamiar 's case (supra) adverted to the question as to what were the matters of religion and stated: "What then are matters of religion ! The word 'religion ' has not been defined in the Constitution and it is a term which is hardly susceptible of any rigid definition.
In an American case (Davie vs Benson; , at 342), it has been said "that the term 'religion ' has reference to one 's views of his relation to his Creator and to the obligations they impose of reverence for His Being and Character and of obedience to His will.
It is often confounded with cultus of form or worship of a particular sect, but is distinguishable from the latter".
We do not think that the above definition can be regarded as either precise or adequate.
Articles 25 and 26 of our Constitution are based for the most part upon article 44(2) of the Constitution of Eire and we have great doubt whether a definition of 'religion ' as given above could have been in the minds of our Constitution makers when they framed the Constitution.
Religion is certainly a matter of faith with individuals or communities and it is not necessarily theistic.
There are well known religions in India like Buddhism and Jainism which do not believe in God or in any Intelligent First Cause.
A religion undoubtedly 458 has its basis in a system of beliefs or doctrines which are regarded by those who profess that religion as conducive to their spiritual well being, but it would not be correct to say that religion is nothing else but a doctrine or belief.
A religion may not only lay down a code of ethical rules for its followers to accept, it might prescribe rituals and observances, ceremonies and modes of worship which are regarded as integral parts of religion, and these forms and observances might extend even to matters of food and dress. " "Restrictions by the State upon free exercise of religion are permitted both under Articles 25 and 26 on grounds of public order, morality and health.
Clause (2) (a) of article 25 reserved the right of the State to regulate or restrict any economic, financial, political and other secular activities which may be associated with religious practice and there is a further right given to the State by sub clause (b) under which the State can legislate for social welfare and reform even though by so doing it might interfere with religious practices . " "The contention formulated in such broad terms cannot, we think, be supported.
In the first place, what constitutes the essential part of a religion is primarily to be ascertained with reference to the doctrines of that religion itself.
It the tenets of any religious sect of the Hindus prescribe that offerings of food should be given to the idol at particular hours of the day, that periodical ceremonies should be performed in a certain way at certain periods of the year or that there should be daily recital of sacred texts or oblations to the sacred fire, all these would be regarded as parts of religion and the mere fact that they involve expenditure of money or employment of priests and servants or the use of marketable commodities would not make them secular activities partaking of a commercial or economic character; all of them are religious practices and should be regarded as matters of religion within the meaning of article 26(b). " Courts have the power to determine whether a particular rite or observance is regarded as essential by the tenets of a particular 459 religion.
In Laxshmindra Thirtha Swamiar 's case, Mukherjea, J. observed: "This difference in judicial opinion brings out forcibly the difficult task which a Court has to perform in cases of this type where the freedom of religious convictions genuinely entertained by men come into conflict with the proper political attitude which is expected from citizens in matters of unity and solidarity of the State organization." The same question arose in the case of Ratilal Panachand Gandhi vs State of Bombay & Ors.(1) The Court did go into the question whether certain matters appertained to religion and concluded by saying that "these are certainly not matters of religion and the objection raised with regard to the validity of these provisions seems to be altogether baseless." In Tilkayat Shri Govindlalji Maharaj vs State of Rajasthan & Ors.,(2) this Court went into the question as to whether the tenets of the Vallabh denomination and its religious practices require that the worship by the devotees should be performed at the private temples and, therefore, the existence of public temples was inconsistent with the said tenets and practices, and on an examination of this question, negatived the plea.
The question for consideration now, therefore, is whether performance of Tandava dance is a religious rite or practice essential to the tenets of the religious faith of the Ananda Margis.
We have already indicated that tandava dance was not accepted as an essential religious rite of Ananda Margis when in 1955 the Ananda Marga order was first established.
It is the specific case of the petitioner that Shri Ananda Murti introduced tandava as a part of religious rites of Ananda Margis later in 1966.
Ananda Marga as a religious order is of recent origin and tandava dance as a part of religious rites of that order is still more recent.
It is doubtful as to whether in such circumstances tandava dance can be taken as an essential religious rite of the Ananda Margis.
Even conceding that it is so, it is difficult to accept Mr. Tarkunde 's argument that taking out religious processions with tandava dance is an essential religious rite of Ananda Margis.
In paragraph 17 of the writ petition the petitioner pleaded that "Tandava Dance lasts for a few minutes where two or 460 three persons dance by lifting one leg to the level of the chest, bringing it down and lifting the other." In paragraph 18 it has been pleaded that "when the Ananda Margis greet their spiritual preceptor at the airport, etc., they arrange for a brief welcome dance of tandava wherein one or two persons use the skull and symbolic knife and dance for two or three minutes.
" In paragraph 26 it has been pleaded that "Tandava is a custom among the sect members and it is a customary performance and its origin is over four thousand years old, hence it is not a new invention of Ananda Margis.
" On the basis of the literature of the Ananda Marga denomination it has been contended that there is prescription of the performance of tandava dance by every follower of Ananda Marga.
Even conceding that tandava dance has been prescribed as a religious rite for every follower of the Ananda Marg it does not follow as a necessary corollary that tandava dance to be performed in the public is a matter of religious rite.
In fact, there is no justification in any of the writings of Shri Ananda Murti that tandava dance must be performed in public.
Atleast none could be shown to us by Mr. Tarkunde despite an enquiry by us in that behalf.
We are, therefore, not in a position to accept the contention of Mr. Tarkunde that performance of tandava dance in a procession or at public places is an essential religious rite to be performed by every Ananda Margi.
Once we reach this conclusion, the claim that the petitioner has a fundamental right within the meaning of Articles 25 or 26 to perform tandava dance in public streets and public places has to be rejected.
In view of this finding it is no more necessary to consider whether the prohibitory order was justified in the interest of public order as provided in Article 25.
It is the petitioner 's definite case that the prohibitory orders under section 144 of the Code are being repeated at regular intervals from August 1979.
Copies of several prohibitory orders made from time to time have been produced before us and it is not the case of the respondents that such repetitive prohibitory orders have not been made.
The order under section 144 of the Code made in March 1982 has also been challenged on the ground that the material facts of the case have not been stated.
Section 144 of the Code.
as far as relevant, provides: "(1) In cases where in the opinion of a District Magistrate, a Sub Divisional Magistrate, or any other Executive Magistrate specially empowered by the State Government in this behalf, there is sufficient ground for proceeding under this section and immediate prevention or speedy remedy is desirable, such Magistrate may, by a 461 written order stating the material facts of the case and served in the manner provided by section 134, direct. " It has been the contention of Mr. Tarkunde that the right to make the order is conditioned upon it being a written one and the material facts of the case being stated.
Some High Courts have taken the view that this is a positive requirement and the validity of the order depends upon compliance of this provision.
In our opinion it is not necessary to go into this question as counsel for the respondents conceded that this is one of the requirements of the provision and if the power has to be exercised it should be exercised in the manner provided on pain of invalidating for non compliance.
There is currently in force a prohibitory order in the same terms and hence the question cannot be said to be academic.
The other aspect, viz., the propriety of repetitive prohibitory orders is, however, to our mind a serious matter and since long arguments have been advanced, we propose to deal with it.
In this case as fact from October 1979 till 1982 at the interval of almost two months orders under section 144(1) of the Code have been made from time to time.
It is not disputed before us that the power conferred under this section is intended for immediate prevention of breach of peace or speedy remedy.
An order made under this section is to remain valid for two months from the date of its making as provided in sub section (4) of section 144.
The proviso to sub section
(4) authorises the State Government in case it considers it necessary so to do for preventing danger to human life, health or safety, or for preventing a riot or any affray, to direct by notification that an order made by a Magistrate may remain in force for a further period not exceeding six months from the date on which the order made by the Magistrate would have, but for such order, expired.
The effect of the proviso, therefore, is that the State Government would be entitled to give the prohibitory order an additional term of life but that would be limited to six months beyond the two months ' period in terms of sub section
(4) of section 144 of the Code.
Several decisions of different High Courts have rightly taken the view that it is not legitimate to go on making successive orders after earlier orders have lapsed by efflux of time.
A Full Bench consisting of the entire Court of 12 Judges in Gopi Mohun Mullick vs Taramoni Chowdhrani(1) examining the provisions of section 518 of the Code of 1861 (corresponding to present section 144) took the view that such an action was beyond the Magistrate 's powers.
Making of successive orders was disapproved by the Division Bench of the Calcutta High Court 462 in Bishessur Chuckerbutty & Anr.
vs Emperor.(1) Similar view was taken in Swaminatha Mudaliar vs Gopalakrishna Naidu;(2) Taturam Sahu vs The State of Orissa;(3) Ram Das Gaur vs The City Magistrate, Varanasi;(4) and Ram Narain Sah & Anr.
vs Parmeshwar Prasad Sah & Ors.(5) We have no doubt that the ratio of these decisions represents a correct statement of the legal position.
The proviso to sub section
(4) of section 144 which gives the State Government jurisdiction to extend the prohibitory order for a maximum period of six months beyond the life of the order made by the Magistrate is clearly indicative of the position that Parliament never intended the life of an order under section 144 of the Code to remain in force beyond two months when made by a Magistrate.
The scheme of that section does not contemplate repetitive orders and in case the situation so warrants steps have to be taken under other provisions of the law such as section 107 or section 145 of the Code when individual disputes are raised and to meet a situation such as here, there are provisions to be found in the Police Act.
If repetitive orders are made it would clearly amount to abuse of the power conferred by s.144 of the Code.
It is relevant to advert to the decision of this Court in Babulal Parate vs State of Maharashtra & Ors.,(6) where the vires of section 144 of the Code was challenged.
Upholding the provision, this Court observed: "Public order has to be maintained in advance in order to ensure it and, therefore, it is competent to a legislature to pass a law permitting an appropriate authority to take anticipatory action or place anticipatory restrictions upon particular kinds of acts in an emergency for the purpose of maintaining public order. " It was again emphasized: "But it is difficult to say that an anticipatory action taken by such an authority in an emergency where danger to public order is genuinely apprehended is anything other than an action done in the discharge of the duty to maintain order. " 463 This Court had, therefore, appropriately stressed upon the feature that the provision of section 144 of the Code was intended to meet an emergency.
This postulates a situation temporary in character and, therefore, the duration of an order under section 144 of the Code could never have been intended to be semi permanent in character.
Similar view was expressed by this Court in Gulam Abbas & Ors.
vs State of U.P. & Ors., where it was said that "the entire basis of action under section 144 is provided by the urgency of the situation and the power thereunder is intended to be availed of for preventing disorders, obstructions and annoyances with a view to secure the public weal by maintaining public peace and tranquillity . " Certain observations in Gulam Abbas 's decision regarding the nature of the order under section 144 of the Code judicial or executive to the extent they run counter to the decision of the Constitution Bench in Babulal Parate 's case, may require reconsideration but we agree that the nature of the order under section 144 of the Code is intended to meet emergent situation.
Thus the clear and definite view of this Court is that an order under section 144 of the Code is not intended to be either permanent or semi permanent in character.
The concensus of judicial opinion in the High Courts of the country is thus in accord with the view expressed by this Court.
It is not necessary on that ground to quash the impugned order of March 1982 as by efflux of time it has already ceased to be effective.
It is appropriate to take note of the fact that the impugned order under section 144 of the Code did not ban processions or gatherings at public places even by Ananda Margis.
The prohibition was with reference to the carrying of daggers, trishuls and skulls.
Even performance of tandava dance in public places, which we have held is not an essential part of religious rites to be observed by Ananda Margis, without these, has not been prohibited.
The writ petitions have to fail on our finding that performance of tandava dance in procession in the public streets or in gatherings in public places is not an essential religious rite of the followers of Ananda Marga.
In the circumstance there will be no order as to costs.
| Respondent No. 1 was alleged to have been making repetitive orders under s.144 of the Code of Criminal Procedure, 1973 from August 1979 directing that no member of a procession or assembly of five or more persons should carry any fire arms, explosives, swords, spears, knives, tridents, lathis or any article which may be used as weapon of offence or any article likely to cause annoyance to the public, for example skulls.
A writ petition was filed in the High Court for a direction on the respondents not to impose such restraints on the followers of Ananda Marga.
The High Court dismissed the writ petition.
The respondent No. 1 made a similar order on March 29, 1982.
An application for permission to take out a procession in the public streets by the followers of Ananda Marga accompanied with Tandava dance was rejected.
The petitioner filed writ petition under article 32 of the Constitution for a direction to the respondent No. 1 and the State to allow procession to be carried in the public streets and meetings to be held in public places by the followers of the Ananda Marga accompanied by the performance of Tandava dance within the State of West Bengal.
The petitioner submitted that Ananda Marga was a socio spiritual organisation dedicated to the service of humanity in different spheres of life such as physical, mental and spiritual, irrespective of caste.
creed or colour; one of the prescriptions of the religious rites to be 448 performed by an Ananda Margi was Tandava dance which was to be performed with a skull, a small symbolic knife, a trishul, and a damroo; and at intervals processions were intended to be taken out in public places accompanied by the Tandava Dance as a religious practice.
The petitioner contended that Tandava Dance was an essential part of the religious rites of Ananda Margis and that they were entitled to practice the same both in private as also in public places and interference by the respondent was opposed to the fundamental rights guaranteed under articles 25 and 26 of the Constitution.
The petitioner also contended that repetitive orders under s.144 of the Code of Criminal Procedure were not contemplated by the Code and, therefore, making of such orders was an abuse of the law and should not be countenanced.
Dismissing the writ petitions, ^ HELD: The Ananda Marga is not a separate religion by itself.
Therefore, application of article 25 of the Constitution is not attracted.
The petitioner asserted that Ananda Marga was not an institutionalised religion but was a religious denomination.
The writings of the founder of the Ananda Marga are essentially founded upon the essence of the Hindu philosophy.
The test indicated in ; and the admission in para 17 of the writ petition that Ananda Margis belong to the Shaivite order lead to the clear conclusion that Ananda Margis belong to the Hindu religion.
[455 E.456 C] Sastri Yagnapurushadji & Ors.
vs Muldas Bhudar das Vaishya & Anr., ; , referred to.
The words 'religious denomination ' in article 26 of the Constitution must take their colour from the word 'religion ' and if this be so, the expression religious denomination ' must also satisfy three conditions: (1) It must be a collection of individuals who have a system of beliefs or doctrines which they regard as conducive to their spiritual well being, that is, a common faith; (2) common organisation; and (3) designation by a distinctive name.
In the instant case Ananda Marga appears to satisfy all the three conditions.
Ananda Marga, therefore, can be appropriately treated as a religious denomination within the Hindu religion.
[456 G 457 C] The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar or Sri Shirur Mutt; , at 1021; The Durgah Committee Ajmer & Anr.
vs Syed Hussain Ali & Ors., ; ; and S.P. Mittal etc.
vs Union of India & Ors.
, ; at 774 referred to.
449 Article 26 of the Constitution provides that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to manage its own affairs in matters of religion.
Courts have the power to determine whether a particular rite or observance is regarded as essential by the tenets of a particular religion.
[457 C D, 458 H] Ratilal Panachand Gandhi vs The State of Bombay & Ors., [1954] S.C.R. 1055; and Tilkayat Shri Govindlalji Maharaj vs The State of Rajasthan & Ors., [1964] 1 S.C.R. 561 referred to.
In the instant case the Tandva dance was not accepted as an essential religious rite of Ananda Margis when in 1955 the Ananda Marga order was first established.
It is the specific case of the petitioner that Shri Ananda Murti, founder of Ananda Marga, introduced Tandva as a part of religious rites of Ananda Margis later in 1966.
Ananda Marga as a religious order is of recent origin and Tandva dance as a part of religious rites of that order is still more recent.
It is doubtful as to whether in such circumstances Tandva dance can be taken as an essential religious rite of the Ananda Margis.
Even conceding that Tandva dance has been prescribed as a religious rite for every follower of the Ananda Marga it does not follow as a necessary corollary that Tandava dance to be performed in the public in a religious procession is a matter of religious rite.
In fact, there is no justification in any of the writings of Shri Ananda Murti that Tandava dance must be performed in public.
Therefore, performance of Tandava dance in procession in the public streets or in gatherings in public places is not an essential religious rite of the followers of the Ananda Marga.
Thus, the Claim that the petitioner has a fundamental right within the meaning of articles 25 or 26 to perform Tandava dance in public streets and public places has to be rejected.
[459 E 460 E] An order made under s.144 of the Code of Criminal Procedure is intended to meet an emergent situation.
The order is not intended to be either permanent or semi permanent in character.
The order is to remain valid for two months from the date of its making as provided in sub s.(4) of s.144.
The proviso to sub s.(4) of s.144 which gives the State Government jurisdiction to extend the prohibitory order for a maximum period of six months beyond the life of the order made by the Magistrate is clearly indicative of the position that Parliament never intended the life of the order under s.144 of the Code to remain in force beyond two months when made by a Magistrate.
The scheme of that section does not contemplate repetitive orders and in case the situation so warrants steps have to be taken under other provisions of the law such as s.107 or s.145 of the Code when individual disputes are raised and to meet a situation such as in this case, there are provisions to be found in the Police Act.
If repetitive orders are made it would clearly amount to abuse of the power conferred by s.144 of the Code.
[461 D 462 D] Gopi Mohun Mullick vs Taramoni Chowdhrani, ILR 5 Cal. 7; Bishessur Chuckerbutty & Anr.
vs Emperor, A.I.R. 1916 Cal.
47; Swaminatha Mudaliar vs Gopalakrishna Naidu, A.I.R. ; Taturam sahu vs The State of Orissa, A.I.R. 1953 Orissa 96; Ram Das Gaur vs The City Magistrate, Varanasi, 450 A.I.R. 1960 All. 397; and Ram Narain Sah & Anr.
vs Parmeshwar Prasad Sah & Ors., A.I.R. 1942 Pat.
414, approved.
Babulal Parate vs State of Maharashtra & Ors., ; at 437; and Gulam Abbas & Ors.
vs State of U.P. & Ors.
,[1981] at 1862, referred to.
|
ivil Appeal No. 32 17 of 1988.
From the Judgment and Order dated 30.5.88 of the Cus toms Excise and Gold (Control) Appellate Tribunal, New Delhi in E/Misc/ 194/87 A & E/A No. 1365/85 A & Order No. 308/88 A. Gauri Shankar, Mrs. H. Wahi, Manoj Arora and section Rajjappa for the Appellant.
Soli J. Sorabjee, Attorney General, V.C. Mahajan, R.P. Srivastava and P. Parmeshwaran for the Respondent.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal preferred by the appellant (assessee) from a judgment of the Central Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter re ferred to as "the said Tribunal"].
As the controversy before us is an extremely limited one, we propose to set out only the facts necessary for appreciating that controversy.
The appellant is a public limited company engaged inter alia in the manufacture of paper and paper boards which were assessable under Tariff Item No. 17 of the First Schedule to the (hereinafter referred to as "the Central Excises Act").
The period with which we are concerned in this appeal is the period September 9, 1979 to July 26, 1983.
The appellant filed several price lists in Part I and Part II in respect of the clearances of paper and 322 paper boards made by the appellant.
Section 4 of the Central Excises Act prescribes the mode of valuation of excisable goods for the purposes of charging of the duty of excise.
Under clause (a) of subsection (1) of section 4, it is provided, in brief, that the duty of excise is chargeable on any excisable goods with reference to value which shall, subject to the other provisions of the Act, be deemed to be the normal price thereof and the normal price, generally speaking, is the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place or removal, where the buyer is not a related person and the price is the sole consideration for the sale.
In the fixation of the normal price of paper and paper boards manufactured by the appel lant for the purposes of levy of excise duty, the appellant claimed several deductions.
One of these deductions was described as "trade discount" and another as "service charge discount".
The trade discount was the discount paid to the purchaser in accordance with the normal practice of the trade.
The appellant had engaged several dealers with a view to promote its sales.
A specimen of the usual agreements entered into by the appellant with its dealers has been taken on record.
The opening part of the said agreement shows that the appellant is referred to in the agreement as the company and the contracting dealer is referred to as the Indentor.
We propose to refer to the dealers engaged by the appellant to promote the sales of its products as "Inden tors" for the sake of convenience.
Clause (3) of the agree ment shows that the Indentor agreed to purchase in his own name or procure acceptable indents from third parties for paper and paper boards manufactured by the company would be of such quantities and varieties as set out in the Schedule A to the agreement.
The Indentors agreed to deposit with the company a certain amount of money as security.
Clause (8) of the agreement shows that the Indentors held themselves responsible for the immediate clearance of the documents relating to the supply of paper on presentation by the bankers and that all bank charges other than discounting charges would be on the consignee 's account.
It is common ground that in the invoices in respect of the paper and paper boards supplied and sold pursuant to the aforesaid agreement with the Indentors, in most cases the name of the dealer concerned was shown as the Indentor and the names of the parties to whom the goods were to be deliv ered were shown as the purchasers but in some cases the Indentors were themselves shown as purchasers.
It was urged by Dr. Gauri Shankar, learned counsel for the appellant, that although the discount allowed to the Indentors in respect of some of the aforesaid sales might have been described as service charge 323 discount that name could not govern the real nature of the transaction and the discount was really a trade discount.
It was submitted by him that this discount should have been allowed as a deduction in the determination of the normal price of the aforesaid goods for the purpose of levy of excise duty.
He relied upon the decision of this Court in Union of India & Ors.
vs Bombay Tyres International Pvt. Ltd., [1984] 17 E.L.T. 329 (S.C) and submitted that the nomenclature given to the discount could not be regarded as decisive of the real nature of the discount.
There can be no quarrel with this proposition.
But it is equally well set tled that in the determination of the normal price for the purposes of levy of excise duty, it is only a normal trade discount which is paid to the purchaser which can be allowed as a deduction and commission paid to selling agents for services rendered by them as agents cannot be regarded as a trade discount qualifying for deduction (Coromandel Ferti lizers Limited vs Union of India and Ors., [1984] 17 E.L.T. 607 (S.C.).
The correctness of this proposition was not disputed by learned counsel for the appellant but it was submitted by him that in several cases where supplies had been effected pursuant to the aforesaid agreements, the Indentors were really themselves the purchasers and hence, the normal trade discount paid to them should have been allowed as a deduction in the determination of the normal price for the purposes of levy of excise duty.
We find from the judgment of the Tribunal and the lower authorities that there is no dispute that wherever the Indentors are shown as the purchasers in the respective invoices, the trade dis count given to them has been allowed as a deduction.
More over, to obviate any controversy in this regard, learned Attorney General who appears for the respondent fairly states that when the matter goes back to the Tribunal, the respondent is agreeable that the normal trade discount may be allowed in those cases where the Indentor is also shown as the purchaser in the concerned invoice.
It is, however, submitted by learned counsel for the appellant that although in some of the cases the Indentor might not be shown as the purchaser and the purchaser shown is the different party, yet the real nature of the transaction was that the Indentor purchased the goods referred to in the said invoice and in turn sold it to a customer whose name was shown as the purchaser in the invoice for the sake of convenience so that the delivery could be directly effected to him.
We are of the view that it is not open to the appellant to raise this contention at this stage.
No case has ever been made out right upto the Tribunal and even before the Tribunal that in respect of any particular invoice although the name of the purchaser was other than that of the Indentor, it was really the Indentor who was the purchaser and he in turn has sold the goods to the third party whose name was shown as 324 purchaser or even that the Indentor had entered into the transaction as the agent of the purchaser.
If such a conten tion had been raised, the factual position could have been examined and different considerations might have been ap plied.
But it is certainly not open to the appellant to raise this contention at this stage, in this appeal, partic ularly keeping in mind that the Tribunal is the final fact finding authority.
No other contention has been raised before us.
In our opinion, there is no merit in the appeal.
There will, however, be one clarification that, as agreed to learned Attorney General, if in any case the purchaser named in the invoice is the same as the Indentor, normal trade discount given to the Indentor will be allowed as a deduc tion in the determination of the normal price for the levy of excise duty subject to other relevant considerations.
In the result, the appeal fails and is dismissed, save to the extent of the aforesaid clarification.
The appellant to pay the costs of the appeal to the respondent.
R.S.S. Appeal dis missed.
| In the proceedings for eviction under the Delhi Rent Control Act, 1958 for arrears of rent, subletting, conver sion of user from residential to commercial and bona fide need, the appellant tenant committed breach of the Control ler 's directions under section 15(1) of the Act in the matter of payment of monthly rent.
Consequently, his defence was struck off and the suit decreed on the sole ground of de layed payment of future rent.
All the other grounds were rejected.
The tenant assailed the order before the Rent Control Tribunal relying on Hem Chand vs Delhi Cloth Mills, on the rigour of section 15(1) of the Act.
The Tribunal found that there was no infirmity in the order.
The High Court maintained the ejectment.
In the appeal by special leave, it was contended for the appellant on the strength of the decision in Ram Murti vs Bhola Nath, that section 15(7) of the Act con fers a discretion on the Rent Controller not to strike off the defence of the tenant and consequently the delay by him in making deposit of future rent should have been excused, and that since no cross appeals were filed by the landlord against the rejection of other grounds in the court of the Rent Control Tribunal or in the High Court nor those grounds were pressed in these two forums by the landlord, those grounds were no more available to him.
The landlord died during the pendency of the appeal and his widow and divorced daughter respondent succeeded to him as landlords.
It was contended for them that the tenant was a rich and well connected industrialist deserving no protection of the rent laws.
Dismissing the appeal, the Court, HELD: 1.
If the appeals were to be allowed by releasing and relaxing the rigour of the order of eviction, the matter then would have to be 507 remitted back at an appropriate stage where the successor landlords could conveniently have the other grounds of eviction adjudicated upon, by overruling the objection that the landlord could have filed an appeal before the Rent Control Tribunal and the High Court seeking eviction of the tenant on grounds other than the ground on which the evic tion was ordered.
[51 lB C] 2.
The successor landlords are two ladies, one a widow and the other a divorcee, brought in the fray by operation of law.
Remitting the case back would not only be unfair and unreasonable but time consuming and inequitous as well to them.
Since almost eighteen years have passed by there should be an end to the dispute.
This course is in the interest of all concerned as well as the State.
Instead of putting the parties to a fresh bout of litigation the order of eviction should, therefore, be sustained. ]51 IC E] 3.
The appellant is granted time ending on March 31, 1991 for vacating the premises subject to his giving an undertaking for vacation on or before the said date and payment of rent to the landlords.
[511E F]
|
N: Criminal Appeal No. 183 of 1984.
Appeal by Special leave from the Judgment and order dated the 26th August, 1983 of the Punjab and Haryana High Court in Cr.
Writ Petition No. 392 of 1983.
C.M. Nayar and Vijay Jhani for the Appellant.
Puran Chand, Mrs. Naresh Bakshi and Miss Kailash Mehta for the Respondents The Judgment of the Court was delivered by CHANDRACHUD C. J.
,: The appellant, Surinder kaur Sandhu, is the wife of respondent 1, Harbax Singh Sandhu.
Respondent 2 is the father of respondent 1 Appellant and respondent 1 were married in 1975 at Bodni Kalan, District Faridkot, Punjab, according to Sikh rites.
Soon after the marriage they left for England, where a boy named Pritpal Singh was born to them on October 24, 1976.
Within a short period after the birth of the boy, the relationship between the spouses came under a strain resulting in a serious episode.
The husband was trapped by the Berkshire Police who got the scent that he was negotiating with a hitman to have the wife run over by a car.
The husband was convicted and sentenced 425 to a term of three years for that offence.
Ironically, it was the wife who intervened and succeeded in obtaining a probation order for the man who had attempted to procure her murder.
The husband was released on probation on February 4, 1982.
The period of probation expired on December 24, 1982.
On January 31, 1983, while the wife was away at work, the husband removed the boy from England and brought him to India.
On the same date, the wife obtained an order under section 41 of the Supreme Court Act, 1981 under which the boy became the Ward of the Court with effect from that date.
That order was confirmed on July 22, 1983 by Mrs. Justice Booth of the High Court of Justice (Family Division).
By the said order, the husband was directed to hand over the custody of the minor boy to the wife or her agent forthwith.
The wife came to India in April 1983.
On May 5, 1983 she filed a petition under section 97 of the Code of Criminal Procedure in the Court of the learned Judicial Magistrate, First Class, Jagraon.
She asked for the custody of her son, contending that he was in the illegal custody of the respondents.
Section 97 authorises the Magistrate to direct a search to be made for persons wrongfully confined and, on their being found, to be produced in the Court in order to facilitate the passing of such order as the circumstances of the case may require.
The respondents relied upon section 6 of the Hindu Minority and Guardianship Act, 1956, and opposed the petition on the ground that Respondent 1 was the natural guardian of the minor boy.
Accepting that contention, the learned Magistrate dismissed the petition, leaving the question of the custody of the child to be decided in an appropriate proceeding.
The wife then went back to England to resume her work and obtained the order dated July 22, 1983 to which we have already referred.
She came back to India once again, this time armed with the aforesaid order of the English High Court.
She then filed the present writ petition in the High Court of Punjab and Haryana, asking for the production and custody of her minor son.
The learned single Judge of the High Court who dealt with the petition made an excellent effort to bring about rapprochement between the spouses but, he did not succeed.
He questioned the boy more than once and he even presided the spouses to live together for a couple of days in the house of the Inspector General of Prisons, Haryana.
The spouses reported back to him that they 426 were unable to resolve their differences.
The learned Judge dismissed the wife 's petition on the grounds, inter alia, that her status in England is that of a foreigner, a factory worker and a wife living separately from the husband that she had no relatives in England; and that, the child would have to live in lonely and dismal surroundings in England.
On the other hand, according to the learned Judge, the father had gone through a traumatic experience of a conviction on a criminal charge; that he was back home in an atmosphere which welcomed him; that his parents were in affluent circumstances; and that, the child would grow in an atmosphere of self confidence and self respect if he was permitted to live with them.
Some of these circumstances mentioned by the learned Judge are not beside the point but, their comparative assessment is difficult to accept as made.
For example, the `traumatic experience of a conviction on a criminal charge ' is not a factor in favour of the father, especially when his conduct following immediately upon his release on probation shows that the experience has not chastened him.
On the whole, we are unable to agree that the welfare of the boy requires that he should live with his father or with the grand parents.
The father is a man without a character who offered solicitation to the commission of his wife 's murder.
The wife obtained an order of probation for him but, he abused her magnanimity by running away with the boy soon after the probationary period was over.
Even in that act, he displayed a singular lack of respect for law by obtaining a duplicate passport for the boy on an untrue representation that the original passport was lost.
The original passport was, to his knowledge, in the keeping, of his wife.
In this background, we do not regard the affluence of the husband 's parents to be a circumstance of such overwhelming importance as to tilt the balance in favour of the father on the question of what is truly for the welfare of the minor At any rate, we are unable to agree that it will be less for the welfare of the minor if he lived with his mother.
He was whisked away from her and the question is whether, there are any circumstances to support the view that the new environment in which he is wrongfully brought is more conducive to his welfare.
He is about 8 years of age and the loving care of the mother ought not to be denied to him.
The father is made of coarse stuff.
The mother earns an income of $100 a week, which is certainly not large by English standards, but is not so low as not to enable her 427 to take reasonable care of the boy.
Section 6 of the Hindu Minority and Guardianship Act, 1956 constitutes the father as the natural guardian of a minor son.
But that provision cannot supersede the paramount consideration as to what is conducive to the welfare of the minor.
As the matters are presented to us to day, the boy, from his own point of view, ought to be in the custody of the mother.
We may add that the spouses had set up their matrimonial home in England where the wife was working as a clerk and the husband as a bus driver.
The boy is a British citizen, having been born in England, and he holds a British passport.
It cannot be controverted that, in these circumstances, the English Court had jurisdiction to decide the question of his custody.
The modern theory of Conflict of Laws recognises and, in any event, prefers the jurisdiction of the State which has the most intimate contact with the issues arising in the case.
Jurisdiction is not attracted by the operation or creation of fortuitous circumstances such as the circumstance as to where the child, whose custody is in issue, is brought or for the time being lodged.
To allow the assumption of jurisdiction by another State in such circumstances will only result in encouraging forum shopping Ordinarily, jurisdiction must follow upon functional lines.
That is to say, for example, that in matters relating to matrimony and custody, the law of that place must govern which has the closest concern with the well being of the spouses and the welfare of the offsprings of marriage.
The spouses in this case had made England their home where this boy was born to them.
The father cannot deprive the English Court of its jurisdiction to decide upon his custody by removing him to India, not in the normal movement of the matrimonial home but, by an act which was gravely detrimental to the peace of that home.
The fact that the matrimonial home of the spouses was in England, establishes sufficient contacts or ties with that State in order to make it reasonable and just for the Courts of that state to assume jurisdiction to enforce obligations which were incurred therein by the spouses.
(See International Shoe Company vs State of Washington (1) which was not a matrimonial case but which is regarded as the fountainhead of the subsequent developments of jurisdictional issues like the one involved in the instant case) It is our duty and function to protect the wife against the burden of litigating in an inconvenient forum which she and her husband had left voluntarily in order to make their living in England, where they gave birth to this unfortunate boy.
428 For these reasons, we set aside the judgment of the High Court and direct that the custody of the child shall be handed over to the appellant mother.
that shall be done during the course of this day.
The High Court has referred to the evidence showing that the annual income of the father 's family is in the range of Rs. 90,000.
That would justify an order directing the respondents to pay a sum of Rs. 3,000 (three thousand) to the appellant for her costs of this appeal.
order accordingly, S.R. Appeal allowed.
| Appellant and Respondent No.1 were married in 1975 at Bodni Kalan District Faridkot, Punjab according to Sikh rites.
Soon after the marriage, they left for England, where a boy named Pritpal Singh was born to them on October 24, 1976.
Soon thereafter, their relationship came under a strain with the result Respondent 1 was trying to negotiate with a hitman to have the appellant run over by a car.
The Berkshire Police got scent of it resulting in the Respondent 's conviction and sentence for a period of three years.
Ironically the appellant wife intervened and succeeded in obtaining a probation order for the man who had attempted to procure her murder.
The husband was released on probation on February 4, 1982.
The period of probation expired on December 24, 1982.
On January 31, 1983, while the wife was away at work, Respondent No. 1 removed the boy from England and brought him to India.
On the same date, the appellant wife obtained an order under section 41 of the Supreme Court Act, 1981 under which the boy became the ward of the Court with effect from that date.
This order was confirmed on July 22, 1983.
In the meantime the appellant came to India in April, 1983 and on 5.5.1983 filed a petition under section 97 of the Code of Criminal Procedure in the Court of the learned Judicial Magistrate first class Jagraon praying for the custody of the child.
The Respondent No. 1 contested and took an objection that under section 6 of the Hindu Minority and Guardianship Act, 1956 he was the natural guardian of the minor boy.
The contention was accepted and the petition was dismissed.
The appellant went back to England to resume her work and obtained the confirmation order dated 22.7.1983 referred to above.
Armed with the said order she returned to India and filed a writ Petition in the High Court of Punjab and Haryana.
The Writ Petition was dismissed on the grounds inter alia that her status in England is that of a foreigner, factory worker and a wife living separately from the husband and having no relatives and as such the child would have to live in lonely and dismal surroundings in England, while it would grow in an atmosphere of self confidence and self respect, if it was permitted to live with its father and grand parents: 423 Hence the appeal after obtaining special leave of the Court.
Allowing the appeal, the Court, ^ HELD: 1.
Section 6 of the Hindu Minority and Guardianship Act, 1956 constitutes the father as the natural guardian of a minor son.
But that provision cannot supersede the paramount consideration as to what is conducive to the welfare of the minor.
As the matters are presented to the Court the boy, from his own point of view, ought to be in the custody of the mother.
[427A B] 2:1 The modern theory of conflict of laws recognises and, in any event, prefers the jurisdiction of the State which has the most intimate contact with the issues arising in the case.
Jurisdiction is not attracted by the operation or creation of fortuitous circumstances such as the circumstance as to where the child, whose custody is in issue, is brought or for the time being lodged.
To allow the assumption of jurisdiction by another State in such circumstances will only result in encouraging forum shopping.
Ordinarily, jurisdiction must follow upon functional lines.
That is to say, for example, that in matters relating to matrimony and custody, the law of that place must govern which has the closest concern with the well being of the spouses and the welfare of the offsprings of marriage The spouses in this case.
had made England their home where this boy was born to them.
The father cannot deprive the English Court of its jurisdiction to decide upon his custody by removing him to India, not in the normal movement of the matrimonial home but, by an act which was gravely detrimental to the place of that home.
The fact that the matrimonial home of the spouses was in England, establishes sufficient contacts or ties with that State in order to make it reasonable and just for the Courts of that State to assume jurisdiction to enforce obligations which were incurred therein by the spouses.
[427 CG] 2:2 The spouses had set up their matrimonial home in England where the wife was working as a clerk and the husband as a bus driver.
The boy is a British citizen, having been born in England, and he holds a British passport.
It cannot be controverted that, in these circumstances the England Court had jurisdiction to decide the question of his custody.[427B C] International Shoe Company vs State of Washington, ; [1945] quoted with approval.
3:1 In the instance case; (i) The welfare of the boy does not require that he should live with his father or with the grand parents; (ii) the "traumatic experience of a conviction on a criminal charge" is not a factor in favour of the father especially when his conduct following immediately upon his release on probation shows that the experience has not chastened him, and (iii) The father is a man without a character who offered solicitation to the commission of his wife 's murder.
The wife obtained an order of probation for him but, he abused her magnanimity by running away with the boy soon after the probationary period was over.
Even in that act, he displayed a singular lack of respect for law by obtaining a duplicate passport for the boy on an untrue representation that the original passport was lost.
The original passport was, to his knowledge, in the Keeping of his wife.
In this background, the 424 affluence of the husband 's parents cannot be regarded as a circumstance of such overwhelming importance as to tilt the balance in favour of the father on the question of what is truly for the welfare of the minor.
At any rate it will not be less for the welfare of the minor if the lived with his mother.
He was whisked away from her and it cannot be said that there are any circumstance to support the view that the new environment in which he is wrongfully brought is more conducive to his welfare.
He is about 8 years of age and the loving care of the mother ought not to be denied to him.
The father is made of coarse stuff.
The mother earns an income of $100 a week, which is certainly not large by English standards, but is not so low as not to enable her to take reasonable care of the boy.
[426E H] 3:2 It is the duty and function of the court to protect the wife.
against the burden of litigating in an inconvenient forum which she and her husband had left voluntarily in order to make their living in England, where they gave birth to this unfortunate boy.
[427H] (The court directed the custody of the child to the mother forthwith and awarded cost of Rs. 3000) [428B]
|
Civil Appeal Nos.
1847 1848/72.
979 From the Judgment and Order dated 30 4 1970 of the Calcutta High Court in Income Tax Reference No. 128 of 1966.
V. section Desai, P. V. Kapur, section R. Agarwal, R. N. Bajoria, A. T. Patra and Praveen Kumar for the Appellant.
J. Ramamurthy and Miss A. Suhbashini for the Respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
These appeals by special leave are directed against a judgment of the Calcutta High Court answering the first question referred to it by the Tribunal in favour of the Revenue and against the assessee.
There were in all five questions referred by the Tribunal but questions Nos. 2 to 5 no longer survive and these appeals are limited only to question No. 1.
That question is in the following terms: "Whether on the facts and in the circumstances of the case, the assessee 's claim for the exchange loss of Rs. 11 lakhs for the assessment year 1957 58 and Rs. 5,50,000/ for the assessment year 1959 60 in respect of remittances of profit from Pakistan was not allowable as a deduction? Since there are two assessment years in regard to which the question arises, there are two appeals one in respect of each assessment year, but the question is the same.
W will briefly state the facts as that is necessary for the purpose of answering the question.
The assessee is a limited company having its head office in Calcutta.
It has inter alia a cotton mill situate in West Pakistan where it carries on business of manufacturing and selling cotton fabrics.
This textile mill was quite a prosperous unit and in the financial year ending 31st March, 1954, being the accounting year relevant to the assessment year 1954 55, the assessee made a large profit in this unit.
This profit obviously accrued to the assessee in West Pakistan and according to the official rate of exchange which was then prevalent, namely, 100 Pakistani rupees being equal to 144 Indian rupees, this profit, which may for the sake of convenience be referred to as Pakistan profit, amounted to Rs. 1,68,97,232/ in terms of Indian rupees.
Since the assessee was taxed on actual basis, the sum of Rs. 1,68,97,232/ representing the Pakistani profit was included in the total income of the assessee for the assessment year 1954 55 and the assessee was taxed accordingly after giving double taxation relief in accordance with the bilateral agreement between India and Pakistan.
It may be pointed out that for some time, after the partition of India.
there continued to be parity in the rate of exchange between India and 980 Pakistan but on 18th September 1949, on the devaluation of the Indian rupee, the rate of exchange was changed to 100 Pakistani rupees being equal to 144 Indian rupees and that was the rate of exchange at which the Pakistani profit was converted into Indian rupees for the purpose of inclusion in the total income of the assessee for the assessment year 1954 55.
The rate of exchange was, however, once again altered when Pakistani rupee was devalued on 8th August, 1955 and parity between Indian and Pakistani rupee was restored.
The assessee thereafter succeeded in obtaining the permission of the Reserve Bank of Pakistan to remit a sum of Rs. 25 lakhs in Pakistani rupees out of the Pakistani profit for the assessment year 1954 55 and pursuant to this permission, a sum of Rs. 25 lakhs in Pakistani rupees was remitted by the assessee to India during the accounting year relevant to the assessment year 1957 58.
The assessee also remitted to India during the accounting year relevant to the assessment year 1959 60 a further sum of Rs. 12,50,000/ in Pakistani rupee out of the Pakistani Profit for the assessment year 1954 55 after obtaining the necessary permission of the Reserve Bank of Pakistan.
But by the time these remittances came to be made, the rate of exchange had, as pointed out above, once again changed to 100 Pakistani rupees being equal to 100 Indian rupees and the amounts received by the assessee in terms of Indian rupees were, therefore, the same, namely, Rs. 25 lakhs and Rs. 12,50,000.
Now, the profit of Rs. 25 lakhs in terms of Pakistani rupees had been included in the total income of the assessee for the assessment year 1954 55 as Rs. 36 lakhs in terms of Indian rupees according to the prevailing rate of exchange of 100 Pakistani rupees being equal to 144 Indian rupees and, therefore, when the assessee received the sum of Rs. 25 lakhs in Indian rupees on remittance of the profit of Rs. 25 lakhs in Pakistani rupees on the basis of 100 Pakistani rupees being equal to 100 Indian rupees, the assessee suffered a loss of Rs. 11 lakhs in the process of conversion on account of appreciation of the Indian rupee qua Pakistani rupee.
Similarly, on remittance of the profit of Rs. 12,50,000 in Pakistani currency the assessee suffered a loss of Rs. 5,50,000/ .
The assessee claimed in its assessments for the assessment years 1957 58 and 1959 60 that these losses of Rs. 11 lakhs and Rs. 5,50,000/ should be allowed in computing the profits from business.
This claim was however rejected by the Income Tax Officer.
The assessee carried the matter in further appeal to the Tribunal but the Tribunal also sustained the disallowance of these losses and rejected the appeals.
The decision of the Tribunal was assailed in a reference made at the instance of the assessee and Question No. 1 which we have set out above was referred by the Tribunal for the opinion of the High Court.
On the reference the High Court took substantially the same view as 981 the Tribunal and held that no loss was sustained by the assessees on remittance of the amounts from West Pakistan and that in any event the loss could not be said to be a business loss, because it was not a loss arising in the course of business of the assessee but it was caused by devaluation which was an act of State.
The High Court accordingly answered the question in favour of the Revenue and against the assessee.
The assessee thereupon preferred the present appeal after obtaining certificate of fitness from the High Court.
The first question that arises for consideration is whether the assessee suffered any loss on the remittance of Rs. 25 lakhs and Rs. 12,50,000/ in Pakistani currency from West Pakistan.
These two amounts admittedly came out of Pakistan profit for the assessment year 1954 55 and the equivalent of these two amounts in Indian currency, namely, Rs. 36 lakhs and Rs. 18 lakhs respectively.
was included in the assessment of the assessee as part of Pakistan profit.
But by the time these two amounts came to be repatriated to India, the rate of exchange had undergone change on account of devaluation of Pakistani rupee and, therefore, on repartition, the assessee received only Rs. 25 lakhs and Rs. 12,50,000/ in Indian currency instead of Rs. 36 lakhs and Rs. 18 lakhs.
The assessee thus suffered a loss Rs. 11 lakhs in one case and Rs. 5,50,000/ in other in the process of conversion of Pakistani currency into Indian currency.
It is no doubt true and this was strongly relied upon by the High Court for taking the view that no loss was suffered by the assessee that the books of account of the assessee did not disclose any loss nor was any loss reflected in the balance sheet or profit and loss account of the assessee.
The reason was that though, according to the then prevailing rate of exchange, the equivalent of Pakistani profit in terms of Indian rupee was Rs. 1,68,97,232/ and that was the amount included in the assessment of the assessee for the assessment year 1954 55, the assessee in its books of account maintained at the Head Office did not credit the Pakistani profit at the figure of Rs. 1,68,97,232/ , but credited it at the same figure as in Pakistani currency.
The result was that the loss arising on account of the depreciation of Pakistani rupee vis a vis Indian rupee was not reflected in the books of account of the assessee and hence it could not figure in the balance sheet and Profit and Loss Account.
But it is now well settled that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessees has earned any profit or suffered any loss.
The assessee may, by making entries which are not in conformity with the proper accountancy principles, conceal profit or show loss and the entries 10 699SCI/7 982 made by him cannot, therefore, be regarded as conclusive one way or the other.
What is necessary to be considered is the true nature of the transaction and whether in fact it has resulted in profit or loss to the assessee.
Here, it is clear that the assessee earned Rs. 36 lakhs and Rs. 18 lakhs in terms of Indian rupees in the assessment year 1954 55 and retained them in West Pakistan in Pakistani currency and when they were subsequently remitted to India, the assessee received only Rs. 25 lakhs and Rs. 12,50,000/ and thus suffered loss of Rs. 11 lakhs and Rs. 5,50,000/ in the process of conversion on account of alteration in the rate of exchange.
It is, therefore, not possible to accept the view of the High Court that no loss was suffered by the assessee on the remittance of the two sums of Rs.25 lakhs and Rs. 12,50,000/ from West Pakistan.
This view which we are taking is clearly supported by the decision of this Court in Commissioner of Income Tax vs Tata Locomotive Engineering Company (1) which we shall discuss a little later.
That takes us to the next and more important question whether the loss sustained by the assessee was a trading loss.
Now this loss was obviously not an allowable deduction under any express provision of section 10(2), but if it was a trading loss, it would be liable to be deducted in computing the taxable profit of the assessee under section 10(1).
This indeed was not disputed on behalf of the Revenue but the serious controversy raised by the Revenue was whether the loss could at all be regarded as a trading loss.
The argument which found favour with the High Court was that the loss was caused on account of devaluation of the Pakistani rupee which was an act of the sovereign power and it could not, therefore, be regarded as a loss arising in the course of the business of the assessee or incidental to such business This argument is plainly erroneous and cannot stand scrutiny even for a moment.
It is true that a loss in order to be a trading loss must spring directly from the carrying on of business or be incidental to it as pointed out by Venkatarama Iyer, j., speaking on behalf of this Court in Badri Das Dage vs C.I.T. (2) but it would not be correct to say that where a loss arises in the process of conversion of foreign currency which is part of trading asset of the assessee, such loss cannot be regarded as a trading loss because the change in the rate of exchange which occasions such loss is due to an act of the sovereign power.
The loss is as much a trading loss as any other and it makes no difference that it is occasioned by devaluation brought about by an act of State.
It is not the factor or circumstance which causes the loss that is material in determining the true 983 nature and character of the loss, but whether the loss has occurred in the course of carrying on the business or is incidental to it.
If there is loss in a trading asset, it would be a trading loss, whatever be its cause, because it would be a loss in the course of carrying on the business.
Take for example the stock in trade of a business which is sold at a loss.
There can be little doubt that the loss in such a case would clearly be a trading loss.
But the loss may also arise by reason of the stock in trade being stolen or burnt and such a loss, though occasioned by external agency or act of God, would equally be a trading loss.
The cause which occasions the loss would be immaterial : the loss, being in respect of a trading asset, would be a trading loss.
Consequently, we find it impossible to agree with the High Court that since the loss in the present case arose on account of devaluation of the Pakistani rupee and the act of devaluation was an act of sovereign power extrinsic to the business, the loss could not be said to spring from the business of the assessee.
Whether the loss suffered by the assessee was a trading loss or not would depend on the answer to the query whether the loss was in respect of a trading asset or a capital asset.
In the former case, it would be a trading loss, but not so in the latter.
The test may also be formulated in another way by asking the question whether the loss was in respect of circulating capital or in respect of fixed capital.
This is the formulation of the test which is to be found in some of the English decisions.
It is of course not easy to define precisely what is the line of demarcation between fixed capital and circulating capital, but there is a well recognised distinction between the two concepts.
Adam Smith in his `Wealth of Nations ' describes `fixed capital ' as what the owner turns to profit by keeping it in his own possession and `circulating capital ' as what he makes profit of by parting with it and letting it change masters.
`Circulating capital ' means capital employed in the trading operations of the business and the dealings with it comprise trading receipts and trading disbursements, while `fixed capital means capital not so employed in the business, though it may be used for the purposes of a manufacturing business, but does not constitute capital employed in the trading operations of the business.
Vide Golden Horse Shoe (new) Ltd. vs Thurgood.,(1) If there is any loss resulting from depreciation of the foreign currency which is embarked or adventured in the business and is part of the circulating capital, it would be a trading loss, but depreciation of fixed capital on account of alteration in exchange rate would be a capital loss.
Putting it differently, if the amount in foreign currency is utilised or intended to be utilised in the course of business or for a trading purpose or for effecting a 984 transaction on revenue account, loss arising from depreciation in its value on account of alteration in the rate of exchange would be a trading loss, but if the amount is held as a capital asset, loss arising from depreciation would be a capital loss.
This is clearly borne out by the decided cases which we shall presently discuss.
We will first refer to the English decisions on the subject for they are quite illuminating.
The first decision to which we should call attention is that in Landes Brothers vs Simpson(1).
There the appellants who carried on business as fur and skin merchants and as agents were appointed sole commission agents of a company for the sale, in Britain and elsewhere, of furs exported from Russia, on the terms, inter alia, that they should advance to the company a part of the value of each consignment.
All the transactions between the appellants and the company were conducted on a dollar basis, and owing to fluctuations in the rate of exchange between the dates when advances in dollars were made by the appellants to the company against goods consigned and the dates when the appellants recouped themselves for the advances on the sale of the goods, a profit accrued to the appellants on the conversion of prepaid advances into sterling.
The question arose whether this profit formed part of the trading receipts of the appellants so as to be assessable to tax.
Singleton, J., held that the exchange profit arose directly in the course of the appellants ' business with the company and formed part of the appellants ' trading receipts for the purpose of computing their profits assessable to income tax under Case I of Schedule D.
The learned Judge pointed out that "the profit which arises in the present case is a profit arising directly from the business which had to be done, because the business was conducted on a dollar basis and the appellants had, therefore, to buy dollars in order to make the advances against the goods as prescribed by the agreements.
The profit accrued in this case because they had to do that, thereafter as a trading concern in this country re transferring or re exchanging into sterling.
" Since the dollars were purchased for the purpose of carrying on the business as sole commission agents and as an integral part of the activity of such business, it was held that the profit arising on retransfer or re exchange of dollars into sterling was a trading profit falling within Case I of Schedule D.
This decision was accepted as a correct decision by the Court of Appeal in Davis vs Shell & Co. of Chine Ltd.(2) 985 We may then refer to the decision of the Court of Appeal in Imperial Tobacco Co. vs Kelly(1).
That was a case of a company which, in accordance with the usual practice, bought American dollars for the purpose of purchasing in the United States, tobacco leaf.
But before tobacco leaf could be purchased, the transaction was interrupted by the outbreak of war and the company had, at the request of the Treasury, to stop all further purchases of tobacco leaf in the United States.
The result was that the company was required to sell to the Treasury and owing to the rise which had in the mean time occurred in the dollar exchange, the sale resulted in a profit for the company.
The question was whether the exchange profit thus made on the dollars purchased by the company was a trading profit or not ? The Court of Appeal held that it was a trading profit includible in the assessment of the company under Case I of Schedule D and Lord Green, Master of the Rolls delivering the main judgment, said : "The purchase of the dollar was the first step in carrying out an intended commercial transaction, namely, the purchase of tobacco leaf.
The dollars were bought in contemplation of that and nothing else.
The purchase on the facts found was, as I say, a first step in the carrying out of a commercial transaction, " "The Appellant Company having provided themselves with this particular commodity "namely, dollars" which they proposed to exchange for leaf tobacco, their contemplated transactions became impossible of performance, or were not in fact performed.
They then realised the commodity which had become surplus to their requirements".
When I say "surplus to their requirements" I mean surplus to their requirements for the purpose and the only purpose for which the dollars were acquired." "In these circumstances, they sell this surplus stock of dollars : and it seems to me quite impossible to say that the dollars have lost the revenue characteristic which attached to them when they were originally bought, and in some mysterious way have acquired a capital character.
In my opinion, it does not make any difference that the contemplated purchasers were stopped by the operation of Treasury or Governmental orders, if that were the case; nor is the case affected by the fact that the purchase was under a Treasury requisition and was not a voluntary one.
It would 986 be a fantastic result, supposing the Company had been able voluntarily, at its own free will, to sell these surplus dollars, if in that case the resulting profit should be regarded as income, whereas if the sale were a compulsory one the resulting profit would be capital.
That is a distinction which, in my opinion, cannot possibly be made." "To reduce the matter to its simplest elements, the Appellant Company has sold a surplus stock of dollars which it had acquired for the purpose of affecting a transaction on revenue account.
If the transaction is regarded in that light, any trader who, having acquired commodities for the purpose of carrying out a contract, which falls under the head of revenue for the purpose of assessment under Schedule D, Case I, then finds that he has bought more than he ultimately needs and proceeds to sell the surplus.
In that case it could not be suggested that the profit so made was anything but income.
It had an income character impressed upon it from the very first.
" This decision clearly laid down that where an assessee in the course of its trade engages in a trading transaction, such as purchase of goods abroad, which involves as a necessary incident of the transaction itself, the purchase of currency of the foreign country concerned, then profit resulting from appreciation or loss resulting from depreciation of the foreign currency embarked in the transaction would prima facie be a trading profit or a trading loss.
The last English decision to which we may refer in this connection is Davis vs The Shell Company of Chine, (supra).
The Company made a practice of requiring its agents to deposit with the company a sum of money usually in Chinese dollars which was repayable when the agency came to an end.
Previously the Company had left on deposit in Shanghai amounts approximately equal to the agency deposits, but because of the hostilities between China and Japan, the Company transferred these sums to the United Kingdom and deposited the sterling equivalents with its parent company which acted as its banker.
Owing to the subsequent depreciation of the Chinese dollar with respect to sterling, the amounts eventually required to repay agency deposits in Chinese currency were much less than the sums held by the Company to meet the claims and a substantial profit accrued to the Company.
The question arose whether this exchange profit was a trading profit or a capital profit.
The Court of 987 Appeal held that it was a capital profit not subject to income tax and the argument which found favour with it may be stated in the words of Jenkins, L. J., who delivered the main judgment : "I find nothing in the facts of this case to divest those deposits of the character which it seems to me they originally bore, that is to say the character of loans by the agents to the company, given no doubt to provide the company with a security, but nevertheless loans.
As loans it seems to me they must prima facie be loans on capital, not revenue account; which perhaps is only another way of saying that they must prima facie be considered as part of the company 's fixed and not of its circulating capital.
As appears from what I have said above, the evidence does not show that there was anything in the company 's mode of dealing with the deposits when received to displace this prima facie conclusion.
In my view, therefore, the conversion of company 's balance of Chinese dollars into sterling and the subsequent re purchase of Chinese dollars at a lower rate, which enabled the company to pay off its agents ' deposits at a smaller cost in sterling then the amount it had realised by converting the deposits into sterling, was not a trading profit, but it was simply the equivalent of an appreciation in a capital asset not forming part of the assets employed as circulating capital in the trade." Since the Court took the view that the deposits were in the nature of fixed capital, any appreciation in their value on account of alteration in the rate of exchange would be on capital account and that is why the Court held that such appreciation represented capital profit and not trading profit.
That takes us to the two decisions of this Court which have discussed the law on the subject and reiterated the same principles for determining when exchange profit or loss can be said to be trading profit or loss.
The first decision in chronological order is that reported in Commissioner of Income Tax, Bombay City vs Tata Locomotive and Engineering Co. Ltd. (supra).
There the assessee, which was a limited company carrying on business of locomotive boilers and locomotives, had, for the purpose of its manufacturing activity, to make purchases of plant and machinery in the United States.
Tata Ink, New York, a company incorporated in the United States, was appointed by the assessee as its purchasing agent in the United States 988 and with the sanction of the Exchange Control Authorities the assessee remitted a sum of $ 33,850/ to Tata Ink, New York for the purpose of purchasing capital goods and meeting other expenses.
The assessee was also the selling agent of Baldwin Locomotive Works of the United States for the sale of their products in India and in connection with this work, the assessee incurred expenses on their behalf in India and these expenses were reimbursed to the assessee in the United States by paying the amount to Tata Ink, New York.
The assessee also earned a commission of $ 36,123/ as selling agent of Baldwin Locomotive Works and this amount received as commission was taxed in the hands of the assessee in the relevant assessment year on accrual basis after being converted into rupees according to the then prevailing rate of exchange and tax was paid on it by the assessee.
Now these amounts paid by Baldwin Locomotive Works in reimbursement of the expenses and by way of commission were not remitted by the assessee to India but were retained with Tata Ink, New York for the purchase of capital goods with the sanction of the Exchange Control Authorities.
The result was that there was a balance of $. 48,572.30 in the assessee 's account with Tata Ink, New York on 16th September, 1949 when, on devaluation of the rupee, the rate of exchange which was Rs. 3.330 per dollar shot upto Rs. 4.775 per dollar.
The consequence of this alteration in the rate of exchange was that the assessee found it more expensive to buy American goods and the Government of India also imposed some restrictions on imports from the United States and the assessee, therefore, with the permission of the Reserve Bank of India, repatriated $ 49,500/ to India.
The repatriation of this amount at the altered rate of exchange gave rise to a surplus of Rs. 70,147/ in the process of converting dollar currency into rupee currency.
The question arose in the assessment of the assessee to income tax whether that part of the surplus of Rs. 70,147/ , which was attributable to $ 36,123/ received as commission from Baldwin Locomotive Works was a trading profit or a capital profit.
The matter was carried to this Court by the Revenue and in the course of the judgment delivered by Sikri, J., this Court pointed out that the answer to the question : ". . depends on whether the act of keeping the money, i.e., $ 36,123/02, for capital purposes after obtaining the sanction of the Reserve Bank was part of or a trading transaction.
If it was part of or a trading transaction then any profit that would accrue would be revenue receipt; if it was not part of or a trading transaction, then the profit made would be a capital profit and not taxable.
There is no doubt that the amount of $ 36,123.02 was a revenue 989 receipt in the assessee 's business of commission agency.
Instead of repatriating it immediately, the assessee obtained the sanction of the Reserve Bank to utilise the commission in its business manufacture of locomotive boilers and locomotives for buying capital goods.
That was quite an independent transaction, and it is the nature of this transaction which has to be determined.
In our view it was not a trading transaction in the business of manufacture of locomotive boilers and locomotives; it was clearly a transaction of accumulating dollars to pay for capital goods, the first step to the acquisition of capital goods.
If the assessee had repatriated $ 36,123.02 and then after obtaining the sanction of the Reserve Bank remitted $ 36,123.02 to the U.S.A., Mr. Sastri does not contest that any profit made on devaluation would have been a capital profit.
But, in our opinion, the fact that the assessee kept the money there does not make any difference specially, as we have pointed out, that it was a new transaction which the assessee entered into, the transaction being the first step to acquisition of capital goods.
" This Court held that the act of retaining $ 36,123/ in the United States for capital purposes after obtaining the sanction of the Reserve Bank of India was not a trading transaction in the business of manufacture of locomotive boilers and locomotives, but it was clearly a transaction of accumulating dollars to pay for capital goods, the first step in the acquisition of capital goods and the surplus attributable to $ 36,123/ was, therefore, capital accretion and not profit taxable in the hands of the assessee.
It would, thus, be seen that the test applied by this Court was whether the appreciation in value had taken place in a capital asset or in a trading asset or in other words, in fixed capital or in circulating capital and since the amount of $ 36,123/ , though initially a trading receipt, was set apart for purchase of capital goods and was thus converted into a capital asset or fixed capital, it was held that appreciation in its value on conversion from dollar currency to rupee currency was a capital profit and not a trading profit.
The position was the same as if the assessee had repatriated $ 36,123/ in the relevant assessment year in which it was earned and then immediately remitted an identical amount to the United States for the purchase of capital goods and profit had accrued on subsequent repatriating of this amount on account of alteration in the rate of exchange.
990 The other decision to which we must refer is the one in Commissioner of Income Tax, Mysore vs Canara Bank Ltd.(1).
The assessee in this case was a public limited company carrying on the business of banking in India and it had opened a branch in Karachi on 15th November, 1946.
After the partition in 1947, the currencies of India and Pakistan continued to be at par until the devaluation of the Indian rupee on September 18, 1949.
On that day the Karachi branch of the assessee had with it a sum of Rs. 3,97,221/ belonging to its Head Office.
As Pakistan did not devalue its currency, the old parity between Indian and Pakistani rupee ceased to exist.
The exchange ratio between the two countries was, however, not determined until 27th February, 1951 when it was agreed that 100 Pakistani rupees would be equivalent to 144 Indian rupees.
The assessee did not carry on any business in foreign currency in Pakistan and even after it was permitted to carry on business in Pakistani currency on 3rd April, 1951, it carried on no foreign exchange business.
The amount of Rs. 3,97,221/, which was lying with the Karachi branch remained idle there and was not utilised in any banking operation even within Pakistan.
On July 1, 1953, the State Bank of Pakistan granted permission for remittance and two days later, the assessee remitted the amount of Rs. 3,97,221/ to India.
This amount, in view of the difference in the rate of exchange became equivalent to Rs. 5,71,038/ in terms of Indian currency and in the process, the assessee made a profit of Rs, 1,73,817/ .
The question arose in the assessment of the assessee whether this profit of Rs. 1,73,817/ was a revenue receipt or a capital accretion.
Ramaswami, J., speaking on behalf of this Court, pointed out that the amount of Rs. 3,97,221/ was lying idle in the Karachi branch and it was not utilised in any banking operation and the Karachi branch was merely keeping that money with it for the purpose of remittance to India and as soon as the permission of the State Bank of Pakistan was obtained, it remitted that money to India.
This money was "at no material time employed, expended or used for any banking operation or for any foreign exchange business".
It was, to use the words of Ramaswami, J., "blocked and sterilised from the period of the devaluation of the Indian rupee upto the time of its remittance to India".
Therefore, even if the money was originally stock in trade, it "changed its character of stock in trade when it was blocked and sterilised and the increment in its value owing to the exchange fluctuation must be treated as a capital receipt".
Since the sum of Rs. 3,97,221/ was, on the finding of fact reached by the Revenue authorities, held on capital account and not as part of the circulating capital em 991 barked in the business of banking, it was held by this Court that the profit arising to the assessee on remittance of this amount on account of alteration in the rate of exchange was not a trading profit but a capital accretion.
The law may, therefore, now be taken to be well settled that where profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business.
But if on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature.
Now, in the present case, no finding appears to have been given by the Tribunal as to whether the sums of Rs. 25 lakhs and Rs. 12,50,000/ were held by the assessee in West Pakistan on capital account or Revenue account and whether they were part of fixed capital or of circulating capital embarked and adventured in the business in West Pakistan.
If these two amounts were employed in the business in West Pakistan and formed part of the circulating capital of that business, the loss of Rs. 11 lakhs and Rs. 5,50,000/ resulting to the assessee on remission of these two amounts to India.
On account of alteration in the rate of exchange, would be a trading loss, but if, instead, these two amounts were held on capital account and were part of fixed capital, the loss would plainly be a capital loss.
The question whether the loss suffered by the assessee was a trading loss or a capital loss cannot, therefore, be answered unless it is first determined whether these two amounts were held by the assessee on capital account or on revenue account or on revenue account or to put it differently, as part of fixed capital or of circulating capital.
We would have ordinarily, in these circumstances, called for a supplementary statement of case from the Tribunal giving its finding on this question, but both the parties agreed before us that their attention was not directed to this aspect of the matter when the case was heard before the Revenue Authorities and the Tribunal and hence it would be desirable that the matter should go back to the Tribunal with a direction to the Tribunal either to take additional evidence itself or to direct the Income Tax Officer to take additional evidence and make a report to it, on the question whether the sums of Rs. 25 lakhs and Rs. 12,50,000/ were held in West Pakistan as capital asset or as trading asset or, in other words, as part of fixed capital or part of circulating capital in the business.
The Tribunal will, on the basis of this additional evidence and in the light of the law laid down by us in this judgment, determine whether the loss 992 suffered by the assessee on remittance of the two sums of Rs. 25 lakhs and Rs. 12,50,000/ was a trading loss or a capital loss.
We accordingly set aside the order of the High Court and send the case back to the Tribunal with a direction to dispose it of in accordance with the directions given by us and in the light of the law laid down in this judgment.
There will be no order as to costs of the appeal.
P.H.P. Appeals allowed and case remanded.
| All the petitioners were charged with the offence of murder u/s 302 I.P.C., but all of them were acquitted by the Sections Judge on 4 11 1972.
The State successfully appealed against the acquittal and by its judgment dated 20 5 1977 the High Court, while reversing the findings of the Sessions Court, held all of them guilty and sentenced them all to life imprisonment.
The petitioners came up to the Supreme Court exercising their statutory right of appeal.
Pending the disposal of the appeal, they moved an application for bail which was rejected on 7 9 1977.
The petitioners moved another application for bail.
Granting the bail, subject to fulfilment of conditions imposed, the Court HELD : 1.
An order refusing an application for bail does not necessarily preclude another, on a later occasion, giving more materials, further developments and different considerations.
While it is a circumstance which the Courts surely must set store, Courts are not barred from second consideration at a later stage.
An interim direction is not a conclusive adjudication and updated reconsideration is not overturning an earlier negation.
[779 D E] 2.
The significance and sweep of article 21 make the deprivation of liberty ephemeral or enduring, a matter of grave concern and permissible only when the law authorising it is reasonable, even handed and geared to the goals of community good and State necessity spelt out In Article 19.
Reasonableness postulates intelligent care and predicates that deprivation of freedom by refusal of bail is not for punitive purpose, but for the bifocal interests of justice to the individual involved and society affected.
[784 E F] 3.
Personal liberty deprived when bail is refused, is too precious a value of ourconstitutional system recognised under article 21, that the curial power to negateit is a great trust exercisable, not casually, but judicially with lively concern for the cost to the individual and the community.
Personal liberty of an accused or convict is fundamental, suffering lawful eclipse only in terms of procedure established by law.
The last four words of article 21 are the life of that human right.
[781 A B] 4.
All deprivation of liberty is validated by social defence and individual correction along an anti criminal direction.
Public justice is central to the whole scheme of bail law.
Feeling justice must be forbidden but punitive harshness should be minimised.
Restorative devises to redeem the man, even through community service, meditative drill, study classes or other resources should be innovated and playing foul with public peace by tampering with evidence, intimidating witnesses or committing offences while on judicially sanctioned "free enterprise" should be provided against.
No seeker of justice shall play confidence tricks on the Court or community.
Conditions may be hung around bail orders, not to cripple but to protect.
Such is the holistic jurisdiction and humanistic orientation invoked by the judicial discretion correlated to the values of our Constitution.
[785 B C] 5.
The principal rule to guide release on bail should be to secure the presence of the applicant, who seeks to be liberated, to take judgment and serve sentence in the event of the Court punishing him with imprisonment.
In this 778 perspective relevance of considerations is regulated by their nexus with the likely absence of the applicant for fear of a severe sentence.
[783 E] The vital considerations are: (a) The nature of charge, the nature of the evidence and, the punishment to which the party may be liable, if convicted, or conviction is confirmed.
When the crime charged is of the highest magni tude and the punishment of it assigned by law is of extreme severity, the Court may reasonably presume, some evidence warranting, that no amount of bail would secure the presence of the convict at the stage of judgment, should he be enlarged (b) whether the course of justices would be thwarted by him who seeks the benignant jurisdiction of the Court to be freed for the time being (c) Antecedents of the man and socio geographical circumstance, and whether or the petitioner 's record shows him to be 'a habitual offender, (d) When, a person charged with a grave offence has been acquitted at a stage, the intermediate acquittal has pertinence to a bail plea when the appeal before this Court pends.
The grounds for denial of provisional releases becomes weaker when a fair finding of innocence has been recorded by one court, (e) Whether the accused 's safety may be.
in, prison, than in the, vengeful village where feuds have provoked the violent offence and (f) The period in.
prison already spent and the prospect of delay in the appeal being heard, and disposed of.
[783 A B,F, 784 C, D, 785 D E, 786,A] Kashmira Singh vs State of Punjab, ; = A.I.R. @ 2148; Gudikanti Narasihmalu and Ors.
vs Public Prosecutor, Govt of A.P.; , Reiterated.
Tinglay vs Dolby, ; Rex vs Rose, 1898 18 CC 717; 67 QB 289; quoted with approval.
Courts should soberly size up police exaggerations; of prospective misconduct of the accused if enlarged, lest danger of excesses and injustice creep subtly into the discretionary curial technique.
Bad record and police prediction of criminal prospects to invalidate the bail plea are admissible in principle, but shall not stampede the Court into complacent refusal.
The endemic pathology of factious scrimmage and bloodshed should be preempted by suitable safe guards.
[785 F G] To answer the test of reasonableness subject to the need for securing the presence of the bail applicant, the Court must also weigh the contrary factors like (i) the better chances which a man on bail has to prepare or present his case than one remanded in custody, (ii) promotion of public justice, (iii) the considerable public expenses in keeping in custody where no danger of disappearance or disturbance can arise and (iv) the deplorable condition verging on the inhuman of our sub jails.
[784 G H; 785 A] In the instant case, the following 'significant factors frown ' upon continuance of incarceration and favour provisional but conditional enlargement of the petitioners.
(a) Petitioners 1 to 5 have suffered sentences in some measures having been imprisoned for about twenty months.
(b) When the High Court entertained the appeal, the State did not press for their custody for apprehended abscondence or menace to peace and justice.
(c) The sixth Petitioner had been on bail in the Sessions Court and all the petitioners had been free during the pendency of the appeal.
(d) There is nothing indicated to show that during the long five years, when the petitioners had been out of prison, pending appeal, there had been any conduct on their part suggestive of disturbing the peace of #he locality, threatening any one in the village or otherwise thwarting the life of the community or the cause of justice and (e) All the petitioners 1 to 5 are the entire male members of a family and their remaining in jail will jeopardise their defence in this Court.
, B E]
|
ition No. 1337 of 1979.
(Under article 32 of the Constitution of India).
V.M. Tarkunde, P.H. Parekh and Hemant Sharma for the Petitioner.
Abdul Khader, Girish Chandra and Miss A. Subhashini for the Respondents.
The Order of the Court was delivered by KOSHAL, J. The short question which falls for determination in this petition under article 32 of the Constitution of India praying for the issuance of appropriate writs quashing the letter dated 16th of March, 1979, by which the representation made by the petitioner against the seniority assigned to him in the cadre of Income tax Officers, Class I was rejected and he was informed that the seniority list forming an appendix to Annexure 'l ' had been correctly framed in accordance with the rules then in force.
The answer to the question posed by the petition has to be answered with reference to Rules 4, 6 and 8 of the Released Emergency Commissioned Officers & Short Service Commissioned Officers (Reservation of Vacancies) Rules, 1971 (hereinafter called the Rules).
The relevant part of Rule 4(1) reads thus: 4(1) Twenty percent of the vacancies in the Indian Foreign Service, and 25 percent of the vacancies in all the Central Civil Services and posts, Class I, to which these rules apply. . . . 40 shall be reserved for being filled by the Emergency Commissioned Officers and the Short Service Commissioned Officers of the Armed Forces of the Union who were commissioned after the 1st November, 1962 but before the 10th January, 1968, and who (i) . . . . . . . . (ii) in the case of Short Service Commissioned Officers are released on the expiry of the tenure of their service; or (iii) . . . . . . . .
Rule 6 in so far as it is relevant for our purpose provides: 6(1) . . . . . . . . . (2) Seniority inter se of candidates who are appointed against the vacancies reserved under sub rule (1) of rule 4 and allotted to a particular year shall be determined according to the merit list prepared by the Commission on the basis of the results of their performance at the examination or test or interview.
(3) All candidates who have been appointed against the vacancies reserved under sub rule (1) of rule 4 shall rank below the candidates who were appointed against unreserved vacancies in the services of posts through the competitive examination or test or interview conducted by the Commission corresponding to the year to which the former candidates are allotted.
It is not disputed that the petitioner is an officer who is entitled to the benefit of reservation under the above abstracted portion of Rule 4(1) and to have his seniority accordance with sub rule (3) of Rule 6.
As we read the sub rule last mentioned we do not find it to be ambiguous in any manner whatsoever.
It lays down in clear terms that the officers appointed against vacancies reserved under sub rule (1) of Rule 4 shall rank below candidates who were appointed against unreserved vacancies in the services concerned through a competitive examination, etc.
Respondents Nos. 2 to 14 who have been placed in the impugned seniority list above the petitioner were appointed to the cadre of Income tax Officers, Class I through a competitive examination or test as envisaged by sub rule(3) of Rule 6.
Now if they were appointed against unreserved vacancies, they are entitled to rank above the petitioner but not otherwise.
41 It is conceded before us that respondents Nos. 2 to 14 have been appointed against vacancies reserved for Scheduled Castes and Scheduled Tribes.
Clearly, therefore, they must rank below the petitioner inasmuch as it cannot be said with any plausibility that they were appointed against unreserved vacancies.
Mr. Abdul Khader appearing for the Union of India has contested the interpretation just above placed by us on sub rule (3) of Rule 6.
According to him that interpretation makes the sub rule retrospective in operation, which it is not.
We agree that the sub rule is intended to be prospective only and that the above interpretation would be operative only after the date on which the sub rule was promulgated and not before that.
But then that means that every seniority list prepared after the date of the promulgation of the sub rule would be governed by it.
Similarly, every promotion made and every question relating to seniority cropping up after the date of the promulgation of the sub rule (which is 28th August, 1971) shall be determined according to that sub rule.
No question of retrospectivity of the sub rule is thus involved.
Of course, the inter se seniority of officers of the cadre prevailing upto 28th August, 1971 had to be determined under the rules as they existed before that date and any promotions made earlier to that date would continue to be good if made in accordance with those rules.
However, the position changed with the promulgation of the Rules and any promotion made thereafter has to conform to them.
Faced with the above situation Mr. Abdul Khader argued that the word, 'unreserved ' in sub rule (3) of Rule 6 would embrace the vacancies reserved for candidates belonging to the Scheduled Castes and Scheduled Tribes who had joined the cadre through open competition, etc., because the sub rule meant to take within its ambit all such persons who had been recruited in that manner.
The logic of the argument is not clear to us because it makes the whole sub rule meaningless.
If the argument were to be accepted, the use of the word 'unreserved ' would be wholly uncalled for and we just cannot hold that the word is redundant, forms part as it does of subordinate legislation.
The word 'unreserved ' can obviously not be equated with its antonym, that is, 'reserved ', and has to be applied only to vacancies which do not fall within the reserved categories.
Mr. Abdul Khader took another point and that was to the effect that the rules of the service in question had been amended 42 earlier to 1971 so as to place candidates covered by Rule 4(1) below those who had been appointed to reserved vacancies through a competitive examination.
That may well have been so but then that makes no difference to the interpretation which is given above to sub rule (3) of Rule 6.
Rule 8 of the Rules declares in no uncertain terms that all rules regulating the recruitment of persons to Central Civil Services and Posts, Class I, to which the Rules apply, shall be deemed to have been amended to the extent provided for in the Rules.
If the rules regulating the seniority of the petitioner and respondents Nos. 2 to 14 were so amended earlier to 1971 as to assign to the petitioner seniority below respondents Nos. 2 to 14, the situation would be wholly irrelevant to the present dispute because after the amendment brought about Rule 8 of the Rules, the members of the service to which the contested parties belong, have to be governed by the amendment of which sub rule (3) of Rule 6 forms a part.
This is the inescapable consequence flowing from Rule 8 of the Rules.
We may take note here of the only other argument raised by Mr. Abdul Khader and that is that Rule 8 regulates only the recruitment of persons to Central Civil Services and Posts, Class I, and not to their conditions of service.
We do not find any substance in this argument either.
The word 'recruitment ' is comprehensive enough to embrace the content of all the rules preceding Rule 8 including the fitment of candidates recruited to the service vis a vis each other.
In the result, we accept the petition, quash the seniority list abovementioned as well as the letter by which the representation there against made by the petitioner was rejected and direct respondent No. 1 to re frame the seniority list assigning the petitioner seniority in accordance with law as explained above.
There will be no order as to costs.
N. K. A. Petition allowed.
| Respondents Nos. 2 to 14 were appointed to the cadre of Income tax Officers, Class I, against vacancies reserved for Scheduled Caste and Schedules Tribes, as a result of a competitive examination or test as envisaged by sub rule (3) of Rule 6.
The Petitioner was similarly appointed to the same cadre but against a vacancy reserved under sub rule (1) of Rule 4 for certain officers of the Armed Forces of the Union.
He was placed in the impugned seniority list below respondents Nos. 2 to 14.
He made a representation against the seniority assigned to him on the ground that under sub rule (3) of Rule 6 he was entitled to rank immediately below candidates appointed against unreserved vacancies.
The representation was rejected by a letter dated 16th March, 1979.
The petitioner filed a petition under article 32 of the Constitution of India seeking the issuance of a writ quashing that letter.
At the hearing it was not disputed that the petitioner was entitled to the benefit of reservation sub rule (1) of Rule 4 and to have his seniority determined in accordance with sub rule (3) of Rule 6.
However, it was contended on behalf of the respondents Nos. 2 to 14, inter alia, that the rules of the service had been amended earlier to 1971, so as to place candidates covered by sub rule (1) of Rule 4 below those who had been appointed against reserved vacancies through a competitive examination.
Accepting the petition, it was ^ HELD: (1) Sub rule (3) of Rule 6 is not ambiguous in any manner whatsoever and lays down in clear terms that the officers appointed against vacancies reserved under sub rule (1) of Rule 4 shall rank below candidates who were appointed against unreserved vacancies in the Services concerned through a competitive examination, etc.
[40 F G] 2.
Respondents Nos. 2 to 14 have been appointed against vacancies reserved for Scheduled Castes and Schedule Tribes.
Clearly therefore, they must rank below the petitioner inasmuch as it cannot be said with any plausibility that they were appointed against unreserved vacancies.
[41 A B] 3.
The argument that the rules of the service in question had been amended to 1971, so as to place candidates governed by Rule 4(1) below those who had been appointed to reserved vacancies through a competitive examination has no substance and makes no difference to the interpretation which is given above to 39 sub rule (3) of Rule 6, Rule 8 of the Rules declares in no uncertain terms that all rules regulating the recruitment of persons to Central Civil Services and Posts, Class I, to which the Rules apply, shall be deemed to have been amended to the extent provided for in the Rules.
Although the rules regulating the seniority of the petitioners and respondents Nos. 2 to 14 were so amended earlier to 1971 as to assign to the petitioner seniority below respondents Nos 2 to 14, the situation is wholly irrelevant to the present dispute because after the amendment brought about by Rule 8 of the Rules, the members of the service to which the contenting parties belong, have to be governed by the later amendment, of which sub rule (3) of Rule 6 forms a part.
This is the inescapable consequence flowing from Rule 8 of the Rules.
[41 G H, 42 A D] 4.
The word 'recruitment ' is comprehensive enough to embrace the content of all the rules proceeding Rule 8 including the fitment of candidates recruited to the service vis a vis each other.
[42 D E]
|
Civil Appeal No. 2419 of 1968.
From the Judgment and Order dated 25 9 67 of the Punjab and Haryana High Court in Civil Writ No. 1630/62.
1280 section K. Mehta, P. N. Puri, K. R. Nagaraja and G. Lal for the Appellants.
K. L. Narula, District Attorney, Haryana, R. B. Datar and Girish Chandra for Respondent No.1.
E. C. Agarwala for Respondent No. 14 (Rest of the Respondents Ex parte) The Judgment of the Court was delivered by JASWANT SINGH, J.
The litigation culminating in the present appeal (by certificate under Article 133(1)(b) of the Constitution) which is directed against the judgment and order dated September 25, 1967, of the Punjab and Haryana High Court in C.W.N. 1630 of 1962 setting aside the allotment dated May 23, 1960 made by Naib Tehsildar cum Managing Officer, Fatehabad, District Hissar in favour of Madan Mohan and others, and orders dated April 18, 1962 and July 21, 1962 of the Assistant Settlement Commissioner and Chief Settlement Commissioner respectively on the finding that "no part of the holding which formed part of the land allotted to respondent No. 14, Mehta Lal Chand, (hereinafter referred to as 'the respondent ') could, during the subsistence of such allotment and without its cancellation, be allotted to any one else" has had a very chequered career extending over well nigh two decades.
It appears that the respondent who is a displaced person from Pakistan was found entitled to an allotment of 113 standard acres and 3 units of land in lieu of 120 acres of land held by him as owner in Bhawalpur (Pakistan).
Against the aforesaid entitlement, the respondent was allotted 90 standard acres and 6 units of evacuee land between 1953 and 1958 in different villages of Tehsil Fatehabad, District Hissar including two areas measuring (1) 13 standard acres and 3 1/2 units and (2) 13 standard acres and 13 1/2 units in village Bahmniwala allotment of which was made on March 1, 1957 and October 10, 1958 respectively.
Pursuant to the above allotment of 13 standard acres and 3 1/2 units made in his favour in village Bahmniwala vide Sanad dated March 6, 1957 (Annexure 'C ' to the writ petition), the respondent was given possession of the plots of land comprised in khasra Nos.
1411 min, 1412 min, 1472 min, 1241 min, 1242, 1243, 1244, 1245, 1246, 1247, 1621, 1622 to 1635 (14 khasras), 1642, 1644, 1645 on June 17, 1957.
The respondent continued to remain in possession of the aforesaid plots of land till Rabi 1960 when consolidation of holdings were undertaken in village Bahmniwala.
Without caring to look into the revenue record, the Consolidation Officer instead of showing the aforesaid allotted area in Bahmniwala in the name 1281 of the respondent included the same in the kurrah (area) of the Custodian.
On coming to know about this irregularity, the respondent filed objections before the Consolidation Officer and requested him to rectify the mistake.
The Consolidation Officer by his order dated March 23, 1960 consigned the objection petition of the respondent to the record room observing that in the absence of the relevant record which, as per the report of the Wasal Baqi Nawis is has been despatched to Jullundur for checking purposes, the factum of allotment cannot be verified and as it is necessary to take proceedings under section 21(2) of the Consolidation of Holdings Act in village Bahmniwala in this very month, the record cannot be awaied any further.
The Consolidation Officer further observed that since it appeared from a perusal of the copy of the Sanad (allotment) that the entire kurrah consisted of almost evacuee land bearing khasra numbers mentioned in the Sanad of allotment, the respondent could, on the receipt of the record, get the area at the place where, according to him, the evacuee land mentioned by him in his application was situate.
By his order dated May 23, 1960, the Naib Tehsildar cum Managing Officer, Fatehabad, however, made the following allotments out of an area of 58 standard acres and 7 units situate in Bahmniwala which included the khasra numbers already allotted to the respondent but which according to the Fard Fazla (statement of surplus area) prepared by the concerned Patwari appeared to be available for allotment: In favour of Bagga Singh, S/o Pokhar Singh: 5 1/2 units " " " Inder Singh, S/o Mit Singh : 7 Standard acres 1 1/2unit " " " M. dan Mohan Singh, S/o Puran Singh, " " " Odin Singh and Harduman Singh, 20 Standerd acres 2 units Sons of Madan Mohan Singh, Predecessor in interest of the appellants Aggrieved by this order of the Naib Tehsildar cum Managing Officer which adversely affected the allotment already made in his favour, the respondent preferred an appeal to the Assistant Settlement Commissioner (with powers of Settlement Commissioner), Punjab, Jullundur contending that 13 standard acres and 3 1/2 units of land in Bahmniwala allotted to him in 1957 had been erroneously included in the 'kurrah ' of the Custodian at the time of the Consolidation operations and that the same had now been erroneously allotted without his knowledge to Bagga Singh, Inder Singh, Madan 1282 Mohan Singh and his sons.
Curiously enough, the Assistant Settlement Commissioner (with powers of Settlement Commissioner) while conceding that the aforesaid 13 standard acres and 3 1/2 units and 13 standard acres and 13 1/2 units in village Bahmniwala were allotted in favour of the respondent on June 17, 1957 and October 10, 1958 respectively and that there was no cancellation order in respect thereof and that the consolidation authorities should not have withdrawn the area from the name of the respondent who had through no fault of his been put to a lot of difficulty and that it was just and proper that the matter of allotment to which he was entitled be settled once for all in such a way that whole of the area is given to him permanently in one village, rejected the appeal by his order dated April 18, 1962 observing that there was no good ground for interfering with the allotment of the appellants and that it would be open to the respondent to apply to the Naib Tehsildar cum Managing Officer to make up the shortfall in his area by allotment of some other land which may be available in that village.
Dissatisfied with the order of the Assistant Settlement Commissioner, the respondent took the matter in revision to the Deputy Secretary (Rehabilitation) exercising the powers of the Chief Settlement Commissioner who also after paying lip sympathy dismissed the revision on the ground that it was time barred.
Aggieved by these orders, the respondent moved the High Court of Punjab and Haryana by means of the aforesaid petition under Articles 226 and 227 of the Constitution.
The High Court by its judgment and order dated September 25, 1962 set side the aforesaid thee impugned orders holding that they were wholly without jurisdiction and the Tehsildar cum Managing Officer was not authorised to allot to the appellants the land which was already comprised in a subsisting valid allotment of the respondent.
It is against this judgment and order of the High Court that the present appeal is directed.
On the appeal coming up before us on July 19, 1978, we heard counsel for the parties at considerable length and felt it necessary for clarification of certain points which had been left vague the courts below to have before us the entire record relating to the allotment made in favour of the respondent.
Accordingly, with the consent of counsel for the parties, we adjourned the hearing of the case and directed the Union of Indian to instruct the Chief settlement Commissioner, State of Haryana, either to appear himself before us with all the relevant record relating not only to the allotment originally made in favour of the respondent vide Sanad No. HS4/ 1957/11202 dated March 1, 1957 but also with the record pertaining to all the subsequent allotments made in his favour upto date or 1283 cause the appearance of a responsible officer with the aforesaid record.
To obviate delay in disposal of the case, we also directed the Chief Settlement Commissioner to have in readiness a factual statement showing the net area in terms of standard acres to which the respondent was entitled as a displaced person, the particulars of the field initially allotted in his favour including the survey numbers and the extent of the area thereof, particulars of the survey numbers of the fields taken out of the respondent 's allotment vide Naib Tehsildar cum Managing Officer, Tehsil Fatehabad 's order dated May 23, 1960 and particulars of all the subsequent allotments made upto date in the respondent 's favour in different villages of District Hissar including village Bahmniwala as also the extent of the allotted area which is at present held by him.
Accordingly, the Chief Settlement Commissioner has caused the attendance of K. L. Narula, Deputy District Attorney, Rehabilitation Department, Haryana, Chandigarh who has also filed an affidavit relating to the points on which information was required by us.
We have perused the entire material and have again heard counsel for all the sides.
Two questions arise for determination in this case (1) whether the respondent acquired any enforceable right as a result of the allotment made in his favour on March 1, 1957 and delivery in pursuance thereof to him of possession of the aforesaid khasra numbers on June 17, 1957 and (2) whether the parcels of land which already stood allotted in favour of the respondent vide allotment order dated March 1, 1957 could be allotted by the Naib Tehsildar cum Managing Officer, Fatehabad in favour of Madan Mohan Singh and others without notice to the respondent and without affording him in opportunity of being heard.
The first question has to be considered in the light of the judgment of this Court in Amar Singh vs Custodian Evacuee Property, Punjab where the whole history of the legislative measures devised from time to time in the erstwhile State of Punjab to combat the gigantic problems created as a result of the mass migration of non Muslim land holders to East Punjab is traced.
A perusal of the judgment reveals that in exercise of the rule making power vested in it under clauses (f) and (ff) of sub section (2) of section 22 of the East Punjab Evacuees ' (Administration of Property) Act, 1947 (E. P. Act No. XIV of 1947) as amended in 1948, the Punjab Government issued Notification Nos. 4891 S and 4892 S on July 8, 1949 1284 setting out the conditions regulating allotment by the Custodian of the land which vested in him.
The first incident of allotment deducible from the notification is hereditability of the rights of the allottee which constitute quasi permanent allotment.
The statement of conditions published under Notification Nos.
4891 S and 4892 S of July 8, 1949 was continued in force as the Administration of Evacuee Property (Rural) Rules framed by the Provincial Government under sub section (2) of section 53 of the Central Ordinance No. XXVII of 1949 under delegation from the Central Government under Notification No. 3094 A/Cus/49 dated December 2, 1949 subject to certain modifications and amendments.
On repeal of the Central Ordinance by Central Act XXXI of 1950, the aforesaid rules were continued by virtue of section 58 of the Act as though made under that Act.
Later in exercise of the delegated rule making power vested in the Provincial Government under section 55 of the Central Act, the Punjab Government framed rules dated August 29, 1951 entitled "Instructions for review and revision of land allotment" which affected the rules of July 8, 1949 only to the extent that they were inconsistent with the earlier rules.
A reference to the earlier and subsequent rules would show that the later rules do not concern any of the matters provided by the earlier rules of 1949 (and 1950) excepting as regards resumption which virtually is cancellation of allotment.
The position that emerges from the foregoing is that the rules of July, 1949 continued in force except to the extent of inconsistency.
(The next set of rules are those made under Central Act XXXI of 1950).
Then came the rules dated August 29, 1951 made by the Punjab Government in exercise of the powers delegated to it by the Central Government under section 55(1) of the Central Act XXXI of 1950.
It will be seen that the rules of August 29, 1951 are substantially the same as those enumerated in clause (6) of July 8, 1949 notification as regards resumption and only supplement the notification of July 8, 1949 as regards eviction in certain contingencies.
The rights and incidents enjoyed by the allottees under the quasi permanent scheme introduced by the aforesaid notification of July 8, 1949 are catalouged at page 823 of the aforesaid judgment of this Court in Amar Singh vs Custodian, Evacuee Property, Punjab (supra).
They are: "1.
The allottee is entitled to right of use and occupation of the property until such time as the property remains vested in the Custodian.
[Clause 3(1).
The benefit of such right will ensure to his heirs and successors.
(Definition of 'allottee ').
His enjoyment of the property is on the basis of paying land revenue thereupon and ceases for the time being.
1285 Additional rent may be fixed thereupon by the Custodian.
If and when he does so, the allottee is bound to pay the same.
[Clause 3(3).
He is entitled to quiet and undisturbed enjoyment of the property during that period.
(Clause 8).
He is entitled to make improvements on the land with the assent of the Custodian and is entitled to compensation in the manner provided in the Punjab Tenancy Act.
(Clause 7).
He is entiled to exchange the whole or any part of the land for other evacuee land with the consent of the Custodian.
(Clause 5).
He is entitled to lease the land for a period not exceeding three years without the permission of the Custodian and for longer period with his consent.
But he is not entitled to transfer his rights by way of sale, gift, will, mortgage or other private contract.
[Clause 4(c).] 8.
His rights in the allotment are subject to the fairly extensive powers of cancellation under the Act and rules as then in force prior to July 22, 1952, on varied administrative considerations and actions such as the following (Clause 6 and subsequent rules of 1951): (a) That the allotment is contrary to the orders of the Punjab Government or the instructions of the Financial Commissioner, Relief and Rehabilitation, or of the Custodian, Evacuee Property, Punjab; (b) That the claims of other parties with respect to the land have been established or accepted by the Custodian or the Rehabilitation Authority; (c) That it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and/or rules framed by the State Government; or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper; 1286 (d) That it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons.
Then came the two Notifications Nos.
SRO 129 dt.
July 22, 1952 and SRO 351 dated Feb. 13, 1953 amending and recasting sub rule (6) of Rule 14 of the Central Rules of 1950 as under: "(6) Notwithstanding anything contained in this rule, the Custodian of Evacuee Property in each of the States of Punjab and Patiala and East Punjab States Union shall not exercise the power of cancelling any allotment of rural Evacuee property on a quasi permanent basis, or varying the terms of any such allotment, except in the following circumstances: (i) where the allotment was made although the allottee owned no agricultural land in Pakistan; (ii) where the allottee has obtained land in excess of the area to which he was entitled under the scheme of allotment of land prevailing at the time of allotment; (iii)where the allotment is to be cancelled or varied (a) in accordance with an order made by a competent authority under section 8 of the East Punjab Refugees (Registration of Land Claims) Act, 1948; (b) on account of the failure of the allottee to take possession of the allotted evacuee property within six months of the date of allotment; (c) in consequence of a voluntary surrender of the allotted evacuee property, or a voluntary exchange with other available rural evacuee property, or a mutual exchange with such other available property; (d) in accordance with any general or special order of the Central Government; Provided that where an allotment is cancelled or varied under clause (ii), the allottee shall be entitled to retain such portion of the land to which he would have been entitled under the scheme of quasi permanent allotment of land; Provided further that nothing in this sub rule shall apply to any application for revision, made under section 26 or 1287 section 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952.
" Thus the power of resumption or cancellation of quasi permanent allotment was restricted and reduced.
The next legislative measure is the (Act No. XLIV of 1954), important provisions whereof which may be useful in dealing with the first question may be noticed.
Section 4 provides for the time, the manner and the form of making an application for payment of compensation.
Section 10 of the Act inter alia lays down that where any immovable property has been leased or allotted to a displaced person by the Custodian under conditions published by the Notification of the Government of Punjab No. 4891 S or 4892 S dated July 8, 1949 and such property is acquired under the provisions of the Act and forms part of the compensation pool, the displaced person shall so long as the property remains vested in the Central Government, continue in possession of such property on the same conditions on which he held the property immediately before the date of the acquisition.
It further provides that the Central Government may for the purpose of payment of compensation to such displaced persons transfer to him such property on such forms and conditions as may be prescribed.
Section 12 provides: "12.(1) If the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a purpose connected with the relief and rehabilitation of displaced persons, including payment of compensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the official gazette a notification to the effect that the Central Government has decided to acquire such evacuee property in pursuance of this section.
(2) On the publication of a notification under sub section (1), the right, title and interest of any evacuee in the evacuee property specified in the notification shall, on and from the beginning of the date on which the notification is so published be extinguished and the evacuee pro 1288 perty shall vest absolutely in the Central Government free from all encumbrances.
(3) . . . . . " It may be noted that by virtue of Central Government Notification No. S.R.O. 697 dated March 24, 1955, under sub section (1) of this section 12, all evacuee property allotted under the Punjab Government Notification dated July 8, 1949 was acquired by the Central Government excepting certain specified categories in respect of which proceedings were pending.
Section 13 which deals with compensation for evacuee property acquired says: "13.
There shall be paid to an evacuee compensation in respect of his property acquired under section 12 in accordance with such principles and in such manner as may be agreed upon between the Governments of India and Pakistan.
" Section 14 which provides for the constitution of compensation pool runs thus: "14.
(1) For the purpose of payment of compensation and rehabilitation grants to displaced persons, there shall be constituted a compensation pool which shall cosist of: (a) all evacuee property acquired under section 12, including the sale proceeds of any such property and all profits and income accruing from such property; (b) such cash balances lying with the Custodian as may, by order of the Central Government, be transferred to the compensation pool; (c) such contributions, in any form whatsoever, as may be made to the compensation pool by the Central Government or any State Government; (d) such other assets as may be prescribed.
(2) The compensation pool shall vest in the Central Government free from all encumbrances and shall be utilised in accordance with the provisions of this Act and the rules made thereunder.
" Section 16 authorised the Central Government to appoint Managing Officers or constitute Managing Corporations for the custody, management and disposal of compensation pool so that it may be effectively used in accordance with the provisions of the Act.
1289 Section 40 enables the Central Government by notification in the official gazette to make rules.
Whereas sub section (1) of the section confers general power on the Central Government to make rules to carry out the purposes of the Act, sub section (2) of the Section particularities the subjects on which rules may be made by the Central Government without prejudice to the general power contained in sub section (1).
In exercise of this power, the Central Government made rules called the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 and published the same vide Notification dated May 21, 1955.
Rule 3 lays down that an application for compensation may be made by a displaced person having a verified claim or if such displaced person is dead, by his successor in interest.
Rule 4 prescribes the from of application for compensation.
Rule 16 says that compensation shall be payable in accordance with the scale specified in Appendices VIII or IX as the case may be.
Rule 49 as originally made ran thus: "49.
Compensation normally to be paid in the form of land.
Except as otherwise provided in this chapter, a displaced person having verified claim in respect of agricultural land shall, as far as possible, be paid compensation by allotment of agricultural land.
Provided that where any such person wishes to have his claim satisfied against property other than agricultural land, he may purchase such property by bidding for it at an open auction or by tendering for it and in such a case the purchase price of the property shall be adjusted against the compensation due on this verified claim for agricultural land which shall be converted into cash at the rate specified in Rule 56." In 1960, the following explanation was added to the above rule: "Explanation: In this rule and in the other rules of this chapter, the expression 'agricultural land ' shall mean the agricultural land situated in a rural area.
" Rule 51 lays down that the scale for the allotment of land as compensation in respect of a verified claim for agricultural land shall be 1290 the same as in the quasi permanent land Allotment Scheme in the States of Punjab and Patiala and the East Punjab States Union as set out in Appendix XIV.
Rule 67AA provides: "67A. Compensation to displaced persons from West Punjab, etc., in respect of agricultural land.
Notwithstanding anything contained in this Chapter, a displaced person from West Punjab or a displaced person who was originally domiciled in the undivided Punjab, but who before the partition of India had settled in North West Frontier Province, Baluchistan, Bhawalpur or Sind, whose verified claim in respect of agricultural land has not been satisfied or has been satisfied only partially by the allotment of evacuee land under the relevant notification specified in section 10 of the Act shall not be paid compensation in any form other than the transfer of acquired evacuee agricultural land and rural houses and sites in the State of Punjab or Patiala and East Punjab States Union in accordance with the scales specified in the quasi permanent allotment scheme operating in those States: Provided that if any person has been allotted land in a State other than Punjab and his land claim has not been satisfied fully, he may, for the remaining claim, either be allotted land due to him in that State or issued a Statement of Account which he may utilise for purchase of property forming part of the compensation pool or for adjustment of public dues.
" Rule 68 is to the following effect: "68.
Grant of Sanad for transfer of agricultural land Where any agricultural land is transferred to any person under these rules, the transferee shall be granted a Sanad in the form specified in Appendix XV (with such modifications as may be necessary in the circumstances of any particular case), or the transfer may be effected in any other manner in conformity with the provisions of any local or special law relating to transfer of agricultural land in force in the area where such agricultural land is situated.
" Rule 71 casts an obligation on every person to whom any immoveable property has been allotted by the Custodian under any of the notifications specified in section 10 of the Act to file a declara 1291 tion in the form specified in Appendix XVI in the office of the Settlement Officer or before the authorised officer in the village concerned on the date and place notified under sub rule (4).
Rule 72(1) provides for an enquiry where the allottee has no verified claim.
Rule 72(2) lays down that if the Settlement Officer is satisfied that the allotment is in accordance with the quasi permanent scheme, he may pass an order transferring the land allotted to the allottee in permanent ownership as compensation and shall also issue to him a sand in the form specified in Appendix XVII or XVIII, as the case may be with such modifications as may be necessary in the circumstances of any particular case granting him such right.
After the foregoing conspectus of the various legislative and delegated legislative measures, let us see whether the respondent had any right the enforcement of which he could have sought by means of the above mentioned writ petition.
From the material on the record it is abundantly clear that the respondent migrated to India from West Punjab in the wake of the partition of the Sub Continent in 1947 and that the settlement and rehabilitation authorities satisfied themselves that he was entitled to an allotment of 113 Standard acres and 3 units of land in lieu of the land left behind by him in Bhawalpur.
Since the respondent migrated from Bhawalpur where he had indisputably settled before the partition of the Sub Continent and his verified claim in respect of agricultural land had been only partially satisfied, he could not according to rule 67A of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955, be paid compensation in any form other than by transfer of acquired evacuee agricultural land in accordance with the scale specified in the quasi permanent allotment scheme.
Consequently, it was the duty of the Settlement officer under Rule 72(2) of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 to pass an order transferring the land allotted to the respondent in permanent ownership as compensation and had to issue him a Sanad in the prescribed form.
It also appears that by virtue of Notification No. 697 dated March 24, 1955 issued under sub section (1) of section 12 of the , all evacuee property allotted under the Punjab Government Notification dated July 8, 1947 (excepting certain specified categories in respect of which proceedings were pending) was acquired by the Central Government.
It is in view of this unchallengable position that we 1292 find from the record particularly the copy of Dharam Chand Patwari 's statement dated April 6, 1962 made before the Assistant Settlement Commissioner (Annexure 'A ' to the petition at pages 24 and 25 of the printed Paper Book) that allotment on permanent proprietary basis of 13 standard acres and 3 1/2 units of land situate in village Bahmniwala was made in favour of the respondent on March 1, 1957 that Sanad evidencing allotment of the aforesaid 28 kila numbers was issued in favour of the respondent on the same date; that possession of the aforesaid area of 13 standard acres and 3 1/2 units was handed over to the respondent on June 17, 1957; that entry regarding delivery of possession of the aforesaid 28 kila numbers was made by the Patwari in the Roznamcha Waqaati on June 17, 1957; that entries exist in khasra girdawaries of village Bahmniwala regarding the respondent 's possession of the aforesaid fields from June 17, 1957 upto Rabi 1960 when due to carelessness on the part of the Consolidation Officer, Ratia, Rectangle No. 133 (kila Nos.
4min, 5min, 6min, 7min, 14min, 15, 16, 17min, 24 and 25) and Rectangle No. 134 (kila Nos.
8min, 9min, 18min, 19min, 20, 21min and 22min) which were allotted in exchange of the aforesaid 28 kila numbers were entered not in the name of the respondent but in the kurrah of the Custodian and subsequently due to the carelessness on the part of the Naib Tehsildar cum Managing Officer were allotted to Madan Mohan Singh and others.
In view of the foregoing, we are of the opinion that the respondent has succeeded in establishing that permanent proprietary allotment of the aforesaid 28 kila numbers of village Bahmniwala was validily made in his favour vide aforesaid allotment order dated March 1, 1957.
Accordingly, we have no hesitation in holding that the respondent had an enforceable right in respect of the aforesaid 28 kila numbers of village Bahmniwala.
In view of our aforesaid finding that permanent proprietary allotment of the aforesaid 28 kila numbers was validly made in favour of the respondent which conferred an enforceable right on him, the answer to the second question cannot but be in the negative.
The view that we have formed is reinforced by the provisions of section 19 of the and Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 which provide as under: "19.
Powers to vary or cancel allotment of any property acquired under this Act. (1) Notwithstanding anything contained in any contract or any other law for the 1293 time being in force but subject to any rules that may be made under this Act, the managing officer or managing corporation may cancel any allotment or amend the terms of any allotment under which any evacuee property acquired under this Act is held or occupied by a person, whether such allotment was granted before or after the commencement of this Act. " 102.
Cancellation of allotments : "A managing officer or a managing corporation may in respect of the property in the compensation pool entrusted to him or to it, cancel an allotment or vary the terms of any such allotment if the allottee (a) has sublet or parted with the possession of the whole or any part of the property allotted to him without the permission of a competent authority, or (b) has used or is using such property for a purpose other than that for which it was allotted to him without the permission of a competent authority, or (c) has committed any act which is destructive of or permanently injurious to the property, or (d) for any other sufficient reason to be recorded in writing.
Provided that no action shall be taken under this rule unless the allottee has been given a reasonable opportunity of being heard." Though in view of the above quoted provisions, it may, in certain contingencies, be open to the Managing Officer or Managing Corporation to cancel the allotment under the aforesaid section 19 of the read with Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955, it cannot be done unless an allottee is given a reasonable opportunity of being heard.
In the present case, it is clear from the record that no action for cancellation of allotment was taken under the aforesaid provisions of the Act and the Rules.
It is not understood how without complying with the aforesaid provisions, the Naib Tehsildar cum Managing Officer allotted the aforesaid parcel of land which already stood allotted in the name of the respondent to the appellants.
The action on the part of the Naib Tehsildar cum Managing Officer was evidently in flagrant violation of the clear and unequivocal provisions of law.
Accordingly, 1294 we agree with the High Court that the impugned orders are manifestly illegal, arbitrary, unjust and cannot be sustained.
However, taking into consideration all the facts and circumstances of the case particularly the fact that the appellants appear to have purchased the area in question from Madan Mohan Singh for a huge sum of Rs. 40,000/ and invested a considerable amount on the construction of a house, we think that it will be eminently just and fair if the appellants are allowed to retain Rectangle No. 134 comprising kila Nos.
8min, 9min, 10min, 11, 12, 13min, 18min, 19min, 20, 21min and 22min on which their house also stands and Rectangle No. 133 comprising kila Nos.
4min, 5min, 6min, 7min, 14min, 15, 16, 17min, 24 and 25 is given over to the respondent.
The learned counsel for the parties also agree to this course being adopted in the interest of justice.
The respondent shall be at liberty to approach the settlement authorities for allotment of some other suitable land in lieu of Rectangle No. 134 comprising kila Nos.
8min, 9min, 10min, 11, 12, 13min, 18min, 19min, 20, 21min and 22min to make up the deficiency, if any, in the land to which he may be entitled and if the latter i.e. the settlement authorities find that the area already held by the respondent if added to the area now ordered to be given to him still falls short of his entitlement, they will be free to allot him an area which will make up his unsatisfied claim provided he is found otherwise authorised to hold the said area on allotment or occupy the same under any other law in force in the State.
The allotment of the area to which the respondent may be found entitled to shall, as far as possible, be made in the vicinity of the area already held by him.
Subject this modification, the rest of the judgment and order of the High Court will stand.
The appeal is disposed of accordingly.
| The respondent, who was a displaced person from West Pakistan, was allotted certain land in India and was given its possession.
At the time of consolidation of holdings in 1960 the Consolidation Officer included a part of this land comprising 13 odd acres in the area of the Custodian.
The respondent 's representations protesting against the action of the Consolidation Officer having failed at the different levels, the respondent moved the High Court under article 226 of the Constitution.
The High Court set aside the impugned orders of the Consolidation Officer on the ground that they were wholly without jurisdiction and that the concerned officer was not authorised to allot to the appellant the land which was already comprised in a subsisting valid allotment made to the respondent.
On the question whether the land in dispute which had already stood allotted in favour of the respondent could be allotted in favour of others without notice to the respondent and without affording an opportunity of being heard.
^ HELD: The respondent had succeeded in establishing that permanent proprietary allotment of the land in dispute was validly made in his favour.
Therefore the respondent had enforceable right in respect of the land and it could not be allotted in favour of others.
[1292F G] Although in certain contingencies it would be open to the Managing Officer or the Managing Corporation to cancel the allotment under section 19 of the read with Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules 1955, it can not be done unless the allottee is given a reasonable opportunity of being heard.
[1293F] In the instant case no action for cancellation of allotment was taken under the provisions of the Act and the Rules.
The action of the Naib Tehsildar cum Managing Officer in allotting to the appellant the land which had already stood in the name of the respondent without complying with the relevant provisions of the Act was in flagrant violation of the provisions of the law.
Therefore, the impugned orders were manifestly illegal, arbitrary and unjust and could not be sustained.
[1293H]
|
ION: Civil Appeal No. 864 of 1987.
From the Judgment and Order dated 23.5.1986 of the Allahabad High Court in C.M.W.P. No. 13975 of 1985.
M.K. Ramamurthi and A.K. Sangal for the Appellant.
Anil Dev Singh, G.B. Pai, O.P. Sharma, Mrs. Shobha Dikshit, R.C. Gubrela, K.R. Gupta and R.K. Sharma for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant has questioned in this appeal by special leave the constitutional validity of sub section (4) of section 6 of the U.P. (hereinafter referred to as 'the Act ') and also the validity of the Order dated December 5, 1984 passed by the Government of Uttar Pradesh remitting an award passed by the Labour Court, Meerut for reconsideration by it.
The appellant was an employee of the Management, M/s. Electra (India) Ltd., Meerut Respondent No. 5 in the above appeal.
The services of the appellant were terminated by the Management by its Order dated April 4, 1977 and the said termination led to an industrial dispute.
The State Government by its Order dated May 5, 1979 made under section 4 K of the Act referred the said dispute for adjudication to the Labour Court, Meerut.
The question which was referred to the Labour Court read as follows: "Whether the termination/removal from work of the employee Shri B.P. Rajwanshi by the employers by their Order dated 4.4.1977 is justified and/or legal? If not, to 474 what benefits/damages is the concerned employee entitled to and with what other details?" On the basis of the pleadings filed by the parties, the following issues were framed by the Labour Court: 1.
Was Shri B.B. Rajwanshi not a workman as defined in the U.P. ? If so has this court jurisdiction to try this case? 2.
Did Shri B.B. Rajwanshi not make efforts to minimise the losses due to unemployment? 3.
To what relief, if any, is Shri B.B. Rajwanshi entitled? 4.
Has Shri B.B. Rajwanshi been retrenched? If so, how does it affect the case? After recording the evidence adduced by the parties and hearing the arguments the Labour Court held, (i) that the appellant was a workman as defined in the Act, (ii) that the termination of the services of the appellant was illegal and (iii) that the appellant was entitled to be reinstated in his post with continuity of service and also to the payment of backwages and other benefits.
The Labour Court accordingly passed an award on August 2, 1984 and forwarded it to the State Government.
| % One hundred seats out of the total seats available in the M.B.B.S./B.D.S. courses were reserved for the Scheduled Castes and Scheduled Tribes candidates, for whom the Indian Medical Council had prescribed by its Regulation II a minimum of 40 per cent marks for eligibility of admission.
The Government of Punjab by a notification (dated May 8, 1987) lowered the percentage of the pass marks for the said candidates from 40 per cent to 35 per cent as against a minimum of SO per cent marks for the general category candidates.
on the basis of selection test held, only 32 qualified candidates of the reserved category were available.
The prospectus published by the university for the competitive examinations provided that the seats left vacant in any reserved category owing to the non availability of the eligible candidates may be filled up from the eligible candidates of the general category.
Accordingly, the remaining seats (out of 100) should have reverted to the general pool of the eligible candidates.
But the government issued an order (dated July 28, 1987) whereby the percentage of pass marks for the Scheduled Castes and Scheduled Tribes candidates was lowered from 35 per cent to 25 per cent (for the 1987 session only).
The appellants challenged the above said orders of the government before the High Court which dismissed the Writ Petition filed by them.
The appellants appealed this Court by special leave.
Dismissing the appeal, the Court, 245 ^ HELD: If the Regulation 11 of the Indian Medical Council is found to be binding, then the impugned orders of the government would be bad, but the Regulation is merely in the nature of a recommendation and the language used in the Regulation is deliberate, intended to indicate the intention of the Council, as inter alia held by a three Judge Bench of this Court in The State of M.P. and Anr.
vs Kumari Nivedita Jain and Ors., ; That was a similar case as this one, and the appellants are not entitled to make any grievance on this score.[249D: 250] The State Government had intended that 100 seats should go to the candidates of the scheduled castes and scheduled tribes.
When that number of the candidates has not available, reduction in the qualifying marks had to be effected, and the government 's action cannot be said to be arbitrary.
[251 D E] After the percentage in the qualifying standard was reduced, all the remaining 68 seats have been filled up by the scheduled castes and scheduled tribes candidates and teaching has begun.
These 68 candidates are not before the Court, not having been impleaded.
It is not open to the Court to cancel their admission behind their back, nor would it be possible to require the State Government to create additional seats to accommodate the appellants.
[251F] OBSERVATION: The standard of medical profession should not be compromised in the national interest.
There has been a perceptible fall in the national standards and general efficiency of the professional men.
While it is not necessary to say anything against reservation, the Court approves of the concern shown by the Indian Medical Council that high standards of efficiency should be maintained, and that can only be possible if the State and the Council cooperate to maintain a high standard.
This aspect should be kept in view when the guidelines are prescribed for the selection of the students for the medical courses.
The impugned notification of the State Government shows that the reduction is confined to one year 1987 only.
It is hoped there would be no necessity for a repetition of this action.
[251G H; 252A B] State of M.P. and Anr.
vs Kumari Nivedita lain and Ors.
; , ; State of Kerala vs Kumari T.P. Roshana & Anr. ; and Krishna Priya Ganguly etc.
vs University of Lucknow & 246 Ors.
; , , referred to.
|
Criminal Appeal No. 393 of 1979.
From the Judgment and Order dated 26.4.1979 of the Tamil Nadu High Court in Criminal Appeal No. 197 of 1978 and Crl.
Revision Case No. 833 of 1977.
U.R. Lalit and K.R. Choudhary for the Appellants.
K.V. Venkataraman for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Parusuraman @ Velladurai, Karuppaiah, Nagasundaram and four others (hereinafter referred to as A1 to A7) were tried for the murder of one Jawahar.
Three charges were framed against them.
A7 was charged under Section 302 read with Section 109, I.P.C. for instigating A1 to 6 to commit the murder.
The second charge related to rioting wherein A1, A2, A4, A5 and A3, A6 were tried under Sections 147 and 148 I.P.C. respectively.
The third charge under Section 302 read with Section 149, I.P.C. was against Al to A6 on the allegations that Al, A2, A4 and A5 armed with sticks, A3 armed with aruval (bill hook) and A6 armed with vel stick (spear stick), attacked Jawahar at about 8.30 A.M. on January 2.8, 1977 and caused him multiple injuries as a result of which he died on the same day.
All the ac cused persons were acquitted by the learned Trial Judge.
On appeal the High Court maintained the acquittal of A4 to A7 but reversed the findings in respect.
of A1to A3.
Believing the prosecution evidence, the High Court came to the conclusion that the commission of offence by A1 to A3 was proved.
They were convicted under Section 304 Part I read with Section 34, I.P.C. and were sentenced to undergo rigor ous imprisonment for five years.
This appeal by A1 to A3 via special leave petition is against the judgment of the High Court.
While granting special leave to appeal this Court by its order dated August 10, 1979 allowed bail to the appel lants.
We have heard learned counsel for the parties.
We agree with the High Court that the participation of the appellants in the occurrence which resulted in the death of Jawahar has been proved beyond doubt.
We are, however, of the view that keeping in view the nature of injuries on the person of the deceased and the facts and circumstances of this case the 3 offence committed by the appellants come within the mischief of Section 325 read with 34, I.P.C. Thirteen external in juries were found on the dead body of Jawahar.
Out of those 11 were on lower legs and arms.
The High Court while consid ering the nature of offence observed as under: "These accused and their associates who be set themselves on Jawahar could never have intend ed to cause the death of Jawahar for, if such was their intention, they could have certainly killed him especially after carrying him into the cholam field and left him dead there instead of merely causing simple and grievous injuries to him.
Even with reference to the aspect whether the accused persons could have, intended to cause such injuries as would be sufficient, in the ordinary course of nature, to cause death, we are not able to give a finding in favour of the prosecution.
Even according to Jawahar 's statement (Exhibit P 6) all that first accused had remarked was that the attack on him was in retaliation for the injuries Jawahar had caused on the first accused a few weeks earlier.
" Agreeing with the above observations of the High Court we are of the opinion that the intention of the appellants was to cause grievous hurt and as such the offence committed by them comes within the parameters of Section 325, I.P.C. We, therefore, set aside the conviction and sentence of the appellants under Section 304 Part I, I.P.C. read with Sec tion 34, I.P.C. and instead convict them under Section 325, I.P.C. read with Section 34, I.P.C. We impose the sentence of imprisonment already undergone by the appellants.
We also impose the sentence of Rs. 7,000 each as fine on the appel lants.
The appellants shall deposit Rs. 7,000 each before the Trial Court within four months from today.
In the event of non payment of fine the appellants shall undergo rigorous imprisonment for five years.
The amount of Rs. 21,000 rea lised as fine from the appellants be paid to the father/mother of deceased Jawahar.
In the event of none of them surviving the amount shall be paid to Indra sister of deceased Jawahar.
The appeal is disposed of in the above terms.
V.P.R Appeal disposed of.
| The appellant Housing Board, which had entered into four contracts with the respondent for construction of tenements within a certain time limit, terminated them after giving notice on the ground that the respondent had failed to complete the construction work despite several extensions granted to him, and filed a suit in the Court of Civil Judge claiming damages of over Rs.4 lakhs.
The respondent filed appllcations under Sections 34 and 20 of the , for stay of the suit and for directions to the appellant Board for filing the arbitration agreement in the Court and also for appointing arbitrator in terms of clause 25 of the agreement.
As per Court 's order, the appellant filed the agreement in the Court and appointed the Arbitra tor.
The Arbitrator made four awards granting the claims of the respondent to the extent of over Rs.8 lakhs and filed them in the Court for making them Rule of the Court.
The appellant 's objections for setting aside the awards on the ground that the Arbitrator had misconducted himself by not framing the main issue, viz., whether or not the claimant abandoned the work and thereby committed the breach of the agreement, by ignoring the letter of termination where in it was clearly stated that the termination had been done on account of the abandonment of the work by the claimant, and failed to decide upon the question of the abandonment of work and wholly side tracked the issue and also by not giving reasons for the award as required under the agree ment, under which he was appointed, were rejected by the Civil Court, which confirmed the awards and made them the Rule of the Court.
The appellant 's appeals against this decision was allowed by the High Court, which set aside the Civil Court 's order and sent back the awards to the arbitra tor for giving reasons, as required under clause 25 of the agreement which specifically provided that in all cases where amount of 905 claim was Rs.50,000 and above, the Arbitrator was bound to give reasons.
In the appeal before this Court, on behalf of the appellant Housing Board it was contended that having held that the arbitrator was guilty of misconduct and the awards were liable to be vitiated on that ground, the High Court ought to have set aside the awards instead of sending them back for recording reasons, which was totally unwarranted by law.
On behalf of the respondent, it was contended that the High Court 's order remanding the awards for recording rea sons clearly fell within the purview of Sec. 16(1)(c) of the , as the objection to the legality of the award was apparent on the face of it, and not within the provisions of Sec.
30 of the Act, inasmuch as the arbitrator had not misconducted himself or the proceedings and the awards in question had not been improperly procured.
Dismissing the appeals and confirming the awards, this Court, HELD: 1.1 Section 16 empowers the Court to remit the award to the Arbitrator for reconsideration only in three cases specified therein.
Clause (c) of Sub Section (1) provides that the award shall be remitted to the Arbitrator by the Court where an objection to the legality of the award is apparent on the face of it.
[710D] 1.2 No doubt, in the instant case, the High Court has come to a finding that the Arbitrator was guilty of miscon duct for his failure to give reasons as required but there is nothing to show that the Arbitrator misconducted himself or the proceeding in any other manner, nor is there anything to show that the awards have been improperly procured nor any allegation, far less, any finding, that the Arbitrator was biased or unfair or he had not heard both the parties or he had not fairly considered the submissions of the parties in making the awards in question.
[710E] 1.3 It is evident from the four awards made by the Arbitrator that the Arbitrator has considered all the spe cific issues raised by the parties in the arbitration pro ceedings and came to his finding after giving cogent rea sons.
The awards cannot under any circumstances be consid ered to be made by the Arbitrator without recording any reasons for the same.
In such circumstances, it cannot be held that the Arbitrator has misconducted himself or in the proceedings in the matter 906 of giving the awards.
The decision of the High Court remit ting the awards back to the Arbitrator for giving reasons is set aside and the awards made by the Arbitrator are upheld and made Rule of the Court.
[710F G, 711A]
|
vil Appeal No. 13041305 of 1987.
From the Judgment and Order dated 7.1.1987 of the Cus toms Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 1120/83 C and 1806 of 1983 C. Soli J. Sorabjee, Ravinder Narain, A.N. Haksar, P.K. Ram and D.N. Misra for the Appellant.
A.K. Ganguli, P. Parmeshwaran, A. Subba Rao and Ms. Sushma Suri for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
These are appeals under section 35L of the (hereinafter referred to as 'the Act ').
The appellant, Tata Oil Mills Company Limited, is engaged in the manufacture of various varieties of soaps.
The present dispute has arisen in relation to its factory at Ghaziabad in the State of Uttar Pradesh.
The dispute pertains to the eligibility of the appellant to the concession granted by the Central Government under Rule 8(1) of the Central Excise Rules, 1944 through notifi cation No. 46 of 1972, subsequently amended by the notifica tion nos.
153 of 1973 dated 24.7.73 and 25 of 1975 dated 1.3.75.
Even though there are three notifications, the point is common and both the appeals involve the same question.
841 The question arises this way.
Ad Valorem excise duty at 20% is levied on soap which falls under item 15 of the first schedule to the Act.
Notification No. 46 of 1972 exempts "such soap as is made from indigenous rice bran oil or or from a mixture of such oil with any other oils from so much of the duty of excise leviable thereon as is equivalent to the amount of duty calculated at the rate of one rupee and fifty paise per metric tonne of such soap for each addition al percentage point increase in the use of such rice bran oil which is in excess of fifteen per cent of the total oils used in the manufacture of such soap.
" To put it in simpler words, the notification intends to grant a concession where the percentage of the rice bran oil used in the manufacture of soap exceeds fifteen per cent of the total oil consump tion in the manufacture.
The extent of exemption is graded according to the percentage of rice bran oil in excess of fifteen per cent.
For example, if the rice bran oil is twenty per cent of the total oils used in the manufacture, the duty exemption will be Rs.7.50 per metric tonne of soap manufactured.
The 1973 notification is on the same lines with the only difference that the duty exemption per metric tonne is Rs.7.50 instead of Rs. 1.50.
The notification of 1975 raised the percentage of rice bran oil referred to in the 1972 notification from fifteen per cent to twenty five per cent but reduced the duty rebate from Rs.7.50 to Rs.3.50 per metric tonne.
Another notification No. 118/75 has been referred to in the papers before us but it has no relevance to the question that falls to be decided here and is left out of account.
The difficulty in the interpretation has arisen because the process of manufacture of soap in the assessee 's factory at Ghaziabad did not involve the use of rice bran oil as such.
This factory manufactured soap from rice bran fatty acid.
The rice bran fatty acid was extracted from rice bran oil in the assessee 's factory elsewhere.
Incidentally, it may be mentioned that the other factory is also licensed under the Excise Act for the manufacture of rice bran fatty acid.
The excise authorities rejected the appellant 's plea for exemption under the first three notifications on the ground that rice bran fatty acid and rice bran oil are technically and commercially two separate commodities.
It was pointed out that the concession under the notifications is available only where soap is made from indigenous rice bran oil and other oils.
This meant that rice bran oil must form part of the process of manufacture of soap in the factory which is manufacturing the soap and claiming the exemption.
The notification will not apply merely because the soap is manufactured out of rice bran fatty acid which in turn has been obtained by hydrolysis of rice bran oil in a different factory (may be one belonging to the same asses see which is a separate 842 unit of manufacture for purpose of excise duty).
The Tribunal confirmed this view.
It considered the terms of notification No. 25/75 and held: "We observe that the concession given under notification No. 25/75 is apparently with a view to encourage the use of rice bran oil in the soap industry.
The point for consideration is whether the rice bran oil for the purpose of benefit of notification should be brought into the factory of manufacturer as such and then subjected to various pretreatments re quired for its use in the soap industry or whether the same could be treated outside the factory and the necessary fraction of the rice bran oil namely rice bran fatty acid required for the manufacture of soap alone could be brought into the factory as raw material and concession availed.
It is not denied that for the use of rice bran oil, the same has neces sarily to be pre treated first and rice bran fatty acid is required to be separated from glycerine.
The appellants in the instant case have only brought in the rice bran fatty acid which has been obtained from rice bran oil by a process of pre treatment in one of their other factories.
It is seen that the Govern ment of India have clarified vide their letter No. P/92/2/72 CH.
III dated 18.7.74 that rice bran oil as such sometimes cannot be used directly and has to be subjected to pre treat ment before use in the manufacture of soap and that the exemption will be admissible in respect of rice bran oil even after pretreat ment for use in the manufacture of soap.
Thus we find that the pre treatment of rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap.
The short point therefore is whether such treatment should be done in the factory of the manufacturer or could be arranged to be done outside.
In the scheme of Central Excise, the various concessions, levies etc., are in respect of products manufactured by a particu lar licencee in the manufacturing unit so licensed and the necessary mechanism of con trols and accountability is with reference to a particular licensee and the manufacturer.
The eligibility to or the concessional assess ment of a product manufactured by the manufac turer has to be determined with reference to the particular manufacturer subject to the fulfilment of the conditions as may be set out in the rele 843 vant concessional notification.
In the instant case, a verification will be required to be done in respect of the following: (1) The nature of the oil used whether rice bran oil or otherwise; (2) The quantum used; (3) the processes of pre treatment carried out on ,the rice bran oil and the fraction thereof used for the soap making.
Now, if the rice bran oil has been pre treated outside the appellant 's factory, it is not possible for (the) jurisdictional authority to verify the facts in regard to above." The Tribunal observed that concessional rates are allowed as incentives for use of certain raw materials and these rates are determined after taking into consideration the economics of operation involving the use of the said material in the manufacturing process in the manufacturer 's factory.
Holding that the notification did not envisage the use of rice bran fatty acid and it is the rice bran oil which is required to be used in the manufacture of soap for concessional assess ment purposes, the Tribunal dismissed the appeals of the assessee.
Hence these appeals.
We are of opinion that the view taken by the Excise Authorities as well as by the Tribunal proceeds upon too narrow an interpretation of the notification.
It is true, as Mr. Ganguli contended, that an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption.
But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects: (a) the object and purpose of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted.
So far as (b) is concerned, it is common ground before us that rice bran oil as such is not directly used in the manufac ture of soap.
Rice bran oil contains glycerol and other impurities which have to be removed by a process of hydroly sis or hydrogenation and it is only the resultant purified rice bran oil that is actually used in the manufacture of soap.
In fact, the Tribunal has given a clear finding that a pre treatment to rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap.
844 Thus even a factory which consumes rice bran oil in the manufacture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter.
So far as (a) is concerned, the object of the notification as even the Tribunal finds is to grant a concession to a manufacturer of soap who manufac tures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture.
If these two aspects are considered together, it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which produces the soap.
The requirement is that the soap manufac ture should, to a prescribed extent, be from rice bran oil as contrasted with other types of oil.
The contrast is not between the use of rice bran oil as opposed to rice bran fatty acid or hydrogenated rice bran oil; the contrast is between the use of rice bran oil as opposed to other oils.
That is the ordinary meaning of the words used.
These words may be construed literally but should be given their fullest amptitude and interpreted in the context of the process of soap manufacture.
There are no words in the notification to restrict it to only to cases where rice bran oil is directly used in the factory claiming exemption and to exclude cases where soap is made by using rice bran fatty acid derived from rice bran oil.
The whole purpose and object of the notification is to encourage the utilisation of rice bran oil in the process of manufacture of soap in preference to various other kinds of oil (mainly edible oils) used in such manufacture and this should not be defeated by an unduly narrow interpretation of the language of the notification even when it is clear that rice bran oil can be used for manufacture of soap only after its conversion into fatty acid or hydrogenated oil.
The position will perhaps become clearer if we consider a case where an assessee manufactures soap out of hydroge nated rice bran oil (which process of hydrogenation, again, is akin to the process of hydrolysis which yields rice bran fatty acid).
The assessee will then be clearly entitled to the exemption under the notification inasmuch as the hydrog enated rice bran oil does not cease to be rice bran oil.
See in this connection: Tungabhadra Industries Ltd. vs C.T.O., ; and Collector of Central Excise vs Jayant Oil Mills etc.
,(CA 729 of 1983 and 2479 of 1987, decided by this Court on 31.3.89).
The answer cannot be different where rice bran oil is treated to yield rice bran fatty acid before soap is manufactured even if it be assumed that, unlike hydrogenated oil the fatty acid is, commercially speaking, a different commodity.
We are, therefore, of opinion that, construing the notifications literally but reasonably in the light of the process of manufacture is explained by the Tribunal, the soap manufactured by 845 the assessee is "soap made from indigenous rice bran oil" and is entitled to the exemption under the notifications to the extent permissible thereunder.
Reference was made, in the course of the arguments before us, to a tariff advice issued as early as July, 1974 by the Ministry of Finance in relation to the notification of 1972.
It reads as under: "I am directed to invite a reference to this Ministry 's notification No. 46/72 C.E. dated the 17th March, 1972, which grants exemption from duty on soap which is produced from rice bran oil or from a mixture of rice bran oil and other oils.
It has been brought to the notice of this Ministry that the benefit of exemption is not being allowed by the Central Excise Officers where rice bran oil or oil mixture is hydrogenated or pre treated before the soap is produced.
The matter has been considered in detail with the concerned authorities and keeping in view the technical opinion tendered by them that rice bran oil as such sometimes cannot be used directly and has to be pre treated before use in the manufac ture of soap, it is hereby clarified that the exemption will be admissible when the rice bran oil is, after processing or pre treat ment, used in the manufacture of soap.
In this connection it may be stated that the exemption Notification does not preclude any processing or pre treatment including hydrogenation in the manufacture of soap if such processes are incidental and ancillary to the manufacturing operating." (Underlining ours) This circular clarifies that the exemption will be admissi ble when the rice bran oil after processing or pre treat ment that is to say, when hydrogenated rice bran oil or rice bran fatty acid is used in the manufacture of soap.
But the counsel for the Union of India would have it that the circular postulates such exemption only where the pre treatment or processing is done is the same factory.
He invites attention to the last sentence of the circular, underlined by us above.
We do not think this is the correct interpretation of the circular.
In the first place, it will be noticed that the circular does not specifically say that the pre treatment or processing should be in the same facto ry of the assessee.
Secondly, no clarification by a circular or tariff advice is at all necessary to cover cases where the conversion from rice bran oil into rice bran fatty acid is done in the same factory for, to such a case, 846 the notification will clearly apply.
If it had been the intention to pin down the concession to cases where the pre treatment or processing is part of the manufacturing process within the same factory, the last sentence would not have stated the obvious but would have read something like this: "In this connection it is emphasised that the exemption notification precludes any process ing or pre treatment, including hydrogenation in the manufacture of soap, except where such processes are incidental and ancilliary to the manufacturing operations.
" The Tribunal has pointed out that the notification refers to the percentage of rice bran oil consumption and that, unless such oil is directly used in the factory, it will not be possible to work back, from the weight of fatty acid used by the assessee, the weight of rice bran ' oil out of which such acid had been obtained.
There are two answers to this objection.
One is that, if what we have stated is the correct interpretation of the notification, the mere fact that there may be some difficulty in ascertaining the weight of oil, cannot be a justification to refuse to give effect to that interpretation.
The second is that a practi cal solution to this difficulty has in fact been evolved and that, too, in the case of the same assessee.
Our attention has been invited to a circular issued by the Assistant Collector, Ernakulam II dated 23.6.77.
This circular states that the matter had been considered pursuant to an appellate order passed in one of the cases relating to the same asses see and it had been decided to fix the formula for arriving at the correlation between rice bran oil on the one hand and hydrogenated rice bran oil or rice bran fatty acid on the other as below: (a) 100 M.T. of hydrogenated = 100 MT of rice bran oil rice bran oil (b) 100 M.T. of Fatty acid = 115 MT of raw rice bran oil The circular refers to the fact that the present assessee (in relation to its Cochin factory) had accepted the above said formula and that the formula as given above was, there fore, "finally fixed in arriving at the rice bran oil con tents of hydrogenated rice bran oil and of rice bran fatty paid for ascertaining the amount of exemption as per notifi cation nos.
45 and 46 of 1972".
It is true that this is only a local instruction issued by certain assessing authorities in Cochin.
It is being referred to only show that there is no insuperable difficulty in ascertaining the weight of rice bran oil that that has been converted into fatty acid and thus 847 entered the process of manufacture in the assessee 's factory particularly in view of the fact that even the process of conversion of rice bran oil into fatty acid or hydrogenated oil is carried but in a factory subject to excise jurisdic tion.
The appellant has drawn our attention to certain ex tracts from a letter of the Ministry of Finance dated 6.4.76.
It poses the problem thus: "A doubt has been raised whether rebate of Central Excise duty would be admissible under Notification No. 24 and 25/75 CE, dated 1 3 75 (predecessor Notification Nos. 45 and 46 of 1972) where rice bran oil and other minor oils are hydrogenated in one factory and sent to another factory for manufacture of soap.
" The answer furnished is this: "The matter has been considered in the Minis try and it is felt that the purpose of rebate scheme of rice bran oil as well as other minor oils envisaged in the Notifications Nos. 24/75 and 25/75 (including their predecessor notifi cations) is to encourage the use of inedible oils in the manufacture of soap so as to relieve the pressure on edible oils.
In Board 's letter F. No. 92/2/72 CX.
3 dated 18 7 74 and F. No. 92/6/74 CX. 3, dated 27 12 74, it was clarified that in respect of rice bran oil as well as other minor oils where such oils are subjected to various treatments, including hydrogenation, such treatment would not debar them from the rebate scheme in as much as such processing is essen tial in the process of manufacture of soap.
As the notifications in question permit the rebate subject to identification of the oil as such, had the manufacturer placed the matter before the concerned Collector pointing out his practical difficulties, the Collector would have advised for suitable documentation (if the existing documentations are not enough) for the receipt, processing, movement and accounting of the oils for the concession in question.
In the circumstances, it is felt that the benefit of rebate cannot be denied to the manufacturers for want of prescribing a satisfactory procedure, especially, when it is contended by the manufacturers that they have opted for 848 the rebate scheme, their factories are under excise control, they have sufficient documen tary evidence about the receipt, processing, movement, incorporation/use in the manufacture of soap.
If, as contended by the manufactur ers, there is sufficient record maintained by them for excise purposes and the reasonable correlation is possible about the identity and use of such oils it would not be correct to deny the concession.
In this connection, it is of relevance to mention that a problem of similar nature had arisen with reference to some other excisable product and the Law Ministry was also consulted.
An extract of their opinion is appended.
It is, therefore, requested that taking into account the local practical situations existing in his jurisdic tion, the Collector may prescribe suitable procedures for identification of such oils for a meaningful implementation of the Rebate Scheme.
A copy of the Trade Notice issued in this regard by the Collector may be sent to DICCE under intimation to this Ministry.
" Following this, trade notices were issued on 25.8.76 and 8.2.77 in certain central excise jurisdiction, the relevant portion of which reads thus: "A doubt has been raised whether the rebate on Central Excise Duty would be admissible under Notification No. 40/72 CE & 46/72 CE both dated 17.3.72 as amended, where the Rice Bran Oil and other Minor Oils are hydrogenated in one factory and sent to another factory for use in the manufacture of soap.
It has been clarified that in respect of Rice bran oil and other Minor oils where such oils are subject to various treatment, including hydrogenation, such treatment would not debar them from the rebate scheme as envisaged in the above said Notifications.
" The trade notice proceeds to set out the procedural safe guards to be followed in granting this relief which are unnecessary for our purpose.
We endorse this as embodying the correct approach to the issue in this case. "This related to a claim of exemption in respect of ferti lisers (super phosphates) manufactured from sulphuric acid in a case where sulphuric acid was converted elsewhere into phosphoric acid and then used for the manufacture of the chemicals.
849 We are, therefore, of the view that the terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee itself.
The question which one has to ask is: does the assessee manufacture soap partly or wholly out of indigenous rice bran oil? and the answer, we think, can only be in the affirmative.
We therefore hold that that the assessee is entitled to the exemption under the notifications referred to above and that the departmental authorities and the Tribunal erred in not granting the said exemption to the assessee.
The appeals are, therefore, allowed.
However, in the circumstances of the case, we make no order as to costs.
R.N.J. Appeals allowed.
| The respondent, and employee in the Posts and Telegraph Department, was retired from service under Rule 2(2) of the Liberalised Pension Rules, 1950 which empowered the Govern ment to retire a servant at any time after he had completed 30 years of qualifying service.
The respondent 's writ peti tion in the Allahabad High Court was dismissed by the learned Single Judge holding that there was no infirmity in the Rule.
The Division Bench, however, accepted the Special Appeal filed by the respondent and declared Rule 2(2) in valid.
Before this Court, it was contended on behalf of the appellant that the Government of India had issued instruc tions dated July 11, 1955 and February 8, 1956 which laid down that the retirement under Rule 2(2) of the Pension Rules should be effected when such retirement was necessary in public interest.
It was further contended that the Minis try of Home Affairs Memorandum dated November 30, 1962 which was issued in the name of the President of India, was statu tory and had the effect of amending Rule 2(2) of the Pension Rules, and reading the rule and the memorandum together the power under Rule 2(2) could only be exercised to weel out unsuitable employees.
Dismissing the appeal, this Court, HELD: (1) Central Government servants superannuate at the age of 58 years.
The Government has the absolute right under Rule 56(j) of 797 Fundamental Rules to prematurely retire a servant in 'Public Interest ' after he has attained the age of 55 years.
The Government has also the power under Rule 2(2) of the Libera lised Pension Rules to retire a servant at any time after he has completed 30 years of qualifying service.
[798H 799A] (2) Fundamental Rule 56(j) while granting absolute right to the Government provides that such power can only be exercised in 'Public Interest '.
This guide line is suffi cient safeguard against the arbitrary exercise of power by the Government.
The object of this Rule is to chop off dead wood.
Rule 2(2) of the Pension Rules on the other hand provides no guide line and gives absolute discretion to the Government.
There is no requirement under the rule to act in 'Public Interest '.
[799E F] (3) Although the rules are mutually exclusive and have been made to operate in different fields but the operational effect of the two rules is that a Government servant who has attained the age of 55 can be retired prematurely under F.R. 56(j) only on the ground of 'Public Interest ' whereas anoth er Government servant who is only 51 and has completed 30 years of qualifying service, can be retired at any time at the discretion of the Government under Rule 2(2) of the Pension Rules.
Any Government servant who has completed 30 years of qualifying service and has not attained the age of 55 years can be picked up for premature retirement under Rule 2(2).
Since no safe guards are provided in the Rule, the discretion is absolute and is capable of being used arbitrarily and with an un even hand.
Rule 2(2) of the Pension Rules is therefore ultra vires Articles 14 and 16 of the Constitution of India.
[799G, 800B C] (4) A statutory rule cannot be modified or amended by executive instructions.
A valid Rule having some lacuna or gap can be supplemented by the executive instructions, but a statutory rule which is constitutionally invalid cannot be validated with the support of executive instructions.
The instructions can only supplement and not supplant the rule.
[800E] (5) The Ministry of Home Affairs, Memorandum dated November 30, 1962 has not been issued under Article 309 of the Constitution of India and as such cannot be statutory.
The memorandum is in the nature of executive instructions issued in the name of the President of India as required under Article 77(1) of the Constitution of India.
[801D] 798 Union of India & Ors.
vs R. Narasimhan, A.I.R. 1988 S.C. 1733,
distinguished
|
: Petitions for Special Leave to Appeal (Criminal) Nos. 1090 91 of 1989.
From the Judgment and Order dated 8.5.1989 of the Delhi High Court in Misc.
Appln.
No. 106/89 & 107/1989.
U.R. Lalit, Tushar Shah and B .V.
Desai for the Petitioners.
J.S. Arora and Satish Agarwala for the Respondent.
After filing of the charge sheet the High Court ordered their re arrest by cancelling the bail.
The order of 379 the High Court is now under challenge.
I do not find any merit in these petitions.
But before dismissing, I wish, however, to draw attention to some aspects of the question raised.
The facts: On 23 March, 1988 the petitioners were arrested in Bombay by officers of the Narcotic Control Bureau.
They were ordered to be produced before the competent Magistrate at New Delhi.
They were accordingly produced before the Addi tional Chief Metropolitan Magistrate, New Delhi.
On 29 March, 1988 they were remanded to jail custody till 12 April, 1988.
The remand order was subsequently renewed from time to time.
On 10 May, 1988 the petitioners moved the Chief Metropolitan Magistrate for bail.
When that petition was pending consideration, the prosecution submitted charge sheet.
The charge sheet was filed on 23 June, 1988 for offences under Sections 21, 23 and 29 of the .
On July 22, 1988 the petitioners filed an application for bail under Section 167(2) Cr.
P.C. on the ground that the charge sheet was filed after the expiry of 90 days of their arrest.
On 29 July, 1988 learned Magistrate enlarged them on bail on their furnishing self bonds in the sum of Rupees two lakhs each with two surety bonds in the sum of Rs. 1 lakh each.
The efforts of the prosecution to have the bail can celled could not succeed before learned Magistrate.
So they moved the Delhi High Court under Section 439(2) read with section 482 of the Cr.
In that application, the nature of the offence committed, the part played by the accused, the gravity of the offence etc., were all set out.
1t was also stated that since two of the accused were earlier absconding, the investigation in the case could not be completed within the time frame.
The High Court by following the decision of this Court in Raghubir Singh vs State of Bihar, ; and after considering the material on record cancelled the bail order.
The High Court said: "In the present cases, no doubt an order was passed granting bail because the charge sheet was not filed within the statutory period of 90 days but it was filed on 92 days.
380 There is no doubt that the charge against the respondents is very serious in nature because they are alleged to have entered into a con spiracy to export heroin out of India.
The minimum punishment prescribed in such offence is a sentence of 10 years rigorous imprison ment, and a fine of Rupees one lakh.
I am, therefore, of the view that the authority re ferred above is fully applicable to the facts of the present case.
Respondents are further alleged to have procured services of one H.S. Gala and a lady carrier Manjula Ben who car ried 3 Kg.
heroin from India to USA in Novem ber 1987.
Therefore it was on the basis of the statements made by those persons in USA that the respondents were arrested in India.
I am, therefore, of the view that it is a fit case where order of bail should be cancelled.
" The question is whether the discretion exercised by the High Court is legally sustainable? Whether the accused have a special right to remain on bail merely because they have been enlarged under proviso (a) to Section 167(2) of the Code? It is not disputed and indeed cannot be disputed that when an accused is granted bail, whether under proviso (a) to Section 167(2) or under the general provisions of Chapter XXXIII, the only method by which the bail may be cancelled is to proceed under Section 437(5) or Section 439(2).
That is because the person released on bail under the proviso to Section 167(2) shall be deemed to be so released under the provisions of Chapter XXXIII of the Code.
Sub section (5) of Section 437 provides: "Any Court which has released a person on bail under sub section (1) or sub section (2) may, if it considers it necessary so to do, direct that such person be arrested and commit him to custody." Sub section (2) of Section 439 provides: "A High Court or Court of Session may direct that any person who has been released on bail under this Chapter be arrested and commit him to custody." 381 Under sub section (5) of Section 437, the Court if it considers it necessary, direct that the person on bail be arrested and committed to custody.
The bail may be cancelled by the Court if it comes to the conclusion that there are sufficient grounds that the accused has committed a non bailable offence and that it is necessary that he should be arrested and committed to custody.
This is what this Court observed in Raghubir Singh vs State of Bihar, ; It was said (at 826): "Where bail has been granted under the proviso to section 167(2) for the default of the prosecution in not completing the investiga tion in sixty days, after the defect is cured by the filing of a charge sheet, the prosecu tion may seek to have the bail cancelled on the ground that the accused has committed a non bailable offence and that it is necessary to arrest him and commit him to custody.
In the last mentioned case, one would expect very strong grounds indeed." And said: "The order for release on bail was not an order on merits but was what one may call an order on default, and order that could be rectified for special reasons after the defect was cured.
" An order for release on bail under proviso (a) to Sec tion 167(2) may appropriately be termed as an order on default.
Indeed, it is a release on bail on the default of the prosecution in filing charge sheet within the prescribed period.
The right to bail under Section 167(2) proviso (a) thereto is absolute.
It is a legislative command and not Court 's discretion.
If the investigating agency fails to file charge sheet before the expiry of 90/60 days, as the case may be, the accused in custody should he released on bail.
But at that stage, merits of the case are not to be examined.
Not at all.
In fact, the Magistrate has no power to remand a person beyond the stipulated period of 90/60 days.
He must pass an order of bail and communicate the same to the accused to furnish the requisite bail bonds.
The accused cannot, therefore, claim any special right to remain on bail.
If the investigation reveals that the accused has committed a serious offence and charge sheet is filed, the bail granted under proviso (a) to Section 167(2) could be cancelled.
382 I examined the material on record.
The offences alleged are of serious nature.
I am of the opinion that the discre tion exercised by the High Court does not call for any interference.
The Petitions, are, therefore, rejected.
N.P.V. Petitions dis missed.
| On June 19, 1962, the Government of Maharashtra issued a draft notification under Section 3(3) of the Bombay Provin cial Municipal Corporation Act, 1949 and thereby proposed the formation of "Kalyan Corporation", by merging of munici pal areas of Kalyan, Ambarnath, Domoivali and Ulhasnagar.
The proposal was resented to by the residents of the said areas and many objections and representations by persons, companies and authorities including the municipal bodies of Ambarnath, and Ulhasnagar were made.
So far as Ulhasnagar was concerned it was stated that Sindhi Community after partition has settled at Ulhasnagar and to keep the identity of Sindhies distinct, they had formed All India Sindhi Panchayat Federation.
The said Federation challenged the draft notification by a Writ Petition before the High Court.
On an assurance being given by the Government before the High Court that the representation made by the Federation would be duly considered, the Writ Petition was allowed to be withdrawn.
As per the assurance, the Federation was given personal hearing on their representation.
Only the Federa tion was heard, none of the other representationists was afforded any hearing though their objections were duly considered.
After considering the matter in the manner aforesaid, the Government decided to exclude Ulhasnagar from the proposed Corporation and accordingly a notification under section 3(2) of the Act was issued.
The Corporation was thus Constituted excluding Ulhasnagar.
Save as aforesaid no other alteration was made in the notification.
406 The Residents of Ambarnath municipal area were not satisfied.
They moved the High Court challenging the validi ty of the notification issued under section 3(2) of the Act.
Their main contention was that there has been hostile dis crimination in the matter as only the Federation was heard and none else.
They also asserted that the establishment of a Corporation without Ulhasnagar, keeping in view the geo graphical contiguity was unintelligibe and incomprehensible.
According to them it was arbitrary and opposed to the object of the Act.
Federation and others interested in the proceedings were allowed to intervene and they supported the stand taken by the Government which was the main respondent.
The State pleaded that the formation of Corporation was an extension of the legislative process and as such section 3 was a piece of conditional legislation, and the notifica tion issued in exercise of that power cannot be said to have been vitiated by non compliance with the principles of natural justice.
According to the State it was not obligato ry for the State to issue a preliminary notification over again before the final notification excluding Ulhasnagar was issued.
The High Court took the view that the decision to ex clude Ulhasnagar was taken by the State abruptly and in an irrational manner and that the decision was against the object of the Act.
On the legality of the procedure followed by the Government, the High Court held that once a decision was taken, it was obligatory on the part of the Government to reconsider the proposal as a whole so for as the rest of the areas were concerned.
The High Court without quashing the impugned notifica tion directed the State Government to reconsider the propos al under subsection (3) of the Act either to exclude or include any area and accordingly make amends in the notifi cation.
It was also directed that the Petitioners and the Federation be given a reasonable opportunity of being heard before any final decision in the matter is taken.
Against the aforesaid decision of the High Court only interveners have preferred these appeals.
The State and Kelyan City Corporation have not appealed.
Counsel for the appellants reiterated the stand taken by the Government before the High Court and urged that the State had a wide discretion in the selection of areas for constituting the Corporation and the Court cannot interfere with such discretion.
State 's power to consti 407 tute a corporation is legislative in character and rules of natural justice have no application.
It was urged that the state had complied with all the statutory requirements and it was not necessary for the state to go through that exer cise again.
It was further urged that the decision of this Court has been disregarded and a binding decision of a co ordinate bench of the same Court in Village Panchayat Chi kalthane & Anr.
vs State of Maharashtra has been ignored.
Allowing the appeals, this Court, HELD: In our system of judicial review which is a part of our constitutional scheme, this Court holds it to be the duty of Judges of superior Courts and tribunals to make the law more predictable.
The question of law directly arising in the case should not be dealt with apologetic approaches.
The law must be made more effective as a guide to behaviour.
It must be determined with reasons which carry convictions within the Courts, professions and public otherwise the lawyers would be in a predicament and would not know how to advise their clients.
Subordinate Courts would find them selves in an embarrassing position to choose between the conflicting opinions.
The general public will be in a dilem ma to obey or not to obey such law and it ultimately fails into disrepute.
[417D F] It is needless to state that the judgment of superior Courts and Tribunals must be written only after deep travail and positive vein.
One should never let a decision go unless he is absolutely sure it is right.
The law must be made clear, certain and consistent.
But ceritude is not the test of certainty and consistency does not mean that there should be no word of new content.
The principle of law may develop side by side with new content but not in consistencies.
There could be waxing and waning the principle depending upon the pragmatic needs and moral yearings.
Such develop ment of law particularly is inevitable in our developing country.
[417G H; 418A B] The rules of natural justice are not applicable to legislative activity plenary or subordinate.
The procedural requirement of hearing is not implied in the exercise of legislative powers unless hearing was expressly prescribed.
[419F] The High Court, therefore, was in error in directing the Government to hear the parties who are not entitled to be heard in law; section 3 of the Bombay Provincial Municipal Corporation Act 1949.
[419F G] The Government in the exercise of its powers under section 3 is 408 not subject to the Rules of natural justice any more than is legislature itself.
[419F] Mahadeolal Kanodia vs The Administrator General of West Bengal, A.I.R. (1960) S.C.p. 926; Sri Bhagwan and Anr.
vs Ram Chand and Anr.
, ; at 1773; Union of India vs Raghbir Singh, ; ; The Nature of Judicial Process by Benjamin N. Cardozo; Bates vs Lord Heilsham of St. Marylebone and Others, 1, W.L.R. 1373; Tulsipur Sugar Co. Ltd. vs The Notified Area Committee, Tulsipur, ; and Baldev Singh vs State of Himachal Pradesh, , referred to.
|
ivil Appeal No. 3284 of 1992 From the Judgement and Order dated 18.2.1992 of the Delhi High Court in Civil Writ Petition No. 2259 of 1991.
R.K. Garg, K.L. Vohra, Rajeev Sharma and D.K. Garg for the Appellants.
Arun Jaitley, V.B. Saharya, Ashok Bhan and B.K. Prasad for the Respondents.
The Judgement of the Court was delivered by SHARMA,J. Heard the learned counsel for the parties.
Special leave is granted.
The respondents in this appeal have successfully invoked the jurisdiction of the High Court under Article 226 of the Constitution for enforcement of a private right to immovable property against the appellants who are two brothers and who are resisting the claim.
The question is as to whether the writ jurisdiction in the High Court is available for the enforcement of such a right claimed by and against private individuals.
906 3.
The dispute relates to a house property in Delhi.
A suit for eviction of the appellants from the building is pending in the trial court.
According to the case of the respondent No. 1, who is the owner of the property, she had let out the same to one Shri B.K. Pandey who later illegally handed over the possession thereof to the appellant no.1.
According to the further case of the respondent, the portion of the said house property which is subject matter of the present case is beyond the purview of the pending suit.
The occasion for initiating the present proceeding with respect to this portion arose, it is said, on account of the high handedness of the appellants who illegally trespassed beyond the area which is the subject matter of the pending suit, and indulged in several illegal activities.
In other words, the appellants are trespassers and are guilty of mischievous conduct.
However, instead of filing a suit in the civil court or making an appropriate prayer for amendment of her plaint in the pending suit, she through respondent no.2 holding power of attorney, approached the High Court directly by a writ petition under Article 226 for issuance of appropriate direction restraining the appellants from disturbing the lawful possession of the respondents.
The Delhi Administration and the Commissioner of Police, Delhi, were also impleaded as parties with a prayer that appropriate order should be issued against them also and they should be directed not to register any further false and vexatious complaint against them at the instance of the appellants.
It is her case that the appellants have been getting undue police help and are being encouraged to commence frivolous criminal cases against respondent no.1 and her agent.
The appellants denied the allegations of fact made against them and also challenged the maintainability of the writ petition.
Although the fact that a suit between the parties was already pending in the civil court was known to the High Court, it proceeded to pass a short order stating: "There is already a civil suit pending between the parties.
Except the prayer in regard to access to the backyard, no other relief can be granted in this writ petition.
We direct respondents 3 and 4 to remove the grill for access 907 to the backyard in the presence of the police and representatives of the petitioners on Sunday, 23rd February 1922 at 11.00 a.m. so that the access of the petitioner to the servants quarters is not stopped." 6.
Mr. Arun Jaitley, the learned counsel appearing on behalf of respondent No. 1 has supported the impugned judgement on the ground that prayer for issuing a direction against Delhi Administration and Commissioner of Police who were respondent nos.
1 and 2 was also made.
It has to be appreciated that the present appellants were respondent nos.
3 and 4 before the High Court; and the High Court has by the impugned order, considered it fit to allow the prayer of the respondents against them for removal of the grills for access to the backyard.
According to the stand of the landlord respondent, since the police were taking a partisan attitude against her, the filing of a writ petition became necessary.
We are unable to follow this argument.
There is no doubt that the dispute is between two private persons with respect to an immovable property.
Further, a suit covering either directly a portion of the house property which is in dispute in the present case or in any event some other parts of the same property is already pending in the civil court.
The respondent justifies the step of her moving the High Court with a writ petition on the ground of some complaint made by the appellants and the action by the police taken thereon.
We do not agree that on account of this development, the respondent was entitled to maintain a writ petition before the High Court.
It has repeatedly been held by this court as also by various High Courts that a regular suit is the appropriate remedy for settlement of disputes relating to property rights between private persons and that the remedy under Article 226 of the constitution shall not be available except where violation of some statutory duty on the part of a statutory authority is alleged.
And in such a case, the court will issue appropriate direction to the authority concerned.
If the grievance of the respondent is against the initiation of criminal proceedings, and the orders passed and steps taken thereon, she must avail of the remedy under the general law constitutional jurisdiction to be used for deciding disputes, for which remedies, under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
908 The jurisdiction is special and extra ordinary and should not be exercised casually or lightly.
We, therefore, hold that the High Court was in error in issuing the impugned direction against the appellants by their judgement under appeal.
The appeal is accordingly allowed, the impugned judgement is set aside and the writ petition of the respondents filed in the High Court is dismissed.
There will be no order as to costs.
G.N. Appeals allowed.
| The petitioner, a diploma holders in Engineering, was Executive Engineer in the respondent Corporation.
He would have been promoted as superintending Engineer, but for a Resolution passed in 1988 making 75% of the posts of Superintending Engineers available to Executive Engineers with diploma in Engineering degrees and 25% to Executive Engineers with diploma in Engineering Respondent No.2 who junior to petitioner but had engineering degree was promoted as superintending Engineer.
The petitioner challenged the promotion of Respondent No. 2 before the High court by way of a writ petition.
The High court having dismissed the same, the petitioner preferred the present special Leave petition.
On behalf of the petitioner, it was contended that since there was a common seniority list of Executive Engineers, any classification on the basis of education qualification was discriminatory and violative of Articles 14 and 16 of the Constitution; and that in the absence of any statutory rule or regulation, a mere resolution could not effect such discrimination.
Dismissing the petition, this court, HELD: 1.1.
It is now well settled that for the purpose of promotion, a valid classification can be made among the members holding the same post on the basis of their qualification.
Such a classification is permissible and does not violate Articles 14 and 16 of the Constitution.
[99 A B] 1.2.
It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work, and the necessity for making a classification, to prescribe quotas on the basis of educational qualification.
[99 D] State of Jammu & Kashmir vs Triloki Nath Khosa & ors., [1974]1 SCR 771, followed.
H.C. Sharma & ors.
vs municipal corporation of Delhi & ors.
; , , referred to.
In the instant case, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 was a regulation passed in accordance with section 64 of the Act.
However, it is well settled that in the absence of a rule or regulation, the authority can prescribe service conditions by executive instructions and this is what was done till year 1988 and is also sought to be done since 1988 by the resolution under challenge.
[100 A,B] Mysore state Road Transport Corporation vs Gopinath Gundachar char; , and V. Balasubramaniam and others vs Tamil Nadu Housing Board and others, [1987]4 SCC 738, relied on.
|
Appeals Nos.
946 of 1963.
Appeals from the judgment dated February 22, 1961 of the Madras High Court in Case Referred No. 121 of 1956.
K. N. Rajagopal Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant (in all the appeals).
A. V. Viswanatha Sastri, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Shah J.
The Andhra Chamber of Commerce hereinafter called the assessee 's a Company incorporated under the Indian Companies Act 7 of 1913.
The assessee was permitted under section 26 of the Act to omit the word "Limited" from its name by order of the Government of Madras.
The following are the principal objects of the Memorandum of Association of the assessee : (a) To promote and protect trade, commerce and industries of India, in the Province of Madras and in particular in the Andhra country.
(b) To aid, stimulate and promote the development of trade, commerce and industries in India, or 567 any part thereof with capital principally provided by Indians or under the management of Indians.
(c) To watch over and protect the general commercial interests of India or any part thereof and the interests of the Andhras in particular engaged in trade, commerce or manufacture in India and in particular the Andhra Desa.
(y) To do all such other things as may be conducive to the preservation and extension of trade, commerce, industries and manufactures or incidental to the attainment of the above objects or any of them.
Clauses (d) to (x) are incidental to the principal objects.
By cl. 4 of the Memorandum of Association it was provided that the income and property of the assessee shall be applied solely towards the promotion of its objects as set forth therein and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividends, bonuses or otherwise howsoever by way of profit to its members.
On December 2, 1944 the assessee purchased a building and made substantial alterations, additions and improvements therein.
The assessee then moved its offices into that building on May 14, 1947 and let out to tenants the portion not required for its use.
The income of the assessee is obtained from subscriptions and donations collected from its members and rent received from the building.
The following table sets out in columns 3 & 4 the net annual value of the property less the statutory deductions permissible under section 9 of the Income tax Act, 1922 and the net excess of expenditure over the income of the assessee (other than the rental income) incurred in connection with all its activities for the assessment years relating to which dispute arises in this group of appeals Previous year Assessment Amount Net excess (calendar year) year Rs. Rs. (1) (2) (3) (4) 1947 1948 49 3,400 7,431 1948 1949 50 6,154 7,139 1949 1950 51 6,928 5,266 1950 1951 52 5,740 10,173 1952 1953 54 8,072 13,672 1953 1954 55 8,072 17,397 In proceedings for assessment before the Second Additional Income tax Officer, City Circle 1, Madras, it was contended that Sup./65 11 568 the annual value of the building was not assessable in its hands as the assessee was a charitable institution within the meaning of section 4(3) (i) of the Income tax Act, 1922.
In the alternative, it was contended that the excess of expenditure over income should be set off against such income if the annual value is held assess,able.
The Income tax Officer rejected the contentions of the assessee and assessed its income from property on the basis of net annual value in the six assessment years without debiting the expenditure in excess of income (other than rent) against the net annual value.
The assessee appealed to the Appellate Assistant Commis sioner against all the orders of assessments.
The Appellate Assistant Commissioner held that the assessee not being a charitable institution the income in question was not exempt under section 4(3) (i).
He also rejected the alternative contention, for in his view, there was no specific profit making activity of the assessee the loss from which could be set off against its other income.
Appeals were then taken to the Income tax Appellate Tribu nal.
The Tribunal held that the assessee was not exempt within the meaning of section 4(3) (i) from liability to pay income tax, because the activities of the assessee were intended for the benefit primarily of its members and "embraced only collective action on behalf of all its constituent members" which "could not be said to be the result of any trade or business or vocation carried on by it".
At the instance of the assessee the Tribunal referred the following questions to the High Court : "(1) Whether the aforesaid income from property owned by the assessee is exempt under section 4 (3) (i) for the aforesaid six years of assessment ? (2) If the answer to the above question is in the negative, whether the activities of the assessee amount to a trade or business, the profit or loss from which is assessable under section 10 ?" The High Court answered the first question in the affirmative and did not record a formal answer on the second question.
Against the order of the High Court, these appeals are preferred by the Commissioner of Income tax, with certificate granted by the High Court under section 66A (2) of the Indian Income tax Act.
We are concerned in this group of appeals with the assess ment of income of the assessee in the years 1948 49 to 1954 55 569 with the omission of the assessment year 1952 53.
Between the years 1948 49 to 1952 53 there has been some change in section 4(3) (i) which before it was amended by Act 25 of 1953 with effect from April 1, 1952 read as follows : "Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them : (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application thereto." By the last paragraph of sub section (3) "charitable purpose" was defined as including relief of the poor, education, medical relief, and the advancement of any other object of general public utility, but nothing contained in cl.
(i) or cl.
(i) or cl.(i.a)or cl.
(ii) shall operate to exempt from the provisions of the Act that part of the income of a private religious trust which does not enure for the benefit of the public.
By the amendment made by section 3 of the Indian Income tax (Amendment) Act 25 of 1953, cls.
(i) and (i a) as they originally stood were amalgamated.
It is common ground that by the amendment, no alteration which has a material bearing on the question to be decided in these appeals has been made.
Income from property qualifies for exemption under section 4(3) (i) if two conditions co exist (i) the property is held under trust or other legal obligation; and (ii) it is so held wholly or in part for religious or charitable purposes .
The building which the assessee owns is by virtue of cl. 4 of the Memorandum of Association held under a legal obligation to apply its income to purposes specified in the Memorandum of Association.
It is not the case of the assessee that the objects of incorporation are relief of the poor, education or medical relief, and the only question canvassed at the Bar is whether the purposes for which the assessee stands incorporated are objects of general public utility, within the meaning of the expression "charitable purpose" in section 4(3).
The principal objects of the assessee are to promote and protect trade, commerce and industries and to aid, stimulate and promote the development of trade, commerce and industries in India or any part thereof.
By the achievement of these objects, it is not intended to serve merely the interests of the members of 570 the assessee.
Advancement or promotion of trade, commerce and industry leading to economic prosperity enures for the benefit of the entire community.
That prosperity would be shared also by those who engage in trade, commerce and industry but on that account the purpose is not rendered any the less an object of general public utility.
It may be remembered that promotion and protection of trade, commerce and industry cannot be equated with promotion and protection of activities and interests merely of persons engaged in trade, commerce and industry.
In Commissioners of Inland Revenue vs Yorkshire Agricultural Society(1) an association called the Yorkshire Agricultural Society was formed with the object of holding annual meetings for the exhibition of farming stock, implements etc.
, and for the general promotion of agriculture.
All prizes were open to competition in the United Kingdom, but certain privileges were attached to membership of the Society.
The income of the Society was derived from entry fees and gate receipts, local subscriptions for prizes, interest on investments, and subscriptions of members.
It was held by the Court of Appeal that on the facts found by the Commissioners the Society was established for a charitable purpose and that purpose continued notwithstanding the incidental benefits enjoyed by members of the Society; and that those benefits did not prevent the.
Society from being established for a "charitable purpose only".
In Halsbury 's Laws of England, 3rd Edn., Vol. 4 at p. 236, Art 517, it is stated "An association or institution may benefit its members in the course of carrying out its main charitable purpose and this alone will not prevent it from being a charity.
It is a question of fact whether there is so much personal benefit, intellectual or professional, to the members of a society or body of persons as to be incapable of being disregarded." In The Institution of Civil Engineers vs The Commissioners of Inland Revenue (2) it was held that the Institution of Civil Engineers founded and incorporated by Royal Charter for the general advancement of mechanical science, and more particularly for promoting the acquisition of that species of knowledge which constitutes the profession of a civil engineer was a body of persons established for charitable purposes only.
The Special Commissioners having regard in particular to the provisions of the supplemental charter of 1922, by which the corporate members (1) (2) 571 of the Institution were authorised to use the title of member, or associate member, as the case might be, found that a substantial part of the objects of the Institution was to benefit the member & and rejected the claim of the Institution for exemption.
The Court of King 's Bench disagreeing with the Special Commisssioners held that the benefit of members was purely incidental to the main purpose of the Institution which was established for charitable purposes only.
The Court of Appeal found that the only purpose for which the Institution was established was the promotion of science and that purpose had never been added to or varied by any of the supplemental charters : it followed therefore that the Institution was established for charitable purposes only, notwithstanding that it is of advantage to a civil engineer in his profession to be a member of the Institution, this result not being a purpose for which the Institution was established, but being incidental to and consequent upon the way in which the Institution carries out the charitable purpose for which alone it was established.
In the promotion of trade, commerce and industries of India the public is vitally interested and if by the activities of the assessee that object is achieved, it would be within the meaning of section 4(3) (1) of the Act an advancement of an object of general public utility.
In enacting the last paragraph of section 4(3) the legislature has used language of great amplitude.
"Charitable purpose" includes not only relief of the poor, education and medical relief alone, but advancement of other objects of general public utility as well.
The clause is intended to serve as a special definition of the expression "charitable purpose" for the Act : it is again inclusive and not exhaustive or exclusive.
Even if the object or purpose may not be regarded as charitable in its popular signification as not tending to give relief to the poor or .for advancement of education or medical relief, it would still be included in the expression "charitable purpose" if it advances an object of general public utility.
The expression "object of general public utility" however is not restricted to objects beneficial to the whole mankind.
An object beneficial to a section of the public is an object of general public utility.
To serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or even all persons living in a particular country or Province.
It is sufficient if the intention be to benefit a section of the public as distinguished from specified individuals.
Observations to the contrary made by Beaumont C.J., in Commissioner of Income tax Bombay Presi 572 dency, Sind and Baluchistan vs The Grain Merchants ' Association of Bombay(1) that "an object of general public utility means an object of public utility which is available to the general public as distinct from any section of the public" and that objects of an association "to benefit works of public utility confined to a section of the public, i.e. those interested in commerce" are not objects of general public utility, do not correctly interpret the expression "objects of general public utility".
The section of the community sought to be benefited must undoubtedly be suffi ciently defined and identifiable by some common quality of a public or impersonal nature: where there is no common quality uniting the potential, beneficiaries into a class, it may not be regarded as valid.
It is true that in this case there is in fact no trust in respect of the income derived from the building owned by the assessee.
But the property and the income therefrom is held under a legal obligation, for by the terms of the permission granted by the Government to the assessee to exclude from its name the use of the word "limited", and by the express term,% of cl. 4 of the Memorandum of Association the property and its income are not liable to be utilised only for the purposes set out in the Memorandum of Association.
Counsel for the revenue submitted that the purposes of the assessee are vague and indefinite.
He submitted that if a competent Court were called upon, as it may be called upon to administer the obligation imposed by the Memorandum of Association, the Court would on account of vagueness of the objects decline to do so, and therefore the purposes cannot be regarded as charitable.
In the alternative, counsel contended that the benefit which is contemplated by the Memorandum of Association was not the benefit to the public generally, but the benefit to its members to carry on their business more profitably.
In the further alternative, relying upon cl. 3(g) of the Memorandum of Association, counsel contended that the objects of the assessee were political, it being open to the assessee to appropriate the entire income for political purposes.
But the primary objects of the assessee are to promote and protect trade, commerce and industries and to aid, stimulate and promote the development of trade, commerce and industries and to watch over and protect the general commercial interests of India or any part thereof.
These objects are not vague or inde (1) 573 finite as objects of general public utility.
An object of general public utility, such as promotion, protection, aiding and stimulation of trade, commerce and industries need not, to be valid specify the modus or the steps by which the objects may be achieved or secured.
It cannot be said that if called upon to administer an institution of which the objects are of the nature set out, the Court would decline to do so merely on the ground that the method by which trade, commerce or industry is to be promoted or protected, aided or stimulated or the general commercial interests of India are to be watched over or protected are not specified.
Analogy of cases like Runchordas Vandra wandas vs Parvati Bhai(1) in which the Privy Council declared a devise under a will in favour of "dharam" void, is misleading.
In that case the devise was declared void, because the expression "dharam" in the view of the Judicial Committee being law, virtue, legal or moral duty was too general and too indefinite for the courts to enforce.
Observations by Lord Simonds in Commissioners of Inland Revenue vs National Anti Vivisection Society(2) that "One of the tests, and a crucial test, whether a trust is charitable lies in the competence of the Court to control and reform it. . . that it is the King as parens patriae who is the guardian of charity, and that it is the right and duty of his Attorney General to intervenue and to inform "the Court if the trustees of a charitable trust fall short of their duty.
So too it is his duty to assist the Court, if need be, in the formulation of a scheme for the execution of a charitable trust.
But. . is it for a moment to be supposed that it is the function of the Attorney General on behalf of the Crown to intervene and demand that a trust shall be established and administered by the Court, the object of which is to alter the law in a manner highly prejudicial, as he and His Majesty 's Government may think, to the welfare of the State ?" do not assist the case of the revenue.
In the view of Lord Simonds the object of the trust was political and, therefore, void, and not because it was vague or indefinite.
In Baddeley and others (Trustees of the Newtown Trust) vs Commissioners of Inland Revenue(") certain properties were conveyed to trustees by two conveyances, in one case on trust, inter alia, for the promotion of the religious, social and physical well being of persons resident in the County Boroughs of West Ham and Leyton by the provision of facilities for religious (1) L.R. 26 I.A. 71.
(2) , 367.
(3) 574 services and instruction and for the social and physical training and recreation of such aforementioned persons who were members or likely to become members of the Methodist Church and of insufficient means otherwise to enjoy the advantages provided and by promoting and encouraging all forms of such activities, as were calculated to contribute to the health and well being of such persons, and in the other case on similar trusts omitting reference to religious services and instruction and otherwise substituting "moral" for "religious".
These trusts were, it was held, not for charitable purposes only.
The case arose under the Stamp Act of 1891, and it was contended that the trusts being charitable stamp duty at a lower rate was chargeable.
The House of Lords held that the trust was not charitable.
It was observed by Lord Simonds that "the moral, social, and physical well being of the community or any part of it is a laudable object of benevolence and philanthropy, but its ambit is far too wide to include purposes which the law regards as charitable".
These cases have, in our judgment, no bearing on the inter pretation of the language used in the Memorandum of Associa tion of the assessee.
The argument that it is only for the benefit of the members or the trading classes in Andhra Desa that the funds of the assessee could be utilised does not stand scrutiny.
It is clear from the diverse clauses in paragraph 3 of the Memorandum of Association that the objects were not merely to benefit the members of the assessee or even the trading community of Andhra Desa.
Reliance was placed upon the membership clause in the Articles of Association and it was submitted that only persons speaking Telugu language and residing in Andhra Desa [as defined in cl. 1 (s) of the Articles of Association] could be members.
But that argument is wholly unfounded.
By sub cl.
(iii) of cl. 5 a Chamber of Commerce or Trade Association protecting and promoting Indian trade, commerce and industry is eligible for election as a member of the Chamber and the representative of such a Chamber of Commerce or Trade Asso ciation need not necessarily be able to speak and write Telugu.
Similarly by sub cl.
(iv) a Company or Corporation having its principal office or registered office in Andhra Desa or a branch in Andhra Desa is eligible to become a member in its conventional or corporate name and the representative of such a Company or Corporation need not necessarily be able to speak or write Telugu.
Again under sub cl.
(v) a Partner of a Firm of a "Private Partnership Concern" or a Joint Family Business 575 concern, or a Sole Proprietory concern having its principal office or registered office in Andhra Desa or a branch in Andhra Desa is eligible for membership of the Chamber and the representative of such a member need not necessarily be able to speak or write Telugu.
Finally, by sub cl.
(vi) an individual residing anywhere in India and connected in any manner with trade, industry and commerce is eligible for membership of the Chamber provided his mother tongue is Telugu or he can both speak and write Telugu.
There is no geographical limitation upon the membership qualification, nor is there limitation about the capacity to speak or write Telugu.
We should not be taken as holding that if there were such restrictions, the character of the assessee as an institution for promotion of charitable objects would thereby be necessarily effected.
Clause 3(g) of the Memorandum of Association on which strong reliance was placed reads as follows : "To urge or oppose legislative and other measures affecting trade, commerce or manufactures and to procure change of law and practice affecting trade, commerce and manufactures and in particular those affecting trade, commerce and industries in which Andhras are concerned and obtain by all acknowledged means the removal, as far as possible, of all grievances affecting merchants as a body and mercantile interests in general.
" But cl. 3(g) is not the primary object of the assessee : it is merely incidental to the primary objects of promotion or protection of trade, commerce and industries, or to aid, stimulate and promote the development of trade, commerce and industries or to watch over and protect the general commercial interests.
The expression "object of general public utility" in section 4(3) would prima facie include all objects which promote the welfare of the general public.
It cannot be said that merely a purpose would cease to be charitable even if public welfare is intended to be served thereby if it includes the taking of steps to urge or oppose legislation affecting trade, commerce or manufacture.
If the primary purpose be advancement of objects of general public utility, it would remain charitable even if an incidental entry into the political domain for achieving that purpose e.g. promotion of or opposition to legislation concerning that purpose, is contemplated.
In In re The Trustees of the Tribune(1) the (1) 576 Judicial Committee of the Privy Council was called upon to consider whether a trust created under a will to maintain a printing press and newspaper in an efficient condition, and to keep up the liberal policy of the newspaper, devoting the surplus income of the press and newspaper after defraying all current expenses in improving the newspaper and placing it on a footing of permanency and further providing that in case the paper ceased to function or for any other reason the surplus of the income could not be applied to the object mentioned above, the same should be applied for the maintenance of a college which had been established out of the funds of another trust created by the same testator, was a charitable purpose within the meaning of section 4(3).
The Judicial Committee expressed the view that the object of the settler was to supply the province with an organ of educated public opinion and this was prima facie an object of general public utility, and observed "These English decisions are in point in so far only as they illustrate the manner in which political objects, in the wide sense which includes projects for legislation in the interests of particular causes, affect the question whether the Court can regard a trust as being one of general public utility.
In the original letter of reference it was not suggested by the Commissioner that the newspaper was intended by its founder to be a mere vehicle of political propaganda, and in the case of Sardar Dyal Singh it seems unrea sonable to doubt that his object was to benefit the people of Upper India by providing them with an English newspaper the dissemination of news and the ventilation of opinion upon all matters of public interest.
While not perhaps impossible it is difficult for a newspaper to avoid having or acquiring a particular political complexion unless indeed it avoids all reference to the activities of Governments or legislatures or treats of them in an eclectic or inconsistent manner.
The circumstances of Upper India in the last decade of the nineteenth century would doubtless make any paper published for Indian readers sympathetic to various movements for social and political reform.
But their Lordships having before them material which shows the character of the newspaper as it was in fact conducted in the testator 's lifetime, have arrived at the conclusion that questions of politics and legislation 577 were discussed only as many other matters were in this paper discussed and that it is not made out that a political purpose was the dominant purpose of the trust.
" In All India Spinners ' Association vs Commissioner of Incometax, Bombay(1) the assessee was formed as an unregistered association by a resolution of the All India Congress Committee for the development of village industry of hand spinning and hand weaving.
The Association was established as an integral part of the Congress Organisation, but it had independent existence and powers unaffected and uncontrolled by politics.
The objects of the Association, amongst others, were to give financial assistance to khaddar organisations by way of loans, gifts or bounties, to help or establish schools or institutions where handspinning is taught, to help and open khaddar stores, to establish a khaddar service, to act as agency on behalf of the Congress to receive self spun yarn as subscription to the Congress and to issue certificates and to do all the things that may be considered necessary for the furtherance of its objects, with power to make regulations for the conduct of affairs of the Association of the Council and to make such amendments in the present constitution, as may be considered from time to time.
The funds of the Association consisted mostly of donations and subscriptions, and out of the funds charkas and handlooms were purchased and supplied to the inhabitants free of charge.
Raw cotton was supplied to the poor people to be spun into yarn and the yam so spun along with the yam acquired by the Association were supplied to other poor people for hand weaving.
The income of the Association was treated by the Commissioner of Incometax as not exempt under section 4(3) (i) of the Indian Income tax Act inasmuch as (i) the dominant purpose of the Association was political, (ii) even assuming it was not political, the dominant purpose was not in any event a valid charitable purpose in law, and (iii) some of the objects were not clearly charitable objects.
The Judicial Committee held that the income of the Association was derived from property held under trust or other legal obligation wholly for charitable purposes and the English decisions on the law of charities not based upon any definite and precise statutory provisions were not helpful in construing the provisions of section 4(3) (i) of the Indian Income tax Act.
The words of section 4(3) were largely influenced by Lord Macnaghten 's definition of charity in Pemsel vs Commissioners for Special Purposes of Income Tax (2) , but that definition had no statutory (1) (2) 578 authority and was not precisely followed in the most material particulars; the words of the section being "for the advancement of any other object of general public utility" and not as Lord Macnaghten said "other purposes beneficial to the community".
The Judicial Committee observed that the primary object of the Association was relief of the poor and apart from that ground there was good ground for holding that the purposes of the Association included advancement of other purposes of general public utility.
The Judicial Committee then held : "These words, their Lordships think, would exclude the object of private gain, such as an undertaking for commercial profit though all the same it would sub , serve general public utility.
But private profit was eliminated in this case.
Though the connexion in one sense of the Association with Congress was relied on as not consistent with 'general public utility ' because it might be for the advancement primarily of a particular party, it is sufficiently clear in this case that the Association 's purposes were independent of and were not affected by the purposes or propaganda of Congress." The Indian legislature has evolved a definition of the ex pression "charitable purpose" which departs in its material clause from the definition judicially supplied in Pemsel 's case(1), and decisions of English Courts, which proceed upon interpretation of language different from the Indian statute have little value.
We, therefore, do not propose to deal with the large number of English cases cited at the Bar, except to mention three, which declared trusts for political purposes invalid.
In Rex vs The Special Commissioners of Income tax (ex parte The Headmasters ' Conference) and Rex vs The Special Com missioners of Income Tax (ex parte) The Incorporated Association of Preparatory School(1) it was held that a conference of Headmasters incorporated under the Companies Act as an Association limited by guarantee, of which under the Memorandum of Association income was to be applied towards the promotion of its expressed objects, one of which was the promotion of or opposition to, legislative or administrative educational measures, the holding of examinations, etc.
was not a body of persons established for charitable purposes only within the meaning of the Income Tax Acts.
Similarly an incorporated Association of Preparatory Schools incorporated under the Companies Act as an Association limited by guarantee, income (1) ; (2) 579 whereof was to be applied solely towards the promotion of its expressed objects which included the advancement and promotion of, or opposition to, legislative or administrative educational measures etc.
was not an association whose income was applicable to charitable purposes only.
The Court of King 's Bench held in the case of each of the two trusts that because the income could be utilised for promotion of, or opposition to, legislative or administrative educational measures, and those being the primary objects, the income was not liable to be applied solely to charitable purposes.
In The Commissioners of Inland Revenue vs The Temperance Council of the Christian Churches of England and Wales (1) a Council constituted by resolution at a meeting of representatives of the temperance Organisation of the Christian Churches of England and Wales, the purpose of which being united action to secure legislative and other temperance reform was held not to be a council established for charitable purposes only, nor was its income applicable to charitable purposes only, and that it was therefore not entitled to the exemption sought.
In Bowman vs Secular Society Ltd.(2) Lord Parker observed: "A trust for the attainment of political objects has always been held invalid, not because it is illegal but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit." This Court in a recent judgment, Laxman Balwant Bhopatkar by Dr. Dhananjaya Ramchandra Gadgil vs Charity Commissioner, Bombay (3) considered whether for the purposes of the Bombay Public Trust Act 29 of 1950 a trust to educate public opinion and to make people conscious of political rights was a trust for a charitable purpose.
The Court held (Subba Rao J., dissenting) that the object for which the trust was founded was political, and political purpose being not a charitable purpose did not come within the meaning of the expression "for the advancement of any other object of general public utility" in section 9(4) of the Bombay Public Trusts Act, 1950.
The definition of "Charitable purpose" in section 9 of the Bombay Public Trusts Act closely follows the language used in the definition given under the Income tax Act section 4(3).
But in Laxman Balwant Bhopatkar 's case(1), as in the cases of the Courts in England which we (1) (2) , 442.
(3) ; 580 have referred to, it was held that the primary or the principal object was political and therefore the trust was not charitable.
In the present case the primary purpose of the assessee was not to urge or oppose legislative and other measures affecting trade, commerce or manufactures.
The primary purpose of the assessee is, as we have already observed, to promote and protect trade, ,commerce and industries to aid, stimulate and promote the development of trade, commerce and industries and to watch over and protect the general commercial interests of India or any Part thereof.
It is only for the purpose of securing these primary aims that it was one of the objects mentioned in the Memorandum of Association that the assessee may take steps to urge or oppose legislative or other measures affecting trade, commerce or manufactures.
Such an object must be regarded as purely ancillary or subsidiary and not the primary object.
The appeals therefore fail and are dismissed with costs.
One hearing fee.
Appeals dismissed.
| The assessee company Me Andhra Chamber of Commerce had as its main object the promotion, protection, and development of trade, commerce and industry in India.
It owned a building where it had its offices, and those parts of it not in the company 's own use were let out to tenants.
In income tax proceedings the company claimed exemption in respect of the rental income under s.4(3) (i) of the Indian Income tax Act, 1922.
The claim was negatived by the assessing and appellate authorities.
The High Court, however, held that the company was a charitable institution and its income from property was exempt under section 4(3) (i).
The Revenue appealed to the Supreme Court by special leave.
It was contended by the appellant that the property was not held by the company for a charitable purpose within the meaning of section 4(3) (i), that the objects of the company were vague, that the benefit contemplated by the Memorandum of Association was not to the public generally but to the members of the company only, and that the objects of the company were political it being open to it to appropriate the entire income for political purposes.
HELD: (i) The term charitable purpose as defined in the Act was inclusive and not exclusive.
It included objects of general public utility.
The object of the assessee company promotion of trade and commerce in the country was an object of general public utility, as not only the trading class but the whole country would benefit by it.
It is not necessary that the benefit must include all mankind.
It is sufficient if the intention be to benefit a section of the public as distinguished from specified individuals.
[571 F H].
Commissioners of Inland Revenue vs Yorkshire Agricultural Society, and The institution of Civil Engineers vs Commissioners of Inland Revenue, , relied on.
Commissioner of Income tax Bombay Presidency, Sind and Baluchistan vs The Grain Merchants ' Association of Bombay, , disapproved.
(ii) There was nothing vague about the company of general public utility such as promotion, protection, aiding and stimulation of trade, commerce need not to be valid, specify the modus or the steps by which the objects may be achieved or secured.
[573 A B].
Runchordas Vandrawandas vs Parvati Bai L.R. 26 I.A. 71, Commissioners of Inland Revenue vs National Anti Vivisection Society, and Baddeley and others (Trustees of the Newtown Trust) vs Commissioners of Inland Revenue, , distinguished.
(iii) The argument that it was only for the benefit of the trading classes ,in Andhra Desa that the funds of the company could be utilised did not stand scrutiny.
[574 D E].
566 (iv) It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be secured thereby if it includes the taking of steps to urge or oppose legislation affecting commerce, trade or manufacture.
If the primary Purpose be advancement of objects of general public utility, it would remain charitable even if an incidental entry into the political domain for achieving that purpose e.g. promotion of or opposition to legislation concerning that purpose is contemplated.
The object mentioned in the Memorandum of Association was that the assessee may take steps to urge or oppose legislative or other measures affecting trade, commerce, or manufacture.
Such an object must be regarded as purely ancillary or subsidiary and not the primary object.
[575 G H; 580 B C].
In re the Trustees of the Tribune, and All India Spinnere Association vs Commissioners of Income tax, Bombay, , relied on.
Pemsel vs Commissioner for special Purposes of Income Tax; , and Bowman vs Secular Society Ltd., , referred to.
Rex vs The Special Commissioners of Income tax (ex parte The Incorporated .Association of preparatory schools) , The Commissioners of Inland Revenue vs
The temporance council of the Christian Churches of England and Wales, , and Laxman Balwant Bhopatkar by Dr. Dhananjaya Ramachndra Charity commissioner, Bombay; , ,
|
ivil Appeal No. 1314 of 1980.
From the Judgment and Order dated 28.9.1978 of the Madras High Court in Civil Revision Petition No. 782 of 1977.
A.T.M. Sampath for the Appellant.
section Padmanabhan and M. Raghuraman for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
This appeal by special leave is by a tenant against whom an order of eviction passed under Sec tion 10(3)(c) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, hereinafter referred to as the "Act", by the Rent Controller was restored by the High Court of Madras after setting aside the dismissal of the eviction petition by the Appellate Authority.
The facts are not in controversy and may briefly be set out as under.
A one storeyed building in Wall Tax Road, Madras was originally owned by one Unnamalai Ammal.
She was using the first floor for her residence and had leased out the ground floor to the appellant herein to be used as a godown for storing his business ware.
It is common ground the appellant 's shop is situate in an adjoining building.
The tease was for a period of 10 years with an option for renewal for a further period of 5 years.
Unnamalai Ammal however refused to renew the lease and filed a suit against the appellant for eviction on the ground she bona fide.
required the ground floor also for her residential use.
The suit did not meet with success.
Unnamalai Ammal bequeathed the property to her son in law and grand son who are the respondents herein.
As legatees of the premises the respond ents filed a petition under Section 10(3)(c) of the Act praying for eviction of the appellant on the ground they bona fide required additional accommodation for their resi dential needs.
The Rent Controller upheld their claim, after finding the relevant factors of bona fide need and com 1178 parative hardship in their favour and ordered eviction.
On appeal by the appellant, the Appellant Authority reversed the findings of the Rent Controller and further held that the respondent were not entitled to recover possession of non residential premises for their residential requirements and dismissed the petition for eviction.
On further revision to the High Court by the respondents Remaprasada Rao, C.J. set aside the order of the Appellant Authority and resorted the order of eviction passed by the Rent Controller.
The aggrieved tenant has preferred this appeal.
The judgment under appeal is assailed by the appellant on four grounds viz. (1) Since the ground floor constitutes a building by itself within the meaning of Section 2(2) of the Act, the respondents can seek eviction of the appellant only under Section 10(3)(a)(i) of the Act and not under Section 10(3)(c); (2) Even if the respondents are entitled to invoke Section 10(3)(c) they can seek eviction only if they require the ground floor for non residential purposes and not for residential purposes; (3) In any event the factors of relative hardship be tween the parties weigh more in favour of the appellant than the respondent; and (4) The High Court was in error in interfering with the findings of fact rendered by the Appellate Authority while exercising its revisional powers under Section 25 of the Act.
Before proceeding to examine the merits of the conten tions, it will be relevant to state a few facts.
The ground floor, though used as a godown, is of a residential pattern and consists of two rooms and a hall besides a kitchen and toilet rooms.
The first floor is being used as their resi dence by the respondents, the other members of the family being the wife and daughter of the second respondent.
The first floor consists of only two rooms and it is the case of the respondents that the accommodation in the first floor has become inadequate for their growing residential needs.
It is also their case that the first respondent who is over 65 years of age finds it difficult to climb the stairs on account of his old age and frail health.
Their further plea is that the water supply to the first floor is inadequate in spite of the electric motor and pump set installed in the ground floor to pump up water.
In contrast the appellant is said to have a spacious three storeyed building in Door No. 39 adjoining the leased premises and also to have another godown close by.
1179 One of the contentions of the appellant was that the eviction proceedings were a continuation of the unsuccessful attempt by Unnamalai Ammal herself to get the tenant evicted and, therefore, the eviction petition lacked bona fides.
The High Court has rejected his contention and in our opinion, rightly too, because the respondents who are the legatees of the building cannot be attributed mala fides because of the earlier eviction suit filed by their predecessor in title.
We may also dispose of another contention of the appellant at this juncture itself which had found favour with the Appellate Authority.
The contention was that with the death of Unnamalai Ammal the family had become smaller and hence there was no need for additional accommodation.
This argu ment overlooks the fact that additional accommodation is sought for because of the difficulty experienced by the first respondent in climbing the stairs in his old age and the need for the second respondent 's daughter, growing in years, to have a room all for herself for keeping her books and reading at home.
We will now proceed to consider the legal contentions of the appellant in seriatim.
The first and foremost contention was that under the Act the ground floor constitutes a sepa rate building and as such the respondents can seek recovery of possession of the ground floor only under Section 10(3)(a)(i) and not under Section 10(3)(c).
For dealing with this contention, the relevant provisions of the Act need setting out.
Section 2 which is the definition Section reads as under: "Definitions: In this Act, unless the context otherwise requires (2) "building" means any building or hut or part of a building or hut, let or to be let separately for residential or non residen tial purpose and includes (a) . . (b) . .
Section 10 sets out the grounds on which the eviction of a tenant can be ordered.
For our purpose it is enough to refer to the following provisions alone: "Section 10(3)(a): A landlord may, subject to the 1180 provisions of clause (d), apply to the Con troller for an order directing the tenant to put the landlord in possession of the build ing (i) in case it is a residential building, if the landlord requires it for his own occupation or for the occupation of any member of his family and if he or any member of his family is not occupying a residential building of his own in the city, town or village concerned; (ii) ommitted (iii) in case it is any other non residential building if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, non residential building in the city, town or village concerned which is his own: (b) ommitted.
(c) A landlord who is occupying only a part of a building, whether residential or non resi dential, may, notwithstanding anything con tained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in posses sion thereof, it he requires additional accom modation for residential purposes or for purposes of a business which he is carrying on, as the case may be.
Provided that, in the case of an application under clause (c), the Controller, shall reject the application if he is satisfied that the hardship which may be caused to the tenant by granting it will outweigh the advantage to the landlord: Provided further that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building and may extend such time so as not to exceed three months in the aggregate.
" It is no doubt true that under Section 2(2) a building has been.
defined as not building or hut but also part of a building or hut let separately for residential or non resi dential purpose.
That would, however, only mean that a part of a building which has been let out or which is to be let out separately can also be construed as a separate and 1181 independent building without reference to the other portion or portions of the building where it is not necessary to treat the entire building as one Whole and inseparable unit.
A limitation on the definition has been placed by the Legis lature itself by providing that the application of the definition is subject to the contextual position.
Therefore, it follows that where the context warrants the entire build ing being construed as one integral unit, it would be inap propriate to view the building as consisting of several disintegerated units and not as one integerated structure.
Secondly there is vast difference between the words "resi dential building" and "non residential building" used in Section 10(3)(a)(i) and (iii) on the one hand and Section 10(3)(c) on the other.
While Section 10(3)(a)(i) and (iii) refer to a building only as residential or non residential Section 10(3)(c) refers to a landlord occupying a pan of a building, 'whether residential or non residential.
(Emphasis supplied).
Further more, Section 10(3)(c) states that a landlord may apply to the Controller for an order of evic tion being passed against the tenant "occupying the whole or any portion of the remaining pan of the building" (Emphasis supplied).
If as contended by the appellant each portion of a building let out separately should always be construed as an independent unit by itself then there is no scope for a landlord occupying "a part of a building" seeking eviction of a tenant "occupying the whole or any portion of the remaining part of the building".
It is, therefore, obvious that in so far as Section 10(3)(c) is concerned the Legisla ture has intended that the entire building, irrespective of one portion being occupied by the landlord and the other portion or portions being occupied by a tenant or tenants should be viewed as one whole and integrated unit and not as different entities.
To import the expansive definition of the word "building" in Section 2(2) into section 10(3)(c) would result in rendering meaningless the words "part of a building" occupied by the landlord and a tenant "occupying the whole or any portion of the remaining part of the build ing".
The third factor militating against the contention of the appellant is that if a portion of a building let out to a tenant is to be treated in all situations as a separate and independent building then Section 10(3)(c) will be rendered otiose because the landlord can never then ask for additional accommodation since Section 10(3)(a) does not provide for eviction of tenants on the ground of additional accommodation for the landlord either for residential or non residential purposes.
It is a well settled rule of interpretation of statutes that the provisions of the Act should be interpreted in such a manner as not to render any of its provisions otiose unless there are compelling reasons for the Court to resort to that extreme contingency.
1182 Yet another noteworthy feature to be borne in mind is that Section 10(3)(c) is governed by two provisos which is not the case when eviction orders are made under any of the sub clauses of Section 10(3)(a).
The first proviso enjoins the Controller to reject the application of a landlord under Section.
10(3)(c) for additional accommodation, even where the need of the landlord is found to be genuine, if the hardship caused to the tenant by an order of eviction will outweigh the advantage to the landlord by the said order.
The second proviso empowers the Controller to give the tenant a reasonable time not exceeding three months in the aggregate to vacate the portion in his occupation and put the landlord in possession thereof.
Obviously the second proviso has been made to facilitate the tenant to find alternate residential or non residential accommodation elsewhere, since the landlord who is already in possession of a portion of the building can put up with the hardship of inadequate accommodation for a period of three months at the most.
The above analytical consideration of the relevant provisions bring out clearly the fallacy contained in and the untenability of the contention that the ground floor occupied by the appellant is a distinct and separate unit and as such the respondents cannot seek his eviction under Section 10(3)(c) of the Act.
This aspect of the matter has been considered in varying degrees in the following decisions and interpreted in ac cordance with our conclusion; vide Saraswathi Sriraman vs
P.C.R. Chetty 's Charities, ; Mohammed Jarfar vs Palaniappa Chettiar, and Chellammal vs Accommodation Controller, Even the Division Bench ruling relied on by Mr. Sampath concedes this position and has observed as follows: "Therefore, if the context in a particular provision requires that the word building should not be understood as defined in Section 22, certainly it is open to the Court to give the normal, natural and ordinary meaning which it is capable of and for that purpose, it is not necessary to rely upon any decision.
(vide page 153 of the report).
" Taking up now for consideration the second contention, there were conflicting decisions in the Madras High Court and this led to a reference of the case in Thirupathi vs Kanta Rao, [1981] Vol.
1 ILR Madras 128 to a Division Bench.
While the Division Bench has taken one view.
a Division Bench of the Andhra Pradesh High Court has 1183 taken a contrary view on the identical issue.
It is perti nent to state here that the provisions of the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act are in pari tnetria with the provisions of the Madras Act in so far as Sections 10(3)(a) and (c) are concerned.
The conflict was with reference to the interpretation of Section 10(3)(c) viz. whether a landlord occupying a part of a building for residential purposes is entitled to seek eviction of a tenant occupying the whole or any portion of the remaining part of the building for non residential purposes for his (landlord 's) residential use and vice versa.
While it was held in Govindan vs Rajagopal Nadar, that a landlord can seek eviction of a tenant under Section 10(3)(c) for additional residential purposes only if the tenant also is putting the building to residential use and likewise a landlord can seek additional accommodation for business purposes only if the tenant is also putting the building to non residential use, it was held to the contrary in Premchand Motichand vs Hatneed Sultan, ; P.I. Kurian vs Government of Tamil Nadu, 85 L.W. 364 and Saraswathi Sriraman vs P.C.R. Chetty 's Charities (supra).
The latter view was taken by Ismail, J., also, as he then was, in an unreported case viz. Rangaswami Reddiar vs Minor N. Jayaraj (C.R.P. No. 2380 of 1977).
Subsequently in the referred case, the Division Bench consisting of Ismail, C.J. and Rathnam J. rendered judgment in Thirupathi vs Kanta Rao, (supra).
(Ismail, C.J., changing his earlier view) holding that a landlord will be entitled under Section 10(3)(c) to seek additional accommodation for residential purposes only if it is a residential building in the occupa tion Of a tenant and likewise a landlord can seek additional accommodation for non residential purposes only if the building is a non residential one.
The Division Bench has further taken the view that the non obstante clause is only to entitle a landlord to seek eviction even when he is in possession of a portion of a building .belonging to him and nothing more.
In a later decision G.N. Rajaram vs Mukunthu N. Venkata rama Iyer.
MLJ 1985(2) 173 the Division Bench ruling has been followed and eviction was ordered of a tenant occupying a room in the ground floor of a residential building for his business purposes.
On the other hand a Division Bench of the Andhra Pradesh High Court in K. Parasuramaiah vs Lakshmamma, AIR 1965 220 has held that if a landlord satisfies the Controller that he wants additional accommodation in the same building for his residential or non residential re quirements then notwithstanding the user to which the tenant was putting the 1184 leased portion.
the landord is entitled to an order of eviction so that he can re adjust the additional accommoda tion in the manner convenient to him and it is not necessary that the additional accommodation sought for should be used by the landlord for the same purpose for which the tenant sought to be evicted was using it.
In the words of the Division Bench: "Clause (c) makes it twice clear that a land lord who occupies a part of a building, wheth er residential or nonresidential can ask for eviction of a tenant occupying another portion whatever may be his requirements, whether residential or non residential".
For holding so, the Andhra Pradesh High Court has taken the words "notwithstanding anything in clause (a)" as having over riding effect over both the conditions laid down in Section 10(3)(a) and (iii) viz. a landlord (1) not having a building of his own for residential or nonresidential pur poses; and (2) seeking the eviction of a tenant from resi dential premises only for residential purposes; and (3) seeking eviction of a tenant from non residential premises only for nonresidential purposes.
We will now examine for ourselves the interpretation to be given to Section 10(3)(c).
In so doing we will first see the legislative intent behind Section 10(3)(c) before con sidering the thrust given by nonobstante clause in it.
Since Section 10(3)(c) provides for both situations viz. a land lord occupying a part of a building which is residential or non residential, the sub clause can be read separately so as to have reference exclusively to a residential building or a non residential building.
In Thirupathy vs Kanta Rao, (supra) the learned Judges have noticed this position and set out Section 10(3)(c) distinctively.
But in so doing they have restricted the relief of additional accommodation to the landlord for residential purposes to residential build ings alone and the relief of additional accommodation for business purposes to nonresidential buildings alone and therein the error has crept in.
In our view.
this restric tion is not envisaged by Section 10(3)(c).
The proper way of distinctively viewing the Section should be as under: "A landlord who is occupying only a part of a residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession 1185 thereof.
if he requires additional accommoda tion for residential purposes or for purposes of a business which he is carrying on, as the case may be." "A landlord who is occupying only a part of a non residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession thereof, if he requires additional accommodation for residential purposes or for purposes of a business which he is carrying on, as the case may be.
" If clause (3) is construed in this manner there can be no scope for a contention that a landlord cab seek addition al accommodation for residence only if the building is a residential one and likewise he can seek additional accommo dation for business purposes only if the building is a non residential one.
There are several reasons which persuade us to take this view.
In the first place it has to be noted that Section 10(3)(c) stands on a different footing from Section 10(3)(a)(i) and Section 10(3)(a)(iii).
It is not a case of a landlord not occupying a residential or non residential building of his own but a case of a landlord occupying a part of a residential or non residential building of his own and putting it to such user as deemed fit by him.
Since the requirement of additional accommodation by the landlord is with reference to the manner of his user of that part of the building which is in his occupation it is the nature of that requirement that should prevail over the manner of user of the tenant of the portion leased out to him.
In other words, the additional accommodation is for extending the user of the building by the landlord to the leased portion for the same purpose for which the portion not leased out is being put to.
Such being the case which the landlord is genuinely in need of additional accommodation for residential or non residential requirements, as the case may be, he can be given relief only it the tenant occupying the other portion of the building is asked to vacate.
If it is to be held that Section 10(3)(c) can be invoked only if the nature of the requirement of the landlord and the nature of user of the leased portion by the tenant coalesce then the landlord will be left without any remedy when the nature of his need and the nature of the user of the leased portion by the tenant do not tally.
Take for example, a case where a landlord has got grown up sons and daughters or there is a married son and growing daughters or there 1186 are old parents who cannot climb stairs etc.
If the landlord is to be refused additional accommodation for residential purposes merely because the tenant is making use of the leased portion for nonresidential purposes the landlord would be placed in an awful predicament.
Similarly.
if a landlord bona fide requires additional accommodation for his business and his business would suffer serious detriment if he cannot secure additional accommodation, it would cause great hardship and gave injustice to the landlord if he is to be denied accommodation merely because the tenant is making use of the leased portion for residential purposes.
It is, therefore, that the Legislature has provided Section 10(3)(c) in its present form so that a landlord bona fide requiring additional accommodation is not confronted with a permanently irremediable situation.
In its anxiety that Section 10(3)(c) should fully serve the purpose for which it has been enacted the Legislature has also added the non obstante clause.
Having regard to the object of Section 10(3)(c) and the terms in which it is worded there is war rant and justification for holding that the non obstante clause has been provided to have overriding effect over both the restrictions placed by Section 10(3)(a)(i) and (iii) viz. landlord seeking eviction of a tenant should not be occupying a building of his own and secondly the nature of user of the leased property by the tenant must correspond to the nature of the requirement of the landlord.
In construing Section 10(3)(c) it is pertinent to note that the words used are "any tenant" and not "a tenant" who can be called upon to vacate the portion in his occupation.
The word "any" has the following meaning: "Some; one out of many; an indefinite number.
One indiscriminately of whatever kind or quantity.
" Word "any" has a diversity of mean ing and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject matter of the statute.
It is often synonymous with "either", "every" or "all".
Its generality may be restricted by context; (Black 's Law Dic tionary; Fifth Edition).
Unless the legislature had intended that both classes of tenants can be asked to vacate by the Rent Controller for providing the.
landlord additional accommodation.
be it for residential or non residential 1187 purposes.
it would not have used the word "any" instead of using the letter "a" to denote a tenant.
Thirdly it is significant to note that there is no reference in clause (c) to the nature of the user of the tenant occupying the leased portion of the building viz. whether he is using it for residential or nonresidential purposes.
If it was the intention of the legislature that only a tenant occupying a residential portion of a building can be asked to vacate for providing additional residential accommodation to the landlord and correspondingly a tenant occupying a portion of a building for non residential pur poses alone being asked to vacate for the nonresidential requirements of the landlord, the legislature would have provided specific stipulations to that effect in clause (c).
On that ground also it must be construed that clause (c) has been provided.
in order to enable a landlord to seek the eviction of any tenant occupying the whole or any portion of the remaining part of the building for residential or non residential purposes for satisfying the additional needs of the landlord irrespective of whether the need is for resi dential or business purposes.
The words "as the case may be" in sub clause (c) have been construed by the Division Bench of the Madras High Court to mean that they restrict the landlord 's right to secure additional accommodation for residential purposes only in respect of a residential building and in the case of additional accommodation for business purpose only to a non residential building.
We are of the view that in the context of sub clause (c).
the words "as the case may be" would only mean "whichever the case may be" i.e. either residential or non residential.
To sum up, the requirement of additional accommodation pertains to the need of the landlord and the manner of user of the portion of the building already in his occupation and consequently the bona fides of his requirement will outweigh all the restrictions imposed by Section 10(3)(a) i.e. nature of the building.
nature of user of the leased portion by the tenant etc.
Even so, the Legislature has taken care to safeguard the interests of the tenant by means of the provi sos to the sub clause.
The first proviso enjoins the Con troller to balance the interests of the landlord and the tenant and to refuse eviction if the hardship caused to the tenant will outweight the advantage to the landlord by reason of the evicton.
The second proviso empowers the Controller to grant adequate time to the tenant upto a maximum of three months to vacate the building and secure accommodation elsewhere.
there.fore.
follows that once a landlord is able to satisfy the 1188 Controller that he is bona fide in need of additional accom modation for residential or non residential purposes and that the advantage derived by him by an order of eviction will outweigh the hardship caused to the tenant, then he is entitled to an order of eviction irrespective of any other consideration.
In the light of our conclusion we approve the ratio in K. Prasuramaiah vs Lakshmamma, (supra) and disapprove the ratio in Thirupathy vs Kanta Rao.
(supra).
The third and fourth question posed for consideration do not present any difficulty.
The Rent Controller has gone into the question of comparative hardship and rendered a finding in favour of the respondents.
The High Court has observed that the Appellate Authority.
while reversing the order.
has failed to take due note of relevant materials placed by the respondents.
The High Court has, therefore, held that the Appellate Authority 's findings have been vitiated because of its non advertance to the evidence and the apparent errors noticed in its assessment of the compar ative hardship between the parties.
In so far as the High Court interfering with the findings of the Appellate Author ity is concerned, the High Court has justified its action by pointing out that Appellate Authority had applied wrong tests and had also failed to give effect to unchallenged findings of the Rent Controller and hence the order of the Appellate Authority suffered from manifest errors in the exercise of its jurisdiction.
The High Court was, therefore.
entitled to allow the revision and consequently the third and fourth contentions also fail.
In the result we find no merit in the appeal and accord ingly it will stand dismissed.
Mr. Sampath, learned counsel for the appellant made a request that in the event of the appeal being dismissed, the appellant should be given suffi ciently long time to secure another godown and shift his stock of goods to that place.
Mr. Padmanabhan learned coun sel for the respondents very fairly stated that the respond ents are agreeable to give time to the appellant till 31.12.87 to vacate the leased portion.
Accordingly we order that in spite of the dismissal of the appeal the appellant will have time till 31.12.87 to vacate the ground floor premises in his occupation and deliver peaceful and vacant possession to the respondents subject however to the appel lant filing an under taking in the usual terms in this behalf within 4 weeks from today failing which the respond ents will be entitled to recover possession of the building forthwith.
The parties will bear their respective costs.
P.S. S Appeal dis missed.
| The respondent was assessed to income tax for assessment year 1960 61 under section 23(3) of the, Income Tax Act, 1922 and for the assessment years 1961 62 and 1962 63 under section 143(3) of the income Tax Act, 1961.
The validity of the notices issued under section 147(a) read with section 148 of the Act of 1961 in respect of these three assessment years was challenged by the respondent under Act 226.
Though the notices did not disclose any material to justify their issue, the Income Tax Officer in his return before the High Court stated that during the course of assessment for the year 1963 64 of the wife of the respondent, she contended having received valu able assets from the respondent between 11th December 1955 and 28th October, 1960 without adequate consideration in money or money 's worth.
The income from the said assets which should have been included in the return of the re spondent was not so included by him and that the capital gains arisen therefrom was also not included or disclosed by the respondent In his returns.
A Learned Single Judge relying upon the decision of the Supreme Court in V.D.M. RM.
M. RM.
Mathiah Chettiar vs Commissioner of Income tax, Madras quashed the notices.
The appeal of the Revenue failed before the Divi sion Bench. ' Dismissing the appeal, HELD: By failure of the assessee to include the share income of his wife and minor child in his return, it cannot be deemed that he has failed to disclose fully and truly all material facts necessary for the assessment within the meaning of section 34(1)(a) of the Indian Income Tax Act.
[1107B] V.D.M. RM.
M. RM.
Muthiah Chettiar vs Commissioner of Income tax, Madras, ; Malegaon Electricity Co. (P) Ltd. vs 1103 Commissioner of Income tax, Bombay, and Commis sioner of Income tax, Kerala vs Smt.
P.K. Kochammu Amma, Peroke, , followed.
|
Civil Appeal No. 763 of 1977.
From the Judgment and Order dated 30.7.1976 of the Calcutta High Court in Appeal No. 167 of 1972.
Raja Ram Agrawal, K.B. Rana and Praveen Kumar for Khaitan & Co. for the Appellant.
A. Subba Rao, P. Parmeshwaran and A.D.N. Rao for the Respondents.
The Judgment of the Court was delivered by OJHA, J.
This appeal by special leave has been preferred against the judgment dated 30th July, 1976 of the Calcutta High Court in Appeal from Original Order No. 167/1972.
The facts in nutshell necessary for the decision of this appeal are that the Appellant Company, a licensee under the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act) carried on during the relevant time, namely, 1st September, 1961 to 26th September, 1963, business of manufacturing different types of glasswared which were excisable goods under the Act.
The appellant used to present A.R.I. forms accompanied with price list of the goods and after paying excise duties calculated on the basis of the price lists used to remove the goods.
The appellant 's office was searched by the Excise Authorities on 26 September, 1963 and several documents, books and papers were seized.
As a consequence of this search and seizure it transpired that the appellant was maintaining two sets of bills.
The bills of one set were those on the basis of which the appellant used to pay excise duty 46 before clearance of the goods and those of the other were such which were never issued to the dealers.
In these two sets of bills inter alia the rate of discount was differently shown.
A notice dated 26th March, 1968 was served on the appellant by the Assistant collector of Central Excise, Calcutta II Division, Calcutta stating that it appeared that the appellant had, during the relevant period, not paid excise duty on the goods at the prices at which they were sold but duty was paid at lower rates declared by it.
The appellant was required to show cause as to why duty amounting to Rs. 1,43,633.84 p. on the prices at which the goods were actually sold, as found on scrutiny of sale vouchers/sale documents should not be recovered under rule 10A of the Central Excise Rule, 1944 (hereinafter referred to as the Rules.) The appellant, in reply to the show cause notice, inter alia asserted that it was the provisions of Rule 10 and not Rule 10A of the Rules which were attracted to the facts of the instant case and that consequently the initiation of proceedings against the appellant was barred by time.
This plea did not find favour with the Excise Authorities and the appellant was required, by order dated 26th August, 1968, to pay to the Central Government, an additional duty of Rs. 1,41,829.11 p.
This order was challenged by the appellant before the High Court under Article 226 of the Constitution of India.
A learned Single Judge of the High Court accepted the contention of the Rule 10 and not Rule 10A of the Rules was applicable and on this view the order dated 26th August, 1968 was quashed.
Aggrieved by that order, the respondents preferred an appeal before a Division Bench of the High Court.
The judgment of the learned Single Judge was reversed and on the finding that it was a case falling under Rule 10A, the writ petition was dismissed by the judgment under appeal.
The only point which has been urged by learned counsel for the appellant in support of this appeal is that the learned Single Judge was right in taking the view that the case fell within the purview of Rule 10 of the Rules and the Division Bench committed an error in reversing his judgment.
For the respondents on the other hand, it has been urged that on the fact found by the division Bench and indeed on the case set up by the appellant itself no exception could be taken to the finding of the Division Bench that it was Rule 10A of the Rules and not Rule 10 which was attracted to the facts of the instant case.
In order to appreciate the respective submissions made by learned counsel for the parties it would be useful to extract Rules 10 and 10A.
They read as hereunder: "10.
Recovery of duties or charges short levied or errones 47 ously refunded When duties or charges have been short levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through mis statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owning to such cause, erroneously refunded, the person chargeable with the duty or charge so short levies, or to whom such refund has been erroneously made, shall pay the deficiency or the amount paid to him in excess as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners ' account, current, if any, or from the date of making the refund." "10A. Residuary powers for recovery of sums due to Government Where these Rules do not make any specific provision for the collection any duty, or of any deficiency in duty has for any reason been short levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall on a written demand made by the proper officer, be paid to such person and at such time and place as the proper officer may specify.
In elaboration of his submission that it was a case covered by Rule 10 of the Rules learned counsel for the appellant pointed out that since the case of the respondents was that on the basis of the documents seized during the search of the appellant 's office on 26th September, 1963 it was found that the duty paid by the appellant on the basis of price lists furnished by the appellant at the time of clearance of the goods was deficient, it was a case where duty had been short levied "through mis statement as to the quantity, description or value of such goods on the part of the owner" as contemplated by Rule 10.
We find it difficult to agree with the submission.
The procedure adopted by the appellant/was indicated by the appellant under its letter dated 23rd March, 1961, a portion whereof as extracted by the learned Single Judge reads as hereunder: "We enclose herewith our three price lists for 1) Bottles and phials 2) Glass Wares and 3) Fancy Wares for the purposes of provisional assessment.
These price are inclusive of Central Excise duty.
As regards Trade discounts to 48 be deducted from the said prices as per Section 4 of the Act we declare that 1) 25% should be deducted from the price list for bottles and phials.
2) 35% from the price list for glass wares and 3) 20% from the price list for fancy wares over and above necessary deduction for Central Excise duty included in the prices.
" The learned Single Judge has also pointed out that the appellant used to clear the goods by executing bond and that in the specimen copy of the bond produced in court it was stated that whereas final assessment of excise duty of glass and glasswares made by the appellant from time to time could not be made for want of full particulars as regards value, description, quality or proof thereof or for non completion of chemical or other tests and whereas the appellant had requested the Excise Authorities as per Rule 9B of the Rules to make provisional assessment of excise duty of the goods pending final assessment, the appellent was giving a guarantee to the extent of the sum mentioned in the bond for payment of the duties.
The learned Single Judge has also pointed out that it appeared to be the common case of the parties that in order to facilitate the assessment of the goods by Excise Authorities, the appellant used to file the price list in advance and after acceptance provisionally of the price list, the goods used to be cleared and if subsequently and discrepancy was detected or found, the same used to be paid by the appellant.
The question as to whether Rule 10 or Rule 10A of the Rules was applicable has to be determined in the background of the appellant as indicated above.
The legal position that Rule 10A does not apply where the case is covered by Rule 10 of the Rules is well settle in view of the decision of this Court in N.B. Sanjana vs Elphinstone Mills, ; , on which reliance has been placed by learned counsel for the appellant.
Consequently, Rule 10A could be attracted only if the case does not fall within the purview of Rule 10.
It was conceded before the learned Single Judge on behalf of the respondents that the respondents were not proceeding under the provision of Rule 9B.
On this basis and on his own finding also that Rule 9B was not attracted, the learned Single Judge held that it was not a case of provisional assessment but a case of regular assessment in pursuance whereof duty was paid by the appelant and that since the case of the respondents was that the appellant had manufactured documents as was revealed as a consequence of the search and seizure referred to above it was a case of short levy due to mis statement by the appellant.
Consequently, the case clearly fell 49 within the purview of Rule 10 of the Rules.
The Division Bench of the High Court in appeal did not, and in our opinion rightly, subscribe to the aforesaid finding.
Simply because Rule 9B of the Rules was conceded not to have been taken recourse to by the respondents so that a provisional assessment could be said to have come into existence in its statutory sense as contemplated by the said rule when duty was paid at the time of clearance of the goods, the conclusion was not inescapable, that a final assessment had come into being at that time.
In our opinion, in view of the procedure adopted by the appellant referred to above it was apparently a case where duty was calculated on the basis of price lists supplied by the appellant to facilitate the clearance of the goods and the correct amount of duty payable was yet to be determined after subsequent varification and appellant was under an obligation to pay, on the basis of the bond executed by them, the difference of the amount of the duty paid at the time of clearance of the goods and the amount found payable after subsequent verification.
In the judgment appealed against the Division Bench of the High Court has found that there was no assessment as is understood in the eye of law but only a mechanical settlement or adjustment of duties on the basis of the sale prices filed by the appellant had been made and at best, it was a case of an incomplete assessment which the Excise Authorities were entitled to complete under Rule 10A.
In taking this view the Division Bench of the High Court has relied on a decision of this Court in Assistant Collector of Central Excise, Calcutta Division vs national Tobacco Co. of India Ltd.; , In that case also the Company used to furnish quarterly price lists which used to be accepted for purpose of enabling the Company to clear its goods and according to the Excise Authorities these used to be verified afterwards by obtaining evidence of actual sale in the market before issuing final certificates that the duty had been fully paid up.
The prices of the goods to be cleared were furnished by the Company on forms known as A.R.I. forms in that case also.
It was held that only a mechanical adjustment for settlement of accounts by making debit entries was gone through and that it could not be said that any such adjustment was assessment which was a quasi judicial process and involved due application of mind to the fact as well the requirements of law.
With regards to the debit entries it was held that the making of such entries was only a mode of collection of tax and even if payment or actual collection of tax could be spoken of as a de facto "levy" it was only provisional and not final.
It could only be clothed or invested with the validity after carrying out the obligation to make an assessment to justify it.
It was also held that it was the process of adjustment that really determined whether levy was short or complete.
It was not a factual or presumed levy which could in 50 a disputed case prove an "assessment.
" This had to be done by proof of the actual steps taken which constitute assessment.
We are of the opinion that in view of the procedure adopted by the appellant in the instant case referred to above and the law laid down by this Court in the case of national Tobacco Co. of India Ltd. (supra) it is not possible to take any exception to the finding of the Division Bench in the judgment appealed against that it was a case which fell within the purview of Rule 10A and not Rule 10 of the Rules.
In the result, we find no merit in this appeal.
It is accordingly dismissed with costs.
N.V.K. Appeal dismissed.
| The appellant company a licensee under the central Excises and Salt Act, 1944 and during the relevant period namely 1st September, 1961 to 26th September, 1963 carried on the business of manufacturing different types of glass wares which were excisable goods under the Act.
The appellant used to present A.R.I. forms accompanied with price lists of the goods and after paying excise duties calculated on the basis of the price lists used to remove the goods.
The office of the appellant was searched by the Excise Authorities on 26th September, 1963 and several documents, books and papers were seized, and as a consequence thereof it transpired that the appellants were maintaining two sets of bills.
The bills of one set were those on the basis of which the appellant used to pay excise duty before clearance of the goods and those of the other were such which were never issued to the dealers.
In these two sets of bills, the rate of discount was differently shown.
A notice dated 26th March, 1968 was served on the appellant by the Assistant Collector stating that it appeared that during the relevant period the appellant had not paid excise duty on the goods at the prices at which they were sold, but duty was paid at lower rates and requiring it to show cause as to why duty on the prices at which the good were actually sold, as found on scrutiny of sale vouchers/sale documents should not be recovered under Rule 10A of the Central Excise Rules, 1944.
In reply the appellant asserted that it was the provision of Rule 10 and not Rule 10A which was attracted to the facts and consequently the initiation of proceedings was barred by time.
This plea did not find favour with the Excise Authorities, and the appellant was required to pay the additional duty of Rs. 1.41 lakhs.
The aforesaid order was challenged by the appellant before the 44 High Court under Article 226 of the Constitution and a Single Judge accepted the contention of the appellant the Rule 10 and not Rule 10A of the Rules was applicable and on this view quashed the order dated 26th August, 1968 The respondents preferred and appeal to the Division Bench which has reversed the order of the Single Judge, on the finding that it was a case falling Rule 10A and dismissed the writ petition.
In the appeal to this Court it was contended that the single Judge was right in taking the view that the case fell within the purview of Rule 10 of the Rules and that the Division Bench committed an error in reversing the Judgment, while the Revenue contested the appeal urging that on the facts found by the division Bench, and indeed on the case set up by the appellant itself no exception could be taken to the finding of the Division Bench that it was Rule 10A and not Rule 10 which was attracted to the facts of the case.
Dismissing the Appeal, this Court, HELD: 1.
The question as to whether Rule 10 or Rule 10A was applicable has to be determined in the background of the procedure which was followed.
The legal position is that Rule 10A does not apply where the case is covered by Rule 10 of the Rules.
[48E] N.B. Sanjana vs Elphinstone Mills, ; relied on.
Simply because Rule 9B of the Rules, was conceded not to have been taken recourse to by the respondents so that provisional assessment could be said to have come into existence in its statutory sense as contemplated by the said rule when duty was paid at the time of clearance of the goods, the conclusion was not inescapable, that a final assessment had came into being at that time.
[49A B] 3.
In view of the procedure adopted by the appellant it was apparently a case where duty was calculated on the basis of price lists supplied by the appellant to facilitate the clearance of the goods and the correct amount of duty payable was yet to be determined after subsequent verification, and appellant was under an obligation to pay, on the basis of the bond executed by them, the difference of the amount of the duty paid at the time of clearance of the goods and the amount found payable after subsequent varification.
[49B C] 4.
The Division Bench of the High Court has found that there was no assessment as is understood in the eye of law, but only a mechanical settlement or adjustment of duties on the basis of the sale prices filed by the appellant had been made and at best, it was a case of incomplete assessment which the Excise Authorities were entitle to complete under Rule 10A.[49D] Assistant Collector of Central Excise, Calcutta Division vs National Tobacco Co. of India Ltd., ; , referred to.
The instant case therefore falls within the purview of Rule 10A and not Rule 10 of the Rules.
|
Civil Appeal No. 5933 1983.
From the Judgment and Order dated 19.2.
1980 of the Allahabad High Court in Civil Misc.
Petition No. 5860 of 1978.
R.K. Jain, Ms. Abha R. Sharma and R.P. Singh, for the Appellant.
M .C. Dhingra for the Respondents.
This appeal by special leave involves the question as to the interpretation of the provisions of Section 29 A of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as 'the Act ').
967 The Act was enacted by the U .P.
State legislature to provide, in the interest of the general public, for the regulation of letting and rent of, and the eviction of tenants from certain classes of buildings situated in urban areas, and for matters connected therewith.
The Act, as originally enacted, was confined in its application to buildings only.
It was amended by U.P. Act XXVIII of 1976 whereby Section 29 A was inserted with a view to give pro tection against eviction to certain classes of tenants of land on which building exists.
The relevant provisions of Section 29 A read as under: "(2) This Section applies only to land let out, either before or after the commencement of this Section, where the tenant, with the landlord 's consent has erected any perma nent structure and incurred expenses in execution thereof.
XXX XXX XXX (4) The tenant of any land to which this Section applies shall be liable to pay to the landlord such rent as may be mutually agreed upon between the parties, and in the absence of agreement, the rent determined in accordance with sub section (5).
(5) The District Magistrate shall on the application of the landlord or the tenant determine the annual rent payable in respect of such land at the rate of ten per cent per annum of the prevailing market value of the land, and such rent shall be payable, except as provided in sub section (6) from the date of expiration of the term for which the land was let or from the commencement of this Section, whichever is later.
XXX XXX XXX (7) The provisions of this section shall have effect, not withstanding anything to the contrary contained in any contract or instrument or in any other law for the time being in force.
" The appellant is the owner of a plot of land measuring 30 x 65 sq.
situated at Garhmukteshwar Road (Azad Road) Meerut.
The said plot of land was let out by the appellant to the respondent No. 1 on March 20, 1957 at an annual rent of Rs. 170.
After the said plot of 968 land had been let out to him, respondent No. 1 with the consent of the appellant constructed a building over the said plot in 1965.
After the enactment of Section 29 A the appellant submitted an application on September 29, 1976, before the District Supply Officer/Delegated Authority, Meerut, for fixation of appropriate rent for the plot of land under sub section (5) of Section 29 A.
The said appli cation of the appellant was dismissed by the District Supply Officer Delegated Authority by order dated April 14, 1978 on the view that the provisions of sub section (5) of Section 29 A for fixation of rent are applicable to those cases only in which there is no agreed rent and that in this case both the parties have accepted that the rent of land is Rs. 170 per year has been fixed on the basis of mutual agreement and, therefore, the question of re fixation of rent does not arise.
Feeling aggrieved by the said order of the District Supply Officer the appellant filed a writ petition in the High Court of Judicature at Allahabad under Article 226 of the Constitution of India.
The said writ petition was dis missed by a Division Bench of the said High Court by order dated February 19, 1980.
The learned Judges have held that under Section 29 A the District Magistrate has jurisdiction to determine the rent only in those cases where there is no agreement relating to rent and if there is an agreement between the landlord and the tenant then the District Magis trate has no jurisdiction to determine the rent.
The learned Judges have further found that in the instant case admitted ly an agreement existed between the appellant and the tenant that the tenant shall pay rent at the rate of Rs. 170 per annum to the appellant and as such there could be no en hancement of the rent under sub section (5) of Section 29 A. Feeling aggrieved by the said decision of the High Court the appellant has filed this appeal after obtaining special leave to appeal.
Shri R.K. Jain, the learned counsel for the appellant has urged that sub section (4) of Section 29 A postulates determination of rent in accordance with sub section (5) in cases where the rent has not been mutually agreed upon between the parties.
The submission of Shri Jain is that the expression "such rent as may be mutually agreed upon between the parties" in sub section (4) of Section 29 A means rent which has been mutually agreed upon after the enactment of Section 29 A and any agreement prior to the said enactment would not preclude determination of rent under Section 29 A of the Act.
In support of this submission Shri Jain has invited our attention to the decision of the Full Bench of the Allahabad High Court in Trilok Chand vs Rent Control and Eviction Officer and Another, [ 969 In Trilok Chand vs Rent Control and Eviction Officer case (supra) a Full Bench of the High Court has considered the correctness of the decision of the Division Bench in the present case and has construed the provisions of Section 29 A of the Act.
In that case it has been held that sub section (4) of Section 29 A precludes determination of rent only in those cases where the agreement fixing the rent was entered into subsequent to the coming into force of Section 29 A.
It has been observed: "The reason is this, sub section (4) applies to the land to which Section 29 A applies.
It provides that the tenant shall be liable to pay to the landlord such rent as may be agreed between the parties.
In the absence of such agreed rent, the sub section further provides that the tenant is liable to pay the rent determined in accordance with subsec tion (5).
These terms are clear enough and indicate that the agreement envisaged thereunder is not the agreement, existed prior to coming into force of Section 29 A.
It refers to subsequent agreement only.
The words "such rent as may be mutually agreed upon between the parties" refers to future agreement and not the past agreement.
Subsection (4) again emphasises "such rent".
Such rent, in the context means the rent to be mutually agreed upon by parties.
Sub section (4) further states that in the absence of agreement, the rent has to be determined in accordance with sub section (5)." (p. 636) "Yet another reason to support our view could be found from sub section (7).
It provides that notwithstanding anything to the contrary contained in any contract or instrument or in any other law for the time being in force, the provisions of Section 29 A shall have effect.
It means clearly that the agreement if any existing on the date of coming into force of Section 29 A is no bar for enforcing the rights under sub section (5).
Sub sections (4) and (5) shall prevail and not the antecedent agreement, if any." (p. 636) The learned Judges of the Full Bench have overruled the decision of the Division Bench in the present case.
We are in agreement with the view propounded by the Full 970 Bench in Trilok Chand 's case (supra).
In our opinion, the words "such rent as may be mutually agreed upon between the parties" in subsection (4) of Section 29 A envisage an agreement with regard to rent entered by the landlord and tenant after the coming into force of Section 29 A. An agreement prior to the commencement of Section 29 A would not preclude determination of rent under sub section (5) of Section 29 A.
In this context it may be mentioned that the words "may be" used in sub section (4) of Section 29 A are much oftener used with reference to the future than the past or the present (Pollock C.B. in Brown vs Batchelor, 25 L .J. exhibit 299, Stroud 's Judicial Dictionary, 5th Edn. P. 1575).
In sub section (4) of Section 29 A the words "may be" are preceded by the word "as" and are followed by the words "mutually agreed upon" which indicate that the words are used with reference to the future.
The provisions of sub section (7) which give overriding effect to the provisions of Section 29 A over an existing contract also lend support to this construction.
We are, therefore, unable to uphold the view of the learned Judges of the Division Bench of the High Court in this case that there could be no enhancement of the rent under sub section (5) of Section 29 A in view of the agreement between the appellant and the tenant that the tenant shall pay rent at the rate of Rs. 170 per annum.
The appeal is, therefore, allowed.
The judgment and order of the High Court dated February 19, 1980 as well as the order dated April 14, 1978, passed by the District Supply Officer/Delegated Authority, Meerut, are set aside and the matter is remanded to the District Supply Officer/Delegated Authority, Meerut for consideration of the application submitted by the appellant for fixation of rent under Section 29 A of the Act in accordance with law.
No order as to costs.
G.N. Appeal allowed.
| For the purposes of a housing project, some land was acquired by way of a notification under the Land Acquisition Act.
The Respondent Society claiming that it had entered into a contract with the owners for purchasing the very property, applied for exemption under the Urban Ceiling Act.
The exemption prayed for was refused initially, but was granted later.
Both the Respondent Society and the owners of the said land filed Writ Petitions before the High Court for quashing of the acquisition proceedings.
The acquisition was upheld by Single Judge, but on appeal by Respondent Society, the Full Bench held the acquisition proceedings to be inopera tive.
Against these orders, the appellant Society which had entered into an agreement with the Municipal Corporation, and as such interested in the acquisition, has preferred the appeals.
Meanwhile, the State Government withdrew the exemption granted under the Urban Ceiling Act.
One of the owners filed a Writ Petition before the High Court challenging the with drawal.
The High Court took note of the fact that the mat ters were pending in this Court and dismissed the petition.
Aggrieved against the order of dismissal, a petition for special leave has been filed.
The Respondent Society also moved the High Court by way of a Writ Petition challenging the withdrawal of exemption, which was pending and this Court transferred the same to itself, to be heard with the pending cases.
On 7.8.1985, this Court gave time to Counsel to consider various compromise proposals.
However, the desired compro mise did not come through.
On 23.8.1988 this Court passed an order holding that the 783 acquisition proceedings have to be revived.
However, no formal disposal was recorded since a settlement was being negotiated.
Even after about 2 yrs.
the settlement did not fructify.
Remitting the matters to the High Court, HELD: 1.
If the settlement does not fructify, the effect of the decision that the acquisition proceedings are to revive, would be that the claim to the land by Respondent Society would come to an end.
In that event, at the most that Society would only be entitled to such compensation as may be awardable in law.
If the acquisition proceeds the appellant Society and the Municipal Corporation would have to workout their mutual rights.
Apart from these, the two writ petitions challenging the withdrawal of the exemption by order dated 23.6.1983 would also have to be disposed of on merits.
In view of the fact that the owner 's writ peti tion was dismissed not on merits but on other considera tions, the said dismissal should be vacated and that writ petition should be heard along with Writ Petition No. 6500/83 as a common question arises for determination.
The order of the High Court dated 13th of June, 1988, is set aside and the High Court is directed to dispose of the Writ Petition afresh on merits.
[787B D] 2.
If the High Court is of the opinion that the matter should be settled and the entire land of the owners amount ing to 18 acres and 3 gunthas should be divided between the two Societies, it will be free to do so if Government also agrees thereto.
Since that arrangement would be with the consent of the State Government it would in such an event be open to the High Court to nullify the acquisition.
The observations made at different stages during the pendency of the proceedings in this Court may not be taken to be expres sion of opinion on merits and the High Court would be free to deal with the matter on its own discretion and in accord ance with law.
[787F G] 3.
In the event of the settlement not coming through, the acquisition proceedings would continue under the law and be concluded by the Land Acquisition Officer in accordance with law.
In the event of the acquisition working out, the two writ petitions against the withdrawal of exemption would not be sustainable as the land would vest in Government as a result of acquisition.
It would be open to the Government or the acquiring authority to take into account the effect of the laws of urban ceiling.
[787H; 788A] 4.
The civil appeals are also remitted to the High Court limited to 784 the consideration of the proposals ' for settlement in the light of the observations made in this Judgment.
Otherwise, they must be taken to have been concluded in this Court on the finding that acquisition proceedings are valid and shall be entitled to continue.
The special leave petition is disposed of with a direction that the writ petition in the High Court shall be re heard.
The transferred writ petition remitted to the High Court for disposal, [788B C] 5.
Money, if any, in deposit in the Registry of this Court to the credit of the parties shall be transferred to the High Court and shall be subject to such directions as the High Court may issue upon a final decision of the rele vant issues arising in the proceedings.
[788D]
|
Appeals Nos. 601 and 602 of 1963.
Appeals from the judgment and decree dated December 9, 1958, of the Allahabad High Court in First Appeals Nos.
373 of 1945 and 92 of 1946.
582 Civil Appeal No. 603 of 1963.
Appeal by special leave from the judgment and decree dated December 9, 1958 of the Allahabad High Court in First Appeal No. 374 of 1945.
N. D. Karkhanis and R. N. Sachthey, for the appellant (in all the three appeals).
G. section Pathak, Rameswar Nath, section N. Andley and P. I. Vohra, for the respondents (in all the three appeals).
Wanchoo, J. These three appeals raise common questions and will be dealt with together.
They arise out of two suits filed against the Government of India claiming damages for loss of goods which were destroyed by fire on the railway platform at Morar Road Railway Station.
One of the suits was filed by Birla Cotton Factory Limited, now represented by the West Punjab Factories Limited (hereinafter referred to as the Factory).
It related to six consignments of cotton bales booked from six stations on various dates in February and March 1943 by the Factory to Morar Road Railway Station.
In five of the cases, the consignment was con Signed to J. C. Mills while in one it was consigned to self.
The consignments arrived at Morar Road Railway Station or.
various dates in March Delivery was given of a part of one consignment on March 7, 1943 while the remaining goods were still in the custody and possession of the railway.
On March 8, 1943, a fire broke out at the Morar Road Railway Station and these goods were involved in the fire and severe damage was caused to them.
It is not necessary to refer to the details of the damage for that matter is not in dispute between the parties.
The case of the Factory was that the damage and loss was caused while the goods were in the custody and control of the railway administration and it was due to misconduct, negligence and carelessness on the part of the railway administration.
Consequently, the suit was filed for Rs. 77,000 and odd along with interest upto the date of the suit and interest pendente lite and future interest.
In the other suit there was one consignment of 45 bales of cotton yarn.
This consignment was booked from Belangunj to Morar Road Railway Station on February 22, 1943 and the railway receipt relating to this consignment was endorsed in favour of Ishwara Nand Sarswat who filed the suit.
This consignment arrived at 583 Morar Road Railway Station on February 23, 1943.
Ishwara Nand Sarswat went to take delivery of this consignment on March 10, 1943, his case being that be had received the railway receipt on March 9, 1943.
He then came to know that the consignment was involved in a fire which had taken place on March 8, 1943 and severe damage had been done to the consignment.
Ishwara Nand Sarswat therefore filed the suit on the ground that damage and loss was due entirely to the gross negligence of the railway administration.
He claimed Rs. 72,000,/ and odd as damages and also claimed interest upto the date of the suit and pendente lite and future interest.
The suits were resisted by the Government of India.
In the first suit by the Factory, it was pleaded that the Factory could not sue as , the goods in five of the receipts had been consigned to the J. C. Mills; secondly, it was pleaded that delivery had been given of atleast five of the consignments to the J.C. Mills before the fire broke out and the railway administration was not therefore responsible for the damage done by the fire, for it was the fault of the J. C. Mills not to have removed the goods immediately after the delivery; thirdly, it was pleaded that damages should have been granted at the rate of Rs. 38/ per bale, which was the price contracted for between the buyer and the seller and not at the market rate on the date of the damage as was done by the courts below , fourthly, it was pleaded that no interest should have been allowed for the period before the suit; and lastly, it was pleaded that the conduct of the railway administration was not negligent and there fore the railway was not bound to make good the loss.
On these pleas, five main issues relating to each of them were framed by the trial court.
The trial court found that the Factory could maintain the suit and decided accordingly.
It also found that in the case of five consignments by the Factory, delivery had been given before the fire broke Out and therefore the railway was not responsible; in the case of the sixth consignment it held that there was no proof that delivery bad been given before the fire broke out and that the railway would be responsible if negligence was proved.
On the quantum of damages, the trial court held that the damages had to be calculated at the market price on the date of the fire and not at the contract price between the buyer and seller.
On the question of interest, the trial court held that interest before the date of the suit should be allowed on equitable , rounds.
Finally, on the question of negligence, the trial court held that there was negligence by the railway and it was therefore liable for loss and damage caused by the fire which broke out on L7Sup./65 9 584 March 8, 1943.
As however, the trial court had held that delivery had been given in the case of five consignments, though the goods had not been removed, the railway was not responsible for the loss.
It therefore decreed the suit in part with respect to the sixth consignment about which it had found that there had been no delivery.
The same issues were raised in the suit by Ishwara Nand Saraswat.
But there was one additional issue in that suit based on the contention of the Government of India that it had given notice to Ishwara Nand that the consignment had arrived on February 23, 1943, Ishwara Nand however did not come to remove the goods till March 8, 1943 when the fire broke out; therefore it was urged that the liability of the railway administration as carrier had ceased after the lapse of reasonable time after arrival of the consignment at the railway station.
This reasonable time could not be beyond three days in any case and therefore the railway administration was not bound to make good the loss even if it had been occasioned on account of the negligence of the administration.
As Ishwara Nand should have removed the consignment within three days of February 23, it was his failure to do so which resulted in the damage and loss.
The issues which were common to this suit and the suit by the Factory were decided on the same lines by the trial court as in the suit by the Factory.
On the further issue which arose in this suit as to the delay in the removal of goods after notice to Ishwara Nand, the trial court held after reference to certain rules made by the railway administration that even if the railway administration 's responsibility as carrier had ceased after the lapse of reasonable time, it was still liable as a bailee either as a warehouseman or as a gratuitous bailee.
It therefore gave a decree for Rs. 76,000 and odd to Ishwara Nand.
Then followed three appeals to the High Court two in the suit by the Factory and one in the suit of Ishwara Nand.
The appeal in the suit by Ishwara Nand was by the Government of India; one appeal in the suit by the Factory was by the factory with respect to that part of the claim which had been dismissed, and the case of the Factory was that in fact no delivery had been made to it and it was entitled to the entire sum claimed as damages.
The other appeal was by the Government of India with respect to the amount decreed by the trial court and it raised all the contentions which had been raised before the trial court.
The High Court dealt with the three appeals together.
In all appeals the High Court confirmed the finding of the trial court that there had been negligence on the part of the railway which 585 resulted in damage to the goods.
On the question whether the suit could be maintained by the plaintiffs, the High Court affirmed the finding of the trial court that both the suits were maintainable.
The High Court also affirmed the finding of the trial court with respect to the rate at which damages should be calculated and on the question of interest before the date of the suit.
Further in the suit by Ishwara Nand, the High Court held that even if the railway administration ceased to be responsible as a carrier after a reasonable time had elapsed after the arrival of the goods at Morar Road Railway Station, it was still responsible as a warehouseman.
The appeal therefore of the Government of India in Ishwara Nand 's suit was dismissed.
On the question of delivery in the Factory '& suit the High Court disagreed with the finding of the trial court that there had been delivery of five consignments.
It held that there was no effective delivery even of these five consignments.
In consequence, the appeal of the Factory was allowed while that of the Government of India was dismissed.
Then followed applications to the High Court for leave to appeal to this Court in the Factory 's suit. 'Me High Court granted the certificate as the judgment was one of variance and the amount involved was over rupees twenty thousand.
However, in the suit of Ishwara Nand, the High Court refused to grant a certificate as the judgment was one of affirmance and no substantial question of law arose.
Thereupon the Government of India applied to this Court for special leave in Ishwara Nand 's suit and that was granted.
The three appeals have been consolidated in this Court for as will be seen from what we have said above, the principal points in volved in them are common.
Learned counsel for the appellant has not and could not challenge the concurrent finding of the trial court and of the High Court that the fire which caused the damage was due to the negligence of the railway administration.
But the learned counsel has pressed the other four points which were raised in the courts below.
He contends (i) that the suits as filed were not maintainable, (ii) that the High Court was in error in reversing the finding of the trial court that the delivery had been given with respect to five of the consignments in the Factory 's suit, (iii) that damages should have been awarded at Rs. 38/ per bale which was the contract price between the buyer and seller and not at the market price on the date on which the damage took place, and (iv) that interest could not be awarded for the period before the suit on the amount of damages decreed.
586 Re.
The contention of the appellant with respect to five of the consignments in the suit of the Factory was that as the consignee of the five railway receipts was the J.C. Mills, the consignor (namely, the Factory) could not bring the suit with respect thereto and only the J.C. Mills could maintain the suit.
Ordinarily, it is the consignor who can sue if there is damage to the consignment, for the contract of carriage is between the consignor and the railway administration.
Where the property in the goods carried has passed from the consignor to some one else, that other person may be able to sue.
Whether in such a case the consignor can also sue does not arise on the facts in the present case and as to that we say nothing.
The argument on behalf of the appellant is that the railway receipt is a document of title to goods [see section 2(4)] of the Indian Sale of Goods Act, No. 3 of 1930), and as such it is the consignee who has title to the goods where the consignor and consignee are different.
It is true that a railway receipt is a document of title to goods covered by it, but from that alone it does not follow, where the consignor and consignee are different, that the consignee is necessarily the owner of goods and the consignor in such circumstances can never be the owner of the goods.
The mere fact that the consignee is different from the consignor does not necessarily pass title to the goods from the consignor to the consignee, and the question whether title to goods has passed to the consignee will have to be decided on other evidence.
It is quite possible for the consignor to retain title in the goods, himself while the consignment is booked in the name of another person.
Take a simple case where a consignment is booked by the owner and the consignee is the owner 's servant, the intention being that the servant will take delivery at the place of destination.
In such a case the title to the goods would not pass from the owner to the consignee and would still remain.
with the owner, the consignee being merely a servant or agent of the owner or consignor for purposes of taking delivery at the place of destination.
It cannot therefore be accepted simply because a consignee in a railway receipt is different from a consignor that the consignee must be held to be the owner of the goods and he alone can sue and not the consignor.
As we have said already, ordinarily, the consignor is the person who has contracted with the railway for the carriage of goods and he can sue; and it is only where title to the goods has passed that the consignee may be able to sue.
Whether title to goods has passed from the consignor to the consignee will depend upon the facts of each case and so we have to look at the evidence produced in this case to decide whether in the case of five con 587 signments booked to the J.C. Mills, the title to the goods had passed to the Mills before the fire broke out on March 8, 1943.
We may add that both the courts have found that title to the goods had not passed to the J. C. Mills by that date and that it was still in the consignor and therefore the Factory was entitled to sue.
We may in this connection refer briefly to the evidence on this point.
The contract between the Factory and the J. C. Mills was that delivery would be made by the seller at the godowns of the J. C. Mills.
The contract also provided that the goods would be dispatched by railway on the seller 's risk up to the point named above (namely, the godowns of the J. C. Mills).
Therefore the property in the goods would only pass to the J. C. Mills when delivery was made at the godown and till then the consignor would be the owner of the goods and the goods would be at its risk.
Ordinarily, the consignments would have been booked in the name of "self" but it seems that there was some legal difficulty in booking the consignments in the name of self and therefore the J. C. Mills agreed that the consignments might be booked in the Mills ' name as consignee; but it was made clear by the J. C. Mills that the contract would stand unaffected by this method of consignment and all risk, responsibility and liability regarding these cotton consignments would be of the Factory till they were delivered to the J. C. Mills in its godowns as already agreed upon under the contract and all losses arising from whatever cause to the cotton thus consigned would be borne by the Factory till its delivery as indicated above.
This being, the nature of the contract between the consignor and the consignee in the present case we have no hesitation in agreeing with the courts below that the property in the goods was still with the Factory when the fire broke out on March 8, 1943.
Therefore the ordinary rule that it is the consignor who can sue will prevail here because it is not proved that the consignor had parted with the property in the goods, even though the consignments were booked in the name of the J. C. Mills.
We are therefore of opinion that the suit of the Factory was in view of these circumstances maintainable.
As to the suit by Ishwara Nand, he relies on two circumstances in support of his right to maintain the suit.
In the first place, he contended that he was the owner of the goods and that was why the railway receipt was endorsed in his favour by the consignor though it was booked to "self".
In the second place, it was contended that as an endorse to a document of title he was in any case entitled to maintain the suit.
The trial court found on the evidence that it had been proved satisfactorily that Ishwara Nand 588 was the owner of the goods.
It also held that as an endorse of a document of title he was entitled to sue.
These findings of the trial court on the evidence were accepted by the High Court in these words : "It was not contended before us that the finding arrived at by the learned court below that the plaintiff had the right to sue was wrong, nor could, in view of the overwhelming evidence, such an issue be raised.
The evidence on the point has already been carefully analysed by the court below.
We accept the finding and confirm it.
It was also pointed out that Ishwara Nand was the endorsed consignee and in that capacity he had in any case a right to bring the suit.
The correctness of this statement was not challenged before us.
" Thus there are concurrent findings of the two courts below that Ishwara Nand was the owner of the goods and that was why the railway receipt was endorsed in his favour.
In these circumstances he is certainly entitled to maintain the suit.
The contention that the plaintiffs in the two suits could not maintain them.
must therefore be rejected.
The contention under this head is that five of the consignments had been delivered to the J. C. Mills before March 8, 1943 and therefore the railway was not responsible for any loss caused by the fire which broke out after the consignments had been delivered on March 6 and 7, 1943.
It was urged that it was the fault of the J. C. Mills that it did not remove the consignments from the railway station by March 7 and the liability for the loss due to fire on March 8 must remain on the J. C. Mills.
The trial court had held in favour of the appellant with respect to these five consignments.
But the High Court reversed that finding holding that there was no real delivery on March 6 and 7, though the delivery book had been signed on behalf of the J. C. Mills and the railway receipts had been handed over to the railway in token of delivery having been taken.
It was not disputed that the delivery book had been signed and the railway receipts had been delivered to the railway; but the evidence was that it was the practice at that railway station, so far as the J. C. Mills was concerned, to sign the delivery book and hand over the railway receipts and give credit vouchers in respect of the freight of the consignment even before the goods had been unloaded from wagons.
It appeared from the evidence that what used to happen was that as soon the wagons 589 arrived and they were identified as being wagons containing consignments in favour of the J. C. Mills, the consignee, namely, the J. C. Mills, used to surrender the railway receipts.
, sign the delivery book and give credit vouchers in respect of the receipt of freight due even before the goods were unloaded from wagons.
This practice was proved from the evidence of Har Prashad (D.W. 6) who was the Assistant Goods Clerk at Morar Road at the relevant time.
He was in charge of making delivery of such goods, there being no Goods Clerk there.
He admitted that signature of Ishwara Nand as agent of the J. C. Mills was taken as soon as the consignments were received and identified by Ishwara Nand without being unloaded.
He further admitted that there had been no actual delivery to Ishwara Nand of the consignments and this happened with respect to all the five consignments.
Ishwara Nand signed the delivery book in token of having received the delivery and surrendered the railway receipts though when he did so the wagons were not even unloaded.
On this evidence the High Court held that it could not be said that there was any effective delivery of the goods to the J. C. Mills through Ishwara Nand, though token delivery was made inasmuch as the delivery book had been signed and the railway receipts surrendered.
It also appears from the evidence of Har Prashad that before the goods were actually removed, Ishwara Nand used to take the permission of Har Prashad to remove them.
This shows that though there might be token delivery in the form of signing the delivery book and surrendering the railway receipts, actual delivery used to take place later and the removal of goods took place with the permission of Har Prashad.
On this state of evidence the High Court was of the view that the so called delivery by signing delivery book and sur rendering the railway receipts was no delivery at all for till then the goods had not been unloaded.
The unloading of goods is the duty of the railway and there can be no delivery by the railway till the railway has unloaded the goods.
It is also clear from the evidence that even after token delivery had been made in the manner indicated above, the consignee was not authorised to remove the goods from the wagons and that it was the railway which unloaded the wagons and it was thereafter that the consignee was permitted to remove such goods with his permission as stated by Har Prashad in his evidence.
The High Court therefore held that there was no clear evidence that delivery of goods had been made over to the consignee in these cases.
Further there was no evidence to show that the consignee could remove the goods from the wagons without further reference to the railway, on the other hand it appeared that after such token delivery permission 590 of Har Prashad was taken for actual removal of goods.
There fore, the High Court came to the conclusion that real delivery had not been made when the fire took place on March 8, for the goods were till then in wagons and the railway was the only authority entitled to unload the same.
Till they were unloaded by the railway, they must be in the custody of the railway and no delivery could be said to have taken place merely by signing the delivery book and surrendering the railway receipts.
We are of opinion that on the evidence the view taken by the High Court is correct.
Though there was a token delivery as appears from the fact that railway receipts had been surrendered and the delivery book had been signed, there was no real delivery by the railway to the consignee, for the goods had not been unloaded and were still under the control and custody of the railway and Har Prashad 's evidence is that his permission had still to be taken before the goods could be actually removed by the consignee.
The contention that the delivery had been made to the consignee before March 8, 1943 must therefore in the peculiar circumstances of this case fail.
(iii).
It is next contended that damages should have been awarded at the rate of Rs. 38/ per bale which was tile contract price between the factory and the J. C. Mills.
This contract was made in November 1942.
The contract price is in our opinion no measure of damages to be awarded in a case like the present.
It is well settled that it is the market price at the time the damage occurred which is the measure of damages to be awarded.
It is not in dispute that the trial court has calculated damages on the basis of the market price prevalent on March 8.
In these circumstances this contention must also be rejected.
The next contention is that no interest could be awarded for the period before the suit on the amount of damages decreed.
Legal position with respect to this is well settled : (see Bengal Nagpur Railway Co. Limited vs Ruttanki Ramji and Others) (1).
That decision of the Judicial Committee was relied upon by this Court in Seth Thawardas Pherumal vs The Union of India(2).
The same view was expressed by this Court in Union of India vs A. L. Rallia Ram(3).
In the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest, it is not possible to award interest by way of damages.
Also see (1) 65 I.A. 66.
(2) (3) ; 591 recent decision of this Court in Union of India vs Watkins Mayer & Company(1).
In view of these decisions no interest could be awarded for the period upto the date of the suit and the decretal amount in the two suits will have to be reduced by the amount of such interest awarded.
We now come to the additional point raised in Ishwara Nand 's suit.
It is urged that Ishwara Nand 's consignment had reached Morar Road Railway Station on February 23, 1943 and Ishwara Nand should have taken delivery within three days which is the period during which under the rules no wharfage is charged.
The responsibility of the railway is Linder section 72 of the Indian Railways Act (No. 9 of 1890) and that responsibility cannot be cut down by any rule.
It may be that the railway may not charge wharfage for three days and it is expected that a consignee would take away the goods within three days.
It is however urged that the railway is a carrier and its responsibility as a carrier must come to an end within a reasonable time after the arrival of goods at the destination, and thereafter there can be no responsibility whatsoever of the railway.
It is further urged that three days during which the railway keeps goods without charging wharfage should be taken as reasonable time when its responsibility as a carrier ends; thereafter it has no responsibility whatsoever.
Under section 7 2 of the Indian Railways Act, the responsibility of the railway administra tion for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway is, subject to the other provisions of the Act, that of a bailee under sections 151, 152 and 161 of the Indian Contract Act, (No. 9 of 1872).
This responsibility in our opinion continues until terminated in accordance with sections 55 and 56 of the Railways Act.
The railway has framed rules in this connection which lay down that unclaimed goods are kept at the railway station to which they are booked for a period of not less than one month during which time the notice prescribed under section 56 of the Railways Act is issued if the owner of the goods or person entitled thereto is known.
If delivery is not taken within this period, the unclaimed goods are sent to the unclaimed goods office where if they are not of dangerous, perishable or offensive character they are retained in the possession of the railway.
Thereafter public sales by auction can be held of unclaimed goods which remain with the railway for over six months.
This being the position under the rules so far as the application of sections 55 and 56 is concerned, it follows that even though the res ponsibility of the railway as a carrier may come to an end within (1) C. As.
43 & 44 of 1963 decided on March 10, 1965.
592 a reasonable time after the goods have reached the destinationstation, its responsibility as a warehouseman continues and that responsibility is also the same as that of a bailee.
Reference in this connection is made to Chapman vs The Great Western Railway Company(1).
In that case what had happened was that certain goods had arrived on March 24 and 25.
On the morning of March 27, a fire accidentally broke out and the goods were consumed by the fire.
The consignor then sued the railway as common carrier on the ground that liability still subsisted when the goods were destroyed.
The question in that case was whether the liability of the railways was still as common carrier, on March 27 or was that of warehousemen.
The question was of importance in English law, for a common carrier under the English law is an insurer and is liable for the loss even though not arising from any default on his part while a warehouseman was only liable where there was want of proper care.
It was held that the liability as a common carrier would come to end not immediately on the arrival of the goods at the destination but sometime must elapse between the arrival of goods and its delivery.
This interval how ever must be reasonable and it was held in that case that reasonable time had elapsed when the fire broke out on March 27 and therefore the railway 's responsibility was not that of a carrier but only as warehouseman.
The position of law in India is slightly different from that in England, for here the railway is only a bailee in the absence of any special contract and it is only when it is proved that the railway did not take such care of the goods as a man of ordinary prudence would under similar circumstance take of his own goods of the same bulk, quality and value as the goods bailed, that the railway 's responsibility arises.
A warehouseman is also a bailee and therefore the railway will continue to be a warehouseman under the bailment, even if its responsibility as a carrier after the lapse of a reasonable time after arrival of goods at the destination comes to an end.
But in both cases the responsibility in India is the same, namely, that of a bailee, and negligence has to be proved.
In view of the rules to which we have already referred it is clear that the railway 's responsibility as a warehouseman continues even if its responsibility as a carrier comes to end after the lapse of a reasonable time after the arrival of goods at the destination.
The responsibility as a warehouseman can only come to end in the manner provided by sections 55 and 56 of the Railways Act and the Rules which have been framed and to which we have already referred as to the disposal of unclaimed goods.
In the present case under the Rules the goods had to remain at Morar (1) (1880) 5Q.B.D.278.
593 Road Railway Station for a period of one month after their arrival there and Ishwara Nand came to take delivery of them on March 10 well within that period.
It may be that as he did not come within three days he has to pay wharfage or what is called demurrage in railway parlance, but the responsibility of the railway as a warehouseman certainly continued till March 10 when Ishwara Nand went to take delivery of the goods.
As it has been found that there had been negligence within the meaning of sections 151 and 152 of the Indian Contract Act, the railway would be liable to make good the loss caused by the fire.
The appeals therefore fail with this modification that the decretal amount would be reduced by the amount of interest awarded for the period before the date of each suit.
The rest of the decree will stand.
The appellant will pay the respondents ' costs one set of hearing fee.
In CA 603/63 interest will be calculated from 6 8 62 in accordance with that order.
Appeal dismissed and decree modified.
| There was a fire at a railway station in which certain goods& were destroyed.
Two suits were filed claiming damage for loss of goods by 'the said fire.
The first suit was filed by a factory which claimed to be owner of the goods as consignor.
The other suit was filed by a consignee in whose favour the relevant documents were endorsed.
The Union of India resisted both the suits.
The trial court and the High Court concurrently held that the loss was due to the negligence of the Railways.
The1 Union of India appealed to this Court.
It was contended on behalf of the appellant : (1) The suits, as filed, were not maintainable.
(2) In the first suit delivery of the goods had been made to the consignee and the High Court 's finding to the contrary was wrong.
(3) Damages should have been awarded at the contract rat .
and not the market rate (4) Interest could not be awarded for the period before the suit on the amount of damages decreed.
(5) In the second suit notice had been given to the consignee that the consignment had arrived on February 23, 1943.
The consignee did not come to remove the goods till March 8, 1943 when the fire broke out, and the liability of the railway administration ceased after the lapse of reasonable time after arrival of the consignment at the railway administration.
HELD: (i) A railway receipt is a document of title to goods covered by it, but from that alone it does not follow, where the consignor and consignee are different, that the consignee is necessarily the owner of the goods and the consignor in such circumstances can never he the owner of the goods.
It is quite possible for the consignor to retain title in the goods himself while the consignment is booked in the name of another person.
In the first of the present suits the risk remained with the consignor according to the agreement of the parties, and it had not been proved that the consignor had parted with the property in the goods.
Therefore the suit by he consignor was maintainable.
[586 D H] In the second suit the railway receipt was endorsed in the consignees favour and the courts below had concurrently found that the consignee was the owner of the goods.
There could therefore be no dispute about the maintainability of the second suit also.
[588 D] (ii) Though there was a token delivery to the consignee in the first suit as appeared from the fact that the railway receipt had been sur 581 rendered and the delivery book had been signed, there was no redelivery by the railway to the consignee.
The goods had not been unloaded and were still under the control and custody of the railway and the evidence of the Assistant Goods Clerk was that his permission had still to be taken before the goods could be actually removed by the consignee.
The contention in the first suit that the delivery had been made to the consignee before March 8, 1943 therefore, in the peculiar circumstances of the case had to fail.
[590 C D] (iii) The High Court rightly calculated the damages on the basis of the on March 8 as it is well settled that it is the market price at lest be damage occurred which is the measure of the damages to be awarded.
[590 E F] (iv) In the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest it is not possible to award interest by way of damages and therefore no interest should have been awarded in the present two suits up to the date of filing of either suit.
[591 A] Bengal Nagpur Railway Co. Ltd. vs Ruttanji Rant, & Ors. 65 I.A. 66, Seth Thawardas Pherumal vs Union of India , Union of India v, A. L. Rallia Ram; , and Union of India V. Watkins Mayer & Co. C. As.
Nos. 43 and 44 of 1963 dt.
10 3 65, relied on.
(v) Under section 72 of the Indian Railways Act, the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway is, subject to the other provisions of the Act, that of a bailee under sections 151, 152 and 161 of the Indian Contract Act.
The responsibility continues until terminated in accordance with sq. 55 and 56 of the Railways Act.
[591 E] It may be that under the Rules framed by the Railways goods are kept at the railway station of destination only for one month, and that demurrage has to be paid after three days of reaching the destination.
But the responsibility of the railway is under section 72 of the Indian Railways Act and it cannot be cut down by any rule.
Even if owing to the said Rules the responsibility of the railway as a carrier ends within a reasonable time after the goods have reached their destination station, its responsibility as a warehouseman continues and that responsibility L. the same at that of a bailee.
[592 E H] Chapman vs The Great Western Railway Company, (1880)5 Q.B.D. 278, distinguished.
In the present case the consignee (in the second suit) claimed the goods well within the period of one month mentioned in the rules.
The fact that he was liable to pay demurrage because he did not take delivery of the goods within three days did not relieve the railway of its respon sibility as warehouseman.
As it had been concurrently found by the courts below that there had been negligence by the railway within the meaning of sections 151 and 152 of the Indian Contract Act, the railway war, liable to make good the loss caused by the fire.
[593 A B]
|
Civil Appeal No. 1988 of 1982.
From the Judgment and order dated 20.4.1982 of the High Court of Allahabad in Writ Petition No. 630 of 1982.
E Anil Dev Singh and Mrs. Shobha Dikshit for the Appellant.
L.M. Singhvi and C.L. Sahu for the Respondent.
The following Judgment of the Court was delivered by F JAGANNATHA SHETTY, J.
This appeal by special leave, is by the Registrar of Firms, societies and chits of the State.
Of Uttar Pradesh and directed against the judgment and order passed by the high Court of Allahabad in writ petition No. 630 of 1982.
The said writ petition was filed by the respondent which is a partnership firm called as "M/s. Secured Investment Company" ("The Company").
The company mainly carries on business at Lucknow.
It has branch offices at Kanpur and Bareilly.
The nature of business of the company is termed as "a scheme for investment".
The question raised in this appeal is whether that scheme for investment falls within H 458 the category of 'prize chit ' as defined under the Prize Chits and money circulation Scheme (Banning) Act, 1978 (for short "The Act").
The Registrar of Firms, Societies and Chits was of the opinion that the scheme of the company falls within the prohibited category of prize chits as defined under the Act.
So he seized all the documents of the company and also directed the concerned banks not to have accounts in relation thereto.
Challenging the action of the Registrar, the company moved the High Court with a writ petition under Art; 226 of the Constitution.
The High Court allowed the writ petition and quashed the orders made by the Registrar.
In order to correctly appreciate the question raised in this appeal, it is better to have first the clear picture of the law governing the question.
Section 3 of the Act imposes a ban not merely on promoting or conducting any prize chit or money circulation scheme, but also on participation in such chit or schemes.
Section 4 makes a contravention of the provisions of Section 3 punishable with imprisonment which may extend to three years or with fine which may extend to Rs.5,000 or with both.
Section 5 provides penalty for other offences like printing or publishing any ticket, coupon or other document for use in the prize chit or money circulation scheme with a view to promote such scheme in contravention of the Act.
Section 6 deals with offences by companies.
Section 7 confers power on the police officers not below the rank of an officer in charge of a police station to enter, search and seize.
Section 8 provides for the forfeiture of newspapers or other publications containing prize chit or money circulation scheme.
Section 11 provides exemption to certain categories of prize chits or money circulation schemes.
The prize chits or money circulation schemes promoted by the State Government or any officer or authority on its behalf, or by a Company wholly owned by a State Government are exempted from the provisions of the Act. 'Conventional Chit ' has been defined under Section 2(a), and "Prize Chit" has been defined under Section 2(e) of the Act.
Conventional Chit stands excluded from the definition of prize chit, and so much so, the Conventional Chit remains untouched by provisions of the Act.
The definition of the conventional chit is as follows: "Section 2(a).
"Conventional Chit" means a transaction whether called chit, chit fund, kuri or by any other name or under which a person responsible for the conduct of the chit enters into an agreement with a specified number of persons that every one of them shall subscribe a 459 certain sum of money (or certain quantity of grain instead) by way of periodical instalments for a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the chit agreement, be entitled to a prize chit.
" We may presently refer to the definition of 'prize chit ' and before that it is better to have a little bit of history of chit transactions.
The words 'Chitty ' or 'kuri ' Chit or Chit Fund appear to be the common words but with regional variations.
Although there is no clear evidence to show the exact place of origin of chit fund, the available text [(i) 'Chit Finance ' by C.P. Somanath Nayar (1973); (ii) Chit Funds and Finance Corporation by section Radha Krishan an (1974)] indicate that it has spread from the Southern most parts of India.
In the Travancore area of the State of Kerala it is generally called 'chitty '.
Within the same State, in Cochin and Malabar areas it is popularly called 'kuri '.
In other parts of the country it is ordinarily called 'chit ' or 'chit fund '.
In Tamil it is termed as 'chit '.
In Malayalam it is called as 'chitti ' or 'kuri '.
These terms appear to be synonymous, meaning thereby a written piece of paper.
These transactions were purely indigenous institution.
They originated in village life originated by a small group of people well know to each other.
They agreed to contribute periodically a certain amount of grain or money and to distribute the entire collection which was termed as 'fund ' to one of the subscribers.
It was carried on with some mutually agreed basis.
In the nineteenth century, if not earlier, it was very popular in central Travancore and Trichur areas probably among Church congregations.
The chit funds appear to have originated from two legitimate demands of the rural people: (i) a necessity for a lump sum amount to meet some unusual expenditure and (ii) to provide a form of accumulated saving when people had no banking facilities.
It was considered as a source of credit and mode of saving.
It was meant for mutual benefit in which some people joined to save and others to borrow.
What distinguishes the chit fund, however, from other financial transactions is that it connects the borrowing class directly with the lending class.
The pooled saving is lent out to the same group of contributors.
A chit fund collects the savings of the members by periodical subscriptions for a definite period.
At the same time, it makes available the pooled savings to each member by turn as agreed by them, The collected fund may be given either by drawing lots or by bidding.
Lots are drawn periodically and the member whose name appears on the win 460 ning chit gets the collection without any deductions.
He, however, continues to pay his subscriptions but his name is removed from subsequent lots.
Thus every member gets a chance to receive the whole amount of the chit.
This is generally the features of a conventional chit.
It is operated without a professional promoter or manager and without any risk of loss of capital.
During the course of years, the chit funds became more and more popular and attractive.
In the usual process of social growth, the chitties crossed boundaries of its birth place.
It assumed new institutional forms with emergence of new types of interpreneurs.
The partnership firms, private or public limited companies took over the chit business in various forms.
They gave different names, such as price chit, lucky draw, benefit scheme or money circulation scheme.
They offered prizes to attract subscribers.
The basic features, however, remained the same in all such schemes.
Periodically the names of the subscribers were put to draw and the lucky member was given a prize either in cash or in kind like articles of utility.
The subscribers were also given refund of a portion of their contributions.
This became regular business in ever so many people.
Undoubtedly, this rapid growth of chit funds has carried with it some unhealthy features of exploitation.
That has been graphically described by Krishna Iyer, J. in Srinivasa Enterprises & ors.
vs Union of India etc.
, 1 at 804 as follows: "The quintessential aspects of a prize chit are that the organiser collects moneys in lump sum or instalments, pursuant to a scheme or arrangement, and he utilises such moneys as he fancies primarily for his private appetite and for (1) awarding periodically or otherwise to a specified number of subscribers, prizes in cash or kind and (2) refunding to the subscribers the whole or part of the money collected on the termination of the scheme or otherwise.
The apparent tenor may not fully bring out the exploitative import lurking beneath the surface of the words which describe the scheme.
Small sums are collected from vast numbers of persons, ordinarily of slender means in urban and rural areas.
They are reduced to believe by the blare of glittering publicity and the dangling of astronomical amounts that they stand a chance in practice negligible of getting a huge fortune by making petty periodical payments.
The indigent agrestics and the proletarian urbani 461 tes, pressured by dire poverty and doped by the hazy hope of a lucky draw, subscribe to the scheme although they can ill afford to spare any money.
This is not promotion of thrift or wholesome small savings because the poor who pay, are bound to continue to pay for a whole period of a few years over peril of losing what has been paid and, at the end of it, the fragile prospects of their getting prizes are next to nil and even the hard earned money which they have invested hardly carries any interest.
They are eligible to get back the money they have paid in driblets, virtually without interest, the expression 'bonus ' in section 2(a) being an euphemism for a nominal sum.
What is more, the repayable amount being small and the subscribers being scattered all over the country, they find it difficult even to recover the money by expensive, dilatory litigative process." In 1974, the Reserve Bank of India intervened.
The Reserve Bank constituted a Study Group headed by Dr. J.S. Raj to examine the adequacy of existing statutory provisions in regulating the conduct of business by non banking companies.
The Study Group was also asked to suggest remedial measures so as to ensure that the activities of such companies, in so for as they pertained to the acceptance of deposits, investment, lending operations, etc.
subserved the national interest The Study Group went into the matter in some depth.
Chapter VI of their report was devoted to Miscellaneous Non Banking Companies which were conducting prize chits, benefit/savings scheme or lucky draws etc.
Paragraph 6.3 of the report contains interesting informations and it reads as follows: "6.3 Companies conducting the above types of schemes are comparatively of a recent origin and of late, there has been a mushroom growth of such companies which are doing brisk business in several parts of the country, especially in big cities like Ahemdabad, Bangalore, Bombay, Calcutta and Delhi.
They had also established branches in various States.
These companies float schemes for collecting money from the public and the modus operandi of such schemes is generally as described below: The company acts as the foreman or promoter and 462 collects subscriptions in one lump sum or by monthly instalments spread over a specified period from the subscribers to the schemes.
Periodically, the numbers allotted to members holding the tickets or units are put to a draw and the number holding the lucky ticket gets the prize either in cash or in the form of an article of utility, such as, a motor car, scooter, etc.
Once a person gets the prize he is very often not required to pay further instalments and his name is deleted from further draws.
The schemes usually provide for the return of subscriptions paid by the members with or without an additional sum by way of bonus or premium at the end of the stipulated period in case they do not get any prize.
The principal items of income of these companies are interests earned on loans given to the subscribers against the security of the subscriptions paid or on unsecured basis as also loans to other parties, service charges and member ship fees collected from the subscribers at the time of admission to the membership of the schemes.
The major heads of expenditure are prizes given in accordance with the rules and regulations of the schemes, advertisements and publicity expenses and remuneration and other perquisites to the directors.
" The Study Group recorded its conclusions in paragraph 6.11 as follows: "From the foregoing discussion, it would be obvious that prize chits or benefit schemes, benefit primarily the promoters and do not serve any social purpose.
On the contrary, they are prejudicial to the public interest and also adversely affect the efficacy of fiscal and monetary policy.
There has also been a public clamour for banning of such schemes; this stems largely from the mal practices indulged in by the promoters and also the possible exploitation of such schemes by unscrupulous elements to their own advantage.
We are, therefore, of the view that the conduct of prize chits or benefit schemes by whatever name called should be totally banned in the larger interests of the public and that suitable legislative measures should be taken for the purpose if the provisions of the existing enactments are considered inadequate.
Companies conducting prize chits, benefit schemes, etc., may be allowed a period of three years which may be extended by one more year to wind up 463 their business in respect of such schemes and/or switch over to any other type of business permissible under the law.
" It will be seen that the Study Group was of the opinion, that prize chits or benefit schemes primarily benefit the promoters and do not serve any social purpose.
They are prejudicial to the public interest.
They adversely affect the fiscal and monetary policies of the Government.
The Study Group was firmly of the view that the conduct of prize chits or benefit schemes by whatever name called should be totally banned in the larger interests of the public.
The Government of India accepted that report, and decided to implement the above recommendations of the Study Group.
In 1978, the Act with which we are concerned was passed in the Parliament.
The Act provides for banning the promotion or conduct of 'money circulation scheme ' or 'prize chit ' which have been defined as follows: "Section 2(c) 'money circulation scheme ' means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the member of such scheme or periodical subscription; section 2(e) 'prize chit ' includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, moneys in one lump sum or in instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefits, thrift, or any other scheme or arrangement by whatever name called, and utilises the moneys so collected or any part thereof or the income accruing from investment or other use of such moneys for all or any of the following purposes, namely: (i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in c 464 whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement.
(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part of the subscription, contributions or other moneys collected, with or with out any bonus, premium interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit.
" The scheme for investment with which the company has been carrying on its business is neither a conventional chit not a 'money circulation scheme '.
That is not disputed by the Registrar of Firms.
According to him, the scheme is a 'prize chit ' as defined under Section 2(e) of the Act.
To understand the correct scope of the definition, we must first try to ascertain the purpose of the legislation.
The legal interpretation is not an activity sui generis.
Under the view, now widely held, the purpose of the enactment is the touchstone of interpretation.
The first step in interpretation, therefore, is to gather all informations about the purpose of the Act.
If the Act was meant for the public good, then every provision thereof must receive fair and liberal construction.
It must be construed with vision to ensure the achievement of the object of the Act.
The purpose of the Act could be gathered by having recourse to the Statement of objects and Reasons accompanying the Bill and in long title of the enactment.
The Statement of objects and Reasons reads as follows: "In June 1974, the Reserve Bank of India had con stituted a Study Group under the Chairmanship of Shri James section Raj, the then Chairman, Unit Trust of India, for examining in depth the provisions of Chapter III B of the , and the directions issued thereunder to non banking companies in order to assess their adequacy in the context of ensuring the efficacy of the monetary and credit policies of the country and affording a degree of protection to the interests of the depositors who place their savings with such companies.
In its report submitted to the Reserve Bank in July 1975, the Group ob 465 served that the prize chit/benefit/savings schemes benefit primarily the promoters and do not serve any social purpose.
On the contrary the Group have stated that they are prejudicial to the public interest and affect the afficacy of the fiscal and monetary policies of the country.
prize chits would cover any kind of arrangement under which moneys are collected by way of subscriptions, contributions etc.
and prizes, gifts etc. are awarded.
The prize chit is really a form of lottery.
Its basic feature is that the foreman or promoter who ostensibly charges no commission collects regular subscriptions from the members.
once the member gets the prize, he is very often not required to pay further instalments and his name is dropped from further lots.
The institutions conducting prize chits are private limited companies with a very low capital base contributed by the promoters, directors or their close relatives.
Such schemes confer monetary benefit only on a few members and on the promoter companies.
The Group had, therefore, recommended that prize chits or money circulation schemes by whatever name called should be totally banned in the larger interests of the public and suitable legislative measures should be undertaken for the purpose.
The Bill proposes to implement the above recommendations of the Group by providing for the banning of the promotion or conduct of any prize chit, or money circulation scheme by whatever name called, and of the participation of any person in such chit or scheme.
The Bill provides for a period of two years within which the existing units carrying on the business of prize chits or money circulation schemes may be wound up and provides for penalties and other incidental matters.
The repeal of the existing State Legislations on the subject has also been provided for in the Bill.
" The long title of the Act reads: "An Act to ban the promotion or conduct of prize chits and money circulation scheme and for matters connected therewith or incidental thereto.
" It will be clear from these recitals that the Parliament intended to ban all prize chits and money circulation scheme.
Some of the aspects of the definition of prize chit has been considered by this Court.
In Reserve Bank of India vs Peerless 466 General Insurance and Investment.
Co. Ltd., ; Chinnappa Reddy, J. speaking for this Court observed (p. 1041): "We do not think that by using the word "includes", in the definition in section 2(e) of the Act the Parliament in tended to so expand the meaning of prize chit as to take in every scheme involving subscribing and refunding of money.
The word "includes", the context shows, was intended not to expand the meaning of "prize chit" but to cover all transactions or arrangements of the nature of prize chits but under different names.
The expression "Prize Chit" had no where been statutorily defined before.
The Bhabatosh Datta Study Group and the Raj Study Group had identified the schemes popularly called "Prize Chits".
The Study Group also recognised that "Prize Chits" were also variously called benefit/savings schemes and lucky draws and that the basic common features of the schemes were the giving of a prize and the ultimate refund of the amount of subscriptions (vide Para 6.3 of the report of the Raj Study Group).
It was recommended that prize chits and the like by whatever name called differently, 'prize chits ', 'benefit/savings schemes ', 'lucky draws ', etc.
It became necessary for the Parliament to resort to an inclusive definitions so as to bring in all transactions or arrangements containing these two elements.
We do not think that in defining the expression 'Prize Chit ', the Parliament intended to depart from the meaning which the expression had come to acquire in the world of finance, the meaning which the Datta and the Raj Study Group had The learned judge while examining the scope of two clauses (i) and (ii) of sec.
2(e) observed (p. 1042 43): "The argument is that the two clauses (i) and (ii) are to be read disjunctively and that they should not be read as if they are joined by the conjunction 'and '.
We do not agree.
There is no need to introduce the word 'or ' either.
How clauses (i) and (ii) of sec.
2(e) have to be read depends on the context.
The context requires the definition to be read as if both clauses have to be satisfied.
There is nothing in the text which makes it imperative that it be read otherwise.
The learned counsel urges that the expression 467 ' 'all or any of the following purposes" indicates that the purpose may be either the one mentioned in (i) or the one mentioned in (ii).
We do not agree with this submission.
Each of the clauses (i) and (ii) contains a number of alternatives and it is to those several alternatives that the expression "all or any of the following purposes" refer and not to (i) or (ii) which are not alternatives at all.
In fact, a prize chit, by whatever name it may be called, does not contemplate exhaustion of the entire fund by the giving of prizes; it invariably provides for a refund of the amount of subscription, less the deductions, to all the subscribers or to those who have not won prizes, depending on the nature of the scheme.
Clauses (i) and (ii) refer to the twin attributes of a prize chit or like scheme and not to two alternative attributes .
" In the light of these principles, we may now have a close look at the definition of prize chit ' under sec.
We may cull out the following attributes: There must be collection of moneys from persons.
The moneys may be collected in one lumpsum or in instalments.
The moneys may be collected by way of contributions, subscriptions or as membership fees, admission fees or service charges.
It may be collected by sale of units, certificates or other instruments.
The collection may be in respect of any savings, mutual benefits, thrift or any other scheme or arrangement, no matter by what name.
The Collection may be made by a promoter, foreman.
agent or in any other capacity.
The collection of moneys or any part thereof is utilised for all or any of the purposes set out in clauses (i) and (ii).
They are the two distinct attributes of prize chit, each of which has to be satisfied.
The definition goes a step further.
The amount collected as such need not be utilised for any of the purposes under clauses (i) and (ii).
It may be sufficient to attract the definition if the amount accrued from investment of such collection is used for all or any of the purposes under clauses (i) and (ii).
Clauses (i) and (ii) provide for giving or awarding prize or gift to subscribers.
It may be periodical or otherwise.
The prize or gift may be awarded by lot, draw or in any other manner.
Then there may be refund of the whole or part of the collection.
The refund may be made to all or such of them who have not won any prize or gift.
The refund may be made with or without any bonus, premium interest or other advantage.
468 Leaving aside the verbiage, if we rewrite the definition which reeks of simplicity, it runs like this: Prize chit includes a scheme by which a person in whatever name collects moneys from individuals for the purpose of giving prizes and refunding the balance with or with out premium after the expiry of a specified period.
From the above analysis, it will be clear that the reach and range of the definition of 'prize chit ' is sweeping.
The generality of the language appears to have been deliberately used so that the transaction, arrangement or scheme in which subscribers or contributors agree to forego a portion of their contributions in the hope of getting any prize or gift should not escape from the net of the definition.
Even the participation of any person in such chit or scheme has been prohibited.
The object being that the people should not be attracted to invest their moneys in the hope of getting prizes or gifts.
The reason being that it has been found by the Study Group of Dr. section Raj that all such prize chits or schemes are in the form of lottery and they do not serve any social purpose.
They are prejudicial to the public interest.
They affect the monetary policies of the country.
They benefit only the promoters.
So much is about the law.
Let us now have the fact of the case.
The terms and conditions of the scheme offered by the company are as follows: "1.
Secured Investment Company will be known as COMPANY.
Every member will deposit with the company Rs.220 only once in return he will get a Reinvestment Deposit Plan Receipt/Bank Cash Certificate (a type of Fixed Deposit receipt) of a Government Nationalised Bank 3.
No interest will be given to the member, thus the maturity value of the Bank 's R.D.P. will be Rs.220.
After a member deposits Rs.220 he will get his Bank 's R.D.P. within 7 days.
For members from Lucknow, Kanpur and Bareilly, every effort will be made to give them the R.D.P. Receipt the very next day.
The duration of the scheme is for 66 months.
469 Therefore, the duration of the bank 's R.D.P. Receipt is also for 66 month.
Lucky draws for articles totalling Rs.15,000 per month will be given every month for 60 months.
Thus the total value of prizes for 60 months will be Rs.9 lakhs.
Totally 60 lucky draws will be held, one every month, after the recruitment of 19,999 members per group.
Every month, 21 1ucky prizes will be given.
The Ist Prize will be a Vijay Scooter, the 2nd Prize will be a Kelvinator refrigerator (lO Its.) or a T.V. and 19 other consolidation prizes consisting of articles like transistor, sewing machine, cycle, pressure cooker, stainless steel thali sets, alarm, clocks, etc.
If there is any price increase, later in the period of the scheme of the value of the prize articles which are detailed below the winning member shall pay for the actual price increase.
Cash in lieu of the articles will not be given.
One Vijay Super Scooter Rs.8000 2.
One Kelvinator Fridge (10 Its.) or one T.V. Plus one Mixi Rs.3900 3.
One cycle Rs.400 4.
One table fan Rs.350 section One Sewing Machine Rs.325 6.
2 Nos.
Philips Transistors (Rs. 230 each) Rs.460 7.
3 Nos.
Pressure Cookers (Rs.175 each) Rs.525 8.
S Nos.
Steel thali sets (Rs. lOO each set) Rs.500 9.
6 Nos.
Alarm Clocks (Rs.90 each) Rs.540 TOTAL Rs. 15,000 9.
A winning member will be entitled to participate in subsequent draws.
Thus a member can win prizes over and over again.
If a member withdraws during the duration of the scheme, he can encash his Bank 's R.D.P. directly the H 470 entire amount of Rs.200 but will lose interest for the ba lance months as per Reserve Bank of India rules governing from time to time.
For example, if a member withdraws immediately after he gets his R.D.P. Receipt, he loses up to a maximum of Rs.92.
This is the maximum amount a member can lose if he withdraws from the scheme immediately after he becomes a member and after getting his Bank R.D.P.
Of course, he will also not be entitled for the balance lucky draws.
11 The reason for deduction of interest is that the company gives these fantastic prizes through the interest thus gained, also this interest gained has to cover the company '.
overheads and profit.
However, a customer 's refund of his Rs.220 is 100 per cent secured, because at the end of the scheme he can go directly to the Bank and encash the R.D.P. without any consent from the Company.
Out station members can encash the R.D.P. by presenting it to any Bank.
The procedure is the same as one normally encashes an outstation cheque.
The Company reserves the right to accept or reject any membership without assigning any reasons.
In case, the total membership is not fully sub scribed to, members can still be scruited after the start of the draws.
However, the Company will at no stage keep memberships reserved in its own name, thus winner of every draw will go to an actual member.
The lucky draws will take place in rotation at Lucknow, Kanpur and Bareilly on the Ist Sunday of every month.
The lucky draws will be taken out by members themselves to ensure fairness and honesty in the draw.
" There are as many as 19,999 subscribers in each scheme.
All of them do not get prizes and indeed they could not get, since there are only 60 draws with 2 1 prizes each.
The members are not told that the company deducts Rs.92 for its own use.
They are only informed that they are assured of the money deposited in the Bank, and in the event of premature withdrawal, they will lose interest upto Rs.92 only.
471 In spite of all these glaring attributes of exploitive nature of the scheme, the High Court appears to have been carried away with the Reinvestment Deposit Plan Receipt for Rs.220.
The High Court was of the view that the scheme could not be considered as "prize chit".
The High Court said: " It is thus clear from a reading of the document (annexure 1) that the so called 'member ' deposits the amount with the petitioners for the purpose of obtaining a Reinvestment Deposit Plan Receipt, which is promised to him by the petitioners.
He may have been having an idea in the background that by depositing the amount of Rs.220 with the petitioners and obtaining the Reinvestment Deposit Plan Receipt, he would also be considered for the distribution of 'Lucky Prizes '.
But that is not enough inasmuch as the amount which he had deposited with the petitioners was to be invested in a nationalised bank and he was to get a Reinvestment Deposit Plan Receipt.
If the person from whom the money has been collected has not deposited it with the petitioners as "contributions ' ' or "subscription", it is difficult to hold that it is collected by the petitioners as his "contribution or subscription".
The High Court appears to have proceeded on the basis that the members of the scheme do not pay subscription to the company.
Nor do they pay the amount as contribution.
The High Court was also of the view that payment of money to the company for the purpose of obtaining R.D.P. receipt with the hope of getting any prize is not sufficient to attract the definition of prize chit.
In our view, the conclusion of the High Court is patently erroneous.
It is unsustainable both on facts and law.
The High Court has failed to consider that the company undisputedly takes away Rs.92 out of Rs.220 paid by each member.
The High Court has further failed to note that the company utilises the deducted amount of Rs.92 for the purpose of giving prizes to members.
Dr. L.M. Singhvi, learned counsel for the company, did not and indeed could not dispute that the company is deducting Rs.92 out of the payment of Rs.220.
The counsel however, urged that since the member gets the full amount of Rs.220 from the bank at the instance of the company, the scheme is an investment scheme and not prize chit.
We are unable to accept this submission.
The fact that the member receives Rs.220 from the bank after the maturity period of his deposit makes little difference in the nature of 472 the transaction of the company.
The fact remains that the company collects in one lumpsum Rs.220 from every member.
It is only by payment of that amount, the individual becomes a member of the scheme and eligible to get monthly prizes.
The company instead of returning the balance of Rs. 128 directly to the member takes him to a nearby branch of the nationalised bank.
There Rs. 128 would be deposited in the name of the member who gets the same with interest after maturity.
But it should not be forgotten that the member does not get back Rs.92 deducted by the company.
Nor he gets any interest on this amount.
He foregoes his amount of Rs.92 with the hope of getting prizes offered by the company.
There is no guarantee that he will get any prize.
He, however, takes chance month after month.
If he is unlucky he waits in vain for 60 months.
The apparent tenor of the scheme may not bring out the exploitative nature of the scheme.
But it is there if anybody wants to know it.
The company undisputedly collects Rs.92 from every subscriber and utilises a portion of it for giving prizes and to meet overhead charges.
The company in all collects an amount of Rs. 18,44,907.75 at the rate of Rs.92 per head from 19,999 subscribers.
The company distributes monthly prizes of the value of Rs. 15,000.
The total value of all the prizes for 60 months works out to Rs.9 Iakhs.
The balance of about 9.5 Iakhs with interest thereon would be utilised by the company.
Is this a promotion of thrift, investment or saving? At whose costs? and for whose benefit? We are, however, glad to note that Madhya Pradesh High Court while considering a similar scheme in Sahara India vs State of M.P. & others, [ 1983] M.P. 2 128 has held that it is prize chit falling within the scope of Section 2(e) of the Act.
We have no doubt that the scheme of the company with which we are concerned is primarily for the benefit of the promoter or the Company at the costs of the subscribers.
This is the kind of transactions or arrangements which Dr. J.S. Raj Study Group said that it should be banned altogether.
Section 2(e) was intended to cover all such arrangements or schemes.
The interpretation given by the Court should not be stultifying the underlying principle in the definition which was meant to protect people from exploitation.
We would like to emphasise that the Act was intended to ban all kinds of prize chits where persons part with their money and risk the chance of getting prizes or gifts.
Therefore, any scheme or arrangement in which a person agrees to lose or made to part a portion of his payment against the chance of getting any prize or gift, should be considered as prize chit falling within the inclusive definition under Section 2(e).
473 From the above discussion, and in the light of the principles to which we have called attention the scheme of the company is nothing but prize chit as defined under Section 2(e) of the Act and the action of the Registrar of firms deserves to be upheld.
In the result, we allow the appeal with costs and set aside the L judgment and order of the High Court.
Before parting with the case we may, however, observe that the Registrar of the Firms while taking action against the persons or firms under the Act will take care to see that the members of the scheme are not denied of their contributions or prizes which they are legitimately entitled to, if the prize chit is allowed to run for the full term .
S.L. Appeal allowed.
| The computation of Court fees in suits falling under section 7(IV) of the Court Fees Act depends upon the valuation which the plaintiff in his option puts on his claim and once he exercises his option and values his claim, such value must also be the value for purposes of jurisdiction under section 8 of the Suits Valuation Act.
The value for purposes of Court fee, therefore, determines the value for purposes of jurisdiction in such a suit and not vice versa.
1022 Where, therefore, the Court finds that the case falls under section 7(IV)(b) of the Court Fees Act, and the plaintiff has omitted to specifically value his claim, liberty should ordinarily be given to him to amend his plaint and set out the amount at which he wants to value his claim.
The value put for purposes of jurisdiction which cannot be binding for purposes of Court fee, and must be altered accordingly Karam Ilahi vs Muhammad Bashir, A.I.R. (1949) Lah.
116, referred to.
Consequently, in the present case where the Division Bench of the Madras High Court was of the opinion that section 7(IV)(b) of the Court Fees Act applied but nevertheless held that the valuation given in the plaint for purposes of jurisdiction should be taken to be the valuation for purposes of court fee and directed the appellant to pay court fees both on the plaint and the memorandum of appeal on that basis, its order was set aside and the appellant allowed to pay court fees on the amount at which he valued his relief.
Held further, that 0. 11, r. 1 of the High Court Fees Rules, 1933, framed by the Madras High Court clearly indicates, that section 12 of the Court Fees Act applies to the Original Side of the Madras High Court and it was, therefore, open to the Division Bench in a reference to assume jurisdiction and pass appropriate orders thereunder.
In the absence of any evidence on the record to show that he had either generally or specially been empowered by the Chief justice in this behalf, the Chamber judge sitting on the Original Side of the Madras High Court has no jurisdiction under section 5 Of the Court Fees Act to pass a final order thereunder.
|
: Criminal Appeal No. 7 of 1951.
Appeal under article 134 (1)(c) of the Constitution of India from the Judgment and Order dated the 10th March, 1951, of the Court of the Judicial Commissioner, Vindhya Pradesh, Rewa, in Criminal Appeal No. 81 of 1950, arising out of the Judgment and Order dated the 26th July, 1950, of the Court of Special Judge, Rewa, in Criminal Case No, 1 of 1949.
1191 G. section Pathak (K. B. Asthana, with him), for the, appellant No. 1.
K. B. Asthana, for appellant No. 2.
M. C. Setalvad, Attorney General for India, (G. N., Joshi, with him), for the respondent.
May 22.
The Judgment of the Court was delivered by JAGANNADHA DASJ.
This is an appeal against the judgment of the Judicial Commissioner of Vindhya Pradesh dated 10th March, 1951, by leave granted under article 134(1) (c) of the Constitution.
The first and the second appellant,% were at the material period of time respectively the Minister for Industries and the Secretary to the Government, Commerce and Industries Department of the then United State of Vindhya Pradesh.
The case for the prosecution against them is as follows: In the State of Panna (one of the component units of the United State of Vindhya Pradesh) there are certain diamond mines.
By an agreement dated the lit of August, 1936, between the Panna Durbar on the one part and the Panna Diamond Mining Syndicate on the other part, the latter obtained a lease for carrying out diamond mining operations for a period of 15 years.
It appears that on or about the 31st October, 1947, the Panna Durbar directed the stoppage of the mining work on the ground that the Syndicate was not carrying on the operations properly.
Since then the Syndicate was making strenuous efforts to obtain cancellation of the said order.
It is alleged that the two appellants in the course of these attempts, with which, at the material time, they were concerned in their official capacity, entered into a conspiracy about the beginning of February 1949 at Rewa (within the United State of Vindhya Pradesh), to obtain illegal gratification for the purpose of revoking the previous order of stoppage of mining work In pursuance of the said conspiracy it is alleged that the second appellant demanded on 8th March, 1949, at Rewa illegal gratification from one Nagindas Mehta, a 1192 representative of the Panna Diamond Mining Syndicate, and that later on 11th April, 1949, the first appellant, in fact, received a sum of Rs. 25,000 towards it at the Constitution House in New Delhi and forged certain documents purporting to be orders passed in official capacity and intended to confer some advantages or benefits on the Panna Diamond Mining Syndicate.
On these allegations the two appellants were charged for criminal conspiracy and for the taking of illegal gratification by a public servant for doing an official act and for the commission of forgery in connection therewith.
The charges were under sections 120 B, 161, 465 and 466, Indian Penal Code, as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, and the trial was held by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949.
At the trial both the appellants were acquitted.
The State filed an appeal to the Judicial Commissioner against the same whereupon both were convicted under sections 120 B and 161, Indian Penal Code (as adapted).
In addition, the first appellant was convicted under sections 465 and 466, Indian Penal Code (as adapted).
He was sentenced to rigorous imprisonment for three years and to a fine of Rs. 2,000 under section 120 B and to rigorous imprisonment for three years under section 161, Indian Penal Code, the two sentences to run concurrently.
In respect of his conviction under sections 465 and 466 no separate sentence was awarded.
The second appellant was sentenced to one year 's rigorous imprisonment and a fine of Rs. 1,000 under section 120 B, but under section 161 no separate sentence was awarded.
The validity of the convictions and sentences has been challenged on the ground that there has been infringement of articles 14 and 20 of the Constitution.
In addition, a further point has been raised before us by leave that no appeal lay to the Judicial Commissioner from the acquittal by the special Judge.
It is convenient to deal with this point in the first 1193 instance.
The question raised depends oil a construction of the provisions of the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949 dated 2nd December, 1949.
By section 2 thereof the Vindhya Pradesh Government was given the power by notification to constitute Special Courts of criminal jurisdiction within the State and by section 3 to appoint a Special Judge to preside over the Special Court.
By section 4 the Government was authorised to issue notifications from time to time allotting cases for trial by the Special Judge in respect of charges for offences specified in the Schedule to the Ordinance.
Sections 5(1), 7 and 8 provide certain departures from the normal procedure or evidence, and section 9 provides for special punishment.
Section 5, sub section (2) provides as follows : "Save as provided in sub section (1) the provisions of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, shall, so far as they are not inconsistent with this Ordinance, apply to the proceedings of a Special Court, and for the purposes of the said provisions, the Court of the Special Judge shall be deemed to be a Court of Session trying cases without a Jury or without the aid of Assessors, and a person conducting a prosecution before a Special Judge shall be deemed to be a Public Prosecutor.
" Section 6 provides as follows : "The High Court may, subject to the provisions of section 7 regarding transfer of cases, exercise, so far as they may be applicable, all the powers conferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, on a High Court as if the Court of the Special Judge were a Court of Session trying cases without a Jury within the local limits of the High Court 's juris.
dictions.
" The argument of learned counsel for the appellants is that section 6 above quoted provides only for the powers of the High Court on appeal preferred to it, but that there is no provision at all confer.
ring on an aggrieved party a right of appeal from 1194 the judgment and order of the Special Judge to I the High Court.
It is contended that the absence of a right of appeal may be a lacuna, but that inasmuch as it has not been expressly provided, it cannot be implied from the fact that a provision has been made for the exercise of powers by the appellate court.
It is conceded that this line of argument, if accepted, would result in there being no appeal even as against a conviction.
But it is urged that it is the inevitable consequence of the lacuna.
It appears however on careful consideration that no such lacuna exists and that sub section (2) of section 5 of the Vindhya Pradesh Ordinance reasonably construed is an express provision conferring a right of appeal to the aggrieved party, whether an accused or the State, against the judgment of the Special Judge.
The section, in terms, says that the provisions of the Code of Criminal Procedure as adapted and in so far as they are not inconsistent with the Ordinance shall apply to the proceedings of a Special Court, and that for the purposes of the said provisions (that is, the adapted provisions which are not inconsistent and hence apply) the court of a Special Judge is to be deemed a Court of Session.
The provisions of the Criminal Procedure Code relating to the right of appeal are sections 410 and 417, and there is nothing in the Vindhya Pradesh Ordinance which is inconsistent with the application of these two sections to the proceedings of a Special Court treated as a Court of Session for the purpose.
It follows that the said proceedings are subject to appeal.
But it is urged that the provisions of the Criminal Procedure Code that are attracted by sub section (2) of section 5 of the Vindhya Pradesh Ordinance to the proceedings of a Special Court are only those provisions which relate to the procedure before the Special Court itself in respect of the proceedings before it and not all the provisions which are connected with or related to those proceedings.
There is, in our opinion, no warrant for putting such a limited construction on this sub section.
The only limitation on the application of the provisions of the Criminal Procedure Code to the 1195 proceedings of the Special Court is the one arising from the existence of any inconsistent provisions in the, Ordinance and not with reference to ' the conduct of the proceedings before that very court.
Once the Special Court is to be deemed a Court of Session the normal right of appeal provided by section 410 or section 417 as the case may be, must be taken to have been expressly provided by reference and not as arising by mere implication.
Learned counsel strongly relied on Attorney General vs Herman James Sillem(1) to show that a provision such as the above was meant only to regulate the proceedings in a case within the four walls or limits of the court.
The statutory provision which came up for construction in that case was however very differently worded, and was meant to regulate "the process, practice, and mode of pleadings," i.e., the procedure.
in the court and not "the proceeding" of the court.
While, no doubt, it is not permissible to supply a clear and obvious lacuna in a statute and imply a right of appeal, it is incumbent on the court to avoid a construction, if reasonably permissible on the language, which would render a part of the statute devoid of any meaning or application.
The construction urged for the appellant renders section 6 futile and leaves even a convicted person without appeal.
We have no hesitation in rejecting it.
Out of the constitutional points raised, that which relates to the alleged violation of article 14 has no substance.
In reliance on Lakshnwndas Ahuja 's case(2) it was sought to be argued that though the trial in this case under Ordinance No. V of 1949 related to offences committed prior to the commencement of the Constitution, the continuance thereof under the special procedure prescribed by the Ordinance was discriminatory and hence unconstitutional.
It is to be noticed that the trial commenced on 2nd December, 1949, the acquittal by the Sessions Judge was on 26th July, 1950, and the conviction by the Judicial Commissioner on appeal therefrom was on 10th March, 1951.
In the (1) ; ; xi E. R. 1200.
(2) ; 1196 light, however, of the later decision of the Supreme Court in Syed Qasim Razvi vs The State of Hyderabad(1), )it was recognised that this point was unsubstantial, unless some material prejudice in the matter of procedure was shown.
In this context the learned Attorney General brought to our notice that even before the Criminal Law Amendment(Special Court) Ordinance No. V of 1949, dated 2nd December, 1949, came into force there was in operation the Code of Criminal Procedure Adaptation (Amendment) Ordinance No. XXVIII of 1949 dated 3rd May, 1949, whereby section 268, Criminal Procedure Code, requiring all trials before a Court of Session to be either by jury or with the aid of assessors was deleted from the Vindhya Pradesh Criminal Procedure Code as adapted.
Therefore by the date when the trial in the present case commenced before the Special Court there was no substantial or material prejudice caused to an accused who was tried by the Special Court, and the continuance of such procedure after the Constitution came into force would make no serious difference.
What, however, was relied upon was a subsequent change in the situation as a result of section 3 of Central Act No. XXX of 1950 [Part C States (Laws) Act, 1950], whereby Acts and Ordinances specified in the Schedule to the (LIX of 1949) were extended to Vindhya Pradesh, and one of the Acts specified in that Schedule was the entire Code of Criminal Procedure.
This therefore had the effect of reviving section 268, Criminal Procedure Code, in its application to Vindhya Pradesh, repealing by section 4 of the Act the pre existing law in this behalf in the State.
It was accordingly argued that to the extent the trial continued under the old procedure subsequent to 16th April, 1950, there were inevitable discrimination and necessary prejudice.
This argument, however, overlooks the fact that the repealing section 4 of Act No. XXX of 1950 contained a saving clause providing that "the repeal shall not affect (a) the previous operation of any such law, or (b) any penalty, forfeiture or punishment incurred in respect (1) ; 1197 of any offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of any such penalty, for feiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed.
" It is to be noticed that the saving provision applies equally to proceedings previously commenced and then pending, whether before the special court or the ordinary court, and that therefore in respect of two persons equally situated in this behalf, one under trial by the ordinary court and the other by the special court, the position continues what it was before, i.e., the continuance of trial does not involve any substantially discriminatory and pre judicial procedure.
Learned counsel however attempted to argue that the very saving clause was a discriminatory provision and hence unconstitutional and invalid.
But there is no reason, why pending proceedings cannot be treated by the legislature as a class by themselves having regard to the exigencies of the situation which such pendency itself calls for.
There can arise no question as to such a saving provision infringing article 14 so long as no scope is left for any further discrimination inter se as between persons affected by such pending matters.
The next and the only serious question that arises 'in this case is with reference to the objections raised in reliance on article 20 of the Constitution.
This question arises from the fact that the charges as against the two appellants, in terms, refer to the offences committed as having been under the various sections of the Indian Penal Code as adapted in the United States of Vindhya Pradesh by Ordinance No. XLVIII of 1949.
This Ordinance was passed on II th September, 1949, while the offences themselves are said to have been committed in the months of February, March and April, 1949, i.e., months prior to the Ordinance.
It is urged therefore that the convictions in this case which were after the Constitution came into force 155 1198 are in respect of an ex post facto law creating offences after the commission of the acts charged as such offences and hence unconstitutional.
This contention raises two important questions, viz., (1) the proper construction of article 20 of the Constitution, and (2) whether the various acts in respect of which the appellants were convicted constituted offences in this area only from the date when Ordinance No. XLVIII of 1949 was passed or were already so prior thereto.
Article 20(1) of the Constitution is as follows: "No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
" This article in its broad import has been enacted to prohibit convictions and sentences under expost facto laws.
The principle underlying such prohibition has been very elaborately discussed and pointed out in the very learned judgment of Justice Willes in the well known case of Phillips vs Eyre(1) and also by the Supreme Court of V. section A. in calder vs Bull (2).
In the English case it is explained that ex post facto laws are laws which voided and punished what had been lawful when done.
There can be no doubt as to the paramount importance of the principle that such ex Post facto laws, which retrospectively create offences and punish them are bad as being highly inequitable and unjust.
In the English system of jurisprudence repugnance of such laws to universal notions of fairness and justice is treated as a ground not for invalidating the law itself but as compelling a beneficent construction thereof where the language of the statute by any means permits it.
In the American system, however, such ex post facto laws are themselves rendered invalid by virtue of article 1, sections 9 and 10 of its Constitution.
It is contended by the learned Attoney General that article 20 of ' the Constitution (1) (1870) 6 Q.B.D. i, at 23,and 25.
(2) ; ; I Law.
Edition 648 at 649, 1199 was meant to bring about nothing more than the invalidity of such ex post facto laws in the post Constitution period but that the validity of the pre Constitution laws in this behalf was not intended to be affected in any way.
The case in Keshavan Madhavan Menon vs The State of Bombay(1) has been relied on to show that the fundamental rights guaranteed under the Constitution have no retrospective operation, and that the invalidity of laws brought about by article 13 (1) of the Constitution relates only to the future operation of the pre Constitution laws which are in violation of the fundamental rights.
On this footing it was argued that even on the assumption of the convictions in this case being in respect of new offences created by Ordinance No. XLVIII of 1949 after the commission of the offences charged, the fundamental right guaranteed under article 20 is not attracted thereto so as to invalidate such convictions.
This contention, however, cannot be upheld.
On a careful consideration of the respective articles, one is struck by the marked difference in language used in the Indian and American Constitutions.
Sections 9(3) and 10 of article I of the American Constitution merely say that "No ex post facto law shall be passed. " and " No State shall pass ex Post facto law.
But in article 20 of the Indian Constitution the language used is in much wider terms, and what is prohibited is the conviction of a person or his subjection to a penalty under ex post facto laws.
The prohibition under the article is not confined to the passing or the validity of the law, but extends to the conviction or the sentence and is based on its character as an ex post facto law.
The fullest effect must therefore be given to the actual words used in the article.
Nor does such a construction of article 20 result in giving retrospective operation to the fundamental right thereby recognised.
All that it amounts to is that the future operation of the fundamental right declared in article 20 may also in certain cases (1) ; 1200 result from acts and situations which had their commencement in the pre Constitution period.
In The Queen vs St. Mary Whitechapel (1) Lord, Denman C.J. pointed out that a statute which in its direct operation is prospective cannot properly be called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing.
The lgeneral principle therefore that the fundamental rights have no retrospective operation is not in any way affected by giving the fullest effect to the wording of article 20.
This article must accordingly be taken to prohibit all convictions or subjections to penalty after the Constitution in respect of ex post facto laws whether the same was a post Constitution law or apre Constitution law.
That such is the intended of the wording used in article 20(1) is confirmed by the similar wording used in articles 20 (2) and 20 (3).
Under article 20 (2) for instance, it cannot be reasonably urged that the prohibition of double jeopardy applies only when both the occasions there for arise after the Constitution.
Similarly.
under article 20 (3) it cannot be suggested that a person accused before the Constitution can be compelled to be a witness against himself, if after the Constitution the case is pending.
In this context it is necessary to notice that what is prohibited under article 20 is only conviction or sentence under an ex post facto law and not the trial thereof.
Such trial under a procedure different from what obtained at the time of the commission of the offence or by a court different from that which had competence at the time cannot ipso facto be held to be.
unconstitutional.
A person accused of the commission of an offence has no fundamental right to trial by a particular court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved.
In this connection our attention has been drawn to the fact that the Vindhya Pradesh Ordinance XLVIII of 1949, though enacted on 11th September, (1) ; at 814.
1201 1949, i.e., after the alleged offences were committed, was in terms made retrospective by section 2 of the said Ordinance which says that the Act " shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948" a date long prior to the date of the commission of the offences.
It was accordingly suggested that since such a law at the? time when it was passed was a valid law and since this law had the effect of bringing this Ordinance into force from 9th August, 1949, it cannot be said that the convictions are Dot in respect of "a law in force" at the time when the offences were committed.
This, however, would be to, import a somewhat technical meaning into the phrase "law in force" as used in article 20. " Law in force" referred to therein must be taken to relate not to a law "deemed" to be in force and thus brought into force, but the law factually in operation at the time or what may be called the then existing law.
Otherwise, it is clear that the whole purpose of article 20 would be completely defeated in its application even to ex post facto laws passed after the Constitution.
Every such ex post facto law can be made retrospective, as it must be, if it is to regulate acts committed before the actual passing of the Act, and it can well be urged that by such retrospective operation it becomes the law in force at.
the time of the commencement of the Act.
It is obvious that such a construction which nullifies article 20 cannot possibly be adopted.
It cannot therefore be doubted that the phrase "law in force" as used in article 20 must be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law "deemed" to have become operative by virtue of the power of legislature to pass retrospective laws.
It follows that if the appellants are able to substantiate their contention that the acts charged as offences in this case have become such only by virtue, of Ordinance No. XLVIII of 1949 which has admittedly been passed subsequent to the commission thereof, then they would be entitled to the benefit of article 20 of 12O2 the Constitution and to have their convictions set ,aside.
This leads to an examination of the relevant pre existing law.
But before taking up that examination, it is convenient to deal with a contention which has been repeatedly pressed on us, viz., that the validity of the convictions in this case cannot be upheld on a consideration of the pre existing state of law, because (1) the charges are specifically with reference to the offences under Ordinance No. XLVIII of 1949, and (2) the said Ordinance itself has repealed the preexisting law.
This contention is, however, without any substance.
An examination of the pre existing state of law in this behalf as on the date of the commission of the offence is not for the purpose of converting the convictions under Ordinance No. XLVIII of 1949 into those under the previous law.
The convictions in this case are clearly and legally referable only to Ordinance No. XLVIII of 1949, which was the law applicable to the offence at the time of the commission thereof on account of the retrospective operation validly given to that law by section 2 of the Ordinance.
It is only for the purpose of considering the constitutional validity of those convictions that the factual position as regards the previous law in this behalf becomes necessary to be examined.
This is a question which arises on the contention of the appellants themselves, and is not an objection to the frame of the charge or the legality of the conviction otherwise than on the footing of constitutional invalidity.
Nor is there any question of prejudice involved, since that question has been raised on behalf of the appellants in the trial court itself, and the burden of making out the facts requisite for the constitutional invalidity of the convictions is on them.
The argument that on the very terms of Ordinance No. XLVIII of 1949 there is no pre existing law with reference to which the constitutionality of the convictions under article 20 is to be judged is based on sections 2 and 3 (1) of the said Ordinance, which run as follows: 1203 Section 2: "The Indian Penal Code as in force generally in the Provinces of India immediately before the commencement of this Ordinance shall apply, and shall be in force in Vindhya Pradesh, subject to the adaptation and modifications set out in the Schedule, and the said Code as so applied shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948.
" Section 3 (1): " If immediately before the commencement of this Ordinance there is in force in Vindhya Pradesh or any part thereof any law corresponding to the Indian Penal Code, such law is hereby repealed.
" It is urged that as a result of these two provisions the pre existing law, if any, has been repealed as from 9th August, 1948, and that therefore the period bet.
ween 9th August, 1948, and 11th September, 1949, on which date Ordinance No. XLVIII of 1949 came into force must be taken to be a period of no penal law in this territory for judging the constitutionality of any conviction subsequent to 11th September, 1949, for an alleged offence committed during that period.
This argument is self contradictory, and proceeds on misconception.
What is relevant for the application of article 20 is not the result brought about by repeal and the retrospective operation thereof, but the factual state of law as it existed prior to the date when the repeal came into operation.
The repeal itself posits the pre existence of the law, and it is that law which is relevant for our present purpose.
It therefore becomes necessary to examine in some detail what was the criminal law factually in force during the months of February, March and April, 1949, when the acts charged as offences against the appellants were committed, and to see whether it wag anything different from what was enacted by Ordinance No. XLVIII of 1949.
Since the valid existence of such law has been, in the course of the arguments, contended as depending on the administrative set up at the relevant period and the legislative authority functioning 1204 in that set up, it becomes necessary to have a ,correct appreciation of the events which resulted in bringing about a United State of Vindhya Pradesh.
The State of Vindhya Pradesh consists of as many 5 pre existing native States known as Bundelkhand Baghlielkand States of which the State of Rewa apparently the largest unit.
Immediately after the passing of the Indian Independence Act of 1947 which by virtue of section 7 thereof resulted in the lapse of the suzerainty of the British Government in India, these various States executed in favour of the Government of India Instruments of Accession under section 6 of the Government of India Act in accordance with the form which is found at pages 165 and 169 of the White Paper on Indian States issued by the Government of India in March 1951.
At about the same time they executed also standstill agreements as per form given at page 173 of the White Paper.
Shortly thereafter and in pursuance of the policy of the Government of India all these 35 States executed, with the concurrence of the Government of India, an inter se Covenant dated 18th March, 1948, for the establishment of a UnitedState of VindhyaPradesh com prising the territories of these 35 States with a common executive, legislature and judiciary.
That Covenant provided for common administrative arrangements and for the election of a Rajpramukh.
Article 9 of the Covenant vested in the Rajpramukh the entire legislative authority of the United State of Vindhya Pradesh until a Constitution to be framed by the appropriate body for the said United State of Vindhya Pradesh provided otherwise.
The Maharajah of Rewa became the first Rajpramukh of the United State of Vindhya Pradesh, and we are informed that.though the Covenant provided the 1st day of May, 1948, as the date within which the administration is to be made over to the Rajpramukh by each of the States, some did not, and that, as a fact, the integrated administration by the Rajpramukh in respect of all States came into operation only from the 9th of August, 1948, Meanwhile, however, it appears to have 1205 been thought expedient that a fresh Instrument of Accession should be executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh replacing the individual Instruments of Accession which were executed in the months of August, September, October and November, 1947.
Consequently a fresh, Instrument of Accession was executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh on the 20th of July, 1948, and was accepted by the Governor General of India on the 13th of September, 1949.
It may be incidentally mentioned that one of the important differences between the previous individual Instruments of Accession executed by the various rulers and the later Instrument of Accession executed by the Rajpramukh is that while under the former, accession was only in respect of three matters, viz., Defence, External Affairs and Communications, under the later Instrument dated the 20th of July, 1948, all matters enumerated in Lists Nos.
I and III of the Seventh Schedule of the Government of India Act, 1935, were accepted as the matters in respect of which the legislature of India, then called the Dominion Legislature, might make laws for the United State of Vindhya Pradesh.
It may also be mentioned that on the 25th November, 1949, the Rajpramukh of the United State of Vindhya Pradesh issued a proclamation whereby he declared that the Constitution of India which was then shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the Vindhya Pradesh as for the other parts of India and specifically superseded and abrogated all other constitutional provisions inconsistent therewith which were then in force in this State.
These arrangements brought about an integrated United State of Vindhya Pradesh within the framework of the Dominion of India but only by way of accession.
Further steps, however, had the effect of merging these United States as part of the territory of India.
It is unnecessary to notice those steps in detail, as they fall beyond the period with which we are concerned for the present purpose, 156 1206 It is against this background of events constituting the integration of these various ruler States into the United State of Vindhya Pradesh within the Union of India by accession thereto that the question as to what was the criminal law in force by February, March and April, 1949, has got to be judged.
From the above ,narration it will be noticed that at the relevant period it was the Government of the United State of Vindhya Pradesh constituted by the inter se integration Covenant dated the 18th March, 1948, that was functioning under the authority of the Rajpramukh of Vindhya Pradesh and subject to the Instrument of Accession with the Dominion of India executed by him on the 20th July, 1948.
As already stated, the actual integrated administration under these arrangements came into operation for the entire United State only on the 9th of August, 1948.
We may now start with the fact above noticed that the various component States became the United State of Vindhya Pradesh on the 18th March, 1948.
In the normal course and in the absence of any attempts to introduce uniform legislation throughout the State the pre existing laws of the various component States would continue to be in force on the well accepted principle laid down by the Privy Council in Mayor of Lyons vs East India Company(1).
The first step towards the introduction of some uniformity in the laws for the entire State was taken by the Rajpramukh by issuing on the 31st July, 1948, an Ordinance styled the Vindhya Pradesh Application of Laws Ordinance No. IV of 1948.
Section 2 of that Ordinance provided as follows: "All Acts, Codes, Ordinances and other laws, and rules and regulations made thereunder, which have, by publication in the Rewa Raj Gazette, been enforced in the Rewa State, and continue to be in force, are extended so as to be applicable to the whole of Vindhya Pradesh, Provided that nothing in this clause shall apply to any local law, rules, regulation or custom having the force of law, which relates to matters connected with land revenue or tenancy.
" (1) 1 M.I.A. 175, at 270,,271.
1207 This Ordinance extended to the whole of Vindhya, Pradesh, and was to come into force with effect from the 9th of August, 1948, by virtue of section I thereof.
The Ordinance was amended later by another Ordinance No. XX of 1949 which deleted from section 2 of the previous Ordinance the words "by publication in the Rewa Raj Gazette".
The effect of these two Ordinances, so far as we are concerned, was to extend ' to the entire State of Vindhya Pradesh the criminal law which was in force previously in the Rewa State.
That law is to be found by reference to Orders Nos.
IV of 1921 and VI of 1922 issued by the then Regent of Rewa acting for the Maharajah on the 18th February, 1921, and 9th March, 1922, respectively.
A perusal of these two Orders and in particular of paragraph 10 of the 1921 Order as interpreted by the 1922 Order makes it perfectly clear "that the Indian Penal Code and the Code of Criminal Procedure were introduced in the Rewa State, in the letter and in the spirit with due adaptation to local conditions.
" It is not disputed that this continued to be the position so far as Rewa State was concerned until the United State of Vindhya Pradesh was formed.
It follows that the Indian Penal Code and the Code of Criminal Procedure with necessary adaptations were brought into operation in the entire United State of Vindhya Pradesh shortly after the introduction of the integrated administration under the Rajpramukh.
It has been urged, however, that though this may have been the intention, the intention did not become operative for reasons to be presently stated.
Section 2 of Ordinance No. IV of 1948 while extending the laws of Rewa State to the rest of Vindhya Pradesh refers to the publication of such laws in the Rewa Gazette as a requisite therefor, and it is pointed out that the Rewa Gazette itself came into existence only in October 1930 (vide page 386 of the printed paper book), whereas the Penal Code and the Criminal Procedure Code were brought into operation in the Rewa State in 1921 and 1922.
It is also pointed out that the deletion of the 1208 ,requirement of previous publication in the Rewa by Ordinance No. XX of 1949 came into operition only when that Ordinance was published in the Vindhya Pradesh Gazette, i.e., on the 15th May, 1949, sometime after the commission of the offence in this ,case.
To substantiate the view that only such of the Rewa laws which were previously published in the Rewa Gazette were understood as having been origi nally extended to Vindhya Pradesh by Ordinance No. IV of 1948, a decision of the Vindhya Pradesh High Court dated the 29th October, 1949, in Criminal Appeal No. 27 has been brought to our notice which assumes that the Prisoners ' Act in force in India was not in force in Vindhya Pradesh as there was no previous publication of it in the Rewa Gazette.
On the other side a notification of Vindhya Pradesh Government dated the 19th March, 1949, and published in the Vindhya Pradesh Gazette dated the 30th March, 1949, has been brought to our notice which specifically mentions all the laws by then in force in Vindhya Pradesh and shows "Indian Penal Code mutatis mutandis with necessary adaptations" as item 86 thereof This is relied on to show that there must have been a previous publication thereof in the Rewa Gazette before integration.
There seems to be considerable force in this argument that in respect of the various Rewa State laws which have been enumerated in the above mentioned Gazette as having been brought into force in Vindhya Pradesh (some of these are Acts prior to 1930) there must have been previous publication in the Rewa Gazette sometime after 1930, and that neither Ordinance No. XX of 1949 nor the decision of Vindhya Pradesh High Court relating to Prisoners ' Act (which is not one enumerated in the above Gazette) can be taken to negative it.
We are prima facie inclined to accept this view and to think that the Indian Penal Code as in force in Rewa became extended to Vindhya Pradesh by Ordinance No. IV of 1948.
But even assuming that section 2 of the Ordinance failed to achieve its purpose on account of misconception as to the previous publication of any particular Rewa law in the Rewa Gazette, 1209 it is clear that that Rewa law would continue to be in force in the Rewa portion of the United State of Vindhya Pradesh, as the Vindhya Pradesh law therefor, on the principle recognised in Mayor of Lyons vs East India Company (1), that on change of sovereignty over an inhabited territory the pre existing laws continue to be in force until duly altered.
Since in the present case we are concerned with offences committed in relation to the Rewa State portion of Vindhya Pradesh, there can be no reasonable difficulty in holding that the criminal law of Rewa State, i.e., the Indian Penal Code and the Criminal Procedure Code with adaptations mutatis mutandis, was the relevant law for our present purpose by the date of integrated administration, viz., the 9th August, 1948.
Now the subsequent alterations therein by Ordinances of the Rajpramukh may be shortly noticed.
So far as the substantive penal law is concerned, there was the Anti corruption Ordinance No. XII of 1948 dated the 16th December, 1948, and the Indian Penal Code (Application to Vindhya Pradesh) Ordinance No. XLVIII of 1949 dated the 11th September, 1949.
The former being prior to the dates of commission of the offences in the present case does not require any further notice.
So far as the Criminal Procedure Code is concerned, there were two Ordinances: (1) the Criminal Procedure Code Adaptation Ordinance No. XV of 1948 dated the 31st December, 1948, and (2) the Criminal Procedure Code Adaptation (Amendment) Ordinance No. XXVII of 1949 dated the 3rd May, 1949.
In view of what has been found above, viz., that by virtue of the Orders of the Regent of Rewa dated 1921 and 1922 the Indian Penal Code and Criminal Procedure Code with the necessary adaptations mutatis mutandis were in force in Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948 or continued to be in force in the Rewa portion of Vindhya Pradesh State by virtue of the principle in Mayor of Lyons ' case (1) it is prima facie correct to say that the penal law in force (1) I M. I. A. 175 1210 in the relevant area was substantially the same both before and after the above mentioned amendments made by the Rajpramukh.
It is urged however that in two important respects relevant for our present purpose there is a difference.
It is pointed out that there is anamendment as regards the definition of "Public servant" by Ordinance No. XLVIII of 1949.
It is also urged that sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, which are extra territorial in operation could not have been brought into force into Rewa or Vindhya Pradesh by adaptation or legislation for lack of legislative competence in this behalf at the relevant times.
The points thus raised assume importance since the charges against the first appellant, who is a Minister, is in his capacity as a public servant and since also one of the charges against him is in respect of acts done in New Delhi completely outside Vindhya Pradesh.
It is true that Ordinance No. XLVIII of 1949 amended the Indian Penal Code by substituting for the previous first clause of section 21 thereof relating to the definition of a "public servant" the phrase "Every Minister of State".
But it does not follow that " a Minister of State" was not a public servant as defined in section 21 of the Indian Penal Code even before this amendment.
Clause 9 of section 21, Indian Penal Code, shows that every officer in the service or pay of the Crown for the performance of any public duty is a "public servant".
The decision of the Privy Council in King Emperor vs Sibnath Banerji(1) is decisive to show that a Minister under the Government of India Act is "an officer" subordinate to the Governor.
On the same reasoning there can be no doubt that the Minister of Vindhya Pradesh would be an "officer" of the State of Vindhya Pradesh.
Therefore, prior to the passing of Ordinance No. XLVIII of 1949 and on the view that the Indian Penal Code with necessary adaptations mutatis mutandis was in force at least in the Rewa portion of Vindhya Pradesh (if not in the entirety of Vindhya Pradesh) the first appellant was a public servant (1) at 222.
1211 as defined in section 21, Indian Penal Code, as adapted.
The amendment of the said section brought about therefore no substantial change in the position of the first appellant.
It has been faintly suggested that, even so, under the pre existing law the definition of public servant could have reference only to an officer of the Rewa State, and that the change brought about by Ordinance No. XLVIII of 1949 made only the Minister of Vindhya Pradesh State a public servant.
This argument is fallacious.
It is implicit in the continuance of Rewa law after integration that from the moment of such continuance it became the Vindhya Pradesh law for the Rewa portion of Vindhya Pradesh territory with the requisite implied adaptation consonant to the new set up.
There is therefore no substance in the argument that the amendment of section 21, Indian Penal Code, by Ordinance No. XLVIII of 1949 brought about any change in the situation of the first appellant as a public servant.
The further question that remains to be considered is whether under the Vindbya Pradesh law, acts committed outside the State are offences and are triable by Vindhya Pradesh courts, and whether in any case there was any such law in factual operation at the date when the acts charged as offences in this case were committed at New Delhi in April, 1949.
Under the normal Indian law the relevant legislative provisions are sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, and the question is whether by express or implied ' adaptation mutatis mutandis these sections can be held to have been validly in force in Vindhya Pradesh at the relevant period.
It is contended that the rulers of native States had no authority for extra territorial legislation, and that consequently any adaptation in this behalf cannot be implied and if expressly purporting to be made, cannot be valid.
There can be no doubt that the provisions of the Penal Code and the Criminal Procedure Code are in the nature of extra territorial legislation, and that every sovereign legislative authority has the power to pass such laws also.
[See Macleod 1212 vs Attorney General for New South Wales (1)].
In the, present case we are concerned only with that portion of the relevant extra territorial law which renders an act committed by a subject of the State outside the limits of the State an offence triable by the courts of state.
In the course of the arguments it has suggested that to that limited extent no question territoriality of the relevant legislation arises.
concept of extra territorial legislation appears to comprehend such cases also, if the passages relied on before us from Pitt Cobbet 's International Law, 5th Edition, at page 216 as also at pages 225 and 226 paragraphs 101 and 102, are to be accepted as correct.
Assuming without deciding that this is so, the argument has been advanced that no ruler of the Indian States, before the 15th August, 1947, and much less the Rajpramukh of Vindhya Pradesh, had any such full sovereign status as to entitle them to pass extraterritorial laws.
It is well known that these rulers had no external sovereignty, as it was taken out of them and exercised by the suzerain British power.
But for internal purposes or municipal purposes the rulers were generally considered as having full sovereign status except to the extent that the suzerain power assumed to itself any function of such internal sovereignty either on specific occasions, or generally but for specified and limited purposes.
In their relation with the rulers of the native States, the suzerain British power acted on the juristic theory propounded by Sir Henry Maine that "sovereignty is divisible, though independence is not"See Ilbert 's Government of India, page 425 a theory accepted in the Butler Committee Report on Indian States (1928 29) at page 25, paragraph 44.
The passages at pages 398, 399 and 426 of Ilbert 's Government of India would show that what may have been left of internal sovereignty to a particular ruler may in exceptional cases be nothing more than titular.
The general position of these Native States in India prior to 15th August, 1947, appears fairly clearly from certain instructive passages at pages 422 and 423 of Ilbert and is correlative (1) 1213 to the actual exercise of British jurisdiction within those States as appears from the following passages: "In point of fact the jurisdiction of the GovernorGeneral in Council within the territories of Native States is exercised (a) over European British subjects in all cases; (b) over native Indian subjects in certain cases; (c) over all classes of persons, British or foreign, within certain areas.
It is the policy of the Government of India not to allow native courts to exercise jurisdiction in the case of European British subjects but to require them either to be tried by the British courts established in the Native State, or to be sent for trial before a court in British India.
The Government of India does not claim similar exclusive jurisdiction over native Indian subjects of His Majesty when within Native States, but doubtless would assert jurisdiction over such persons in cases where it thought the assertion necessary. . " "The Government of India does not, except within specified areas, or under special circumstances, such as during the minority of a native prince, take over or interfere with the Jurisdiction of the courts of a Native State in cases affecting only the subjects of that State, but leaves such cases to be dealt with by the native courts in accordance with native laws.
" Lee Warner in his book on "Protected Princes of India" states the position at pages 351 and 352.
The following extract from paragraph 143 at page 351 is instructive : "But where, as in the case of European British subjects, material distinctions in religion, education, and social habits separate them from the native community, and justify the extension to them of those rights of ex territoriality, which are still obtained for them by Capitulations and agreements with foreign 157 1214 non Christian nations, these distinctions are absent in the case of native Indian subjects of Her Majesty.
The systems of native justice, if not similar to those in British territory, are more or less assimilated, and provided that the trial of native Indian subjects by the ordinary tribunals of the States, whose laws they have offended, is supervised by the British agent, the general rule is to leave to the Native States jurisdiction over such British subjects who break their laws, even where the offence committed is also cognisable under the law of India.
The British Government goes still farther, since it extradites to the Native State a native Indian subject, who, after the commission of an extraditable offence in the Native principality, seeks shelter in British territory, provided that the political agent is satisfied that the crime can be properly tried in the courts of the Native State.
The powers of the sovereigns of the States, in respect of the trial of native Indian subjects, have been generally classified.
Some chiefs can try any person, whether their own or a native Indian subject, for a capital offence without express permission; others can only try a native Indian subject for such an offence with permission; and others, again, cannot pass a final sentence of death without the confirmation of Government to it." These passages, while showing that the extent of the exercise of internal sovereignty by each of these rulers in actual practice, is a matter for evidence, when called in question, indicate that full jurisdiction over the rulers ' own subjects was never denied but generally conceded, except where a sentence of death was involved.
There is therefore no reason at all to think that the rulers had no authority to pass laws binding their own subjects and regulating their own courts in respect of acts committed outside their State assuming such laws to be extra territorial.
In this context an old treaty of 1813 between Rewa State and the British Government and a fairly recent judoment of the Rewa High Court in 1945 have been brought to our notice to show the contrary at least so far as Rewa State is concerned.
The treaty is to be found at page 255 of 1215 Volume V of Aitchison 's Treaties, Engagements and ' Sanads.
Article 6 thereof which is relied on only provides facilities for the suzerain Government to follow and pursue into Rewa State, offenders who having committed offences in British India escape away into the State.
This does not negative the authority of the Rewa State to enact legislation concerning its own subjects when they commit such offences outside the State.
1945 Rewa Law Reports 84 is no doubt a case in which the High Court assumed that the court had no jurisdiction to try an offence committed outside the State by a subject of the State.
There is no discussion in the judgment of the question involved, and this single instance is not enough to make out either the absence of the State 's legislative authority in this behalf or the factual non existence of the relevant law.
It must therefore be held that the rulers of the native States had prior to 1947, the authority to pass extra territorial laws relating to offences committed by their own subjects and vesting in their own courts the power to try them, except where the contrary is made out by evidence in the case of any individual State, and that so far at least as Rewa State is concerned, the contrary cannot be held to have been proved.
The further point that has been raised is that whatever may be the position of the Rewa State before 1947 the attempt of the Rajpramukh of the State of Vindhya Pradesh in so far as he purported to extend the extra territorial portion of any of the Rewa laws to Vindhya Pradesh by Ordinances Nos.
IV of 1948 and XX of 1949 and his attempt to introduce into Vindhya Pradesh the extra territorial portion of the Indian Penal Code and the Criminal Procedure Code by Ordinances Nos. XLVIIII of 1949 and XXVIII of 1949 respectively, must fail as he had no such authority for extra territorial legislation with reference to the basic covenants from which his authority was derived.
These basic covenants are as already above shown the inter se integration agreement 1216 dated 18th March, 1948, executed by all the rulers of the component States of Vindhya Pradesh and the Instrument of Accession dated 20th July, 1948, executed by the Rajpramukh in favour of the Dominion of India.
Under the inter se integration agreement and by article IX, clause (3) thereof, the Rajpramukh was vested with the power to make and promulgate Ordinances for the peace and good government of the United State of Vindhya Pradesh or of any part thereof.
Under the Instrument of Accession and by clause (3) thereof the Rajpramukh accepted all matters enumerated in Lists I and III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature may make laws for the United State.
It has been strenuously argued before us that in view of these provisions the authority of the Rajpramukh for legislation was in substance reduced to the powers of the Provincial Legislature within the framework of the Constitution of India as it then was.
Section 6, subsection (1), of the Indian Independence Act and section 99(2) as amended are relied on to show that the Provincial Legislature has no power to make extra territorial laws.
It is accordingly argued that the Rajpramukh had no power at least after the execution of the Instrument of Accession to amend or adapt the Indian Penal Code or the Criminal Procedure Code so as to bring into operation sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, with the necessary modifications in the State of Vindhya Pradesh.
Though this argument appears plausible, a careful scrutiny of the scheme of the integration and accession covenants as also of the relevant provisions of the Government of India Act and the Indian Independence Act shows clearly that such an argument is not tenable.
The provisions under the Government of India Act under which the Instrument of Accession has been executed keep the position of the Provinces distinct from the position of the acceding States.
Section 5(1) of the Government of India Act while making the provinces as well as the acceding States, 1217 part of the Dominion of India enumerates the two under separate categories by clauses (a) and (b).
Subsection (2) of section 6 specifically provided that, "An Instrument of Accession shall specify the matters which the Ruler accepts as matters with respect to which the Federal Legislature may make laws for his State, and the limitations, if any, to which the I power of the Federal Legislature to make laws for his State, and the exercise of the executive authority of the Federation in his State, are respectively to be subject.
" Section 101 of the Government of India Act in terms says that, "Nothing in the Act shall be construed as empowering the Federal Legislature to make laws for a Federated State otherwise than in accordance with the Instrument of Accession of that State and any limitation contained therein.
" If the argument put forward by the appellants ' counsel is correct, viz., that the mere reference to the legislative items in respect of which the Dominion Legislature could make laws applicable to the State of Vindhya Pradesh as Lists I and III carried with it the necessary implication that the Dominion Legislature alone had the power to make laws for the State with extra territorial operation, and to that extent therefore curtailed the legislative authority of the Rajpramukh, it would be tantamount to the importation of all the limitations under sections 99 to 104 into the Instrument of Accession.
This would be contrary to section 101 of the Government of India Act.
There is no justification for such a view merely because of the reference to the enumerated items as Lists I and III which may have been a matter of convenience for reference.
On the other hand, the Instrument of Accession in terms states by clause 9 as follows: "Save as provided by or under this Instrument nothing contained in this Instrument shall affect the exercise of any power, authority and rights enjoyed by the Rajpramukh or the validity of any law for the 1218 time being in force in the United State or any part thereof.
" The authority of the Rajpramukh which is referred to in this clause is not only the unfettered legislative authority "to make and promulgate Ordinances for the peace and good government of the United States or any part thereof" Vested in him by Article IX of the integration Covenant dated 18th March, 1948, but also that which is vested in him under article VI of the said agreement.
This article vests in him "all rights, authority, and jurisdiction belonging to the ruler of each Covenanting State and incidental to the government thereof," There can be no doubt therefore that if, as has been pointed out above, the various Covenanting States and in particular the State of Rewa, had the power to pass extra territorial laws at least to the extent of making certain acts committed outside the State by its subjects as offences and to vest in the State courts authority to deal with such offences, that power has not in any way been curtailed either by the integration Covenant or the Instrument of Accession.
It follows therefore that sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, at least in so far as it affected the subjects and courts of the State, were entirely within the legislative competence of the States concerned for all purposes of adaptation or amendments.
Now, so far as sections 3 and 4 of the Indian Penal Code are concerned, the amendment brought about by Ordinance No. XLVIII of 1949 is nothing more and nothing less than a mere adaptation of these sections for the new set up and this, as shown above, was exactly the law already in force without formal amendment.
Hence it would follow that the conviction of the appellants in respect of all the offences of which they are charged including the extra territorial offence said to have been committed by the first appellant at New Delhi is not open to the objection under article 20 on the ground that it is a conviction under an ex post facto law.
1219 As regards the amendments in the Criminal Procedure Code brought about by Ordinances Nos.
XV of 1948 dated the 31st December, 1948, and XXVII of 1949 dated the 3rd May, 1949, no detailed consideration is necessary in view of what has been held at the outset that the constitutional objection under article 20 does not apply to a change in procedure or change of court.
Items 62 and 63 of section 2 of Ordinance No ' XV of 1948 would seem to indicate that the jurisdiction which the criminal courts of Vindhya Pradesh previously had to try extra territorial offences was probably lost thereby.
If so, that jurisdiction,"as restored under Ordinance XXVII of 1949 by the amendment thereby of the said items 62 and 63 thus bringing it into line with section 188, Criminal Procedure Code, with the requisite adaptations.
Hence the power of the Vindhya Pradesh courts to hold trials for extra territorial offences which was probably interrupted from 31st December, 1948, was restored on 3rd May, 1949, before the trial in this case commenced with retrospective operation, i.e., as from the date of the prior Ordinance, i.e., 31st December, 1948.
In the result, we hold that (1) The appeal to the Judicial Commissioner from the acquittal by the Special Judge was competent; (2) The trial of the appellants under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance No. V of 1949 is not open to objection under article 14 of the Constitution; (3) The criminal law relating to the offences charged against the appellants at the time of their commission was substantially the same as that which obtained at the time of the convictions and sentences by the appellate court.
This was so both in respect of offences committed within the limits of the State of Vindhya Pradesh and those committed outside it ; (4) The law relating to the offence committed by the first appellant outside the State of Vindhya Pradesh (at New Delhi) was perfectly within the competence of the appropriate legislative authority at the relevant 1220 time; and (5) Consequent on 3 and 4 above, the objection to the convictions and sentences of the appellants ,under article 20 is not sustainable.
The appeal is accordingly directed to be posted for consideration whether it is to be heard on the merits.
Order accordingly.
| The appellants, who were during the relevant period, the Minister for Industries and Secretary to the Government respectively of the State of Vindhya Pradesh, were tried by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance (No. V of 1949) for charges under sections 120 B, 161, 465 and 466 of the Indian Penal Code as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, the facts alleged against them being that they entered into a conspiracy in February, 1949, at Rewa to obtain illegal gratification for revoking a previous Government Order and in pursuance of that conspiracy the second appellant demanded such gratification on 8th March, 1949, at Rewa and the first appellant received Rs. 25,000 towards it on the 11th April, 1949, at New Delhi and forged certain documents purporting to be official orders.
They were acquitted by the Special Judge but on appeal the first appellant was convicted by the Judicial Commissioner on all the charges and the second as under sections 120 B and 161 of the Indian 1189 Penal Code.
The validity of the trial and convictions was challenged on appeal to the Supreme Court inter alia on the ground that they contravened articles 14 and 20 of the Constitution and on the ground that no appeal lay to the Judicial Commissioner from the order of the Special Judge.
Held (i) that, as section 5 (2) of the Vindhya Pradesh Ordinance, 1949, provided that the provisions of the Criminal Procedure Code shall apply to the proceedings of a Special Court and that the Special Judge shall be deemed to be a court of session, the normal right of appeal provided by section 410 or section 417, as the case may be, of the Criminal Procedure Code must betaken to have been expressly provided by reference, and the order of the Special Judge was appealable to the Judicial Commissioner.
Attorney General vs Herman James Sillem (11 H. L. C. 704) distinguished.
(ii) That the trial of the appellants did not contravene article 14 of the Constitution inasmuch as in the Vindbya Pradesh Criminal Procedure Code (as amended) which was in force at the commencement of the trial (namely 2nd December, 1949) there was no provision requiring all trials before Courts of Sessions to be either by jury or with the aid of assessors, and the fact that the entire Criminal Procedure Code including section 268 thereof was extended to Vindhya Pradesh on the 16th April, 1950, by the Part C States (Laws) Act, 1950, could not affect the validity of the trial after that date as section 4 of the said Act provides that the repeal of the earlier law by that Act shall not affect pending proceedings, and pending proceedings being a class in themselves, a provision saving such proceedings could not contravene article 14.
Syed Qasim Razvi vs State of Hyderabad ([1952] S.C.R. 710) referred to.
(iii) The prohibition contained in article 20 of the Constitution against convictions and subjections to penalty under ex post facto laws is not confined in its operation to post Constitution laws but applies also to ex post facto laws passed before the Constitution in their application to pending proceedings.
[The difference between Indian and American law in this respect pointed out.] (iv) Article 20, however, prohibits only conviction or sentence under an ex post facto law, and not the trial thereof.
Such trial under a procedure different from what obtained at the time of the offence or by a court different from that which had competence at that time cannot ipso facto be held to be unconstitutional.
(V) The expression " law in force " in article 20 means a law which was in fact in existence and in operation at the time of the commission of the offence (or, in other words, the then existing 154 1190 law) and does not include a law which by subsequent legislation has to be deemed to have been in force at that time.
(vi) Though the charges against the appellants were specifically framed with reference to the offence under Ordinance No. XLVIII of 1949, as the acts charged as offences did not become such only by virtue of the said Ordinance and as they were offences even under the law which prevailed at the time when the acts were committed, they could not be regarded as convictions for violation of a law which was not in force at the time of the commission of the acts charged.
(vii) By virtue of the Orders of the Regent of Row& of 1921 and 1922, the Indian Penal Code and the Criminal Procedure Code with the necessary adaptations were in force in the Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948, or continued to be in force in the Rewa portion of that State by virtue of the principle laid down in Mayor of Lyons vs Bast India Co. (1 M.I. A. 175), and were the penal law in force in the relevant area when the acts were committed.
(viii) The amendment of the definition of "public servant" in S.21 of the Penal Code, made by Ordinance No. XLVIII of 1949 brought about no substantial change in the position of the first appellant as a public servant.
(ix) The Ruler of the Rewa State had prior to 1947 the authority to pass extra territorial laws relating to offences committed by his own subjects and vesting in his own courts the power to try them, that power was not in any way curtailed either by the integration covenant or the Instrument of Accession, and sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, at least in so far as they affected the subjects and courts of the State, were within the legislative competence of the State.
(x) The conviction of the appellants in respect of all the offences with which they were charged including the extra territorial offence said to have been committed by the first appellant at New Delhi was not illegal under article 220 on the ground that the conviction was under an ex post facto law.
|
Civil Appeals Nos. 702 and 840 843 of 1975.
Appeals by special leave from the judgment and order dated the 18 3 1975 of the Bombay High Court (Nagpur Bench) Nagpur in special civil applications Nos. 1668, 1893, 1895 to 1897 of 1974.
section T. Desai, section C. Mandia and Shri Narain for the appellants 'in C.A. 702/75.
section P. Mehta, section C. Mandia and Shri Narain for the appellants in C.A. 840 843/75.
V. section Desai and J. Ramamurthi and section P. Nayar for the respondents in all the appeals.
The Judgment of the Court was delivered by BHAGWATI, J.
These five appeals by special leave raise a short but interesting question of law relating to the applicability of section 171, sub section
(6) of the Income Tax Act, 1961 (hereinafter referred to as the new Act).
The facts giving rise to these appeals are few and may be briefly stated as follows: There was at all material times a Hindu Undivided Family consisting of one Gulabdas, his wife and five sons.
The Hindu Undivided Family had considerable movable properties consisting of shares in limited companies and jewellery and it was also a partner through its manager and Karta in two firms which may for the sake of convenience be referred to as the 'Export Firm ' and the 'Mining Firm '.
lt appears that besides these movable properties, the Hindu Undivided Family also owned some irremovable properties.
On 15th November, 1955 there was a partial partition among the members of the Hindu Undivided Family and the movable properties were divided including the credit balances after taking into account the debit balances on the Export Firm and the Mining Firm.
These movable properties which formed the subject matter of partial partition, were of the value of Rs. 4,87,054/ and they were divided amongst the members of the Hindu Undivided Family in such a manner that Gulabdas got properties worth Rs. 53,442/ , his wife got properties worth Rs. 50,000/ , while each of the five sons got properties worth Rs. 76,722/ .
The consequence of this partial partition was that the Hindu Undivided Family ceased to be a partner in the Export Firm and the Mining Firm and thereafter Gulabdas and his son Govinddas continued as partners in these two firms in their individual capacity.
When the Hindu Undivided Family was sought to be assessed for the assessment year 1957 58, for which the relevant previous year was Samvat Year commencing from 16th November, 1955 a claim was 47 made on behalf of the members of the Hindu Undivided Family that they had effected a partial partition of their movable properties on 15th November, 1955.
This claim was accepted by the Income Tax officer after due inquiry and a finding was recorded by him in the order of assessment that there was a partial partition of the movable properties of the Hindu Undivided Family on 15th November, 1955.
The result was that from and after the assessment year 1957 58 no part of the income of the Export Firm or the Mining Firm was included in the assessment of the Hindu Undivided Family.
Now it appears that the assessments of the Export Firm and the Mining Firm relating to the assessment years 1950 51 to 1956 57 were reopened after the new Act came into force and reassessments were made enhancing the assessable income of the two firms in accordance with the procedure provided in the new Act.
Consequent upon the reassessments of the income of the two firms for the assessment years 1950 Sl to 1956 57, notices were issued to the Hindu Undivided Family for reassessments of its income for those years, since the Hindu Undivided Family was a partner in these two firms during those years.
The Income Tax officer, after following the requisite procedure.
passed an order of reassessment dated 26th March, 1970 for each of the assessment years 1950 Sl to 1956 57 enhancing the assessable income of the Hindu Undivided Family.
The appeals filed by the two firms against the orders of reassessment made on them partially succeeded before the Appellate Assistant Cornmissioner and consequently, orders were passed by the Income Tax officer on 25th March, 1971 rectifying the orders of reassessment dated 26th March, 1970 made against the Hindu Undivided Family.
The two firms obtained some further relief as a result of appeals filed by them before the Tribunal and in consequence, further rectification orders dated 3rd September, 1974 were passed by the Income Tax officer rectifying the reassessments of the Hindu Undivided Family.
The net effect of these orders of rectification passed by the Income Tax officer was that ultimately a much larger amount of tax was determined as payable by the Hindu Undivided Family than what was found due when the original assessments were made for the assessment years 1950 51 to 1956 57.
So far the members of the Hindu Undivided Family had no grievance because what was done by the Income Tax officer was merely to carry out reassessment or rectification of assessment of the income of the Hindu Undivided Family consequent upon enhancement of the assessable income of the two firms in which the Hindu Undivided Family was a partner during the assessment years 1950 Sl to 1956 57.
But on 25th January, 1974, the Income Tax officer made certain orders in respect of the assessment years 1950 Sl to 1954 55 and 1956 57 which prejudicially affected the interest of the petitioners.
The Income Tax officer, by these orders, determined the several liability of the members of the Hindu Undivided Family under section 171, sub section
(7) of the new Act by apportioning the assessed on the Hindu Undivided Family for the assessment years 1950 51 to 1954 55 and 1956 57 amongst the members in the proportion of 2/7th share to Gulabdas this perhaps also included the share of his wife and l/7th share to each of the five sons.
These orders were subsequently rectified by 48 orders dated 3rd September, 1974 revising the allocation of the liability, consequent upon the rectification made in the orders of assessment against the Hindu Undivided Family as a result of the relief granted to the two firms by the Tribunal.
The orders dated 3rd September, 1974 also proceeded on the same lines and allocated the tax liability of the Hindu Undivided Family amongst the members in the same shares as the earlier orders.
The Income Tax officer also passed an order dated 13th August, 1974 allocating the tax liability of the Hindu Undivided Family for the assessment year 1955 56 among the members in the same shares under section 171, sub section
(7) of the new Act.
This led to the filing of a petition by each of the five sons of Gulab das in the High Court of Bombay challenging the validity of the orders dated 13th August and 3rd September, 1974 which had the effect of imposing personal liability on each of the members of the Hindu Undivided Family for the tax liability allocated to him.
The petitioners in these petitions did not object to the recovery of the tax liability of the Hindu Undivided Family from out of the joint Family properties come to their hands on partial partition, but their argument was that they were not jointly and severally liable for the tax liability nor was the Income Tax officer entitled to proceed against them personally or recovery of any share of the tax liability.
That raised the question as to the applicability of sub section
(6) read with sub section
(7) of section 171 of the.
new Act, for, it was under this provision that the Income Tax officer claimed to allocate the tax liability amongst the members of the Hindu Undivided Family and to recover from the petitioners personally the share of the tax liability allocated to them.
The principal contention.
of the petitioners was that the provision in section 171, sub section
(63 and (7).
had no application, where the assessment of a Hindu Undivided Family was made under the provisions of the Indian Income Tax Act, 1922 (hereinafter referred to as, the old Act) and at the time when the tax was sought to be recovered, it was found that the family had effected a partial partition, since this provision had the effect of imposing one the members of the Hindu Undivided Family a new liability which did not exist before and it could not be construed so as to have retrospective operation.
This contention was, however, rejected by the High Court and it was held that sub section
(6) read with sub section
(7) of section 171 was applicable in the present case and since the Income Tax Officer found at the time when he sought to recover the tax liability assessed on the Hindu Undivided Family, that the family had already effected a partial partition on 15th November, 1955, he was entitled to recover the tax from every member of the Hindu Undivided Family and each member was severally liable for his share of the tax computed; according to the portion of the joint family property allotted to him at the partial partition.
The High Court also rejected the other contentions advanced on behalf of the petitioners and dismissed each of the petitions with costs.
The petitioners thereupon preferred the present appeals with special leave obtained from this Court.
Though several contentions were raised in the petitions and also argued before the High Court, the petitioners at the hearing of the appeals before us confined their attack against the validity of the 49 orders dated 13th August, 1974 and 3rd September, 1974 to only one contention and that related to the applicability of sub section
(6) read with sub section
(7) of section 171 of the new Act.
The petitioners sought to repel the applicability of sub section
(6) of section 171 of the new Act by a two fold argument.
In the first place, the petitioners contended that section 25A of the old Act did not impose any personal liability on the members for the tax assessed on the Hindu Undivided Family in case of partial partition.
This liability was created for the first time by sub section
(6) of section 171 of the new Act and this sub section could not, therefore, be construed to have retrospective effect so as to apply to assessments made on the Hindu Undivided Family for any assessment year prior to 1st April, 1962 when the new Act came into force.
The present L case, which related to the assessment years 1950 51 to 1956 5 /, was in the circumstances governed by section 25A of the old Act in so far as the question of personal liability of the members was concerned and sub section
(6) of section 171 of the new Act had no application to it.
Secondly, it was urged on behalf of the petitioners that even if section 171, sub section
(6) of the new Act were applicable in a case like the present, the conditions of this sub section were not satisfied, as there was no finding of partial partition recorded by the Income Tax officer after making due inquiry as contemplated in sub section
(3) of section 171 of the new Act.
Of these two arguments, the first is, in our opinion, well founded and hence it is not necessary to consider the second.
We may first look at section 25A of the old Act.
The position which obtained before this section was introduced in the old Act was that though a Hindu Undivided Family was a unit of assessment, there was no machinery provided in the Act for levying tax and enforcing liability to tax in cases where a Hindu Undivided Family had received income in the year of ac`count but was no longer in existence as such at the time of assessment.
This difficulty was the more acute by reason of the provision contained in section 14(1) which said that tax shall not be payable by an assessee in respect of any sum which he received as a member of a Hindu Undivided Family.
` The result was that the income of a Hindu Undivided Family could not be assessed and the tax could not be collected from the members of the family, if at the time of making the assessment the family was divided.
This was obviously a lacuna and the legislature, therefore, introduced section 25A in the old Act for assessment of the income of a Hindu Undivided Family and enforcement of the liability to tax, where the Hindu Undivided Family was no longer in existence at the date of assessment.
But, as pointed out by this Court in Additional Income Tax Officer vs Thimmayya(1) this section went very much beyond what was required for rectifying the defect.
It made two substantive provisions, namely, (1) a Hindu undivided family which has been assessed to tax shall be deem ed, for the purposes of the Act, to continue to be treated as undivided and therefore liable to be taxed in that status, unless an order is passed in respect of that family recording partition of its property as contemplated by sub sections
(1) and (2) if at the time of making an assessment, it is claimed by or on behalf of the members of the family that (1) 50 the property of the joint family has been partitioned among the members or groups of members in definite portions, i.e., a complete partition of the entire estate is made, as distinct from a partial partition, the Income Tax Officer shall hold an inquiry and if he is satisfied that the partition has taken place, he shall record an order to that effect.
Where such order has been passed, the Income Tax officer would be entitled to make an assessment of the total income received by or on behalf of the Hindu Undivided Family as if no partition had taken place.
Now, ordinarily when tax is assessed on a Hindu undivided family, it would be payable out of the properties of the joint family, even after they are partitioned amongst the members and no member would be personally liable for discharging the liability to tax.
But J sub section
(2) made a radical departure and provided that when upon a total partition, an order under.
sub section
(1) has been recorded, the Income Tax officer shall apportion the tax assessed on the total income of the Hindu undivided family and assess each member or group of members in accordance with the provisions of section 23 by adding to the tax for which such member of group of members may be separately liable, tax proportionate to the portion of the undivided family property allotted to him or ' to the group and all members or groups of members shall be "liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family".
The liability which, so long as an order is not recorded under sub section
(1), would be restricted to the assets of the Hindu undivided family, was thus, by virtue of sub section
(2), transformed, when the order is recorded, into personal liability of the members for the amount of tax due by the Hindu undivided family.
But the order could be recorded only if there was total partition, as contra distinguished from partial partition, and on a claim made by or on behalf of the members of the family, the Income Tax officer, after holding an inquiry, was satisfied that such total partition had taken place.
Now, in the present case, the partition which took place between the members of 15th November, 1955 was partial as regards the properties of the joint family and there was no total partition effected amongst the members at any time.
Hence the liability of the Hindu Undivided Family to tax for the assessment years 1950 51 to 1956 57 could be recovered only out of the assets of the joint family and it could not be apportioned amongst the members nor could the members be held jointly and severally liable for payment of such tax liability under section 25A of the old Act.
The question is whether the enactment of sub sections
(6) and (7) of section 171 of the new Act has made any difference in this position.
Section 171 of the new Act corresponds to section 25A of the old Act and provides for assessment of a Hindu undivided family after partition.
But it has made various changes in the law.
The principal change is that the new section applies not only to cases of total partition, but also to cases of Partial Partition.
Sub section
(1) of this section reproduces the same fiction as in section 25A and deems a Hindu family to continue to be a Hindu undivided family "except where and in so far as a finding of partition has been given in respect of the Hindu undivided family".
Sub section
(2) provides that where, at the time of making 51 an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family that a partition, whether total or partial, has taken place among the members of such family, the Income Tax officer shall make an inquiry after giving notice to all the members of the family and sub section
(3) proceeds to say that on the completion of the inquiry, the Income Tax officer shall record a finding as to whether there has been a total or partial partition of the family property and if there has been such a partition, the date on which it has taken place.
Where an order has been made recording the partition, the assessment of the total income received by or on behalf of the joint family as such is required to be made in accordance with the procedure laid down in sub section 4(a) and (S), which is the same as that under section 25A, although the relevant provisions are differently cast.
The procedure is to compute the total income of the joint family upto the date of the partition and also determine the tax payable by the joint family as such as if no partition had taken place and as if the joint family was still in existence.
Sub section
4(b) makes each member or group of members jointly and severally liable for the whole amount of the tax determined as payable by the joint family.
Then follows sub section
(6) which is material and reads as follows: "notwithstanding anything contained in this section, if the Income tax officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Income tax officer shall proceed to recover the tax from every person who, was a member of the family before the partition, and every such person shall be jointly and severally liable for the tax on the income so assessed.
" Sub section
(7) provides that "for the purposes of this section", that is, for the purposes of sub sections 4(b) and (6), "the several liability of any member or group of members shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial".
Now it is clear on a plain grammatical construction of the language of sub section
(2) to (5) of section 171 that these sub sections contemplate a case where at the time of making assessment under sections 143 or 144, a claim is made by or on behalf of any member of a Hindu family that a total or partial partition has taken place among its members.
Then the claim would be investigated by the Income tax officer and if satisfied, the Income Tax Officer would record a finding that there has been such partition of the pint family property and the assessment of the total income of the joint family would then be made as if no such partition had taken place.
And in such a case all the members would be Jointly and severally liable for the tax assessed as payable by the joint family and for determining their several liability, the assessed on the joint family would be apportioned among the members "according to the portion of the joint family property allotted to" each of them.
But it may happen that at the time of making assessment under sections 143 or 144 no claim of partition, total or partial, is put forward on behalf of any member of a Hindu family, either because 52 no such partition has taken place or because of inadvertent or deliberate omission on the part of the members of the Hindu family and where that happens, the Hindu family would continue to be assessed as a Hindu undivided family and the tax determined as payable by it would be recoverable only out of the joint family properties and no member would be personally liable for any part of the lax, even though an order recording partition may have been passed after the assessment, since sub section
(4)(b) of section 171 would have no application in such a case.
That was also the position under section 25A of the old Act with this difference that under that section the only partition which could be recorded was total partition and not partial partition.
The legislature, while enacting s 17.1 in the new Act, decided to introduce another radical departure from the old Act by providing in sub s (6) that even where no claim of total or partial partition is made at the time of making assessment under section 143 or section 144 and hence no order recording partition is made in the course of assessment as contemplated under sub sections
(2) to (5), if it is found? after the completion of the assessment, that the family has already effected.
a partition, total or partial, all the members shall be jointly and severally liable for the tax assessed as payable by the joint family and the tax liability shall be apportioned among the members according to the portion of the joint family property allotted to each of them.
Sub section
(6) of section 171 thus for the first time imposed, in cases of this kind, joint and several liability on the members for the tax assessed on the Hindu undivided family and this was a personal liability as distinct from liability limited to the joint family property received on partition.
Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair a existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure.
The general rule as stated by Halsbury in ol. 36 of the Laws of England (3rd Ed.) and reiterated in several decisions of this Court as well as English Courts is that "all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective" and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment.
If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.
If we apply this principle of interpretation, it is clear that sub section (6) of section 171 applies only to a situation where the assessment of a Hindu undivided family is completed under section 143 or section 144 of the new Act.
It can have no application where the assessment of a Hindu undivided family is completed under the corresponding provisions of the old Act.
Such a case would be governed by section 25A of the old Act which does not impose any personal liability on the members in case of partial partition and to construe sub section
(6) of section 171 as applicable in such a case with 53 consequential effect of casting on the members personal liability which did not exist under section 25A, would be to give retrospective operation to sub section
(6) of section 171 which is not warranted either by the express language of that provision or by necessary implication.
Sub section
(6) of section 171 can be given full effect by interpreting it as applicable only in a case where the assessment of a Hindu undivided family is made under section 143 or section 144 of the new Act.
We cannot, therefore, consistently with the rule of interpretation which denied retrospective operation to a statute which has the effect of creating or imposing a new obligation or liability, construe sub section
(6) of section 171 as embracing a case where assessment of a Hindu undivided family is made under the provisions of the old Act.
Here in the present case, the assessments of the Hindu Undivided Family for the assessment year 1950 Sl to 1956 57 were completed in accordance with the provisions of the old Act which included section 25A and the Income tax officer was, therefore, not entitled to avail of the provision enacted in sub section
(6) read with sub section
(7) of section 171 of the new Act for the purpose of recovering the tax or any part thereof personally from any members of the joint family including the petitioners.
But the Revenue Authorities then fell back on another contention, namely, that since the assessments of the Hindu Undivided Family for the assessment years 1950 51 to 1956 57 were reopened by the Income Tax Officer by issuing notices under section 148 and the reassessments were completed by orders dated 26th March, 1970 under section 147, in virtue or section 297(2)(d) of the new Act, sub section
(6) of s 171 was, on the plain terms of section 297(e)(d), applicable and the Income Tax officer was entitled to recover personally from the members, the tax reassessed on the Hindu Undivided Family, as it was found by him that the family had already effected a partial partition.
This contention requires an examination of the true meaning and effect of section 297(2) (d) That subsection has two clauses and it reads as follows: "(d) Where in respect of any assessment year after the year ending on the 31st day of March, 1940, (i) a notice under section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly. ' Admittedly, in the present case, cl.
(ii) of section 297(2)(d) applied since no proceedings under section 34 OF the old Act in respect of escaped 54 income of the Hindu Undivided Family were pending at the time of the commencement of the new Act and it was for this reason that notices under section 148 were issued by the Income Tax officer for Reopening the assessments of the Hindu Undivided Family for the assessment years 1950 51 to 1956 57.
Now clause (ii) of section 297(2) (d) provides that when a notice under section 148 is issued for reopening an assessment "all the provisions of this Act shall apply accordingly".
The argument of the Revenue Authorities, therefore, was that when notices under section 14 were issued for reopening the assessments of the Hindu Undivided Family, all the provisions of the new Act became applicable and they included sub section
(6) of section 171 and, therefore, that sub section was applicable for recovery of the tax reassessed on the Hindu Undivided Family pursuant to the notices under section 148.
This argument is without force.
It is based on a misconstruction of the words "all the provisions of this Act shall apply accordingly" in cl.
(ii) of s 297(2) (d).
These words merely refer to the machinery provided in the new Act for the assessment of the escaped income.
They do not import any substantive provisions of the new Act which create rights or liabilities.
The word 'accordingly ' in the context means nothing more than 'for the purpose of assessment" and it clearly suggests that the provisions of the new Act which are made applicable are those relating to the machinery of assessment.
The substantive law to be applied for determining the liability to tax must necessarily be the law under the old Act, for that is the law which applied during the relevant assessment years and it is that law which must govern the liability of the parties.
Though sub sections
(1) to (S) of section 171 merely lay down the machinery for assessment of a Hindu undivided family after partition, sub section
(6) of section 171 is clearly a substantive provision imposing new liability on the members for the tax determined as payable by the joint family.
The words "all the provisions of this Act shall apply accordingly" cannot therefore be consumed as incorporating by reference subs.
(6) of section 171 so as to make it applicable for recovery of the tax reassessed on the Hindu Undivided Family in cases falling within cl.
(ii) of section 297(2) (d).
This contention of the Revenue Authorities must accordingly be rejected.
In the circumstances we allow these appeals and issue a writ in each appeal quashing and setting aside the orders dated 13th August, 1974 and 3rd September, 1974.
The respondents will pay the costs of the petitioners throughout.
| When a notification is published under section 12(1) of the , under section 12(2) the right, title and interest of the evacuee in the evacuee property is extinguished and the property vests absolutely in the Central Government free from all encumbrances.
Section 13 of the Act provides for the payment of compensation for such acquisition in accordance with the principles agreed upon between the Government of India and Pakistan.
No such principles of compensation had, however, been agreed upon between the two Governments.
The appellant was declared an evacuee and his property as evacuee property.
When the notification under section 12 was issued, he challenged it but the High Court dismissed his writ petition holding that the vesting in the Central Government was unconditional and did not depend upon the fixation or payment of compensation under section 13.
Dismissing the appeal to this Court, ^ HELD: (1) In the face of the clear provision in section 12(2), it could not be contended that the evacuee property did not vest in the Central Government until compensation for its acquisition had been determined and paid.
[781F] (2) The appellant could not rely on article 31(2) because, article 31(5) expressly provides that it shall not affect the provisions of any law which the State may make either in pursuance of an agreement with the Government of any other country "or otherwise".
So even in the absence of an agreement with the Government of Pakistan, it is permissible for the State to make the Act, and its provisions would not be affected by anything contained in article 31(2).
[781CD] (3) Under section 13, compensation would have been payable to the appellant in accordance with any principles agreed upon between the Government of India and Pakistan.
Therefore, in the absence of such an agreement, the appellant would not be entitled to claim any compensation.
[781 E]
|
l Appeals No. 1760 of 1967.
Appeals from the judgment and order dated February 1, 2, 1966 of the Bombay High Court in Income tax Reference No. 60 of 1961.
B. Sen, section K. Aiyar and B. D. Sharma, for the appellant.
M. C. Chagla and A. K. Verma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Bombay High Court in an Income tax reference.
The respondent Company which is the assessee carries on business of the manufacture and sale of yam and cloth in Bangalore.
In 1914 it started a Provident Fund for the benefit of the monthly rated employees and this fund was called "The Staff Provident Fund".
Subsequently another fund was started known as the "Work men Provident Funds".
These funds were, not recognised under the provisions of Chapter IXA of the Income tax Act, 1922 (hereinafter called the Act).
The employees,and the assessee made contributions to the two funds from time to time.
The Employees ' Provident Funds Act (to be referred to as the Provident Funds Act) came into force on 31st October, 1952.
The amounts standing to the credit of the two funds on that date so far as they are referable to the contributions by the Company stood as follows : (1) Staff Provident Fund: Company 's contributions upto 31 10 1952 89,605 9 2 Proportionate interest thereon 19,596 8 7 1,09,202 1 9 (2) Workmen 's Provident Fund : Company 's contribution upto 31 10 1952.
1,83,190 13 2 Proportionate interest thereon9,379 2 5 1,92,569 15 10 3,01,772 1 7 The assessee came within the first schedule to the Provident Fund Act and therefore it applied under section 17 for exemption from the operation of the provisions of that Act.
A provisional exemption was given on 1st July, 1953.
The assessee was, however, informed that pending the grant of exemption it need not make any payment of the accumulations to the Regional Provident Fund Commissioner, as was enjoined under the Provident 470 Fund Act.
Following some correspondence between the Com missioner and the assessee the latter sought cancellation of the exemption by, means of a letter dated 11th July, 1955.
The Provident Fund Commissioner cancelled the exemption granted under section 17, of the Provident Funds Act and required the assessee to comply with all its provisions and the Scheme framed thereunder and further to transfer all the provident fund 's accumulations to the Employees Provident Fund immediately.
In accordance with the communication from the Commissioner, the assessee transferred an amount which included a sum of Rs. 3,01,772 1 7 which represented the assessee 's contribution to the two funds upto 31st October, 1952.
The assessee claimed deduction in the assessment for the assessment year 1957 58 on account of the transfer of the amount of Rs. 3,01,772 1 7 to the Provident Fund Com missioner.
The Income Tax Officer disallowed this claim on the ground that the amount in question was allowable to be treated ,as capital expenditure ' under the provisions of section 58K of the Act.
An appeal was taken to the Appellant Assistant Commissioner but it failed.
The assessee appealed to the Appellate Tribunal.
The Tribunal held that there was a transfer of the fund to Trustees which came within the scope of Section 58K of the Act and therefore the amount was not deductible nor could the deductions be allowed under section 10(1) or Section 10(2 (xv).
The assessee sought reference and the following two questions were referred : (1) Whether the provisions of Section 58K of the Income tax Act apply to the transf er of the sum of Rs. 3,01,772 1 7 to the Regional Provident Fund Commissioner ? (2) If the answer to the above question is in the negative , whether the sum of Rs. 3,01,772 1 7 is allowable as a deduction in arriving at the commercial profits under section 10(1) or is an allowable deduction under section 10(2) (xv) of the Income tax Act in the computation of the assessable "business" profits.
The High Court examined in detail the provisions contained in Chapter IXA of the Act.
It was observed that the scheme of section 58K in that Chapter was that though an employer could not claim any allowance at the time he transferred his own accumulated contributions to the Provident Fund to the trustees,, he could claim exemption ' in respect thereof at the time his share of contributions was paid to the employee provided arrangements were made to deduct from those amounts the income tax payable by his employee.
The transfer of the fund contemplated under section 58K was a voluntary transfer by an employer of the Provident Fund maintained by him to the trustees to hold it in trust for 471 the benefit of his employees.
The High Court, however, proceeded to consider the matter even on the assumption that the transfer of the fund contemplated by section 58K(1) Would also include involuntary transfer.
According to the High Court the position that emerged on a consideration of the materials provisions of the Provident Funds Act and the Scheme framed thereunder was as follows : For the administration of the statutory Provident Fund which came into existence and stood constituted on the framing of the Scheme, a Board of trustees called the Central Board of Trustees was constituted.
On the framing of the Scheme and the constitution of the statutory Provident Fund the employers in the industries to which the Provident Funds Act applied were required to transfer the accumulated balances of the Provident Fund, if any, which had been maintained by them.
Similarly, trustees of the private Provident Fund constituted by an employer were also required to transfer the accumulated balances to the statutory Provident Fund.
Such employers were further required to make their own annual contributions according to the prescribed limit to that fund.
The Board of trustees and the Officers administering the fund were required to open a Provident Fund account and in that account a separate account was maintained of each member showing the balance to his credit containing the contributions of the employer.
The High Court was of the view that a trust in its true sense had not been constituted by the Provident Funds Act or the Scheme and that the transfer was not to the trustees but to the fund The first question was answered in the negative and in favour of the assessee.
The answer to the second question was given in the affirmative, it being held that the deduction claimed was allowable under section 10 (2) (xv) and that the provisions of section 10 (4) (c) did not 'operate as a bar to the claim made by the assessee for deduction of the amount in question.
Section 58K of the Act was in those terms "58K. TREATMENT OF FUND TRANSFERRED BY EMPLOYER TO TRUSTEE: (1) Where an employer who maintains a provident fund (whether recognised or not) for the benefit of his employees and has not transferred the fund or any portion of it, transfers such fund or portion to trustees in trust for the employees participating in the fund, the amount so transferred shall be deemed to be of the nature of capital expenditure; (2) When an employee participating in such fund is paid the accumulated balance due to him therefrom, any portion of such balance as repre 472 sents his share in the amount so transferred to the trustee (without addition of interest, and exclusive of the employee 's contributions and interest thereon) shall, (if the employer has made effective arrangements to secure that tax shall be deducted at source from the amount of such share when paid to the employee,) be deemed to be an expenditure by the employer within the meaning of [clause (xv)] of sub section (2) of section 10, incurred in the year in which the accumulated balance due, to the employee is paid.
For the application of sub section (1) the following conditions must be satisfied : (1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or portion thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund.
It has not been shown that the view taken by the High Court that the transfer in the present case was not made to any trustees is unfounded.
But we need express no opinion on the point because in our judgment the third condition could not be regarded as having been satisfied.
The transfer was not made to trustees in trust for the employees participating in the fund.
The common statutory fund created under the Provident Funds Act is meant not for the employees of the assessee only but it is meant for employees of hundreds of other employers who are covered by that Act.
In other words the employees of the assessee alone did not participate in that fund.
It is very doubtful whether the Provident Funds Act and the Scheme thereunder can be said to create a trust in the sense in which that word is used in section 58K (1) merely because the Board managing the Scheme was called the Board of Trustees.
The members of the Board did not become trustees in the legal sense.
They were appointed to administer the fund which vested in them only for the purpose of administration.
It could well be said that the essential ingredient of a trust, namely, reposing of confidence by the author of the trust in the trustees for the purpose of carrying out his desires, wishes and directions and the acceptance of those obligations by the trustees was absent in the present case.
It is, however, not necessary to examine in detail this aspect of the matter because as observed before the fund under the Provident Funds Act, was not restricted to the employees of the assessee only and it could never 4 73 be said that they alone participated in that fund.
In such a situation section 58K could not be made applicable.
Hardly any argument was addressed on the decision of the High Court on the second question. ' The expenditure was in curred in the relevant accounting year.
It was something which had gone irretrievably.
The amount in question had been spent and paid out in the relevant year of 'accounting, and was therefore allowable as expenditure incurred exclusively for the purpose of the business.
It is not suggested that is was incurred for any other purpose.
The conditions, of section 10(2) (xv) had been fully satisfied in the present case.
In the result we concur in the answers given by the High Court.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| The appellant challenged the election of the first respondent to the State Legislative Assembly on the grounds : (1) the respondent was disqualified under section 8(2) of the Representation of the People Act, because, on the date of his election he stood convicted 'for offenses under .the Penal Code, though later, he was acquitted by the High Court and (ii) the Returning Officer rejected some ' ballot papers cast in the appellant 's favour holding that the marks made on those ballot papers were made otherwise than with the instrument supplied for the purpose and that those ballot papers were therefore liable to rejection under r.56(2) of the Conduct of Election Rules, 1961.
The High Court dismissed the petition.
In appeal to this Court, HELD: Dismissing the appeal, (1) In a criminal case, acquittal in appeal does not take effect merely from the date of the appellate order setting aside the conviction, it has the effect of retrospectively wiping out the conviction and sentence awarded by the lower court.
The opinion whether a successful candidate was disqualified on the date of his election is to be formed by the High Court .at the time of pronouncing judgment in the election petition.
When the High Court had before it the order of acquittal which had taken effect retrospectively, it was impossible for the court to arrive at the opinion that on the date of election the respondent was disqualified.
The High Court was therefore, right in holding that the respondent was not disqualified and that his election was not void on the ground.
[800 F] (2) For rejection under r. 56(2)(d) there must be a definite finding that the ballot papers bore marks made otherwise than with the seal supplied for the purpose.
In the present case, the finding recorded by the High Court amounted to holding that the marks made could not be identified with the seal which was supplied for marking the, votes.
On this finding the High court was right in not upsetting the order of Returning Officer for rejecting these votes, and consequently an inference follows that they must have been made by some other means.
If these votes were not to be counted in favour of the appellant the appellant 's case had to fail, because, on the evidence recorded and the issues framed on the basis of the pleadings in the election petition the respondent had still a majority of valid votes.
[803 A]
|
vil Appeal Nos. 150 and 160 of 1964.
Appeals by special leave from the award dated September 20, 1962, of the Industrial Tribunal, Ernakulam in Industrial Dispute Nos. 11 and 10 of 1962 respectively.
761 G.B. Pai, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.
M.R.K. Pillai, for the respondents.
The Judgment of the Court was delivered by Gajendragadkar, C.J.
The short question of law which these two appeals raise for our decision relates to the construction of sections 3 and 11 of the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958 (No. 47 of 1958) (hereinafter called the Act.
That question arises in this way.
Two complaints were filed against the appellant, the Tam Oil Mills Company Ltd., by the two groups of respondents, its workmen, respectively under section 33A of the .
These applications alleged that the management of the appellant had contravened the provisions of section 33 of the said Act inasmuch as it had denied its employees leave with wages on Founder 's Day and Good Friday in 1962.
According to the respondents, they were entitled to have holidays with pay on the said two days under the terms and cOnditions of service, and so, they claimed that the Tribunal should direct the appellant to give its employees holidays under the said existing arrangement and should pass other appropriate order 's for the payment of wages for the two holidays in question.
The appellant disputed the correctness of the respondents ' contention.
The Tribunal has rejected the appellant 's plea and has declared that the respondents are entitled to the privilege 'of paid holidays on Founder 's Day and Good Friday in 1962.
It has also ordered that the appellant should pay the wages to the respondents for those two days and the proportionate salary of the staff members as soon as the award comes into force.
It is against these orders passed by the Tribunal on the two complaints preferred before it by the respective respondents that the appellant has come to this Court by special leave; and on its behalf, Mr. Pai has contended that in making the award ', the Tribunal has misconstrued the effect of sections 3 and 11 of the Act.
Standing Order 30 of the Standing Orders of the appellant company makes provision for leave of all categories.
S.O. 30 (vi) provides for holidays.
It lays down that the factory will be closed on the following days which will be considered as Company Holidays with pay, and will not be counted against the casual or privilege leave of an employee: 1.
New Year Day (1st January).
Founder 's 'Day (Saturday nearest to 3rd March) 3.
Good 3 Friday 4.
Onam 5.
Christmas Day (25th December) There is a note appended to this:proVision which makes it clear that in the event 'of the Company being compelled to observe a holiday or holidays for reasons of State such day or days shall not be counted as against 'the privilege or casual leave of the employees but shall 762 be treated as a Company holiday or holidays.
Thus, it is clear that under the relevant Standing Order, the respondents are entitled to 5 paid holidays every year.
After the Standing Orders were framed and certified, there was an agreement between the appellant and the respondents ' Union as a result of which the appellant agreed to grant a further holiday, and ' this agreement raised the number of total paid holidays in a year to 6.
The additional holiday which the appellant thus agreed to give to the respondents was to be given on the day when the respondents ' Union would celebrate its Union Day.
Apparently, this holiday was analogous to the Founder 's Day, the idea underlying the agreement being that just as the appellant gave a paid holiday on the Founder 's Day, the respondents should be given a paid holiday on the Union Day.
It appears that even after this agreement was reached, the respondents began to claim additional holidays; but the appellant was not prepared to make any addition to the list of holidays.
It was prepared to leave the choice of the agreed holidays to the employees provided they submitted to the Company an agreed list of such holidays.
In 1958, the Act was passed and it came into force on the 29th December, 1958.
Section 3 of the Act provides "Grant of National and Festival Holidays Every employee shall be allowed in each calendar year a holiday of one whole day on the 26th January, the 15th August and the 1st May and four other holidays each of one whole day for such festivals as the Inspector may, in consultation with the employer and the employees specify in respect of any industrial establishment".
The result of this provision was that every employer to whom the Act applied had to declare holidays on the 26th January, the 15th August and the 1st May and had to give four other holidays according to the decision of the Inspector, the requirement of the section being that the Inspector had to consult the employer and the employees before fixing such other holidays.
In other words, section 3 statutorily fixed the number of paid holidays at 7; fixed three out of them and left the decision of the remaining four to the Inspector who had to consult the employer and the employees.
In pursuance of this provision, the Inspector declared certain holidays for the year 1959.
Not satisfied with the decision of the Inspector, one of the appellant 's employees Mr. Baskara Menon filed a writ petition in the Kerala High Court under article 226 of the Constitution challenging the validity of the Inspector 's decision.
In that writ petition, the question about the construction of section 3 of the 763 Act was agitated.
In the result, the High Court held that the complaint made by the petitioner against the validity of the decision of the Inspector was not well founded, and so, the writ petition was dismissed.
In 1962, the appellant followed the same procedure and got a decision as to the festival holidays from the Inspector and declared that the said holidays would be observed as paid holidays in the year.
At this time, certain industrial disputes were pending between the appellant and its employees belonging both to monthly and daily rated categories before the Industrial Tribunal at Ernakulam.
The respondents felt that the declaration of the holidays made by the appellant for the year 1962 amounted to a contravention of section 33 of the , and so, they filed the two present complaints before the Industrial Tribunal under 33A of the said Act.
That, in brief, is the genesis of the present complaints.
We have already noticed the provisions of section 3 of the Act.
The contention raised by the respondents before the Tribunal was that the statutory provision as to 7 paid holidays prescribes the minimum number of holidays which the employer has to give to his employees.
This provision, according to the respondents, does not over ride or abrogate the existing arrangement as to paid holidays.
In regard to paid holidays which are common to section 3 and the present arrangement they would, of course, have to be treated as paid holidays, but the four other festival holidays which the Inspector decides from year to year would be in addition to the holidays which the appellant is bound to give to the respondents under the existing arrangement, and since the appellant has limited the number of paid holidays to 7 for the year 1962, it has acted contrary to the terms of employment evidenced by the existing arrangement as to paid holidays and that constitutes the violation of section 33 of the .
This contention has been upheld by the Tribunal; and Mr. Pai argues that the view taken by the Tribunal is plainly inconsistent with the true scope and effect of section 3 read with section 11 of the Act.
That takes us to section 11 of the Act, because this section has to be read along with section 3 in determining the validity of the conclusion recorded by the Tribunal on the main point of dispute between the parties.
section 11 reads thus: "Rights and privileges under other laws, etc., not affected Nothing contained in this Act shall adversely affect any rights or privileges which any employee is entitled to with respect to national and.
festival holidays on the. date on which this Act comes into force under any other law, contract, custom or usage, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act".
D)5 SCI 10 764 This section gives an option to the employees, they can choose to have the paid ' holidays either as prescribed by section 3 or as are available to them under any other law, contract, custom or usage exercising this choice, it must, however, be borne in mind by the employees that the 26th January, the 15th August and the 1st May have to be taken as three holidays.
That is the direction of section 3.
In regard to the remaining 4.
the Inspector decides which days should be paid holidays.
In other words, the.
statutory requirement is 7 paid holidays.
If under the existing arrangement the employees are entitled to 'have more ,,than7 paid holidays, that right will not be defeated by section 3, because section 11 expressly provides that if the rights or privileges in respect of paid holidays enjoyed by the employees are more favourable than are prescribed by section 3, their existing rights and privileges as to the total number of holidays will not be prejudiced by section 3.
The scheme of section 11 thus clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones, so that the respondents should be entitled to claim the seven holidays prescribed by section 3 plus the six holidays to which they are entitled under the existing arrangement.
If in addition to the three holidays which are compulsory under section 3, the employees are getting, say 3 ' other paid holidays, then section 3 would step in and would require the employer to give his employees one more paid holiday, so as to make the number of paid holidays 7.
In our opinion, if sections 3 and 11 are read together, there can be no doubt that the respondents ' claim that they should have 7 holidays as prescribed by section 3 plus 6 holidays as are available to them under the present arrangement is cleary untenable.
In the present case, the respondents were having six paid holidayS. The statute has fixed the minimum number at 7 paid holidays, and so, since the existing arrangement was less favourable to the employees, the statutory provision will come to their help and they will be entitled to claim 7 paid holidays in a year, and that means that section 3 will be operative.
If that be so, the procedure followed by the employer in consulting the Inspector and in fixing the list of 4 paid holidays for 1962 in addition to the three holidays fixed by the statute is perfectly consistent with the provisions of section 3 of the Act.
The Tribunal was, therefore, in error in holding that the appellant had contravened section 33 of the .
In the result, the appeals must be allowed, the orders passed by the Tribunal in the two respective complaints set aside, and the two complaints dismissed.
There would be no order as to costs.
Appeals allowed.
| Under the Standing Orders of the appellant company, its employees were entitled to five holidays with pay on specified dates during each year.
Furthermore, by an agreement with the respondents ' union, the company had agreed to grant an additional day 's holiday with pay, thus raising the total number of paid annual holidays to six.
In 1958 the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958, was passed and section 3 of the Act required every employer to declare holidays on every 26th January, 15th August and 1st May, and to grant four additional festival holidays each year, on dates to be fixed by the Inspector after consulting the employer and the employees.
The number of paid holidays was thus statutorily fixed at 7.
In 1962, the company obtained the Inspector 's decision on the four festival holidays and declared the dates on which such holidays would be given.
At that time, while an industrial dispute between the company and its employees was pending.
the respondents filed applications under section 33A of the , before the Tribunal.
It was contended in these applications that the statutory provision in section 3 for 7 paid holidays did not override or abrogate the existing arrangement as to paid holidays and that the holidays to be given under section 3 would be in addition, to the holidays which the appellant was bound to give the respondents under existing arrangements; and that the appellant 's attempt to limit the nUmber of paid holidays to 7 during 1962 was contrary to the terms of employment evidenced by the existing arrangement and therefore violative of section 33.
This contention was upheld by the Tribunal.
In appeal to this Court, HELD: Under section 3 the statutory requirement is 7 paid holidays each year.
If under an existing arrangement the employees were entitled to more than 7 paid holidays, such more favourable right was protected by section 11.
The scheme of section 11 clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones and, in the present case, would operate only to raise the total number of holidays from 6 under the existing arrangements to 7 paid holidays in accordance with section 3.
[764 B E]
|
iminal Appeal No., 7 of 1951.
Appeal under article 134(1)(c) of the Constitution of India from the Judgment and Order dated the 10th March,, ' 1951, of the judicial Commissioner Vindhya 1099 Pradesh, Rewa in Criminal Appeal No. 81 of 1950 arising out of the Judgment and Order dated the 26th July, 1950, of the Court of the Special Judge, Rewa, in ' Criminal Case No. 1 of 1949.
Jai Gopal sethi (K. B. Asthana, with him) for appellant No.1.
S.C. Isaacs (Murtza Fazl Ali, with him) for appellant No. 2.
Porus A. Mehta for the respondent.
March 5.
The Judgment of the Court was delivered by BHAGWATI J.
The appellant No. 1 was the Minister *of Industries and the appellant No. 2 was the Secretary to the Government of the Commerce and Industries Department of the State of Vindhya Pradesh.
The appellant No. 1 was charged with having committed offences under sections 120 B, 161, 465 and 466 of the Indian Penal Code and the appellant No. 2 under sections 120 B and 161 of the Indian Penal Code as adopted by the Vindhya Pradesh Ordinance No. 48 of 1949.
They were tried in the Court of the Special Judge at Rewa under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance No. LVI of 1949 and the Special Judge acquitted both of them.
The State of Vindhya Pradesh took an appeal to the Court of the Judicial Commissioner, Rewa.
The Judicial Commissioner reversed the order of acquittal passed by the Special Judge and convicted both the appellants of the several offences with which they were charged.
The Judicial Commissioner awarded to the appellant No. 1 a sentence of 3 years rigorous imprisonment and a fine of Rs. 2,000 in default rigorous imprisonment of 9 months under section 120 B of the Indian Penal Code and a sentence of three years ' rigorous imprisonment under section 161 of the Indian Penal Code, both the sentences to run concur rently.
He imposed no sentence upon the appellant No. 1 under sections 465 and 466 of the Indian Penal Code.
He awarded to the appellant No. 2 a sentence of rigorous imprisonment for one year and a fine of Re. 1,000 and in default rigorous imprisonment for 1100 nine months under section 120 B of the Indian Penal Code.
He did not award any separate sentence to appellant No. 2 under section 161 of the Indian Penal Code.
On an application made to the Judicial 'Commissioner, Rewa, for leave to appeal to the Supreme Court the Judicial Commissioner granted the appellants leave to appeal under article 134(1)(c) of the Constitution in regard to the four points of law raised in the case before him.
The constitutional points involved in the appeal came up for hearing before the Constitution Bench of this court and were dealt with by the Judgment of this court delivered on the 22nd May, 1953.
The Constitution Bench held that the appeal to the Judicial Commissioner from the acquittal by the Special Judge was competent and that there was no infringement of the fundamental rights of.
the appellants under articles 14 and 20 of the Constitution (Vide ; The appeal was accordingly directed to be posted for consideration whether it was to be heard on the merits.
An application wag thereafter made by the appellants to this court for leave to urge additional grounds and this court on the 20th October, 1953, made an order that the appeal should be heard on merits.
The appeal has accordingly come up for hearing and final disposal before us.
The case for the prosecution was as follows.
By an agreement executed on the 1st August, 1936, between the Panna Durbar of the one part and the Panna Diamond Mining Syndicate represented by Sir Chintubhai Madholal and Hiralal Motilal Shah of the other part, the Panna Durbar granted to the syndicate a lease to carry on diamond mining operations for a period of 15 years.
The period of the lease was to expire on the 30th October, 1951, but there was an option reserved to the lessee to have a renewal of the lease for a further period of 15 years from the date of such expiration.
There were disputes between the syndicate on the one hand and the Panna Durbar on the other and by his order dated the 31st October, 1946, the Political Minister of Panna stopped the mining operations of the syndicate.
The, State of 1101 Panna became integrated in the Unit of Vindhya Pradesh in July, 1948, and the administration of Panna came under the control and superintendence of the Government of Vindhya Pradesh with its seat at Rewa under His Highness the Maharaja of Rewa as Rajpramukh and the appellant No.
I became the Minister in charge of the Industries Department in the Cabinet which was formed by the Rajpramukh.
The appellant No. 2 held the post of Secretary, Commerce and Industries Department, and was working under the appellant No. 1.
On the 1st September, 1948, the syndicate appointed one Pannalal as Field Manager to get the said order of the Panna Durbar stopping the working of the mines rescinded.
Pannalal made several applications for procuring the cancellation of the said order and on the 13th January, 1949, and the 26th January, 1949, Pannalal made two applications and handed them over personally to the appellant No. I requesting for the resumption of the mining operations and was asked to come in February for the purpose.
The appellant No. I consulted the legal advisers of the State and a questionnaire was framed which was to be addressed to the syndicate for its answers.
When Pannalal went to Rewa the questionnaire.
was handed over to him on the 9th February, 1949, for being sent to Sir Chinubbai Sir Chinubhai sent the replies to the said questionnaire along with a covering letter dated the 18th February, 1949, where in he expressed a desire to meet the appellant No. 1 for personal discussion in regard to the settlement of the matter of the resumption of the mining operations etc.
In reply to the telegrams sent by Sir Chinubhai on the 19th February, 1949, the Personal Assistant to appellant No. 1 intimated to Sir Chinubhai that he could go to Rewa and see the appellant No. 1 on the 7th March, 1949.
As Sir Chinubhai was ill he deputed his Personal Assistant, Nagindas Mehta to go to Rewa and see the appellant No. 1 on his behalf Nagindas arrived at Rewa on the evening of the 6th March, 1949.
The appellant No. 1 had gone out of Rewa and Nagindas had to wait.
He saw the appellant No. 1 on the morning.
of the 8th March, 1949, but was asked 1102 to see the appellant No. 2.
The appellant No. 2 saw Nagindas at the Guest House where lie had put up and informed Nagindas that a third party was offering Rs. 50,000 for the mining rights.
Nagindas told the appellant No. 2 that the syndicate was a limited concern and could not afford to pay so much money .
but if the amount was reduced they would make an effort to pay the sum.
The appellant No. 2 then told Nagindas that he would talk over the matter with the appellant No. I and let him know.
The same day in the afternoon the appellant No. 2 saw Nagindas at the Guest House and informed him that as the syndicate was working for the last so many years the appellant No. 1 was prepared to reduce the amount to about Rs. 25,000.
Nagindas told the appellant No. 2 that he would talk over the matter with Sir Chinubhai in Bombay and would let him know about it.
Nagindas then left for Bombay but he reached Bombay on the 29th March, 1949, having been detained on the way for some other business of his.
He saw Sir Chinubhai in Bombay and reported to him what had happened, at Rewa and gave him to understand that resumption orders would not be passed unless a bribe of Rs. 25,000 was paid.
Sir Chinubhai did not approve of the idea of giving a bribe and suggested that Nagindas should lay a trap for catching the appellant No. 1.
Nagindas sent a telegram on the 29th March, 1949, agreeing to go to Rewa in the week thereafter for completion.
On receipt of that telegram the appellant No. 2 in the absence of appellant No. 1 who was on tour sent a telegram on the 1st April, 1949, to Sir Chinubhai pressing him to come the same week as his presence was essential to complete the matter which had been already delayed.
On the 4th April, 1949, Pannalal was informed by the appellant No. 2 that the appellant No. 1 was leaving for Delhi that day and that he should go to Bombay and send Sir Chinubhai to Delhi to meet the appellant No. I in the Constitution House where he would be staying.
He also gave a letter to Pannalal to the same effect.
Appellant No. 1 left for Delhi on the 4th April,, 1949, with the files of the Panna Diamond Mining 1103 Syndicate and reached Delhi on the 5th April, 1949.
On the 6th April, 1949, the appellant No. 1 sent a telegram through his Personal Assistant Mukherji to Sir Chinubhai at Bombay asking him to meet the appellant No. I on the 7th, 8th or 9th April, 1949, at 31 Constitution House for final talks regarding the Panna Diamond Mining Syndicate.
On receipt of the said telegram Sir Chinubhai sent a telegram in reply stating that his Personal Assistant, Nagindas and Pannalal were reaching Delhi on the 9th April, 1949.
Nagindas reached Delhi on the 8th April, 1949, and put up at the Maidens Hotel and Pannalal reached Delhi on the 10th April, 1949, and put up at the Regal Hotel.
On the 9th April, 1949, Nagindas informed the appellant No. I on the telephone about his arrival at Delhi and an appointment was fixed for 10 30 am.
on the 10th April, 1949 Nagindas contacted Shri.
Bambawala, the inspector General of Police of the Special Police Establishment on the morning of the 10th April, 1949, before, coming to meet the appellant No. I and told him how the appellant No. 1 was coercing him to pay a bribe.
Shri Bambawala referred Nagindas to Pandit Dhanraj, Superintendent,, Special Police Establishment, and Nagindas told him the whole story of his harassment by the appellant No. 1 and it was then decided to lay a trap for, appellant No. 1.
Nagindas informed Pandit Dhanraj that he would meet the appellant No. 1 at about 11 a.m. and then report their talk to him in the afternoon.
Nagindas then saw the appellant No. 1 at the Constitution House at the appointed time and at this meeting the appellant No. 1 demanded from Nagindas a sum of Rs. 25,000 as a bribe for allowing the resumption of the mining operations and made it quite clear that he would not accept anything less than ' Rs. 25,000.
As Nagindas had not received the moneys from Bombay, the following day, ie., the 11th April, 1949, at 3 p.m. was fixed for the next meeting.
Nagindas thereafter informed Pandit Dhanraj as to what had taken place at the aforesaid meeting between him and the appellant No. 1.
Nagindas went to the Constitution House and saw the appellant No. I at about 3 p.m. on the 11th April,, 1949.
Pannalal was already 143 1104 there.
Nagindas and the appellant No. 1 went into the bedroom where Nagindas requested the appellant No. I to extend the period of the lease for 10 years so that the syndicate might be compensated for the loss sustained by the stoppage of the mining operations.
The appellant No. I thereupon asked Nagindas to submit a written application in Hindi and as Nagindas did not know it he called Pannalal into the bedroom and asked him to write out an application to that effect.
The appellant No. I after making sure from Pannalal that Pannalal was present at Rewa on the 1st April, 1949, asked Pannalal to put the date on the said application as the 1st April, 1949.
The appellant No. 1 made an endorsement at the foot of the said application and dated it as of the 1st April, 1949.
It was arranged that Nagindas should see the appellant No. 1 at 9 p.m. that day, that Nagindas should pay Rs. 25,000 to the appellant No. I at that time and the appellant No.
I would deliver the resumption order to Nagindas on payment of the said sum of Rs. 25,000.
Nagindas then left the Constitution House and reported to Pandit Dhanraj what had transpired between him and appellant No. 1.
He further told Pandit Dhanraj that he had not received any moneys upto that time.
Pannalal was asked to proceed to the Constitution House in advance and inform the appellant No. 1 that Nagindas would be coming along at 9 p.m. that night.
Nagindas and Pandit Dhanraj then proceeded to the house of Shri Shanti Lal Ahuja, Additional District Magistrate.
Pandit Dhanraj made arrangements for a raiding party.
Nagindas 's statement was recorded on oath and a search of his person was made and he was then given three bundles containing 250 Government currency notes of Rs. 100 and a memorandum of the same was also prepared.
After these formalities were gone through Pandit Dhanraj, Nagindas and the Additional District Magistrate along with the police party left for the Constitution House.
It was arranged that Pannalal should be sent out by Nagindas after the completion of the transaction, on some pretext or other to the taxi waiting outside and that this would serve as a signal for the raiding party 1105 which would rush into the room No. 31 Constitution House which was occupied by the appellant No. 1.
Nagindas then went inside the suit of rooms occupied by the appellant No. 1 and the appellant No. 1 took him to his bedroom and closed the door which connected the bedroom with the sitting room where Pannalal was already waiting.
After this the appel lant No. 1 handed over the resumption order to Nagindas and on reading the same Nagindas found that the extension given was only for 4 years and be asked the appellant No. 1 why this was so when the appellant No. 1 had promised before to give an extension for 10 years.
On this the appellant No. I told Nagindas that he should put up another application after a few months and then the appellant No. 1 would extend the period.
Appellant No. 1 then signed the resumption order and put down the date thereunder as the 2nd April, 1949.
As soon as the signed order was handed over to him Nagindas handed over to the appellant No. I the Government currency notes of the value of Rs. 25,000 which had been given to him previously by the Additional District Magistrate.
Nagindas then asked for an extra copy of the said order and the same was accordingly given to him after being dated and initialled by the appellant No. 1.
The appellant No. 1 took the Government currency notes and put them in the upper drawer of the dressing table in the bedroom.
After the transaction was thus completed Nagindas shouted to Pannalal to go to the taxi and bring his cigarette case.
Pannalal went opt to the taxi and on receipt of this signal the Additional District Magistrate and Pandit Dhanraj rushed into the sitting room along with the other members of the raiding party.
The appellant No. 1 met the raiding party at the communicating door between the two rooms.
After the Additional District Magistrate and Pandit Dhanraj had disclosed their identity appellant No. I was asked by Pandit Dhanraj whether he had received any money as a bribe to which the appellant No. 1 replied in the negative.
Pandit Dhanraj then told appellant.
No. 1 that he should produce the money which he had received, otherwise he would be 1106 forced to search the room.
On this appellant No. I went to the said dressing table, opened the top drawer and brought out the three bundles of Government currency notes given to him by Nagindas and handed them over to Pandit Dhanraj.
On inquiry by the Additional District Magistrate as to how he had come into possession of the said notes, the Appellant No. 1 stated that he had brought Rs. 40,000 from his home out of which Rs. 15,000 had been spent by him in the purchase of a motor car and the remaining sum was with him which was required by him to purchase some ornaments in connection with the marriage of his daughter.
In the meanwhile two respectable witnesses, Shri Gadkari, who was a member of the Central Electricity Authority, Ministry of Works;, Mines and Power, Government of India, and Shri Perulakar, who was the Minister for Agriculture and Labour, Madhya Bharat, were brought to the bedroom of the appellant No. 1 by the police.
The appellant No. 1 repeated the said statement and gave the same explanation before these two witnesses which he had given and made before the Additional District Magistrate and Pandit Dhanraj a little while before.
Nagindas was then searched in the presence of these two witnesses and the two copies of the order which had been given to him by appellant No. I were recovered from his person.
Two other copies of the said order and the application and the file of the Panna Diamond Mining syndicate were recovered from the. search of the upper drawer of, the dressing table in the bedroom of appellant No. I Appellant No. 1 also produced a receipt in support of his story of the purchase of the car.
The relevant memos of the search were prepared and also a list of the numbers of the Government currency notes of Rs. 25,000 which had been produced by the appellant No. 1.
This list was compared and checked by the said witnesses Gadkari and Perulgkar with the numbers of notes and also with those appearing in the list which was in the possession of the Aditional District Magis trate and which, was shown to the said witnesses.
They found that the numbers in the said two lists tallied in all respects.
After the completion of the list the Additional 1107 District Magistrate confronted appellant No. 1 with the documents which were produced before him by Nagindas and also the list of notes and asked appellant No. 1 if he had any explanation to offer.
The apppllant No. 1 was confused and could give no explanation.
On further enquiry whether the appellant No. I had any other money with him, he opened an iron confidential box a key of which was in his possession and brought out a sum of Rs. 132 which was not taken charge of as the same had no concern with the case.
Thereafter appellant No. I was put under arrest and was subsequently released on bail.
* * * * After these documents were forged the next important event was the passing, of the sum of Rs. 25,000 as and by way of bribe or illegal gratification by Nagindas to the appellant No. 1.
Here also it would have been difficult for the prosecution to establish the guilt of the appellant No. 1 if the matter had rested merely on the evidence of Nagindas or that of the police witnesses supported a,% they were by Shanti Lal Ahuja, the Additional District Magistrate.
Nagindas 's evidence suffering from the infirmity pointed out before could not be enough to carry conviction with the court.
He was out to trap the appellant No. 1 and had been clever enough also to have inveigled the police authorities to procure the wherewithal of the bribe for him.
It is patent that but for the procurement of these Rs. 25,000 by the police authorities and their handing over the sum to Nagindas, Nagindas would not have had the requisite amount with him and the offence under section 161 would never have been committed.
The police authorities also exhibited an excessive zeal in the matter of bringing the appellant No. 1 to book and their enthusiasm in the matter of trapping the ' appellant No. I was on a par.
with that of Nagindas and both the parties were thus equally to blame in the matter of entrapping the appellant No. 1.
The evidence of these witnesses therefore was not such as to inspire confidence in the mind of the court.
Shanti Lal Ahuja, the Additional District Magistrate, also lent himself to the.
police authorities and became 1108 almost a limb of the police.
His position as the Additional District Magistrate was submerged and he reduced himself to the position of an ordinary witness taking part in the affair as a member of the raiding.
party and his evidence could be no better or no worse than that of the police witnesses themselves.
If therefore the matter had rested merely upon their evidence it would have been difficult to carry the guilt home to the appellant No. 1.
The evidence as to the recovery of this sum of Rs. 25,000 from the top drawer of the dressing table in the bedroom of the appellant No. I and also in regard to the handing over of that sum by the appellant No. I to Shanti Lal Ahuja, the Additional District Magistrate, was equally tainted and if that evidence stood by itself no court would have been safe in acting upon the same.
The statement which was made by the appellant No. I to Shanti Lal Ahuja, the Additional District Magistrate, was inadmissible in evidence.
Section 162 of the Criminal Procedure Code rendered the statement made by the appellant No. I to the police officers inadmissible.
The investigation into the offence had already started immediately on the First Information Report being registered by the police authorities and Pandit Dhanraj himself admitted in his evidence that the investigation into the offence had thus started before the raid actually took place.
The statement made by the appellant No. 1 to Shanti Lai Ahuja, the Additional District Magistrate was therefore made after the investigation had started and during the investigation of the offence and was therefore hit by section 164 of the Criminal Procedure Code.
It was urged on behalf of the respondent that this statement was not a confessional statement and was therefore not hit by section 164 and Shanti Lai Ahuja, the Additional District Magistrate, could therefore depose to such statement even though the same was not recorded as required by the provisions of section 164 of the Criminal Procedure Code.
There is authority however for the proposition that once the investigation had started any non confessional statement made by the accused also required to be recorded in the manner indicated in that section and if no such record had 1109 been made by the Magistrate, the Magistrate would not be competent to give oral evidence of such statement having been made by the accused.
(See A.I.R. 1936 Privy Council 253 and Indian Law Reports 49 Calcutta 167 followed in and A.I.R. 1937 Nagpur 254).
The statement made by the appellant No. 1 therefore to Shanti Lal Ahuja, the Additional District Magistrate, not having been recorded by him in accordance with the provisions of section 164 was inadmissible in evidence and could not be proved orally by him.
, If therefore the statement was thus eliminated from evidence nothing remained so far as the witnesses Nagindas and Pannalal on the one hand and the police witnesses as well as Shanti Lal Ahuja, the Additional District Magistrate, on the other hand were concerned which could bring the guilt home to the appellant No. 1.
Reliance was therefore placed by the prosecution on the evidence of Gadkari and Perulakar.
They occupied responsible positions in life and were absolutely independent witnesses.
Two criticisms were levelled against their evidence by the Special Judge.
The one criticism was that contrary to the evidence of Pandit Dhanraj they asserted that their, statements were not recorded on the night of the 11th April, 1949.
Pandit Dbanraj had recorded their statements after they had left the bedroom of the appellant No. I at the Constitution House relying upon his memory of the events that had happened that night.
These statements however were not read over to them and therefore could not have the value which otherwise they would have had.
The other criticism was that they had appended their signatures to the Panchnama of the numbers of the currency,notes recovered at that time which Panchnama contained the statement that on being asked the appellant No. I had produced the bundles of currency notes from the top drawer of the dressing table.
This statement was not factually correct as both these witnesses were brought into the bedroom of the appellant No. I after the recovery of the Government currency notes by the police from the appellant No., 1.
It was certainly indiscreet on their part not to have scrutinised 1110 the contents of the Panchnama before they appended their signatures thereto.
That is however a far cry from coming to the conclusion that they acted in a highly irresponsible manner and their testimony was unreliable.
The circumstances under which the numbers of the currency notes were recorded in the Panchnama, the statement made by the appellant No. 1 to them and the confusion into which the appellant No. 1 fell when he was questioned by the police authorities on the tallying of the numbers contained in the memo prepared when the raid was organised with the numbers of the currency notes actually found in the bedroom of the appellant No. 1 were events which would indelibly print themselves in the memory of these witnesses and even though they were examined in the Court of the Special Judge about 10 months after the occurrence, these events and particularly the fact that the appellant No. I claimed these moneys which were thus recovered as his own would certainly not be in any manner whatever forgotten by them.
The only suggestion which was made against the credibility of these witnesses on this point was that they must not have exactly remembered what transpired on that night in the bedroom of the appellant No. I and that they might have committed an honest mistake when narrating the events that had happened on that night.
An honest lapse of memory would no doubt be a possibility but having regard to the circumstances of the case we are of the opinion that the events that happened that night in the bedroom of the appellant No. I and which were deposed to, by these witnesses were not such as to be easily forgotten by them and when these witnesses deposed to the fact that the appellant No. I claimed this sum of Rs. 25,000 as his own and was utterly confused when explanation was sought from him by the police authorities in regard to the tallying of the numbers of these Government currency notes, it is not easy 'to surmise that they were suffering from any lapse of memory.
The evidence of these witnesses in regard to the statement made by the appellant No. 1 before them was also attacked on the ground that Shanti Lal 1111 Ahuja, the Additional District Magistrate 's asking the appellant No. 1 to repeat the statement which he had earlier made before him to these witnesses was a mere camouflage.
Shanti Lal Ahuja, the Additional District Magistrate, knew very well that the statement made by the appellant No. 1 to him was not recorded under the provisions of section 164 of the Criminal Procedure, Code and was therefore inadmissible in evidence and he therefore resorted to these tactics of having the appellant No. 1 repeat the very same statement to these witnesses so as to avoid the bar of section 164.
Reliance was placed in this behalf on A.I.R. 1940 Lahore 129 (Full Bench) where it wag held that if on the facts of any case it was found that a statement made to a third person was in reality intended to be made to the police and was represented as having been made to a third person merely as a colourable pretence in order to avoid the provisions of section 162 the court would hold it excluded by the section.
The same ratio it was submitted applied to the statements made to these two witnesses because they were a colourable pretence to avoid the provisions of section 164 of the Criminal Procedure Code which had certainly not bee n complied with by Shanti Lal Ahuja, the Additional District Magistrate.
It has however to be observed that every statement made to a person assisting the police durirng an investigation cannot be treated as a statement made to the police or to the Magistrate and as such excluded by section 162 or section 164 of the Criminal Procedure Code.
The question is one of fact and has got to be determined having regard to the circumstances of each case.
On a scrutiny of the evidence of these two witnesses and the circumstances under which the statements came to be made by the appellant No. 1 to them we are of the opinion that the appellant No. I was asked by Shanti Lal Ahuja, the Additional, District Magistrate, to make the statements to these two witnesses not with a view to avoid the bar of section 164 of the Criminal Procedure Code or by way of colourable pretence but by way of greater caution particularly having regard to the fact that the appellant No. 1 occupied the position .of a Minister of 144 1112 industries in the State of Vindhya Pradesh.
The statements .made by the appellant No. 1 to these witnesses therefore did not suffer ' from this disability and were admissible in evidence.
The evidence of these witnesses being thus worthy of credit and the statements made by the appellant No. 1 to them being admissible in evidence there is no doubt that the appellant No. 1 claimed these moneys, viz., Rs. 25,000, which were recovered from the top drawer of the dressing table in the bedroom of the appellant No. 1 as his own being the balance of Rs. 40,000 which he had brought from his home when he came to Delhi.
If this was ' so the very fact that the numbers of these Government currency notes of the value of Rs. 25,000 tallied with the numbers of the notes which had been handed over to Nagindas earlier when the raid was organised and which numbers were also specified in the memo prepared at that time was enough to establish the falsity of the allegation made by the appellant No. 1 that he had brought these moneys from his home These moneys were proved to have been provided by the police authorities and given to Nagindas when the raid was organised and were the instruments of the offence of the taking of the bribe or illegal gratification by the appellant No. 1.
If the numbers of these notes tallied with the numbers of the notes which were thus handed over by the police authorities to Nagindas they could not have belonged to the appellant No. 1 and were certainly brought there by Nagindas and handed over by him to the appellant No. 1 as alleged, by the prosecution.
A suggestion was made that there was oportunity for Nagindas to plant these moneys into the top drawer of the dressing table when the back of the appellant No. 1 was turned upon him.
Even assuming that there was that possibility it is sufficiently negatived by the fact that when these moneys were recovered from the top drawer either at the instance Nagindas as alleged by the appellant No. 1 or at, the instance of the appellant No. 1 as alleged by the prosecution the appellant No. 1 did not express any surprise at these moneys being thus found there.
If the version of the appellant No. 1 1113 was correct he had only brought about Rs. 25,000 from his house.
Rs. 15,000 has been already spent by him in the purchase of the car.
, About Rs. 10,600 were spent by him in the purchase of the ornaments and only a sum of Rs. 100 odd was the, balance left with him.
According to that version there was not the slightest possibility of the sum of Rs. 25,000 being found in the top drawer of the dressing table.
Far from expressing a surprise in this manner the appellant No. 1 claimed these moneys as his own.
The appellant No. 1 could not have by any mischance failed to appreciate that these Government currency notes which were thus recovered from the to p drawer of the dressing table exceeded by far the amount which according to him he had left with him by way of balance and the most natural reaction to the recovery of this large sum of money would .
have been that he would have certainly denied that these moneys were his and he would have been surprised at finding that such a large sum of money was thus found there.
No such reaction was registered on his face.
On the contrary if the evidence of the two witnesses Gadkari and Perulakar is to be believed and we see no reason why it should not be believed, the appellant No. 1 claimed this sum of Rs. 25,000 as his own being the balance out of the money which he had brought from his home when he came to Delhi.
This is sufficient to establish that these moneys which earlier bad been handed over by the police authorities to Nagindas found their way into the top drawer of the dressing table in the bedroom of the appellant No. 1 and were the primary evidence of the offence under section 161 having been committed by the appellant No. 1.
The further circumstance that on the num bers of these notes being tallied and his explanation in that behalf being asked for by the 'Police authorities the appellant No. 1 was confused and could furnish no explanation in regard thereto also supports this conclusion and there is no doubt left in our minds that the appellant No. 1 was guilty of the offence.
under section 161 of the Indian Penal Code with ;Which he was charged 1114 We cannot however leave this case without expressing our strong disapproval of the part which the police authorities and Shanti Lal Ahuja, the Additional District Magistrate, took in this affair.
As already observed this offence would never have been committed by the appellant No. I but for the fact that the Notice authorities provided Nagindas with the wherewithal of the commission of the offence.
Sir Chinubhai as it appears from the evidence was not in a position to provide Nagindas with this sum of Rs. 25,000 or any large sum and in fact in spite of the telephone calls made by Nagindas upon him had not provided any amount beyond Rs. 3,000 which was meant for the other expenses of Nagindas, to him.
Nagindas was therefore not in a position to provide this sum of Rs. 25,000 for payment of the bribe or the illegal gratification to the appellant No. 1.
But for the adventitious aid which he got from, the police authorities the matter would not have progressed any further, and Nagindas would I have left Delhi empty handed.
The police authorities however once they got scent of the intention of Nagindas thought that it was too good an opportunity to miss for entrapping the appellant No. 1 who occupied the position of the Minister of Industries in the State of Vindhya Pradesh.
They therefore provided the sum of Rs. 25,000 on their own and handed it over to Nagindas.
The police authorities in this step which they took showed greater enthusiasm than Nagindas himself in the matter of trapping the .appellant No. 1.
It may be that the detection of corruption may sometimes call for the laying of traps, but there is no justification for the police authorities to bring about the taking of a bribe by supplying the bribe money to the giver where he has neither got it nor has the capacity to find it for himself.
It is the duty of the police authorities to prevent crimes being committed.
It is no part of their business to provide the instruments of the offence.
We cannot too strongly disapprove of the step which the police authorities took in this case in the matter of providing the sum of Rs. 25,000 to Nagindas who but for the 1115 police authorities thus coming to his aid would never have been able to bring the whole Affair to its culmination.
Not only did the police authorities thus become active parties in the matter of trapping the appellant No. I they also provided a handy and an ostensibly independent witness in the person of Shanti La] Ahuja, the Additional District Magistrate.
Even though he was a member of the judiciary be lent his services to the police authorities and became a limb of the police as it were.
The part which Shanti Lal Ahuja, the Additional District Magistrate, took in this affair cannot be too strongly condemned.
We can only repeat in this connection the observations of the Privy Council in A.I.R. 1936 Privy Council 253 at page 258 in regard to the Magistrates placing themselves in positions where they would have to step into the witness box and depose as ordinary citizens.: "In their Lordships view it would be particularly unfortunate if Magistrates were asked at all generally to act,rather as police officers under section 162 of the Code; and to be at the same time freed, notwithstanding their position as Magistrates, from any obligation to make records under section 164.
In the result they would indeed be relegated to the position of ordinary citizens as witnesses and then would be required to depose to matters transacted by them in their official capacity unregulated by any statutory rules of procedure or conduct whatever. . " The position was laid down with greater emphasis by Mr. Justice P. B. Mukharji in A.I.R. 1951 Calcutta 524 at page 528 where the learned Judge observed: "Before I conclude I wish to express this court 's great disapprobation of the practice that seems to have become very frequent of sending Magistrates as witnesses of police traps.
The Magistrate is made to go under disguise to witness the trap laid by the police. 'In this case it was Presidency Magistrate and in other cases which have come to our notice there have been other Magistrates who became such witnesses.
To make the Magistrate a party or a limb of the police during the police investigation seriously 1116 undermines the independence of the Magistrates and ,perverts their judicial outlook.
The Magistrates are the normal custodians of the general administration of criminal justice and it is they who normally decide and pass judgments on the acts and conduct of the police.
It is not enough to say, therefore, that the Magistrate acting as a witness in a particular case does not himself try that case.
This practice is all the more indefensible here specially when there is no separation of the executive from the judiciary.
The basic merit of the administration of criminal justice in the State lies in the fact that the person arrested by the police is entitled to come before an independent and impartial Magistrate who is expected to deal with the case without the Magistrate himself being in any way a partisan or a witness to police activities.
There is another danger and that is the Magistrates are put in the unenviable and embarrassing position of having to give evidence as a witness and then being disbelieved.
That is not the Way to secure respect for the Magistracy charged with the administration of justice.
In my judgment this is a practice which is unfair to the accused and unfair to, the Magistrates.
It is also unfair to the police.
Because charged with the high responsibility and duty of performing a great and essential public service of this State the police cannot afford to run the risk of opprobrium ' even if unfounded, that they have enlisted the Magistrate in their cause.
That risk is too great and involves forfeiting public respect and confidence. . . " We perfectly endorse the above observations made 'by Mr. Justice P. B. Mukharji and hope and trust that Magistrates will not be employed by the police authorities in the manner it was done by the Special Police Establishment in this case before us.
The independence of the judiciary is a priceless treasure to be cherished and safeguarded at all costs against predatory activities of this character and it is of the essence that public confidence in the independence of ,the judiciary should not be undermined by any such tactics adopted.
by the executive authorities We have therefore eliminated from our consideration the whole of the evidence given by Shanti Lal Ahuja, the Additional District Magistrate, and come to our conclusion in regard to the guilt of the appellant No. I relying solely on the testimony of the two independent witnesses Gadkari and Perulakar.
The result therefore is that the appeal of the appellant No. 1 will be dismissed except with regard to his conviction and sentence, under section 120 B of the Indian Penal Code and the convictions and sentences passed upon him by the Judicial Commissioner under section 465 and section 466 as also section 161 of the Indian Penal Code will be confirmed.
The appeal of the appellant No. 2 will be allowed and he be acquitted and discharged of the offences with which he was charged and immediately set at liberty.
The bail bond of the appellant No. 2 will be cancelled.
| The appellant who lived in a village near Goa was found in possession of contraband gold.
He was prosecuted under section 167(81) of the Sea Customs Act read with section 9 of the Land Customs Act (9 of 1924).
The trial Magistrate convicted him but the Sessions Judge relying on the decision of the Calcutta High Court in Sitaram Agarwala 's case acquitted him.
The High Court of Mysore, in appeal against the acquittal, considered the evidence and relying, inter alia, on the statement made by the appellant to the Deputy Superintendent of Customs and Excise held him guilty.
With certificate the appellant came to this Court.
The questions that felt for consideration were : (i) whether the view taken by the High Court differing from the view taken by the Calcutta High Court in Sitaram Agarwala 's case with respect to the interpretation of section 167(81) was correct, and (ii) whether the statement made by the appellant to the Deputy Superintendent of Customs & Excise was admissible in view of section 25 of the Indian Evidence Act.
HELD : (i) The High Court was right in not following the view of the Calcutta High Court in Sitaram Agarwala 's case, the correct view as to the interpretation of section 167(81) of the Sea Customs being that the section takes in even those persons who may not be concerned with the actual import of the prohibited goods.
[700 G H] Sachidananda Banerjee, Assistant Collector of Customs vs Sitaram Agarwal, , followed.
Sitaram Agarwal vs State, , disapproved.
(ii)The Central Excise and Salt Act, 1944 does not confer all the powers of the police officer on Central Excise Officers.
The powers confered on them by section 21(2) of the Act are only for the purpose of inquiry under section 21(1); they would not entitle the said officers to file a charge sheetunder section 173 of the code of Criminal Procedure.
Therefore even though a central excise officer may have when making enquiries for purposes of the Act, powers an officer in charge of a police station has when investigating a cognizable offence, he does not thereby become a police officer within the meaning of section 25 of the Indian Evidence Act, and the statement of an accused person recorded by him is not hit by that section .
[704 B C, F G] Raja Ram Jaiswal vs State of Bihar, ; and Nanoo Sheikh Ahmed vs Emperor, Bom.
78, distinguished.
State of Punjab vs Barkat Ram,, ; , relied on.
699 Radha Kishun Marwari vs King Emperor, Patna 46, referred to.
|
N: Criminal Appeal No. 603 of 1989.
From the Judgment and Order dated 8.6.1989 of the Bombay High Court in Crl.
Application No. 995 of 1989.
B .R. Handa and A.M. Khanwilkar for the Appellant.
Ram Jethmalani, P.K. Dey, Ms. Rani Jethmalani (N.P.) and D.M. Nargolkar for the Respondents.
The Judgment of the Court was delivered by 317 ABMADI, J.
Special leave granted.
Heard counsel on both sides.
The facts leading to this appeal are as under: On May 30, 1988, the respondent, a retired Naval Officer of the rank of Captain was apprehended at the Bombay Inter national Airport (Sahar Airport) when he was about to take the Air India Flight from Bombay to New York.
On search of his luggage certain highly sensitive documents marked se cret/confidential were found.
A complaint was lodged against him for the breach of the provisions of the Official Secrets Act, 1923 and the .
Soon after his arrest he filed an application dated 22nd September, 1988 for bail.
That application was rejected by the High Court on 29th September, 1988.
Thereafter, he filed a writ petition challenging the validity of Sections 3 and 5 of the Official Secrets Act, 1923 but that writ petition was dismissed by a Division Bench of the Bombay High Court on 8th December, 1988.
In the meantime, he had preferred an application dated 21st November, 1988 for transfer of his case to another learned Judge and for grant of bail.
While granting the prayer for transfer the Division Bench refused to enlarge the respondent on bail by its order dated 19th December, 1988.
Soon thereafter on 18th January, 1989, the respondent filed the third application for bail which too was rejected by Suresh, J. Having thus failed to secure enlargement on bail the respondent approached the learned Sessions Judge, Bombay for a direction to the jail authorities that he be produced before the Head of the Orthopaedic Department of J .J.
Hospital as he had some spinal pain.
The respondent also moved a separate application for being admitted to the Naval Hospital.
The learned Sessions Judge acceded to his request and got him examined by Dr. Dongaonkar who submitted his report on 3rd February, 1989.
On 10th February 1989, the respondent moved another application complaining of viola tion of Court 's order and for enlargement on bail.
This was followed by yet another application for bail dated 16th February, 1989 and in the alternative for a direction to admit him to a suitable hospital where he may be served meals cooked at his home.
On the said application certain directions were given and the respondent was shifted to the general ward of G.T. Hospital, Bombay.
The Trial Court flamed charges against the respondent on 27th February, 1989.
On 24th April, 1989, the respondent filed yet another application for grant of bail on medical grounds and in the alternative for being admitted to a hospital or any other place where he can conveniently receive instructions in yogic exercises.
All his pending applications made for bail etc. were rejected by Puranik, J. by a common order dated 6th June, 1989, except Criminal Application No. 995 of 1989 preferred in April, 1989 318 for enlargement on bail on medical grounds.
Possibly the fact that he had referred this application was not brought to the notice of Puranik, J. Two days after the rejection of the group of bail applications by Puranik, J., application No. 995 of 1989 was disposed of by Suresh, J., who directed that he be enlarged on bail for a period of two months on his furnishing security in the sum of Rs. 10,000 with one surety on the terms and conditions catalogued at (a) to (g) of the order.
The learned Judge felt that by permitting him to be kept in virtual house arrest the State 's grievance that he meets visitors including mediamen and gives inter views at the G.T. Hospital open ward will not survive.
He was also of the view that having regard to his spinal disor der it was necessary that he had proper facilities for yogic exercises under expert guidance.
It is this order of the learned Judge that is assailed before us by the State of Maharashtra.
When this matter came up for admission before Shetty, J., during vacation, the learned Judge, after taking note of the fact that respondent was suffering from disc prolapse for which he was treated by Dr. Dongaonkar and had shown considerable improvement and after evaluating the opinion of Dr. Khadilkar who had certified that the respondent was fit to attend court, observed as under: "Having regard to the nature of the offences charged, the sickness or disability complained of, the nature of the treatment required, the certificates given by the Doctors, I am of the opinion that the bail order made by the High Court appears to be a bit out of the ordinary.
" The learned vacation Judge then directed notice to issue and stayed the operation of the High Court 's Judgment of 8th June, 1989.
While doing so, he observed that the respondent should be given necessary treatment of Yogic exercises in the Jail.
Therefore, since the passing of this order on 15th June, 1989, the operation of the High Court 's order enlarg ing the respondent on bail and placing him in virtual house arrest on the terms and conditions set out in the court 's order, is stayed.
The learned counsel for the State of Maharashtra con tended that the learned Judge in the High Court while pass ing the impugned order of 8th June, 1989 ought to have realised that only two days before his colleague Puranik, J. had rejected all the pending bail applications (except Criminal Application No. 995/89) preferred at intervals by the respondent.
In Criminal Application No. 375/89 one of the prayers 319 made in paragraph 7(e) was as under: "That the applicant may, pending his illness be ordered and directed to be placed under house arrest and/or be released on bail on such terms and conditions as may be Puranik, J. considered this request of the respondent in paragraph 24 of his order of 6th June, 1989 and rejected the same.
Despite the rejection of the said application No. 375 of 1989 along with a group of applications seeking enlarge ment on bail and other directions, Suresh, J. granted almost the same request only two days later while disposing of the application No. 995/89.
That is what Shetty, J. described as 'a bit out of the ordinary ' when the matter came up for hearing before this Court on 4th August, 1989 a communica tion received from the respondent requesting that he be brought to Delhi by plane to enable him to argue the matter in person was placed before the Court.
This Court while rejecting his request for being brought by plane from Bombay to Delhi observed that he may inform the Court if he desired legal aid.
At the next hearing instead of informing the Court whether he desired legal aid, he repeated his request for personal appearance through his son which was rejected.
However, the Supreme Court Legal Aid Committee was requested to appoint an Advocate to appear and argue the case on his behalf.
The matter was listed for hearing on 8th September, 1989.
When the matter was called on for hearing, Mr. Jethmala ni, learned counsel for the respondent made a fervent plea that having regard to the age and the condition of the respondent, this Court should recall its earlier order staying the operation of the impugned order and should refuse to exercise its jurisdiction under Article 136 of the Constitution of India.
The submission of Mr. Jethmalani was that ordinarily bail should be granted to under trials and this Court should refrain from exercising jurisdiction under Article 136 to cancel bail granted by the High Court.
He made an endeavour to satisfy us that even on merits this was a fit case for grant of bail notwithstanding the fact that several bail applications, made by the respondent one after another.
were .rejected by the High Court.
We cannot accede to the submissions of Mr. Jethmalani.
It is evident from the facts stated above that after the respondent 's successive applications for bail were spurned, he requested for being admitted to the hospital on medical grounds, that is, on the 320 ground that he was suffering from spinal disorder.
He was first admitted to the J.J. Hospital and was later shifted to G.T. Hospital open ward on his request.
After improvement to the extent of 70% and above was reported by Dr. Dongaonkar who treated him and on Dr. Khadilkar declaring him fit to attend the court, he contended that he had consulted a yoga instructor who advised him a course in yogic exercises to get rid of his spinal disorder.
In the meantime he had filed a number of applications for being released on bail.
This batch of applications were put up before Puranik, J. for disposal.
The attention of Puranik, J. was not drawn to the pendency of one such application No. 995/89 till he disposed of the batch of such bail applications on 6th June 1989.
Even if the said application was filed after the hearing started before Puranik, J., the learned Judge could have been told about its pendency before he rendered his decision on 6th June, 1989.
This conduct of the respondent has given rise to the argument that the respondent desired to keep the question regarding his enlargement on bail alive.
We have pointed out that in one of the applications No. 375/89 he had sought precisely the same relief which came to be grant ed by the impugned order.
The question then is whether there was justification for releasing the respondent on bail to facilitate yogic exercises under expert guidance at his residence, albeit under conditions of surveillance, even though Puranik, J. had rejected a more or less similar prayer only two days before? Should this Court refuse to exercise jurisdiction under Article 136 of the Constitution even if it is satisfied that the jurisdiction was wrongly exercised? Liberty occupies a place of pride in our socio political order.
And who knew the value of liberty more than the rounding fathers of our Constitution whose liberty was curtailed time and again under Draconian laws by the coloni al rulers.
That is why they provided in Article 21 of the Constitution that no person shall be deprived of his person al liberty except according to procedure established by law.
It follows therefore that the personal liberty of an indi vidual can be curbed by procedure established by law.
The Code of Criminal Procedure, 1973, is one such procedural law.
That law permits curtailment of liberty of anti social and anti national elements.
Article 22 casts certain obliga tions on the authorities in the event of arrest of an indi vidual accused of the commission of a crime against society or the Nation.
In cases of under trials charged with the commission of an offence or offences the court is generally called upon to decide whether to release him on bail or to commit him to jail.
This decision has 'to be made, mainly in non bailable cases, having regard to the nature of the crime, the circumstances in which it was committed, the 321 background of the accused, the possibility of his jumping bail, the impact that his release may make on the prosecu tion witnesses, its impact on society and the possibility of retribution, etc.
In the present case the successive bail applications preferred by the respondent were rejected on merits having regard to the gravity of the offence alleged to have committed.
One such application No. 36 of 1989 was rejected by Suresh, J. himself.
Undeterred the respondent went on preferring successive applications for bail.
All such pending bail applications were rejected by Puranik, J. by a common order on 6th June, 1989.
Unfortunately, Puranik, J. was not aware of the pendency of yet another bail appli cation No. 995/89 otherwise he would have disposed it of by the very same common Order.
Before the ink was dry on Pura nik, J. 's order, it was upturned by the impugned order.
It is not as if the court passing the impugned order was not aware of the decision of Puranik, J., in fact there is a reference to the same in the impugned order.
Could this be done in the absence of new facts and changed circumstances? What is important to realise is that in Criminal Application No. 375 of 1989, the respondent had made an indentical request as is obvious from one of the prayers (extracted earlier) made therein.
Once that application was rejected there was no question of granting a similar prayer.
That is virtually overruling the earlier decision without there being a change in the fact situation.
And, when we speak of change, we mean a substantial one which has a direct impact on the earlier decision and not merely cosmetic changes which are of little or no consequence.
Between the two orders there was a gap of only two days and it is nobody 's case that during these two days drastic changes had taken place necessitating the release of the respondent on bail.
Judicial discipline, propriety and comity demanded that the impugned order should not have been passed reversing all earlier orders including the one rendered by Puranik, J. only a couple of days before, in the absence of any substan tial change in the fact situation.
In such cases it is necessary to act with restraint and circumspection so that the process of the Court is not abused by a litigant and an impression does not gain ground that the litigant has either successfully avoided one Judge or selected another to secure an order which had hitherto eluded him.
In such a situation the proper course, we think, is to direct that the matter be placed before the same learned Judge who disposed of the earlier applications.
Such a practice or convention would prevent abuse of the process of court inasmuch as it will prevent an impression being created that a litigant is avoiding or selecting a court to secure an order to his liking.
Such a practice would also discourage the filing of successive bail applications without change of circum stances.
Such a practice if adopted would be condusive to judicial discipline and would also 322 save the Court 's time as a Judge familiar with the facts would be able to dispose of the subsequent application with despatch.
It will also result in consistency.
In this view that we take we are fortified by the observations of this Court in paragraph 5 of the judgment in Shahzad Hasan Khan vs Ishtiaq Hasan Khan, [1987] 2 SCC 684.
For the above reasons we are of the view that there was no justification for passing the impugned order in the absence of a substan tial change in the fact situation.
That is what prompted Shetty, J. to describe the impugned order as 'a bit out of the ordinary '.
Judicial restraint demands that we say no more.
It is true that ordinarily this Court does not interfere with an order granting bail but in the facts of this case we feel judicial discipline will be sacrificed at the altar of judicial discretion if we refuse to exercise our jurisdic tion under Article 136 of the Constitution.
In the result we allow this appeal and set aside the impugned order dated 8th June, 1989 granting bail to the respondent accused.
R.S.S. Appeal allowed.
| Four large industrial units owned by the respondent company were closed down with effect from September 9, 1984 resulting in denial of employment to about 10,000 employees.
In the writ petition, the workmen sought immediate payment of salary and wages for the period since closure and compen sation as per the amendment to the Industrial Disputes Act in 1984 and payment of dues under the provident fund ac count, gratuity etc.
The High Court had in the meantime on May 22, 1986 appointed a provisional liquidator under the Companies Act.
This Court on October 29, 1987 had directed the Central Government to make a reference to the Board constituted in terms of s.4 of the Sick Industrial Companies Act, 1985, which had come into force, to frame a scheme as contemplated under section 10 thereof for revival of the company and submit it for consideration of the Court within four months time.
On September 7, 1988, the Court took note of the fact that the State of Bihar was inclined for nationalisation of the company and directed a committee with the Industries Secre tary to the Union of India as its Chairman to be immediately constituted to work out the modalities of nationalisation.
On December 13, 1988 the Court considered the report of the committee indicating that three units, excepting paper and boards unit, were viable and could be revived, and adjourned the matter to give an opportunity to the parties to explore the possibilities of revival of the viable units.
Till August 8, 1989 no substantial progress had been made.
There after the State of Bihar and the Union of India filed their statements separately and the memorandum prepared by the Attorney General was also made available to the Court.
In this background the Court, HELD: 1.
Living to about 10000 families has been denied for over five years and apart from national loss, the work men have been 616 put to serious jeopardy.
There is a huge amount of wages outstanding to them.
Several financial institutions have large dues to recover from the company.
The Trustees of the Debenture Trust Deeds have also sought to intervene to maintain their claim.
Apart from these, the owners of the company have also pleaded that they are entitled to compen sation in the event of the properties of the company being taken away by way of nationalisation.
A lot of assets are fast becoming useless and will soon become junk.
If the company gets liquidated, the liabilities would turn out to be far in excess of the assets and notwithstanding first or second charge on the assets, the creditors may not apprecia bly benefit.
It is, therefore, of paramount importance that the company in respect of viable units should be revived and allowed to come into production.
[620D, A C] 2.1 The State of Bihar is directed to appoint an autho rised officer to be the Rehabilitation Administrator.
[620H] 2.2 The Provisional Liquidator appointed by the High Court shall hand over to the Administrator all the assets of the company which he had taken over under orders of that Court.
The assets of the company not yet taken over shall vest forthwith in the Administrator.
[621A] 2.3 The assets of the company encumbered with financial and other institutions shall not be available to be proceed ed against for a period of one year, and there shall be a moratorium for a period of one year in regard to proceedings taken and pending or to be taken against the company hereaf ter, and limitation shall remain suspended for the period.
[621D E] 2.4 The State Government of Bihar shall deposit within eight weeks an amount of Rs. 15 crores with the Administra tor against the cost of assets to be taken over.
A similar sum of Rs. 15 crores shall be advanced by the Union of India to the State from out of plan assistance.
The sum paid by the State shall be utilised, in due course for payment of arrears of wages of the workers and for disbursement of secured loans of financial institutions and other parties for which security of the company 's assets had been fur nished.
The Administrator shall open an account with the lead nationalised bank for the State operating at Dalmiana gar into which the two sums of money shall be credited.
[621F H] 2.5 The Administrator shah set up a Committee with a retired 617 High Court Judge, a retired District Judge and an Accounts Officer to examine the claims of the owners of the company and other parties including financial institutions within six months and to report the matter to the Court for direc tions.
[622A] 2.6 An inventory of all the articles shall be made within four weeks.
Steps shall be taken to form a new compa ny within four weeks.
Appointment of technical consultants and other competent officers shall be undertaken within two months.
The retrenched employees shall come back to work in phases.
Steps shall be taken to explore the viability of the paper unit within three months after the company is recom missioned in respect of the three units.
Liberty is given to the parties to apply in the event of necessity.
[622C D & E] 2.7 The case shall remain pending, to be called again on March 1, 1990.
[622H]
|
Civil Appeals Nos.
848 850 of 1977.
From the Judgment and Order dated 16 7 1976 of the Kerala High Court in W.A. Nos. 910, 194 and 253/75.
AND CIVIL APPEAL Nos.
666 669 of 1978.
From the Judgment and decree dated 8 6 1977 of the Kerala High Court in W.A. Nos.
364 365, 472 and 473 of 1975.
P. Govindan Nair and K. R. Nambiar for the Appellants in CAs.
848/77 and 666 667/78 and for Respondents 2 to 4 in CA 849/77 and 2 3 in CA 850/77.
M. M. Abdul Khader and N. Sudhakaran for the Appellant in CAs.
849 850/77 and Respondent 2 in CA 848/77 and RR1 in CA 666/78, 667/78 and RR 2 in CA 668 669/78.
T. section Krishnamoorthy Iyer, T.P. Sundara Rajan and P. K. Pillai for Respondent No. 1 in 848/77.
T. L. Vishwanath Iyer, and section Balakrishnan for the Respondent No. 1 in CAs.
668 669/78 and RR 2 in CAs.
666 667/78.
The Judgment of the Court was delivered by 292 KRISHNA IYER, J.
Law and development, as yet a Cinderella of our corpus juris, is a burgeoning branch of creative jurisprudence which needs to be nourished with judicious care, by courts in developing countries.
The Town Planning Act, a developmental legislation amended and updated by the Kerala Legislature, was designed to draw up plans and to execute projects for the improvement of the towns and cities of that over crowded State with its populous multitudes uncontrollably spiralling, defying social hygiene and economic engineering.
Although the Act is of 1932 and originally confined to the Travancore portion of the Kerala State, it has received amendatory attention and now applies to the whole of Kerala with beneficial impact upon explosive cities like Cochin.
This legislation, naturally, has made some deviation from the Kerala Land Acquisition Act, 1961, but having received insufficient attention from the draftsman on constitutional provisions, has landed the Act in litigation through a challenge in the High Court where it met with its judicial Waterloo when a Division Bench invalidated Section 31(1) and 34(2A) which were the strategic provisions whose exit from the statute would virtually scotch the whole measure.
The State of Kerala has come up in appeal, although the immediate victim is the Cochin Town Planning Trust.
The schematic projection of the Town Planning Act (the Act, for short) may be a good starting point for the discussion of the sub missions made at the Bar.
The Act, with a prophetic touch, envisions explosive urban developments leading to terrific stresses and strains, human, industrial and societal.
Land is at the base of all development, and demand for the limited space available in the cities may so defile and distort planned progress as to give future shock unless scientific social engineering takes hold of the situation.
The State of its specialized agencies must take preemptive action and regulate the process of growth.
The Act fills this need and contemplates the creation of a Town Planning Trust, preparation of town planning schemes, acquisition of lands in this behalf, compensation for betterment by citizens and other miscellaneous provisions, apart from creation of development authorities.
While this is the sweep of the statute, our concern is limited to schemes sanctioned by Section 12, acquisition of lands for such schemes under Section 32, compensation for such compulsory taking under Section 34 and the modifications in the manner of acquisition and the mode of compensation wrought into the Land Acquisition Act by the above provisions of the Town Planning Act.
It is indisputable that the compensation payable and certain other matters connected therewith, differ as between the provisions in this Act and the Land Acquisition Act.
The latter is more beneficial 293 to the owner and the challenge, naturally, has stemmed from this allegedly invidious discrimination.
In two separate cases, two judges upheld the challenge and, on appeal, the High Court affirmed the holdings that the provisions of Sub section 34(1) and 34(2A) were unconstitutional, being violative of Article 14.
Hence these appeals.
We will now proceed to scan the substance of the submissions and the reasoning in the High Court 's judgment.
Counsel for the State, Shri P. Govindan Nair, supported by counsel for the Trust, Shri Abdul Khader, have canvassed the correctness of the reasons which have appealed to the High Court, and some decisions of this Court have been brought to our notice in this connection.
The owners of the lands acquired have been represented before us by Sri T. C. Raghavan who has, in his short submission, supported the judgment under appeal.
One of the appeals has become infructious, because the State, after the High Court invalidated Section 34 of the Act, proceeded under the Land Acquisition Act, acquired the land, paid compensation and took possession thereof, thus completely satisfying the land owner.
Shri T. section Krishnamurthi Iyer, appearing for the owner, pointed out this circumstance and so we dismissed that appeal but mention it here because Shri T. C. Raghavan has relied on this fact in support of one of his arguments, as we will presently disclose.
Before entering into the merits, we may recall the submissions of Shri T. L. Viswanathan, a young lawyer from Kerala, who made us feel that orality, marked by pointed brevity and suasive precision, is more telling than advocacy with counter productive prolixity.
Although the responsible scrutiny that a bench decision of the High Court deserves has been bestowed, we are unable to support the judgment under appeal or the arguments of counsel in support.
The controversy regarding the vires of Sec.
34 revolved round a few points.
Before us, article 14 has loomed large and a submission has been made that by use of the provisions for making schemes under Sec. 8 or Sec.
10 the authority may indefinitely immobilize the owner 's ability to deal with his land since Sec.
15 clamps restrictions, and this is unreasonable.
We agree that it is a hardship for the owner of the land if his ability to deal with his property is either restricted or prevented by a notification, and nothing happens, thereafter, leaving him guessing as to what the State may eventually do.
Indeed, if such a state of suspense continues for unlimited periods, it may be unreasonable restriction on the right to property, although currently the right to pro 294 perty itself has been taken away from Part III.
That apart, we must see whether there is any justifiable classification between common cases of compulsory acquisition under the Land Acquisition Act and the special class of acquisitions covered by the Town Planning Act which may furnish a differentia sufficient to repel the attack of Article 14.
Section 15 of the Act forbids dealings by the owner in many ways, once the publication of a notification is made.
The grievance particularised by Shri Raghavan is that after a draft scheme has been prepared by the municipal council and published, it becomes operational only on the sanction by Government but there is no time limit fixed in Sec.
12 within which Government shall sanction.
Supposing it takes several years for Government to express its approval or disapproval, the owner may suffer.
We regard this grievance as mythical, not real, for more than one reason.
The scheme is for improvement of a town and, therefore, has a sense of urgency implicit in it.
Government is aware of this import and it is fanciful apprehension to imagine that lazy insouciance will make Government slumber over the draft scheme for long years.
Expeditious despatch is writ large on the process and that is an in built guideline in the statute.
At the same time, taking a pragmatic view, no precise time scale can be fixed in the Act because of the myriad factors which are to be considered by Government before granting sanction to a scheme in its original form or after modification.
Section 12 and the other provisions give us some idea of the difficulty of a rigid time frame being written into the statute especially when schemes may be small or big, simple or complex, demanding enquiries or provoking discontent.
The many exercises, the differences of scale, the diverse consequences, the overall implications of developmental schemes and projects and the plurality of considerations, expert techniques and frequent consultations, hearings and other factors, precedent to according sanction are such that the many sided dimension of the sanctioning process makes fixation of rigid time limits by the statute an impractical prescription.
As pointed out earlier, city improvement schemes have facets which mark them out from other land acquisition proposals.
To miss the massive import and specialised nature of improvement schemes is to expose one 's innocence of the dynamics of urban development.
Shri Raghavan fairly pointed out that, in other stages, the Act provides for limitation in time (for example, sec. 33 which fixes a period of three years between the date of notification and the actual acquisition).
Only in one minimal area where time limit may not be workable, it has not been specified.
The statute has left it to Government to deal expeditiously with the scheme and we see sufficient guideline in the Act not to make the gap between the 295 draft scheme and governmental sanction too procrastinatory to be arbitrary.
We need hardly say, that the court is not powerless to quash and grant relief where, arbitrary protraction or mala fide inaction of authorities injures an owner.
An aside: We are surprised at the obsolescent and obscurantist vocabulary surviving in the Town Planning Act because there are many B feudal and incongruous expressions such as 'our Governments and references to a Land Acquisition Act which has already been repealed by the Kerala Land Acquisition Act, 1961.
Modernisation is a process necessary even for the statute book and yet it has not been done, despite opportunity for the legislature, while amending later, to carry out such simple, verbal and yet necessary changes.
Be it remembered that the Town Planning Act did undergo an extensive amendment as late as 1976 when, surely, some of the verbal replacements could easily have been made.
Medievalism lingering in legislations is hardly a tribute to the awareness of our legislators.
Section 12 of the Act provides for publishing the draft schemes so that objections or suggestions may be put forward by affected persons.
The scheme is then passed by the Municipal Council, of course, after considering objections and suggestions.
Thereupon, it is submitted to the Government for sanction and the fact of such submission is also published so that the public may still raise objections or make suggestions to Govt.
which will consider them, make further inquiries, if necessary, and ultimately sanction the scheme with or without modifications or may even refuse sanction or return the scheme to the Council for fresh consideration.
Once the scheme is sanctioned by the Government, it is again published.
Section 12(6) imparts finality to the scheme and this virtually corresponds to the declaration under sec.
6 of the Land Acquisition Act.
Chapter III of the Act is comprehensive and complex because the subject of scheme making demands expert attention and affects community interest.
A Director of Town Planning is appointed who shall be consulted by Municipal Councils in matters of town planning.
Developmental schemes are not sudden creations.
On the other hand, the Municipal Council first decides to prepare a scheme, adopts a draft scheme, if any, made by the owners of the lands, prepares the necessary plan of the lands which is proposed to be included in the scheme and notify its resolution for public information.
A copy of the plan is kept for the inspection of the public.
Since all improvement schemes are matters of public concern, on the passing of a resolution and its notification under sec. 8, a time bound obligation is cast on the Municipal Council by section 9, which reads thus : 296 "section 9: Publication of draft scheme: (1) If the resolution is to make a scheme, municipal council shall, within twelve months from the date of the notification under s.8 or within such further period not exceeding twelve months, as our Government may allow, and after consulting, in the prescribed manner, the owners of lands and buildings in the area affected, prepare and publish a draft scheme.
" It is apparent that improvement schemes cannot hang on indefinitely and an outside limit of 2 years is given for the preparation and publication of draft schemes from the initial resolution to make or adopt the scheme is passed by the Municipal Council.
Government itself may step in and direct the Municipal Council to prepare schemes and sec.
10 empowers it in this behalf.
11 contains detailed provisions regarding the material to be included in the draft scheme.
These are preparatory exercises, and then comes the sanction of the scheme by the Government under Sec. 12.
We indicate the elaborate character of the strategy, stages, contents and character of schemes for improvement and the opportunities for objections and suggestions to the public and the consultation with technical experts and Government, time and again, only to emphasise the complex nature of modern urban development schemes which makes it a different category altogether from the common run of 'public purposes ' for which compulsory acquisition is undertaken by the State.
Conceptwise and strategywise, development schemes stand on a separate footing and classification of town planning schemes differently from the routine projects demanding compulsory acquisition may certainly be justified as based on a rational differentia which has a reasonable relation to the end in view viz., improvement of towns and disciplining their development.
Once this basic factor is recognised, the raison detre of a separate legislation for and separate treatment of town planning as a special subject becomes clear.
It was pointed out that under the Kerala Land Acquisition Act, there is a time limit of 2 years written into Section 6 by engrafting a proviso thereto through an amendment of 1968 Act (Act 29 of 1968).
Section 6 deals with a declaration that land is required for a public purpose and the relevant proviso thereto reads: "S.6(i) Proviso : Provided that no declaration in respect of any particular land covered by a notification under sub section (1) of shall be made after the expiry of two years from the date of publication of such notification." An argument was put forward that under the Land Acquisition Act there is thus a protection against unlimited uncertainty for the owners once lands are frozen in the matter of dealing with them by an initial notification.
This protection against protraction and inaction on the part of the State and immobilisation of ownership is absent in the Town Planning Act.
According to Mr. T. C. Raghavan, appearing for some respondents, this makes for arbitrariness and discrimination invalidatory of the relevant provisions of the Town Planning Act.
In our view there is no substance in this submission, having regard to the specialised nature of improvement schemes and the democratic a participation in the process required in such cases.
We repel the submission.
Much argument was addressed on the 'either or ' arbitrariness implicit in section 33 of the Act.
The precise contention is that it is open to the Trust to acquire either under the Kerala Land Acquisition Act or under Chapter VII of the Town Planning Act.
In the latter event, no solatium is payable while under the former statute it is a statutory obligation of the acquiring Govt.
Thus, if an Authority has an option to proceed under one statute or the other and the consequences upon the owner are more onerous or less, such a facultative provision bears the lethal vice of arbitrariness in its bosom and is violative of article 14 and is therefore, void.
Section 32 of the Act is the foundation for this argument and reads thus: 32.
Modification of Land Acquisition Act: Immovable property required for the purpose of town planning scheme shall be deemed to be land needed for a purpose within the meaning of the Land Acquisition Act, XI of 1089, and may be acquired under the said (Act) modified in the manner provided in this chapter.
What is spun out of the words used is that for the purposes of town planning schemes an immovable property "may be acquired under the said Act (The Land Acquisition Act) modified in the manner provided in this Chapter".
Of course, Chapter VII, particularly sub sec.
(1) of section 34 thereof, relates to compensation and does not provide for payment of solatium.
Moreover, it is mentioned that the provisions of sections 14, 22 and 23 (both sides agree, this should be read as Sec. 25) of the Land Acquisition Act shall have no application in the acquisition of property for the purpose of the Town Planning Act.
298 We do not accept the argument that there is a legal option for the authority to acquire either under the Land Acquisition Act or under the Town Planning Act when land is needed for a scheme.
Theoretically, yes, but practically, No. Which sensible statutory functionary, responsible to the Treasury and to the community, will resort to the more expensive process under the Land Acquisition Act as against the specially designed and less costly provision under section 34? Fanciful possibilities, freak exercise and speculative aberrations are not realistic enough for constitutional invalidation on the score of actual alter.
natives or alive options, one more onerous than the other.
In Magan lal 's case, the Court pointed out : "The statute itself is the two classes of cases before us clearly lays down the purpose behind them, that is premises belonging to the Corporation and the Government should be subject to speedy procedure in the matter of evicting unauthorised persons occupying them.
This is a sufficient guidance for the authorities on whom the power has been conferred.
With such an indication clearly given in the statutes one expects the officers concerned to abail themselves of the procedures prescribed by the Acts and not resort to the dilatory procedure of the ordinary Civil Court.
Even normally one cannot imagine an officer having the choice of two procedures, one which enables him to get possession of the property quickly and the other which would be a prolonged one, to resort to the latter.
Administrative officers, no less than the courts, do not function in a vacuum.
It would be extremely unreal to hold that an administrative officer would in taking proceedings for eviction of unauthorised occupants of Govt.
property or Municipal property resort to the procedure prescribed by the two Acts in one case and to the ordinary Civil Court in the other.
The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion.
In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal.
It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account.
This is not one of those cases where discrimination is writ large on the face of the statute.
Discrimi 299 nation may be possible but is very improbable.
And if there is discrimination in actual practice this Court is not powerless.
Furthermore, the fact that the Legis lature considered that the ordinary procedure is insufficient or ineffective in evicting unauthorized occupants or Govt.
and Corporation property and provided a special speedy procedure therefor is a clear guidance for the authorities charged with the duty of evicting unauthorised occupants.
We therefore, find ourselves unable to agree with the majority in the Northern India Caterers ' case.
" The same reasoning applies to the present situation.
The Town Planning Act is a special statute where lands have to be acquired on a large scale and as early and quickly as possible so that schemes may be implemented with promptitude.
What is more, there is a specific and purposeful provision excluding some sections of the Kerala Land Acquisition Act.
In such circumstances, it is incredible that the authority acting under the Act will sabotage Chapter VII, in particular section 34, by resorting to the Kerala Land Acquisition Act in derogation of the express provision facilitating acquisition of lands on less onerous terms.
He functions under the Town Planning Act, needs Lands for the schemes under that Act, has provisions for acquisition under that Act.
Then would be, by reckless action, travel beyond that Act and with a view to oblige the private owner betray the public interest and resort to the power under the Land Acquisition Act, disregarding the non obstante provision in Sec.
of the Act? Presumption of perversity cannot be the foundation of unconstitutionality.
Moreover, the expression, used in the context of section 32, clearly (does not bear the meaning attributed to it by the counsel for the respondents.
All that it means is that when immovable property is found necessary for the purpose of a 'scheme ' it may be acquired by the compulsory process written into section 32.
It is, as if there were only one option, not two.
If the scheme is to be implemented, the mode of acquisition shall be under section 32 and the manner of such acquisition is the same under the Land Acquisition Act minus sections 14, 22 and 25 thereof.
A slight reflection makes it clear that the mode prescribed is only one, and so the theory of alternatives one of which being mere onerous than the other, and the consequent inference of arbitrariness, cannot arise.
We overrule that argument.
We must notice, before we part with this point, the argument of Sri Raghavan for the respondents that the existence of alternatives is not theoretical nor chimerical but real, and proof of the pudding is in the eating.
He pointed to one of the appeals in this batch where the proceedings under sec.
34 of the Act were given up, the provision 300 of the Land Acquisition Act used, and full compensation and solatium paid to the owner.
This instance gave flesh and blood to the submission about discrimination.
Shri Khader, for the trust countered this argument by stating that because the High Court struck clown the Act and the land was needed.
the only statute then available to the State was the Land Acquisition Act.
So, the authority was reluctantly constrained to notify and acquire under the Land Acquisition Act.
Had Sec.
34 of the Act been available, this step would not have been taken and absent Sec.
34 the argument of alternatives has no basis.
We agree with this reasoning and repel the submission of arbitrary power to pick and choose.
At worst, a swallow does not make a summer but we must warn that prodigal state action to favour some owner when sec.
34 has been resuscitated will be betrayal of public interest and invalidated as mala fide even at the instance of a concerned citizen.
The legislature cannot be stultified by the suspicious improvidence, or worse, of the Executive.
The more serious submission pressed tersely but clearly, backed by a catena of cases, by Shri Viswanathan merits our consideration.
The argument is shortly this.
As between two owners of property.
the presence of public purpose empowers the State to take the lands of either or both.
But the differential nature of the public purpose does not furnish a rational ground to pay more compensation for one owner and less for another and that impertinence vitiates the present measure.
The purpose may be slum clearance, flood control or housing for workers, but how does the diversity of purposes warrant payment of differential scales or quantum of compensation where no constitutional immunity as in article 31A, or applies? Public purpose sanctions compulsory acquisition, not discriminatory compensation, whether you take A 's land for improvement scheme or irrigation scheme, how can you pay more or less, guided by an irrelevance viz. the particular public purpose? The State must act equally when it takes property unless there is an intelligent and intelligible differentia between two categories of owners having a nexus with the object, namely the scale of compensation.
It is intellectual confusion of constitutional principle to regard classification good for one purpose, as obliteration of differences for unrelated aspects.
This logic is neatly applied in a series af cases of this Court.
It is trite that the test to rebuff article 14 turns of the differentia vis a vis the object of the classification.
In Vajarveu Mudaiar 's case, the Court took the view, (on this aspect the decision is not shown to have been overruled) that where there is no rational relation in the 301 matter of quantum of compensation between one public purpose and another you cannot differentiate between owners.
Whether you acquire for a hospital or university, for slum clearance or housing scheme, compensation cannot vary in the rate or scale or otherwise.
"Out of adjacent lands of the same quality and value, one may be acquired for a housing scheme under the Amending Act and the other for a hospital under the Principal Act, out of two adjacent plots belonging to the same individual and of the same quality ' and value, one may be acquired under the Principal and the other under the Amending Act.
From whatever aspect the matter is looked at, the alleged differences have no reasonable relation to the object sought to be achieved.
In Durganath Sharma 's case, a special legislation for acquisition of land for flood control came up for constitutional examination.
We confine ourselves to the differentiation in the rate of compensation based on the accident of the nature of the purpose where the Court struck a similar note.
In the Nagpur Improvement Trust case and in the Om Prakash case, this Court voided the legislation which provided differential compensation based upon the purpose.
In the latter case the Court observed : "There can be no dispute that the Govt. can acquire land for a public purpose including that of the Mahapalika or other local body, either under the unmodified Land Acquisition Act, 1894, or under that Act as modified by the Adhiniyam.
If it chooses the first course, then the land owners concerned will be entitled to better compensation including 15% solatium, the potential value of the land etc.
nor will there be any impediment or hurdle such as that enacted by section 372(a) of the Adhiniyam in the way of such land owners, dissatisfied by the Collector 's award, to approach the Court under section 18 of that Act.
It is not necessary to dilate further on this point at this matter stands concluded by this Court 's decision in Nagpur Improvement Trust 's case by the ratio of which we bound.
It will be sufficient to close the discussion by extracting here what Sikri C.J., speaking for the Court in Nagpur Improvement Trust 's case said: "Can the Legislature say that for a hospital land will be acquired at 50% of the market value, for a school at 60 % of the value and for a Govt.
building at 70 % of the 302 market value? All three objects are public purposes and as far as the owner is concerned it does not matter to him whether it is one public purpose or the other.
article 14 confers an individual right and in order to justify a classification there should be something which justifies a different treatment to this individual right.
It seems to us that ordinarily a classification based on the public purpose is not permissible under article 14 for the purpose of determining compensation.
The position is different when the owner of the land himself is the recipient of benefits from an improvement scheme, and the benefit to him is taken into consideration in fixing compensation.
Can classifications be made on the basis of authority acquiring the land? In other words can different principles of compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government? It seems to us that the answer is in the negative because as far as the owner is concerned it does not matter to him whether the land is acquired by one authority or the other.
It is equally immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired.
If the existence of two Acts could enable the State to give one owner different treatment from another equally situated the owner who is discriminated against, can claim the protection of Article 14.
" The principle that may be distilled from these rulings and the basics of 'equality ' jurisprudence is that classification is not permissible for compensation purposes so long as the differentia relied on has no rational relation to the object in view viz. reduction in recompense.
Is it rational to pay different scales of compensation, as pointed out by Sikri, C.J. in the Nagpur Improvement Trust case, depending on whether you acquire for housing or hospital, irrigation scheme or town improvement, school building or police station? The amount of compensation payable has no bearing on this distinction, although it is conceivable that classification for purposes of compensation may exist and in such cases the statute may be good.
We are unable to discern any valid discremen in the Town Planning Act vis a vis the Land Acquisition Act warranting a classification in the matter of denial of solatium.
We uphold the Act in other respects but not when it deals invidiously between two owners based on an irrelevant criterion viz. the acquisition being for an improvement scheme.
We are not to be 303 understood to mean that the rate of compensation may not vary or must be uniform in all cases.
We need not investigate this question further as it does not arise here although we are clear in our mind that under given circumstances differentiation even in the scale of compensation may comfortably comport with article 14.
No such circumstances are present here nor pressed.
Indeed, the State, realising the force of this facet of discrimination offered, expilatory fashion, both before the High Court and before us, to pay 15% solatium to obliterate the hostile distinction.
The core question now arises.
What is the effect even if we read a discriminatory design in Sec.
34? Is plastic surgery permissible or demolition of the section inevitable? Assuming that there is an untenable discrimination in the matter of compensation does the whole of section 34 have to be liquidated or severable portions voided? In our opinion, scuttling the section, the course the High Court has chosen, should be the last step.
The Court uses its writ power with a constructive design, an affirmative slant and a sustaining bent.
Even when by compulsions of inseverability, a destructive stroke becomes necessary the court minimises the injury by an intelligent containment.
Law keeps alive and "operation pull down" is de mode.
Viewed from this perspective, so far as we are able to see, the only discriminatory factor as between section 34 of the Act and section 25 of the Land Acquisition Act vis a vis quantification of compensation is the non payment of solatium in the former case because of the provision in section 34(1) that section 25 of the Land Acquisition Act shall have no application.
Thus, to achieve the virtue of equality and to eliminate the vice of inequality what is needed is the obliteration of section 25 of the Land Acquisition Act from section 34(1) of the Town Planning Act.
The whole of section 34(1) does not have to be struck down.
Once we excise the discriminatory and, therefore, void part in Sec.
34(1) of the Act, equality is restored.
The owner will then be entitled to the same compensation, including solatium, that he may be eligible for under the Land Acquisition Act.
What is rendered void by article 13 is only to the extent of the contravention of article 14.
The lancet of the Court may remove the offending words and restore to constitutional health the rest of the provision.
We hold that the exclusion of Sec.
25 of the Land Acquisition Act from sec.
34 of the Act is unconstitutional but it is severable and we sever it.
The necessary consequence is that section 34(1) will be read omitting the words 'and section 25 ' .
What follows then? Section 32 obligates the state to act under the Land Acquisition Act but we have struck down that part which excludes sec.
25 of the Land Acquisition Act 304 and so, the 'modification ' no longer covers section 25.
It continues to apply to the acquisition of property under the Town Planning Act.
Section 34(2) provides for compensation exactly like section 25(1) of the Land Acquisition Act and, in the light of what we have just decided, section 25(2) will also apply and "in addition to the market value of the land as above provided, the court shall in every case award a sum of fifteen per cen tum on such market value in consideration of the compulsory nature of the acquisition.
" The upshot of this litigation thus is that the appeal must be allowed except to the extent that solatium shall be payable as under the Land Acquisition Act.
Since the State has always been willing to pay that component and has repeated that offer even before us right from the beginning, we direct the parties to bear their respective costs.
P.B.R. Appeal allowed.
| The Cochin Town Planning Act in particular contemplates the creation of a town planning trust, the preparation of town planning schemes (section 12) acquisition of lands in this behalf (section 32) compensation for such compulsory taking (section 34) and modifications in the manner of acquisition and the mode of compensation in the Kerala Land Acquisition Act.
The petitioners ' writ petitions challenging the validity of the Town Planning Act were allowed by the High Court on the ground that the provisions of Section 34(1) and 34(2A) were unconstitutional being violative of article 14 of the Constitution.
In appeal to this Court it was contended that by the use of the provisions for making schemes under section 8 or section 10, the authority may indefinitely immobilize the owner 's ability to deal with his land since section 15 clamps restrictions and this is unreasonable. ^ HELD: 1.
City improvement schemes have facets which mark them out from other land acquisition proposals.
To miss the massive import of the 15 specialised nature of important schemes is to expose one 's innocence of the dynamics of urban development.
The statute has left it to the government to deal expeditiously with the scheme and there are sufficient guidelines in the Act not to make the gap between the draft scheme and governmental sanction too procrastinatory to be arbitrary.
[294 G H] 2.
Section 12(6) imparts finality to The scheme and this corresponds to the declaration under section 6 of the Land Acquisition Act.
A conspectus of the relevant provisions of the Act makes it clear that improvement scheme cannot hang on indefinitely and an outside limit of two years is given for the preparation and publication of draft schemes from the time the initial resolution to make or adopt the scheme is passed by the Municipal Council.
Conceptwise and strategy wise development schemes stand on a separate footing and classification of town planning schemes differently from the routine projects demanding compulsory acquisition may certainly be justified as based on rational differentia which has a reasonable relation to the end in view namely improvement of towns and disciplining their development.
[295 F G] 3.
There is no substance in the argument that if the land is acquired under the Town Planning Act no solatium is payable while if the land is acquired under the Land Acquisition Act it is a statutory obligation of the acquiring government to pay solatium.
The Town Planning Act is a special statute where lands have to be acquired on large scale and as early and as quickly as possible so that schemes may be implemented with promptitude.
There is in addition a specific and purposeful provision excluding some sections of the 291 Kerala Land Acquisition Act.
In such circumstances it is incredible that the authority acting under the Act will sabotage chapter VII, in particular section 34, by resorting to the Kerala Land Acquisition Act in derogation of the express provision facilitating acquisition of lands on less onerous terms.
[299C D] Maganlal vs Municipal Corporation, [1975] 1 S.C.R. p. 23, referred to.
The amount of compensation payable has no bearing on the distinction whether the lands are acquired for housing or hospital, irrigation schemes or town improvement, school building or police station.
5(a) The exclusion of section 25 of the Land Acquisition Act from section 34 of the Act is unconstitutional.
But it is severable.
[302G] (b) The only discriminatory factor as between section 34 of the Act and section 25 of the Land Acquisition Act vis a vis quantification of compensation is the non payment of solatium in the former case because of the provisions of section 34(1) and that section 25 of the Land Acquisition Act shall have no application.
To achieve the virtue of equality and eliminate the vice of inequality what is needed is the obliteration of section 25 of the Land Acquisition Act from section 34(1) of the Town Planning Act.
The whole of section 34(1) does not have to be struck down.
Once the discriminatory and void part in section 34(1) of the Act is excised equality is restored.
The owner will then be entitled to the same compensation including solatium that he may be eligible under the Land Acquisition Act.
[303E F]
|
ivil Appeal No. 1743 of 1975.
(Appeal by special leave from the judgment and order dated 5.9.1975 of the Rajasthan High Court in S.B. Civil 2nd Appeal 302 of 1974) M. Jain,., for the appellant.
S.C. Agarwala and V.J. Francis, for Respondents 1 & 2.
The Judgment of Y.V. Chandrachud and P.K. Goswami, JJ. was delivered by Goswami, J.S. Murtaza Fazal Ali, J. gave a separate Opinion.
GOSWAMI, J.
The facts of the case relating to this appeal by special leave have been fully described in the judgment of our learned brother, Fazal Ali, J.
We agree with the conclusion reached by him that this appeal should be dismissed.
We also agree with our learned brother that the appeal should be dismissed on the merits.
However, so far as the question of law that arises in this appeal, we would like to confine our decision to the reasons given hereinafter.
The question of law ,that arises in this appeal is as to whether an application for special leave or an appeal by special leave to thin, Court is an "appeal" within the meaning of section 13A of the Rajasthan Premises (Control of Rent and Eviction) Act 1950, as amended by the Rajasthans Ordinance No. 26 of 1975 (briefly the Act).
We should, therefore, read section 13A: "13A. Special provisions relating to pend ing and other matters: Notwithstanding anything to the contrary in this Act as it existed before the commencement of the Ordinance or in any other law, (a) no court shall, in any proceeding pending on the date of commencement of the amending Ordinance pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, the tenant applies under clause (b) and pays to 327 the landlord,.
or deposits in court, within such time such aggregate of the amount of rent in arrears, interest thereon and full costs of the suit as may be directed by the court under and in accordance with that clause; (b) in every such proceeding, the court shall, on the application of the tenant made within thirty days from the date of commence ment of the amending Ordinance, notwithstand ing any order to the contrary, determine the amount of rent in arrears upto the date of the order as also the amount of interest thereon at six per cent per annum and costs of the suit allowable to the landlord; and direct the tenant to pay the amount so determined within such time, not exceeding ninety days, as may be fixed by the court, and on such payment being made within the time fixed as aforesaid, the proceeding shall be disposed of as if the tenant had not committed any default; (c) the provisions of clause (a) and (b) shall mutatis mutandis apply to all appeals, or applications for revision, preferred or made after the commencement of the amending Ordinance, against decree$ for eviction passed before such commencement with the variation that in clause (b), for the expression "from the date of commencement of the amending Ordinance" the expression "from the date of the presentation of the memorandum of appeal or application for revision" shall be substi tuted; (d) no court shall in any proceeding pending on the date of commencement of the amending Ordinance, pass any decree in favour of a landlord for eviction solely on the ground that due to the death of the tenant as defined in clause (vii) of section 3 as it stood before the commencement of the amending Ordi nance, his surviving spouse, son, daughter and other heir as are referred to in sub clause (b) 04 clause (vii) of section 3 were not entitled to the protection against eviction under this Act as it stood before the com mencement of the amending Ordinance; (e) no decree for eviction passed by any court before the commencement of the amending Ordinance shall, unless the same already stands executed before such commencement, be executed against the surviving spouse, son, daughter and other heir as are referred to in sub clause (b) of the clause (vii) of section 3 if such decree was passed solely on the ground as is referred to in clause (d) and such decree shall be deemed to be a nullity as against them; and 5 1546SCI/77 328 (f) the provisions of clause (d) shall mutatis mutandis apply to all appeals, or appli cations for revision preferred or made, after the commencement of the amending Ordinance,and Explanation: For the purposes of this section : (a) amending Ordinance means the Rajas than Premises (Control of Rent and Eviction) (Amendment) Ordinance, 1975; and (b) 'proceeding ' means suit, appeal or application revision.
" Even in the original Act passed in 1950 section 13(1)(a) was there with two provisos and there was restriction against eviction.
Under section 13(4) of the original Act a right was conferred upon the tenant in a suit founded on the ground of non payment of rent to pay the arrears with inter est and costs as determined by the court on the first day of hearing within the outside limit Of fifteen days from the date of the order.
If ,the tenant complied with the order, the suit for eviction stood dismissed, By the Amending Rajasthan Act 12 of 1965 section 13A was introduced.
Sub section (4) of section.13 of the original Act was substituted by still preserving the tenant 's right to pay the arrears with interest and costs within the out side limit of two months and on payment of the same no decree for eviction on the ground of nonpayment of rent shall be passed.
The Rajasthan Ordinance No. 26 of 1975 inter alia has amended the opening non obstante clause of section 13A and except for substituting the word 'Act ' by 'Ordinance ' in clauses (a), (b) and (c) nothing else has been altered.
Section 13A is selective enough.
Only one type of eviction decree which is solely based on the ground of non payment of rent is taken care of extending still further the period for payment ,of arrears with interest and costs.
Under section 13A, as amended, the benefit is available in pending suits of that category, appeals therefrom and appli cations for revision pending on the date of commencement of the Ordinance, that is, on 29th September, 1975.
The decree of eviction with which we are concerned in this appeal is founded on the ground of non payment of rent as specified in section 13(1) (a).
There is a two fold submission bY the learned Counsel for the appellant.
First, in view of the fact that the appellant lodged on 23rd September, 1975, an application under Article 136 of the Constitution praying for special leave to appeal against the judgment of the High Court and the Ordinance was passed on 29th September, 1975, after that application, his case is governed by section 13A(a) and (b) of the Act.
In the alternative, the appellant submits that at any rate after the special leave had been granted by this Court there was an appeal reading against the judgment of the High Court 329 and since he submitted an application within 30 days from the grant of Special leave his case is covered by section 13A(c) of the ACt.
" With regard to the first submission it may be pointed out that an application for special leave under Article 136 of the Constitution against a judgment or an order cannot be equated with the ordinary remedy of appeal, as of right, under any provisions of law.
It is an extraordinary right conferred under the Constitution, within the discretion of ,this Court, and such an application for Special leave does not come within the contemplation of appeal pending before the court under Section 13A(a).
It is true that the word "proceeding" winch appears in section 13A(a) and (b) means suit, appeal or application for revision according to the Explanation appended to section 13A.
Therefore, in order to attract section 13A(a), a suit, appeal or application for revision ,must be pending on the date of commencement of the Ordinance No. 26 of 1975.
In view of the connotation of the wordl "proceeding" as given under the Explanation to section 13A it is impermissi ble to extend the meaning of the word "proceeding" to in clude an application for Special leave under Article 136 of the Constitution.
The collocation of the Words, "suit, appeal or application for revision" in the Explanation to denote "proceeding" would go to show that suits, regular appeals therefrom, as provided under the ordinary law and applications for revision alone are intended.
It is incon ceivable that if the legislature had intended to include within the ambit of "proceeding" an application for special leave under Article 136 of the Constitution it would have omitted to mention it in express terms.
We will now deal with the second submission of the appellant.
which is the alternative argument.
It is submitted by the appellant that even if an appli cation for special leave is not an appeal for the purpose of section 13A(a) in view of the fact that leave of this Court had been obtained and an appeal had been pending in pursu ance of the grant of special leave he iS entitled to invoke the protection under section 13A(c).
It is on that basis that the appellant submitted a second application relying on section 13A(c).
Under Order XVI, rule 11 of the Supreme Court Rules, on the grant of special leave the petition for special leave shall, subject to the payment of additional court fee, if any, be treated as the petition of.
appeal and it shall be registered and numbered as such.
Under section 13A(c) read with section 13A(b), in a pending appeal, the tenant has to make an application within 30 days from the date of the presentation of the memorandum of appeal".
There is no provision in an appeal by special leave for presentation of a memorandum of appeal, but, as stated earlier, under rule 11 on the grant of special leave the petition for special leave is treated as the petition of appeal and registered and numbered as such.
We may in this connection contrast the provisions of the Civil Procedure Code where the proce dure is laid down for appeals.
Order 41, Civil Procedure 330 Code, deals with appeals from original decrees.
Under sub rule (1) of rule 1 of Order 41, every appeal shah be pre ferred in the form of a memorandum signed by the appellant or his pleader and presented to the court or to such officer as it appoints in this behalf.
Under Order 42, the rules of Order 41 shah apply, so far as may be, to appeals from appellate decrees.
Similarly the same procedure, as under Order 41, is provided for under Order 43, rule 2, with regard to appeals from orders.
It is, therefore, clear that under the Civil Procedure Code an appeal has to be preferred in the form of a memorandum and presented to the court or to such officer appointed by the court in that behalf.
The question of limitation provided under section 13A(b) and (c) is important and the terminus a quo for the purpose of section 13A (c) is from the date of presentation of the memorandum of appeal.
Since no petition of appeal has to be presented in this court after special leave is granted, such a contingency of appeal to this Court by way of special leave is not intended to be covered by section 13A(c).
On the other hand the expression "the presentation of the memorandum of appeal" in section 13A(c) chimes with the construction that the legislature clearly intended to in clude only the hierarchy of appeals under the Civil Proce dure Code wherein presentation of the memorandum of appeal is an obvious requisite.
We may next deal with the question whether section 22 of the Act is of assistance in deciding this controversy since our learned brother 's conclusion has received sustenance also from the said section.
We do not think so.
Before we proceed further we may turn to some of the material provisions in the Act.
Section 6 provides for fixation of standard rent and under sub section (1 ) thereof the landlord or the tenant may institute a suit in the lowest court of competent jurisdiction for fixation of standard rent for any premises.
Sub section (1) of section 7 provides for fixation of provisional rent by the same court upon the institution of a suit under section 6.
Under sub section (4) of section 7 any failure to pay the provisional rent for any month by the fifteenth day of the next following month shah render the tenant liable to eviction under clause (a) of sub section (1) of section 13, and all sums due from the tenant as such rent shall be recoverable from him as if the order under sub,section (1) were a decree of the court in a suit for periodical payments.
Section 11 provides for procedure for increasing rent and the landlord may bring a suit under subsection (3) of section 11 for increasing rent or standard rent in the lowest court of competent jurisdiction.
Under sub section 11(4) the court shall, after such summary en quiry, as it may think necessary, make orders according to law, and a decree shall follow.
Section 19A provides for payment, remittance and deposit of rent by tenants and the court for the purpose of that section as well as for sec tions 19B and 19C with respect to any local area means any civil court which may be specially authorised by the State Govern 331 ment by notification in this behalf, or where no civil court is so authorised; the court of the Munsif, and the court of the Civil Judge, where there is no court of Munsif having jurisdiction over the area.
Section 12 provides for dealing with disallowance of amenities by the landlord by the Magistrate.
The Magistrate means the sub Divisional Magistrate having jurisdiction.
over the place where the premises in question are situated and includes such other Executive Magistrate having juris diction over and sitting at that place, as the State Govern ment may empower in this behalf section 3(i)].
Under sub section (6) of section 12 the order of the Magistrate under subsection (3) shall be executed by the Munsif having juris diction, or where there is no Munsif, by the Civil Judge having jurisdiction over the area in which the premises are situated as if it were a decree passed by such Munsif or Civil.
Judge, as the case may be.
Next,section 17 describes the powers of a Magistrate to require premises to be let and certain orders can be passed under that section by the Magistrate.
Similarly section 19 enables the Magistrate to pass certain orders with regard to the vacant building sites.
From a conspectus of the above provisions it will be seen that there are two types of forums for instituting action under the Act.
One category of actions is taken to the lowest court of competent jurisdiction which is a civil court and the other category is lodged before the Magistrate on the executive side.
The word court, however, is not defined in the Act but for purposes of sections 19A, 19B and 19C.
While the forums are specified for certain types of actions enumerated in the Act no court as such is specified in the Act for entertaining suits of eviction by landlord against a tenant.
It is, therefore, manifest that such suits will lie in the ordinary civil court of competent jurisdiction.
That court will, however, have to take into account the relevant provisions of the Act, for the purposes of determination of controver sies raised before it.
The benefits conferred by the Act upon the tenants will have to be given by the civil court in trying eviction suits.
Where there is a bar of eviction under the Act the court will have to give effect to it.
As is clear from the above narration that there is a dichotomy of forums under the Act, some matters are lodged before the lowest court of competent jurisdiction and some others before the Magistrate.
There is a tertium quid, namely, the usual court which is available to the landlord for instituting suits for eviction against tenants.
The landlord, however, will have to take note of the provisions under the Act and comply with those provisions in such a litigation.
The tenant also, in such suits, will be able to claim all the benefits conferred upon him under the Act which the courts will, in appropriate cases, grant.
In the above background of the provisions in the Act section 22 which provides for appeals and revisions may be read: 332 "22(1) From every decree or order paSsed by a. court under this Act, an appeal shall lie to the court tO which appeals ordinarily lie from original decrees and orders passed by such former court.
(2) No second appeal shall lie from any such decree or order; Provided that nothing herein contained shall affect the powers of the High Court for Rajasthan in revision; (3) Any person aggrieved by an order of the.
Magistrate may, within fifteen days from the date of such order, appeal therefrom to the District Magistrate or such.
authority.
as the State Government may from time to time appoint in that month.
" It is very significant that while SectiOn 22( 1 ) quali ties the decree or order aS being "under this Act", Section 13A, on the contrary, does not describe "proceeding" to be under the Act.
Section 22(1) refers to every decree or order passed by a court under this Act.
The decree or order passed.
under this Act must,therefore, have reference to those passed under Sections 6, 7, 11, 19A and 19C. Sub section (2) pro vides that no second appeal shall lie from any such decree or order.
Such decrees or orders are, therefore, again referable to those passed under the above mentioned sections under the Act, While a second appeal is barred in case of those decrees and orders under the Act the High Court 's power of revision is not barred.
Sub section (3), of section 12 provides for appeals from an order of a Magistrate to the District Magistrate or such authority as may be appointed by the Government.
As noticed earlier Certain orders are passed by.the Magistrate under section 1,(3), Section.
17 and section 19 Section ,22(3) makes provision of appeal against such orders passed under section 12(3), section 17 and section 19.
It is, therefore, clear that the Act provides for the. institution of actions in two different forums and also makes provision for appeals and revisions against orders and decrees passed under the Act.
There is no provision in the Act for institution of suits for eviction which will, there fore, lie in the ordinary =courts of competent jurisdiction.
Appeals, also revisions, where competent, will lie against 'decrees in eviction suits in the usual hierarchy of Courts.
It is manifest from a perusal of the scheme of the Act that appeals or applications for revision under section 13A(c) relate only to decrees in :suits for eviction based on the ground.
of nonpayment of rent.
Such appeals or appli cations for revision under section 13A(c) are not contem plated under section 22 of the Act.
As shown above, decrees or orders passed by the court under the Act against which appeals and revisions are provided in Section 22 do not take in decrees or orders passed in a Suit for eviction.
Usual rights of appeal and revision will be available in the latter class of 333 suits.
To hold otherwise will be to deny a right of second appeal to a litigation, be he a landlord or tenant, against a decree in an eviction suit which is clearly not the inten tion of the legislature.
Second appeal is only barred in ease of decrees or orders passed under the Act to which a copious reference has been made hereinabove with reference to the various provisions of the Act.
With regard to execution proceedings, it. would appear that these are outside the scheme of clauses (a) to (c) of section 13A but it is unnecessary to express any firm opinion on that point since it does not arise in this ap peal.
We are of opinion that the appellant cannot take advan tage of section 13A in this appeal by special leave.
His applications under section 13A stand dismissed.
The appeal is, therefore, dismissed, but there will be no order as to costs.
FAZAL ALl, J.
This appeal by special leave involves a question of law regarding the ambit and.scope of section 13A of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 as amended by Ordinance No. 26 of 1975 dated September 29, 1975 which was later replaced by an Act.
The appeal arises in the following circumstances.
The defendant/appellant along with his two brothers Padam Chand and Tara Chand had taken on lease a shop at a monthly rent of Rs.60/ from the plaintiffs/respondents as far back as September 1, 1961.
The shop was situated in Tripolia Bazar, Jaipur City (Rajasthan).
The plaintiffs served a notice of eviction under section 106 of the Transfer.
of Property Act on the appellant and his two brothers terminating.
the tenancy and directing.
them to vacate the premlses.
As the tenants did not Vacate the premises, the plaintiffS instituted the present suit. in the Court of the Munsiff East, Jaipur City,_ claiming eviction of the appel lant and his two brothers on me ground that they had not paid or tendered rent for a period of, six months from Magh shukla 1, smvt.
In the plaint the plaintiffs also averted that the.
shop was required by them for their own use and occupation and that the tenants had sublet the shop to Rajasthan Bartan Bhandar.
without the consent of the plaintiffs.
We might mention here that these two grounds.
taken by the plaintiffs have been held by all the Courts to be completely disproved, and.the suit was decreed by the District Judge and the High Court mainly, on.
the ground that thetenants had defaulted in payment of rent for a PeriOd of six months and were, therefore, liable to be ejected under the provisions.
0f the Rajasthan premises (Control. of Rent and Eviction) Act, 1950 hereinafter referred to as 'the Act '.
It appears that after summonses were served on all the three defendants including the appellant, two of the brothers of the appellant, Viz., Padam Chand and Tara Chand put in their appearance, but the appel lant despite the service did not put in his appearance.
In fact the counsel who was appearing for the other two defend ants had been instructed to appear for the appellant also, but the Vakalatnama was not signed by the appellant.
The appellant appears to have taken advantage of 334 this lacuna in contending that he had not participated in the proceedings of the Trial Court.
On February 14.
1966 the defendant Tara Chand moved an application under section 13 of the Act praying to the Court that the rent due may be determined and the defendants may be directed to deposit the rent.
The Court accordingly determined the rent on March 1, 1966 and directed the defendants to deposit a sum of Rs.398 75 Paise on or before April 19, 1966.
As the rent was not deposited, the plaintiffs moved an application for striking out the defence of the defendants against eviction for their failure to comply with the provisions of section 13(4) of the Act.
The Court accordingly by its order dated December 14, 1966 struck out the defence of the defendants.
It may be pertinent to note that although the appellant had not put in his formal appearance he under stood the order of the Trial Court dated December 14, 1966 striking out the defence and treated the same as having been passed not only against his brothers Padam Chand and Tara Chand, the two defendants, but also against himself and accordingly he along with his brothers preferred an appeal against that order to the Senior Civil Judge, Jaipur City on October 30, 1967.
This appeal was ultimately dismissed and then the three defendants flied an application for revision before the High Court which was also dismissed by the High Court by its order dated September 19, 1968.
Thus it is manifest that the appellant was fully aware of the proceedings that had taken place as also of the order that had been passed against the defendants striking out their defence.
When the record was received back by the THai Court, Shri Tara Chand Jain Advocate of the defendants informed the Court on November 26, 1968 that he was holding brief only on behalf of the two defendants Padam Chand and Tara Chand and not on behalf of the appellant Gyan Chand.
The Court accordingly passed an order that the suit was to proceed ex parte against the appellant.
On November 30, 1968 the appellant flied an application for setting aside the ex parte order passed against him and this application found favour with the Trial Court and was accordingly allowed.
The appellant was allowed to file his written statement which he filed on January 27, 1969.
Thereafter the appellant applied to the Court for determining the rent due to the plaintiffs but that application was rejected on the ground that no amount of rent was payable as the entire rent due had already been paid by the other two defendants.
Thereafter the plaintiffs flied an application before the Trial Court for striking out the defence against Gyan Chand as he had not complied with the order under section 13(4) of the Act passed by the Court previously.
The Trail Court, however, did not pass any orders on that application and ultimately dismissed the suit holding that there was no default.
It may be.
stated at the outset that when the appellant applied for setting aside the ex parte order he gave no explanation whatsoever for his non appearance in the suit, after the summonses were served on him but merely tried to explain his absence on November 26, 1968.
We have already pointed out that the appellant knew very well that the defence had been struck ,out by an order of the Court and had actually joined in the appeal and the revision flied by the other two defendants.
In spite of that for two years he kept quiet and gave no explanation whatsoever for not appearing before the 335 Court and participating in the proceedings until November 30, 1968.
This delay of two years which has been seriously commented upon by the High Court has not been explained satisfactorily by the appellant.
After the suit was dismissed by the Trial Court, the plaintiffs filed an appeal before the Additional District Judge who allowed the appeal holding that the defendants were defaulters and accordingly decreed the suit.
The grounds of subletting and personal requirement as alleged by the plaintiffs were, however, held not proved.
Thereaf ter there was second appeal to the High Court which affirmed the judgment of the District Judge and maintained the decree passed by the District Judge.
The High Court has rightly pointed out that the conduct of the appellant in not giving any explanation for not participating in the proceed ings despite service of the summonses speaks volumes against him.
The argument of the appellant that the entire proceedings should be cancelled as they had taken place in his absence was rightly rejected by the High Court.
In view of the concurrent findings of fact recorded on this point by the District Judge and the High Court, we are not at all inclined to interfere, in this appeal by special leave, with the merits of the case decided by the Courts below we are satisfied that the appellant was not diligent at all and has to thank his stars if the decision of the Courts below went against him In these circumstances, we do not propose to enter into merits of the appeal.
Mr. Jain, however, raised a pure question of law flowing from the amendment by which section 13A was introduced in the Act by virtue of Ordinance No. 26 of 1975.
Mr. Jain submitted that the statutory benefit conferred by section 13A would have to be extended to the appellant before this Court also and since the rent due had already been paid and the appellant was prepared to pay the costs and interest, the suit should be dismissed.
In order to appreciate this point, it may be necessary to state the sequence of facts.
The High Court dismissed the second appeal of the appellant on September 5, 1975.
Against this judgment, the appellant filed an applica tion for special leave in this Court on September 23, 1975.
Six days later i.e. on September 29, 1975 Ordinance No. 26 of 1975 dated September 29.
1975 introduced section 13A by amend ing the Act.
On October 28, 1975 the appellant filed a Civil Miscellaneous Petition in this Court praying that the Court may issue directions under the newly amended section 13A (c) of the Act.
On November 14, 1975 this Court granted special leave.
On December 11, 1975 another Civil Miscella neous Petition was filed by the appellant renewing his prayer for directions to be given by this Court under section 13A of the Amending Act.
The significance of these Civil Mis cellaneous Petitions appears to have been that if the spe cial leave petition was not treated as an appeal, then the moment the special leave was granted by this Court the appeal stood admitted by this Court and, therefore, the second application was filed for directions under section 13A of the Act as amended.
Mr. Agarwala counsel for the respondents has vehemently contended that section 13A of the Act would have absolutely no application to appeal by special leave filed in this Court.
In order to appreciate 336 this point it may be necessary to examine the language and the circumstances under which section 13A was introduced.
It would appear that before the introduction of section 13A by virtue of the.
Ordinance there was no provision in the Act which prohibited the Court from passing any decree if at any stage the tenant was prepared to deposit the, entire rent, costs and interest as directed by the Court.
The Legisla ture in pursuance of its socialistic policies attempted to liberalise the conditions of tenancies so as to give the tenants special protection against frivolous evictions.
With this object in view, the Ordinance appears to have been passed which was later on replaced by an Act.
In the state ment of objects and reasons accompanying.the amending Act it is mentioned that the Legislature decided to provide relief to tenants occupying premises in urban areas and in clause (6) 0f the said statement, the following observations are made: "In relation to pending suits and pro ceedings for ejectment on ground of defaults, an opportunity had been given to tenants to deposit the arrears of rent within thirty days and upon such deposit no decree for ejectment will be passed on such ground against them." Thus a perusal of clause (6) of the statement of Objects and reasons would clearly show that the intention of ,the Legislature was to confer certain benefits on the tenants to pending suits and proceedings for ejectment only on ground of defaults by giving them an opportunity to deposit the arrears within a specified time.
It is nowhere mentioned in clause (6) that this benefit was to be extended beyond the frontiers of the State in appeals which Were not ordinary remedies but which were special remedies provided for under the Constitution.
Thus the scope of the amendment was to confine the protection given to the tenants within the limits of the hierarchy of courts mentioned by the Act, and to the.
Courts in the State of Rajasthan.
It may be noticed that the statement of,objects and reasons does not even give a hint that the benefit conferred by section 13A 'would ' be available even in the execu tion proeedings after the decree had` been passed.
We shall now analyse section 13A of the Act, against the background of the main objective of the Legislature.
Section 13A of the ACt as introduced by Ordinance No. 26 of 1975 and later re placed by the Act runs thus: "13A. Special provisions relating to pending and other matters Notwithstanding anything to the contrary, in 'this Act as it ' existed before the commencement of the ordinance or in: any other law: (a) no court shall, in any proceeding.
pending on the date of commencement of the amending ordinance pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, if the tenant applies under clause (b) and pays to the landlord; or deposits in court, Within such time.
such aggregate of the amount of rent in arrears, interest 337 thereon and full costs of the suit as may be directed by the court under and in accordance with that clause;.
(b) in every such proceeding, the court shall on the application of the tenant made within thirty days from the date of commence ment of the amending ordinance, notwithstand ing any order to the contrary, determine the amount of rent in arrears upto the date of the order as also the amount of interest thereon at six per cent per annum and costs of the suit allowable to the landlord; and direct the tenant to pay the amount so determined within such time, not exceeding ninety days, as may be fixed by the ,court, and on such payment being made within the time fixed as afore said, the_proceeding shall be disposed of as if the tenant had not committed any default; (c) the provisions of clauses (a) and (b) mutatis mutandis apply to all appeals, or application for revisions, preferred or made after the commencement of the amending ordi nance, against decrees for eviction passed before such commencement with the variation that in clause (b), for the expression "from the date of commencement of the amending ordinance" the expression "from the date of the presentation of the memorandum of appeal or application for revision" shall be substi tuted; X X X Explanation: For the purpose of this section .
(a) "amending ordinance" means the Rajasthan Premises (Control of Rent and Eviction) (Amendment) Ordinance, 1975; and (b) "Proceeding" means suit, appeal or application for revision.
" Section 13A contemplates only three kinds of proceedings, namely, suits, appeals and applications for revisions and these proceedings must be under the Act ,itself.
Clause.
(a) of section 13A of the Act provides that no court after the commencement of the mending ordinance shall pass any decree on the ground of non payment of rent if the tenant applies and a s to the landlord the entire rent in arrears interest and full costs of the suit.
Clause (b) requires that such an application is to be made within thirty days of the com mencement of the amending ordinance on,Which the Court would determine the rent in arrears and direct, interest to be paid at the rate of six per cent per annum.
Clauses (a) and (b) obviously do not apply to the present case, because the proceedings were not pending in any court when the ordinance or the Act came into force.
Reliance was, however, placed on the word "proceeding" as appearing in clauses (a) and (b) in 338 order to plead an argument that the word "proceeding" was wide enough to include not.
only Suits, but appeals at all stages.
This argument in our opinion is based on a serious misconception of the interpretation of the word "proceeding".
The Legislature has not left the connotation of the word "proceeding" in doubt because clause (b) of the Explanation clearly indicates what "proceedings" contemplat ed by section 13A in clauses (a), (b) and (c) are.
The Expla nations clearly shows that "proceeding" means suit, appeal or application for revision.
A logical interpretation of clause (b) of the Explanation would clearly reveal that the Act itself has limited the scope of the proceeding to suits, appeals or applications for revision under the hierarchy of the statute.
In other words, the Explanation refers only to Such proceedings as may be pending in any suit, appeal or application for revision under the Act.
Section 22 of the Act runs thus: "22.
Appeals and Revisions : (1) From every decree or order passed by a Court under this Act, an appeal shall lie to the Court to which appeals ordinarily lie from original decrees and orders passed by such former court.
(2) No second appeal shall lie from any such decree or order; Provided that nothing herein contained shall affect the powers of the High Court for Rajasthan in revision; X X X X " Section 22 provides for an appeal to the Court where an appeal ordinarily ties, i.e. the Court of the District Judge in the instant case and thereafter an application in revi sion to the High Court.
The use of the words "such proceed ing" in clause (b) of section 13A fortifies our conclusion that the proceedings contemplated by section 13A are really the pro ceedings referred to in Explanation which means proceedings in the nature of suits, appeals or applications for revision as referred to in section 22 of the Act.
In these circumstances we are unable to agree with the learned counsel for the appellant that proceedings in this Court would fall within the ambit of clauses (a) and (b) of section 13A of the Act.
It was then submitted that at any rate clause (c).
of section 13A would apply to the facts of the present case and the appellant should be given the benefit of that provision.
It is true that clause (e) applied the provisions of clauses (a) and (b) mutatis mutandis to appeals and applications for revision.
It may be noticed, however, mat this benefit is not conferred even in the execution proceedings arising out of decrees passed in suits or appeals and upheld in revi sions.
The true interpretation of clause (c) of section 13A would, therefore, be that this clause also contemplated the same proceedings as contemplated by clauses (a) and (b), namely the proceedings indicated in the Explanation.
Thus the benefit conferred by clause (c) would apply only to appeals or applications for revisions filed under the 339 Act as provided by section 22 of the Act.
The Legislature never intended to confer this benefit beyond the frontiers of the State.
It was however, submitted that the word "appeal" is wide enough to include an appeal by special leave filed in this Court.
It is, however, not possible to accept this conten tion.
The amendment was passed some time in the year 1975 i.e. about 25 years after the Constitution had come into force.
An appeal by special leave was a special remedy provided for by article 136 of the Constitution and the State Legislature of Rajasthan must be presumed to be aware of this special remedy as also the nomenclature of this remedy.
If the intention was to extend the benefit to appeals for special leave it should have been so clearly stated in clause (c).
Furthermore, the Rules flamed by the Supreme Court, the knowledge of which also must be ascribed to the State Legislature, make a clear cut distinc tion between an application filed in the Court for grant of special leave and a petition of appeal after the leave is granted.
It was suggested that the application for special leave to appeal may be treated as the memorandum of appeal as referred to in clause (c) of section 13A.
It is, however, not possible to accept this ,contention, because the constitu ents and ingredients of an application for special leave to appeal are quite different from those of a memorandum of appeal preferred to an appellate Court under O. XLI r. 1(2) of the Code of Civil Procedure.
Under O. XVI r. 4 of the Supreme Court Rules, 1966 the petition for special leave is to contain only the necessary facts and not the grounds.
It is true, r. 11 of O. XVI of the Supreme Court Rules provides that the petition for special leave would be treated as a petition of appeal after the special leave is granted, but that also cannot be equated with a memorandum of appeal as contemplated by clause (c) of section 13A of the Act.
In contra distinction to the provisions of the Supreme Court Rules it would appear that O. XLI r. 1 (2) of the Code of Civil Procedure runs thus: "The memorandum shall set forth, con cisely and under distinct heads, the grounds of objection to the decree appealed from without any argument or narrative; and such grounds shall be numbered consecutively.
" It would thus appear that the provisions of r. 1 (2) of O. XLI Code of Civil Procedure require that the memorandum of appeal has to set forth under the distinct heads the grounds of objections to the decree appealed from.
No such requirement is to be found in the Supreme Court Rules either for an application for special leave to appeal or in the petition of appeal which is required to be field if certifi cate by High Court is granted.
The Legislature must be presumed to be aware of the difference between an applica tion for special leave to appeal and a memorandum of appeal.
If the intention was to extend the benefit of section 13A even to appeals before the Supreme Court, then apart from the word memorandum of appeal, the words "application for special leave to Supreme Court" should have been mentioned.
The fact that clause (c) of section 13A merely mentions the words "from the date of the presentation of the memorandum of appeal or application for revision" clearly indicate that 340 the remedies contemplated by the Act are the remedies of appeal and revision as provided for by section 22 of the Act.
In fact, as already pointed out, the benefit conferred by section 13A of the Act does not extend even to the.
execution pro ceedings and in these circumstances it cannot be assumed that it would have applied to a Court which is beyond the frontiers of the State and to a remedy which has been pro vided not by the State Legislature but by the Constitution itself.
For these reasons, therefore, we reject the argument of the appellant that clause (c) of section 13A of the Act would apply to the present appeal and that the appellant is, therefore,entitled to the benefit of this provision on the basis of the Civil MisCellaneous Petition filed by him.
We are clearly of the opinion, on an interpretation of the various clauses of section 13A of the Act and the Explanation thereto that.
the benefit under section 13A has been intended by the Legislature to be conferred only on the appellate and revisional courts and even execution proceedings have been excluded from the ambit Of the protection granted.
For these reasons I agree with the judgment proposed by my brother Goswami, J., and dismiss the appeal but in the peculiar circumstances of the case without any order as to costs.
P.B.R. Appeal dismissed.
| Section 13A was introduced in Rajasthan Premises (Con trol of Rent and Eviction) Act, 1950 by an Ordinance on September 29, 1975, The Ordinance was later replaced by an Act.
Clause (a)of the section provides that no Court shall, in any proceeding pending on the date of the commencement of the Amending Ordinance, pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent under certain circumstances.
Clause (b) provides that in every such proceeding the Court shall, on the application of the tenant, made within 30 days from the date of the presentation of the memorandum of appeal or application for revision, determine the amount of rent in arrears.
Clause (c) provides that the provisions of els.
(a) & (b) shall, mutatis mutandis, apply to all appeals, or applications for revision, preferred or made after the commencement of the Amending Ordinance.
Explanation (b) to the section defines a proceeding to mean a suit, appeal or application for revision.
Section 22(1) provides that from every decree or order passed by the Court under the Act, an appeal shall lie to the Court to which appeals ordinarily lie :from original decrees and orders passed by such former Court.
On the ground of non payment of rent, a decree of evic tion was passed against the appellant, who was the respond ent 's tenant.
The High Court having affirmed the decree on appeal, the appellant filed an application for special leave to this Court on September 23, 1975.
The Ordinance intro ducing section 19A was passed on September 29, 1975.
This Court granted special leave on November.
In appeal to this Court it was contended by the appel lant (1) that since the application for special leave was pending before this Court on the date of the commencement of the Ordinance, the case was governed by section 13A (a) and (b) of the Act; (2) in the alternative since, as a result of the grant of special leave, an appeal had been pending before this Court, the appellant was entitled to the protection of section 13A(c) of the Act.
Dismissing the appeal, HELD: (Per Chandrachud and Goswami, JJ) (1)(a) In order to attract section 13A(a) a suit, appeal or application for revision must be pending on the date of the commencement of the Ordinance.
An application for special leave under article 136 of the Constitution cannot be equated with the ordinary remedy of appeal as of right under any provision of law.
It is an extraordinary right conferred under the Constitution, within the discretion of the Supreme Court and an application for special leave does not come within the contemplation of appeal pending before the Court under section 13A(a).
The collocation of the words "suit, a. appeal or application for revision" used in the explanation to denote "proceeding", shows that the suits and regular appeals therefrom as provided under the ordinary law and applications for revision alone are intended.
[329C & B] 325 (b) The expression "presentation of memorandum of appeal" under section 13A (c) chimes with the construction that the legislature clearly intended to include only the hierarchy of appeals under the Code of Civil Procedure.
[330D] (c) Under section 13A(c) read with section 13A(b) in a pending appeal, the tenant has to make an application within 30 days "from the date of presentation of the memorandum of appeal".
There is no provision in an appeal by special leave for presentation of memorandum of appeal, under r. 11 of O.XVI.
of the Supreme Court Rules, on the grant of special leave, the petition for special leave is treated as the petition of appeal.
In contrast under O.41 r. 1(1) of the Code of Civil Procedure, every appeal shall be preferred in the form of a memorandum signed by the appellant and pre sented to the Court.
[329H] (d) The terminus a quo for the purpose of section 13A(c) is from the date of presentation of the memorandum of appeal.
Since no petition of appeal has to be presented in the Supreme Court after the special leave is granted, such a contingency of appeal to this Court by way of special leave is not intended to be covered by section 13A(c).
[330C] (2) Section 22 cannot assist the appellant in this case.
While section 22(1 ) qualifies the decree or order as being "under this Act" section 13A does not describe "proceeding" to be under the Act.
[330E; 332C] The Act provides for the institution of serious in two different forums namely, the lowest Court of competent jurisdiction, which is the Civil Court, and the other before a Magistrate on the executive side.
[332F] Appeals or applications for revision under section 13A(c) relate only to decrees in suits for eviction based on the ground of non payment of rent.
Such appeals or applications for revision under section 13A(c) are not contemplated under section 22.
Decrees or orders passed by the Court under the Act, against which appeals and revisions are provided in section 22, do not take in decrees and orders passed in a suit for eviction.
Usual rights of appeal and revision will be available in the latter class of suits.
To hold otherwise will be to deny a right of second appeal to a litigant, whether it is landlord or tenant, against a decree in an eviction suit which is clearly not the intention of the legislature.
Second appeal is only barred in case of de crees or orders passed under the Act.
[332H] (Per section Murtaza Fazal Ali, J.) Proceedings in this Court would not fall within the ambit of cls.
(a) and (b) of section 13A. [338F] (a) The Explanation to the section clearly shows that the word "proceeding" refers only to such proceedings as may be pending in any suit, appeal or application for revision under the Act.
The use of the words "such proceedings" in section 13A(b) shows that the proceedings contemplated by section 13A are really proceedings referred to in the explanation, which means proceedings in the nature of suits, appeals or appli cations for revision as referred to in section 22.
[338E F] (b) Section 13A(c) would not apply to the present case.
The benefit conferred by el.
(c) would apply only to appeals and applications for revision filed under the Act as provid ed by section 22.
The true interpretation of cl.
(c) would be that this clause contemplated the same proceedings as con templated by els.
(a) and (b), namely, proceedings indicated in the explanation.
[338G H] (c) An appeal by special leave is a special remedy provided by article 136 of the Constitution and the legislature must be presumed to be aware of this special remedy.
If the intention was to extend the benefit to appeals for special leave, it should have been clearly stated in el.
[339B] (d) The Supreme Court Rules make a clear cut distinction between an application filed for the grant of special leave and a petition of appeal, if the leave is granted.
The constituents and ingredients of an application for special leave to appeal are quite different from those of a memoran dum of appeal under O.X.LI r. 1(2) of the Code of Civil Procedure.
[339D] 326 (e) The provisions of O.XLI, r. 1(2) C.P.C. require that the memorandum of appeal has to set forth under distinct heads, the grounds of objections to the decree appealed from.
No such requirement is to be found in the Supreme Court Rules either for an application for special leave to appeal or in the petition of appeal which is required to be filed if certificate by the High Court is granted.
The legislature must be.
presumed to be aware of the difference between an application for special leave to appeal and a memorandum of appeal.
Though r. 11 of O.XVI of the Supreme Court Rules provides that the petition for special leave would be treat ed as a petition of appeal after the special leave is grant ed,it cannot be equated with a memorandum of appeal contem plated by section 13A(c) of the Act.
[339G H] (f) The fact that section 13A(c) mentions the words "from the date of the presentation of the memorandum of appeal or application for revision" clearly indicates that the reme dies contemplated by the Act are remedies of appeal and revision as provided for by section 22 of the Act.
[339H]
|
Civil Appeal No. 1308 of 1968.
From the order dated 1st May, 1967 of the Punjab and Haryana High Court at Chandigarh in Civil Writ No. 707 of 1967.
621 Hardyal Hardy, Naunit Lal and Miss Lalita Kohli, for the appellants.
O. P. Sharma and P. N. Puri, for the respondents.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal by certificate under Article 133 (1) (a) of the Constitution of India granted by the High Court of Punjab and Haryana at Chandigarh is directed against its order dated May 1, 1967, dismissing in limine the writ petition filed by the appellants herein.
The facts giving rise to this appeal are: Natha Singh, appellant No. 1 herein, was recorded in revenue records as land owner in respect of 39 standard acres and 9 3/4 units of land in village Malout, 53 standard acres and 5 1/2 units in village Kanamgarh and 4 standard acres and 2 units in village Bhagwanpur.
By his order dated July 5, 1959, the then Collector, Ferozepore, acting under the provisions of the Punjab Security of Land Tenures Act, 1953, hereinafter referred to as 'the Act ' declared an area of 63 standard acres and 1 1/4 units out of the aforesaid land aggregating 93 standard acres and 1 1/4 units as surplus in the hands of Natha Singh.
Rajinder Singh and Jarnail Singh, appellants Nos. 2 and 3 herein, who are the sons of appellant No. 1, went up in appeal against the said order of the Collector to the Commissioner, Jullundur Division, who vide his order dated July 20, 1965 allowed the appeal, set aside the aforesaid order of the Collector and remanded the case for fresh determination of the "Surplus Area." After re examination of the case on remand, the Collector, Ferozepore, vide his order dated December 20, 1965, overruled the plea raised by appellants Nos. 2 and 3 that the area comprised in khasra Nos. 296, 297, 517, 519, 285, 293 and 206 which was in their cultivating possession as tenants under appellant No. 1 before the commencement of the Act should be treated 'Tenants Permissible Area ' and excluded from the surplus pool and held that the entries in khasra girdawaries on which the claim of the said appellants was grounded could not be relied upon as they had been tampered with.
The Collector further held that even taking the entries at their face value, appellants Nos. 2 and 3 could not be treated tenants as contemplated by the Punjab Tenancy Act, 1887 (Act XVI of 1887) as they were not paying any rent to appellant No. 1.
The Collector also overruled the plea raised by appellant No. 1 that there was some 'banjar ' land which had to be excluded while reckoning the permissible area.
Dissatisfied with this order, the appellants preferred an appeal to the Commissioner, Jullundur Division, who by his order dated November 7, 1966 dismissed the same and upheld the aforesaid order of the Collector, Ferozepore.
Aggrieved by these orders, the appellants took the matter in revision to the Financial Commissioner, Taxation, Punjab, who also by his order dated March 3, 1967, affirmed the aforesaid orders of the Collector, Ferozepore, and Commissioner, Jullundur Division.
All these orders were challenged by the appellants before the High Court of Punjab and Haryana by means of a petition under Article 226 of the Constitution but the same, as already stated, was dismissed in limine.
The High Court, however, granted a certificate to the appellants under Article 133(1) (a) of the Constitution.
622 Appearing in support of the appeal, Mr. Hardayal Hardy has contended that the writ petition filed by the appellants could not, in the facts and circumstances of the case, be dismissed in limine by the High Court.
Elaborating by his submission, the learned counsel has urged that the orders passed by the revenue authorities could not be sustained as they did not, while computing the 'Surplus Area ', leave out the permissible area which even according to the khasra girdawaries and Roznamcha Waqaiti which is maintained for the purpose of recording changes in cultivation was being cultivated by appellants Nos. 2 and 3, as tenants of appellant No. 1 since 1951 52; that 30 bighas of land which was recorded as 'banjar ' at the time of the commencement of the Act and did not fall within the definition of land as contained in section 2(8) of the Act had not been taken into account while evaluating and assessing the "Surplus Area", and that appellants Nos. 2 and 3 were not afforded proper and adequate opportunity by the Collector to prove the claim put forth by them.
Mr. Hardayal Hardy has, in conclusion, drawn our attention to the application made by the appellants for permission to adduce additional documentary evidence in the form of khasra girdawaries for the years 1952 to 1960, the grounds of appeal preferred by the appellants before the Commissioner, the grounds of revision filed by them before the Financial Commissioner, the depositions of appellant No. 1 and Gurcharan Singh, Patwari, and forms A.D.E. and F. and its inclusion in the record and has emphasized that the aforesaid documents which are relevant and necessary for disposal of the appeal should be allowed to be produced.
With regard to the first contention advanced on behalf of the appellants, it is sufficient to observe that it has been time and again observed by this Court that in dealing with a petition under Article 226 of the Constitution, the High Court cannot exercise the jurisdiction of an appellate court and cannot re examine or disturb the findings of fact arrived at by an inferior court or a tribunal in the absence of any error of law.
So far as the contention of the learned counsel for the appellants based on the revenue record is concerned, it may be remarked that it has been concurrently found by the Collector and the Commissioner who examined the original khasra girdawaries that they had been tampered with by the revenue staff in collusion with the appellants.
In the circumstances, it would not be safe to place any reliance on them.
The reliance sought to be placed on 'Roznamcha Waqaiti ' is also an after thought.
No authenticated copy of the 'Roznamcha Waqaiti ' with reference to which we are invited to verify the entries in the khasra girdawaries has been included in the record.
It is also significant that no reliance either before the Collector or before the Commissioner or even before the Financial Commissioner seems to have been placed upon the 'Roznamcha Waqaiti '.
It is also to be noted that even in the application for leave to adduce additional evidence, no mention has been made of any entry in 'Roznamcha Waqaiti '.
Even if the entries in khasra girdawaries are treated as genuine, they can be of little 623 assistance to the appellants as they do not at all, as observed by the Collector, appear to show that any rent was being paid by the appellants Nos. 2 and 3 to appellant No. 1.
In the absence of payment of rent or in the absence of material to show that there was a contract between appellant No. 1 and appellants Nos. 2 and 3 absolving the latter of the liability to pay rent, it is difficult to uphold the claim of appellants Nos. 2 and 3 that they were tenants of appellant No. 1.
So far as the claim regarding 'banjar ' land is concerned, it would suffice to say that the Collector who examined the revenue record found that there was no land which fell within that category.
It cannot be disputed that a land owner who wishes to claim the benefit of the exclusion of 'banjar qadim ' or 'banjar jadid ' land from the purview of land has to prove that it was not at the relevant date being put to any agricultural purpose or a purpose subservient to agriculture or used for pasture.
No such proof seems to have been adduced in the instant case.
It is also important to note that even before the Commissioner, the appellant did not plead that any 'banjar ' land was not left out of consideration while assessing the 'Surplus Area '.
All that was urged before the Commissioner was that the land comprised in khasra No. 864 of village Malout had not been left out of account although it was banjar.
The Commissioner repelled this plea as he found from the examination of the record that the area comprised in the said khasra number was 'Chair Pumkin Sarak ' which had not been taken into account while assessing the 'Surplus Area of appellant No. 1.
The contention raised on behalf of the appellants that they were not allowed an opportunity of establishing their claim cannot also be countenanced.
There is nothing on the record to indicate that the appellants were denied opportunity to prove their case.
The Financial Commissioner has categorically found that appellants Nos. 1 and 2 had full opportunity to place on record their evidence to establish that they were cultivating the land of their father as his tenants and that they did not avail of that opportunity by placing any material on the record to show that, or that there was a private partition as sought to be urged by them before him.
In view of the foregoing reasons we are satisfied that the orders passed by the revenue authorities did not suffer from any error of law so as to warrant interference in writ proceedings and the High Court was justified in dismissing in limine that writ petition preferred by the appellants.
So far as the application of the appellants for additional evidence is concerned, it cannot be allowed in view of the well settled principles of law that the discretion given to the appellate court to receive and admit additional evidence is not an arbitrary one but is a judicial one circumscribed by the limitations specified in Order 41, Rule 27 of the Code of Civil Procedure.
If the additional evidence is allowed to be adduced contrary to the principles governing the reception of such evidence, it will be a case of improper exercise of discretion and the additional evidence so brought on the record will have to be ignored.
The true test to be applied in dealing with applications for additional 624 evidence is whether the appellate court is able to pronounce judgment on the materials before it, without taking into consideration the additional evidence sought to be adduced.
(See Arjun Singh Alias Puran vs Kartar Singh and Ors.(1).
In the instant case, we have not been able to experience any difficulty in rendering the judgment on the material already before us.
Instead we feel that the prayer for adducing additional evidence has been made merely to fill up gaps on the basis of some revenue record which has been found by the Collector and the Commissioner to the spurious.
We also do not find any other substantial reason to accede to the request of the appellants to allow them to adduce additional evidence.
There is no inherent lacuna or obscurity which we require to be filled up or removed to be able to pronounce judgment.
The application of the appellants is accordingly rejected.
In the result we do not find any merit in this appeal which is also hereby dismissed but in the circumstances of the case without any order as to costs.
M.R. Appeal dismissed.
| The respondent, who was a Muslim, was the Congress candidate for election to the State Legislative Assembly.
He challenged the appellant 's election and the High Court allowed the election petition on three grounds (1) that the appellant committed a corrupt practice under a 123(1), Representation of the People Act, 1951 in that he offered a bribe to the respondent to induce him not to contest the election; (2) that the appellant committed corrupt practice under section 123(3A) in that he issued and personally distributed a pamphlet containing communal allegations with a view to create ill feeling among the voters; and (3) that the appellant 's agents distributed that pamphlet with the appellant 's contest.
Allowing the appeal to this Court, ^ HELD :(1)(a) While it is necessary to protect the purity of elections by ensuring that the candidate do not secure the valuable votes of the people by undue influence, fraud, communal porpaganda.
bribery or other corrupt practices, the valuable verdict of the people at 'the polls must be given due respect and should not be disregarded or set at naught on vague, frivolous or fanciful allegations, or on evidence which is of a shaky or pre varicating character.
[450F G, H] (b) Tho onus lies heavily on the election petitioner to make out a strong case for setting aside the election.
He must, in order to succeed.
plead all material particulars and prove them by clear and Cogent evidence.
[450G; 451K] (c) The allegations of corrupt practice being in the nature of a quasicriminal charge, must be proved beyond reasonable doubt.
When the election petitioner seeks to drove the charge by purely partisan evidence of his workers; agents.
supporters and friends the court would have to approach the evidence with great care and caution, and would, as a matter of prudence, though not as a rule of law, require corroboration of such evidence from independent quarters, unless the court in fully satisfied that the evidence is so creditworthy and true, that no corroboration to lend further assurance Is necessary.
[451A] (d) The attempt of the agents or supporters of the defeated candidate is always to get the election set aside by fair means or foul and the evidence of such witnesses, must, therefore, be regarded as highly interested and tainted evidence.
[451C D] (e) When, the evidence led by the election petitioner, even though consistent, is fraught with inherent improbabilities and replete with unnatural tendencies, the court may refuse to accept such evidence, because consistency alone h not the conclusive test of truth.
It is, however, difficult to lay down any rule of universal application and each case will have to be decided on its facts.
[451D E], Bhanu Kumar Shastri vs Mohan Lal Sukhadia & Ors. ; Rahim Khan vs Khurshid Ahmed & Ors.
; ; Abdul Hussain Mir vs Shamsul Huda and another; , and Ghasi Ram vs Dal Singh & Ors. ; , followed.
14 L522SCI/76 446 (2) In the present case, the High Court correctly adumbrated the legal propositions but had not correctly applied them to the facts and evidence.
It also applied different standards in appreciating the evidence.
It readily accepted ll the evidence of two witnesses on one issue while rejecting as partisan and interested on another issue.
[453A D] (3) The cumulative effect of the inherent improbabilities and the intrinsic infirmities of the evidence for the respondent, and the unnatural conduct of the respondent and his witnesses, lead to the conclusion that the respondent had failed to prove the allegation of the offer of bribe.
[465B C] (a) The respondent bore a serious animus against the appellant and yet it was alleged that the appellant offered him a bribe even though they were not well acquainted with each other.
[458G. 460D] .
(b) The offer was alleged to have been made in the presence of two witnesses, ' in a crowded` place ' and pressed upon the respondent even though he spurned it.
The High Court is not right in its view that an offer could have been made as alleged, and that only for actual payment a secluded place could be chosen.
[458F H; 459B C] (c) The High Court is also not right in its view that because the appellant was.
at the Taluk Office when the respondent went there the appellant would have offered the bribe.
On the contrary, the respondent, for that very reason, might have concocted this story of the offer of bribe.
[457E F] (d) The High Court failed to consider, (i) that while it is easy to make an allegation of offer of bribe, it is very difficult for the person against whom it is made to rebut it; [457G E] (ii) that the allegation was sought to be proved by the respondent, by the partisan and highly interested testimony of two witnesses and was sought to be corroborated by the equally interested testimony of two others to whom the incident was alleged to have been narrated shortly thereafter.
and that t he respondent had not examined any independent witness, even though such witness were available; [457H 458A] (iii) that the appellant would not have attempted to bribe the respondent because, the respondent had the, support of the Congress, and even if he with drew, the Congress would have put up another candidate.
[461B CI (iv) that the respondent had not complained about the bribe either to the local Congress committee or to the police; and [461F G; 464D E] (v) that there was no reference either to the corroborating witnesses or to the narration of the incident of the offer of the bribe to those witnesses, in the petition.
If it were true it is unlikely that the respondent would have omitted a reference to it.
[464A B] (e) Further.
the fact of repetition of the story of the offer of bribe to the two corroborating witnesses was a material particular or an additional fact pertaining to the averments In the petition and not a mere matter of evidence.
Since it was nob mentioned in tho petition it has to be excluded from consideration.
[464B C] (f) As the alleged offer is an electoral offence of a quasi criminal nature, the onus of proving it was initially on the respondent, but he failed to discharge the onus.
[464A H] (g) If such a serious allegation is allowed to be proved against a successful.
Candidate by partisan, interested and improbable evidence, without any independent corroboration, it would give an easy handle to the defeated candidates to destroy the sanctity of the electoral process.
[464A 465B] (4) The respondent has not 'adduced any satisfactory evidence that the r offending pamphlet was printed by the appellant or distributed by him personally, whereas, the appellant has, through his evidence, Though of a 447 negative character, shown that the probabilities are that the appellant did not A have it printed and that he did not distribute it.
[491E F] (a ) Distribution of an objectionable pamphlet is a corrupt practice under section 123(4) and the pamphlet in the present case, containing communal propaganda comes under section 123(3A) as well.
[471G H; 474E] (b) The allegation of publishing such an objectionable pamphlet is easy to make and difficult to rebut.
The court must subject the tainted and interested evidence regarding its publication to the strictest scrutiny because it can be printed by the defeated candidate in any press with secrecy.
circulated among his supporters and he can make them say that it was printed, published and circulated by the successful candidate.
[471H 472B] Baburao Bagaji Karemoga and ors.
vs Govind & Ors., , followed.
(c) The appellant had denied the printing or publication of the pamphlet and ' the respondent failed to discharge his initial onus of proving that the appellant printed and distributed it.
[472D E] (d) Since there were a considerable number of Muslim voters in the constituency, the appellant ' would not have taken the risk of 'offending them by circulating such a pamphlet.
The respondent, on the other hand, had a strong motive to reverse the appellant 's election by any possible means, and he had his own press.
[472H; 474F G, H] (e) The High Court was wrong in its approach that since the pamphlet contained anti Muslim propaganda it would not have been printed by the respondent.
An unsuccessful candidate, motivated by the desire to unseat a successful candidate, would stood to any device to show that the successful candidate was guilt of a corrupt practice.
[472G] (f) Merely because the respondent disclosed the name of the press where he got some other pamphlets printed, it could not be contended by him that he would have disclosed the name of the press which printed the offending pamphlet if he got it printed.
The contents of the pamphlet were so offensive that the printer would not have taken the risk of disclosing the name of the press and expose it to legal action.
[491B C] (g) Most of the witnesses for the respondent who stated that the pamphlet was given to them before or during the election were of the turn coat type, that is.
persons who claimed to have worked for the appellant but gave evidence for the respondent; and tho others were in some way or the other totally interested in the respondent or connected with him.
[479F] Rahim Khan vs Khurshid Ahmed and others; , followed.
F (h) one witness gave evidence that he received the pamphlet from his wife during the election.
but since she was not examined, the evidence was rightly rejected by the High Court.
[490H 491A] (i) The High Court held that the pamphlet was in existence before or during the election, applying the test that the pamphlet was produced by tho witness who stated that it was given to him by the appellant.
But that cannot be a safe criterion because, the respondent could have handed it over to the witness before he have evidence.
Further.
the probabilities are that it was not then in existence.
[471C E] (i) Respectable witness of the appellant gave evidence that no such pamphlet was circulated, for then they would have known about it.
Also considering its provocative language, it is unlikely that the Government officials posted to prevent any communal propaganda by the candidates would have failed to notice it.
[473B: 474G H] (ii) Further, the respondent would not have failed to give in the petition or in the material particulars furnished by him later, the name of the persons from whom he came to know about the pamphlet.
The respondent collected materials for filing the election petition soon after the appellant was declared 448 elected and more than a month before filing it.
In spite of such a full and complete opportunity before filing the petition, and later when the appellant applied for further particulars regarding the distribution of the pamphlet, the respondent merely gave the names of certain villages and the dates on which the pamphlet was alleged to have been distributed; but he did not mention tho name of a single person to whom the pamphlet had`been distributed by the appellant personally, even though, according to the led by the respondent, he.
was in possession of such damaging evidence against the appellant.
[470B 471B; 475A B; 490C E] (iii) The respondent had made several complaints to the police about various matters but did not complain about the pamphlet either to the police or the local Congress committee.
If his silence was due to legal advice, as contended, he should have given the explanation in The petition or examined the lawyer who gave such an advice [487E F; 490E E] (5) (a) Section 81 of the Representation of the People Act, 1951, provides that the election petition shall be filed within 45 days From tho date of the election of the returned candidate.
Therefore, any allegation of corrupt practice which is not made in the election petition filled within the time allowed by the statute cannot be allowed by way of an amendment under section 86(5) because, that would amount to extending the period of limitation peremp orily fled by the A.
The ambit of section 86(5) is extremely narrow.
It requires three essential conditions which arc the sire qua non to be fulfilled before an amendment could be allowed, namely (i) that the amendment seeks merely to amplify the particulars, of a corrupt practice; (ii) that the corrupt practice, whoso particulars are to be given, must have been previously alleged in the election petition itself, and (iii) that the amendment is, in the opinion of the court necessary for ensuring a fair and effective trial of the petition.
The power of amendment or amplification is thus restrict ed only to amplify the material particulars of any corrupt practice which had been previously alleged in the election petition, and the court has no power to allow an amendment by permitting the election petitioner to amplify the material particulars of a corrupt practice which was specifically pleaded In the petition; for, that would amount to introducing a new corrupt practice after the expiry of the period of limitation a result which was never envisaged by the statute.
[466H; 467B C, E Hl Samant N. Balakrishna etc.
vs George Fernandez & Ors., etc.
; , , followed.
(b) In the present case, reading the averments in election petition as a whole, however broadly or liberally they are construed, the irresistible inference is that the respondent had laid special stress on the fact of distribution of the pamphlet by the appellant alone.
Wherever the averment of distribution of the pamphlet is made in the petition, it is stated that it was done by the appellant.
There is absolutely no averment that tho pamphlet was distributed by tho agent, workers or supporters or friends of the appellant.
Hence, it could not be con tended by the respondent that tho averments include not merely distribution by the appellant, but also by his agents and workers.
Since there was no pleading at all by the respondent that the pamphlet was distributed by his agents, etc., particulars supplied by the respondent in his application for amendment of his.
petition on the point of distribution by agents, etc., must be completely disregarded.
The court also has no jurisdiction to allow such particular to be given with respect to tho fact that the pamphlets were distributed by the agents and supporters of the appellant.
Therefore, the amendment, in respect of the third ground on which the judgment of the High Court was based, should not have been allowed, the particulars mentioned by the respondent on this item.
must be disregarded, the evidence given by him should be excluded from consideration, and the finding of the High Court should be set aside.
[468H 469D, E F] (c) The attention of tho High Court was not drawn by the appellant to this aspect but, as it is a pure question of law and amounts to violation of the statutory mandate in section 86(5) this Court can decide on the correctness of the order of the High Court, allowing particulars regarding distribution of pamphlet by the agents etc., of the appellant.
[469D E] 449
|
No. 513 of 1970.
Petition under article 32 of the Constitution of India for writ in the nature of habeas corpus.
The petitioner appeared in person.
P. Ram Reddy and P. P. Rao, for the respondent.
The Judgment of the Court was delivered by Dua, J.
The petitioner, A. Lakshmanrao, an Advocate practicing at Narasipatnam in the district of Visakhapatnam in the State of Andhra Pradesh has applied under article 32 of the Constitution for a writ of habeas corpus on the following averments The petitioner, while going home from the court, was arrested on 17th July, 1970 at about 12.30 in the afternoon.
He was not shown any warrant at the time of his arrest.
He was produced before a Judicial Magistrate, First Class, on 18th July and 824 remanded to judicial custody under section 167 (2), Cr.
P.C. for 15 days.
At the time of remand he was informed by the Magistrate that he was accused of offenses under sections 120 B, 121 A 122 read with 302 and 395, I.P.C. in Crime No. 3 of 1970 (known as Parvatipuram Naxalite Conspiracy Case).
This crime had been registered in January, 1970 in which more than 148 persons were sought to be proceeded against.
The names of only 148 accused persons were specifically mentioned.
The petitioner and one Dr. C. Ramadass were not specifically named.
They were apparently included in the expression "others".
On 30th March, 1970 a report was filed by the Investigating Officer describing it as a preliminary charge sheet in which it was stated that the investigation in the case had not been completed and several accused persons had yet to be traced.
This report, according to the averments, does not fall under section 173(1), Cr.
P.C. Even in this preliminary charge sheet the names of the petitioner and Dr. Ramadass were not included.
On 1st August when the period of the petitioner 's first remand expired, again no charge sheet was separately filed against him and Dr. C. Ramadass.
The prosecution, however, sought extension of the period of remand.
When the petitioner objected to further remand a second preliminary charge sheet was presented to the court on that very day specifically including the petitioner 's name.
His remand was thereupon extended upto 6th August and thereafter upto 20th August.
On 20th August he was not produced in the court because of want of escort and the order of remand was made in his absence.
He has expressed ignorance about the period of this remand.
The present petition dated 22nd August, 1970 was forwarded to this Court through the Superintendent.
Central Jail, Rajahmundry (Andhra Pradesh).
The petitioner challenges the remand orders from the 1st August onwards and claims that his detention is illegal and that he is entitled to be set at liberty.
The remand order dated 20th August, 1970 which was made in his absence because he could not be produced before the court on the ground of lack of escort is challenged on the further ground that the law does not permit remand orders without the actual production of the accused before the court: According to the petitioner who himself argued his case, section 344(1A), Cr.
P.C. does not contain any guidelines for the court in the matter of remand orders and he added that this section is otherwise too inapplicable to the investigation stage of criminal cases.
When his attention was drawn to the explanation to section 344, according to which the likelihood of further evidence being obtained by the remand in cases of suspicion against an accused person raised by the evidence already obtained, he contended that the 825 explanation could not, as a matter of law, serve to extend the scope of the substantive provision contained in sub section
On this premise the petitioner questioned the vires of section 344(1A) and (2) and the explanation.
In the counter affidavit sworn by the Judicial Magistrate in whose court the case against the petitioner is pending, while referring to the proceedings held on 1st August, 1970, it is affirmed that the petitioner and Dr. C. Ramadass were produced in court and it was submitted by them that since their names had not shown in the preliminary charge sheet the court had no power to extend the period of reman.
On that very day the prosecution filed a second preliminary charge sheet in which the petitioner and Dr. C. Ramadass were shown as accused nos.
149 and 150 suspected of having committed offences under sections 120 B, 121A, 122 read with 302 and 395, I.P.C.
The Court thereupon passed an order of remand in respect of both of them.
A bail application filed on behalf of the petitioner and Dr. C. Ramadass was thereafter argued by the petitioner and the matter was adjourned to 6th August, 1970 for orders when that application was disposed of.
On behalf of the other respondents a lengthy affidavit has been sworn by section Veeranarayanareddi, Deputy Superintendent of Police, Crime Branch, C.I.D., Government of Andhra Pradesh, Hyderabad.
It is affirmed in this affidavit that the petitioner is an active Naxalite and along with others is accused of charges under sections 120 B read with sections 302, 395, 397, 399, 364, 365, 368 and 386, I.P.C. in P.R.C. No. 3/70, pending in the Court of the Judicial First Class Magistrate, Parvatipuram Taluk.
A separate complaint under sections 121 A and 120 B read with 121, 122, 123 and 124A, I.P.C. is also stated to have been filed against the aforesaid persons including the petitioner in the same court in P.R.C. 8 of 1970.
These two cases are known as Parvatipuram Naxalite Conspiracy Cases and relate to 46 murders, 82, dacoities, 99 attacks on police and 15 abductions committed by the accused persons in Andhra Pradesh.
The accused persons are also alleged to have committed several offences of the types just mentioned in the Agency Tracts of Orissa bordering Andhra Pradesh.
The Government of Andhra Pradesh had on account of the gravity of the situation declared certain areas affected by the Naxalite menace in Srikakulam and Warangal Districts as disturbed areas Under section 3 of the Andhra Pradesh Suppression of Disturbances Act, 1948.
In the affidavit certain incidents have been traced from 1964 and it is affirmed that as a result of various political developments certain volunteers were recruited from various parts of Andhra Pradesh and the petitioner helped them in creating revolutionary bases in the agency tracts of Visakhapatnam District.
There is also reference to one of the accused persons having become an approver and another having made a confes 826 sional statement.
After stating various facts discovered during investigation it is affirmed that the investigation of this case is limited not only to the State of Andhra Pradesh but it extends to several States where naxalite, movement has spread, including West Bengal and Orissa, and as many as 900 witnesses have already been examined during the course of investigation which has taken nearly nine months.
Sanction of the State Government has also been ob tained for the prosecution of the petitioner and the other accused persons under section 196, Cr.
On 12th October, 1970 the investigation was completed and a final charge sheet filed in the court of the Judicial Magistrate in P.R.C. No. 3 of 1970.
The separate complaint against the petitioner and other accused persons mentioned earlier was also filed in the court of the Judicial Magistrate under sections 121A, 120B read with 121, 123 and 124A, I.P.C. on the same day.
It is admitted that the preliminary charge sheet is not covered by section 173(1), Cr.
But it is averred that it is only a report pending further investigation seeking extension of remand under section 344, Cr.
The long period of investigation has been ascribed to the fact that there was an organised attempt on the part of the accused and their followers to thwart the, efforts of the authorities in bringing the accused to book.
It is admitted that the peti tioner is lodged in Central Jail, Rajahmundry and that on 20th August, 1970 he could not be produced before the court for lack of escort.
The; remand is also admitted to have been extended by the Magistrate, respondent No. 1, from time to time on 3rd and 17th September and 1st October, 1970.
The court, it is pleaded, is empowered to pass an order of remand even in the absence of the accused under section 344, Cr.
P.C. unlike the remand order under section 167, Cr.
Incidentally, in this counter affidavit there is a reference to the prejudicial activities in which the petitioner has been indulging in connection with Naxalite movement.
The initial non inclusion of his name in the array of accused persons ' has been explained on the ground that sufficient corroboration of the approver 's testimony incriminating the petitioner was not forthcoming at that stage.
In so far as, the question of legality of the remand order dated 20th August, 1970 without producing the petitioner before a Magistrate is concerned, the point is concluded by a recent judgment of this Court in the case of Rai Narain vs Supdt.
Central Jail, New Delhi(1).
In that case this Court by majority expressed the view that as a matter of law personal presence of an accused person before a Magistrate is not a necessary requirement for the purpose of his remand under section 344, Cr.
P.C., at the instance of the police, though as a rule of caution it is highly desirable that the accused should be personally produced before the Magistrate so that he may, (1) 827 if he so chooses, make a representation against his remand and for, his release on bail.
The Court on a review of the decided cases, observed "There is nothing in the law which required his personal presence before the Magistrate because that is a rule of caution for Magistrates before granting remands at the instance of the police.
However, even if it be desirable for the Magistrates to have the prisoner produced before them, when they recommit him to further custody, a Magistrate can act only as the circumstances permit.
" The order of remand dated 20th August, 1970 was in the circumstances not contrary to law so as to render the petitioner 's, custody illegal justifying his release by this Court on habeas corpus.
It is unnecessary to point out that it was and still is open to the, petitioner to apply for his release on bail to the appropriate court in accordance with law there being no illegal obstacle in his way in this respect.
The challenge to the constitutional validity of section 344(1A), Cr.
P.C. is also in our opinion misconceived.
Section 344 reads " (1) In every inquiry or trial, the proceedings.
shall be held as expeditiously as possible and in particular, when the examination of witnesses, has once begun, the same shall be continued from day to day until all the witnesses in attendance have been examined, unless the Court finds the adjournment of the same beyond the following day to be necessary for reasons to be recorded.
(1 A) If, from the absence of a witness, or any other reasonable cause, it becomes necessary or advisable to postpone the commencement of, or adjourn, any inquiry or trial, the Court may, if it thinks fit, by order in writing, stating the reasons therefore, from time to time, postpone or adjourn the same on such terms as it thinks fit, for such time as it considers reasonable, and may by a warrant remand the accused if in custody: Provided that no Magistrate shall remand an accused person to custody under this section for a term exceeding fifteen days at a time Provided further that when witnesses are in attendance.
no adjournment or postponement shall be granted, without examining them, except for special reasons to be recorded in writing.
828 (2)Every order made under this section by a Court other than a High Court shall be in writing signed by the presiding Judge or Magistrate. ' Explanation.
If sufficient evidence has been obtained to raise a suspicion that the accused may have committed an offence, and it appears likely that further evidence may be obtained by a remand, this is a reasonable cause for a remand.
" Sub section (1 A) was originally numb. red as sub section 1 The present sub section (1) of section 344 was added by the Amending Act 26 of 1955 when the original sub section (1) was renumbered as sub section (1 A).
The impugned sub section vests in the court seized of a criminal case power to postpone the commencement of or adjourn any inquiry or trial before him by order in writing stating the reasons therefore from time to time on such terms as the court thinks fit and for such time as it considers reasonable.
When the case is so postponed or adjourned the court may also by a warrant remand the accused, if in custody.
This judicial power to postpone or, adjourn the proceedings is to be exercised only if from the absence of witnesses or any other reasonable cause the court considers it necessary or advisable to do so.
Reasonable cause for remand according to, the explanation to this section covers a case where sufficient evidence is obtained to raise a suspicion about the complicity of an accused person in the offence and it appears likely that more evidence may be obtained by remand.
The court has in the exercise of its judicial discretion in granting or declining postponement or adjournment of the case and in ordering remand of the accused, to keep in view all the relevant facts and circumstances of the case.
The petitioner strongly contended that this section clothes the court with an unfettered, arbitrary and unguided power.
A plain reading of the section shows the untenability of the submission.
Apart from the fact that it is only when either from the absence of a witness or some other reasonable cause the court, considers it either to be necessary or advisable to postpone the commencement of, the inquiry or trial or adjourn the hearing of the case that the order can be made, the court is also required to record the order in writing giving the reasons why it thinks fit that the case should be postponed or adjourned.
It is further open to the court to impose terms and to fix the period which cannot exceed 15 days at one time.
This discretion being vested in a court of law has to be exercised _judicially on well recognised principles, and is in our view immune from challenge on the ground of arbitrariness or want of guidelines.
In our opinion, therefore, not only are the guidelines clearly contained in the statute but the discretion being judicial is required to be exercised on general principles guided by rules of reason and justice on the facts of each case, 829 and not in any arbitrary or fanciful manner.
It may also be remembered that if the discretion is exercised in an arbitrary or un judicial manner remedy by way of resort to the higher courts is always open to the aggrieved party.
The second limb of the challenge is based on the contention that section 344 falls in Chapter 24, Cr.
P.C. which contains general provisions as to inquiries and trials.
According to this submission this section cannot apply to a case which is at the stage of investigation and collection of evidence only.
This argument appears to us to be negatived by the express language both of sub section
(1A) and the explanation.
Under sub section
(1A) the commencement of the inquiry or trial can also be postponed.
This clearly seems to refer to the stage prior to the commencement of the inquiry.
The explanation makes it clear beyond doubt that reasonable cause as mentioned in sub section
(1A) includes the likelihood of obtaining further evidence during investigation by securing a remand.
The language of section 344 is unambiguous and clear and the fact that this section occurs in Chapter 24 which contains general provisions as to inquiries and trials does not justify a strained construction.
Indeed, postponement of an inquiry also seems to be within the contemplation of the general provisions as to inquiries and trials.
So this challenge also fails.
The suggestion that the explanation could not extend the substantive provisions of sub section
(1A) has merely to be stated to be rejected because the explanation merely serves to explain the scope of the expression reasonable cause.
The last submission that there is in any event no guideline for making a remand order and, therefore, the power to remand an accused person under section 344 is ultra vires being arbitrary and ' unguided is wholly unacceptable.
When a case is postponed or adjourned and the accused is in custody the court has to exercise its judicial discretion whether or not to continue him in custody by making a remand order.
The court is neither bound to make an order of remand nor is it bound to release the accused person.
The period of remand is in no case to exceed 15 days at a time.
The discretion to make a suitable order is to be exercised judicially keeping in view all the facts and circumstances of the case including the nature of the charge, the gravity of the alleged offence, the, area of investigation, the antecedents of the accused and all other relevant factors which may appropriately help the court in determining whether to keep the accused in custody or to release him on bail.
The court has to ensure the presence of the accused and ' a just, fair and smooth inquiry and trial of the offence charged.
The order of remand is thus subject to judicial discretion and the, order is also subject to review by the superior courts in accordance, 830 with law.
The power conferred being judicial the absence of an express, precise standard for determination of the question would not render the section unconstitutional.
Detention pursuant to an order of remand which appropriately falls within the terms of section 344 is accordingly not open to challenge in habeas corpus.
After we had reserved orders the petitioner forwarded to this ;Court through jail supplementary affidavit containing written arguments.
We have gone through the affidavit but we do not find any new point requiring discussion.
It only discloses a further attempt to reopen the majority decision of this Court in Rai Narain 's case (supra) by relying on the minority judgment and by submitting that section 344(1A), Cr.
P.C. offends article 19(1)(d) of the Constitution.
All that we need Say at this stage is that the majority view :is binding on us.
This petition accordingly fails and is dismissed.
G.C. Petition dismissed.
| The petitioner was arrested on July 17, 1970 and was produced before a first class Magistrate next day when he was remanded to judicial custody under section 167(2) Cr.
P.C. for 15 days.
He was informed at the time of remand that his arrest was in connection with a case relating to dacoity and murder and conspiracy to commit the same.
Although a charge sheet had been submitted against about 148 persons accused in the case the petitioners ' name was not among them, because as the police later explained, investigations against him had not been completed.
The petitioner objected to a second remand on August 1, 1970 but that very day the prosecution filed a supplementary charge sheet including his name.
Remand was then extended upto August 6 and thereafter upto August 20, 1970.
On the last mentioned date he was not produced before the magistrate because of alleged want of escort and the remand was extended in his absence.
In a petition under article 32 of the Constitution the petitioner challenged his detention from August 1 onwards.
The remand order of August 20 was challenged on the ground that it was made in his absence and it was urged that the law does not permit remand without actual production of the accused before the Court.
The constitutional validity of section 344(1A) and of the Explanation to the section was also challenged.
HELD : (1) In view of this Court 's decision in Rai Narain 's case it could no longer be urged that the production of an accused before the magistrate for the purpose of remand was a necessary requirement.
though as a rule of caution it is highly desirable that the accused should be personally produced before the magistrate so that he may if he so chooses make a representation against his remand.
The order of remand dated August 20, 1970 was in the circumstances not contrary to law so as to render the petitioner 's custody illegal justifying his release by this Court on habeas corpus.
It was still open to the petitioner to apply for bail to the appropriate court in accordance with law.
Rai Narain vs Supdt.
Central Jail, New Delhi, ; applied.
[826 G 827 C] (ii)Sub section (1A) of section 344 of the code vests in the court seized of a criminal case, power to postpone the commencement of or adjourn any inquiry or trial before him by order in writing stating the reasons therefore from time to time on such terms as the court thinks fit and for such time as it considers reasonable.
When the case is so postponed or adjourned the court may also by a warrant remand the accused, if in custody.
The discretion to adjourn being vested in a court of law has to be exercised judicially on well recognised principles and is therefore immune from challenge on the ground of arbitrariness or want of guidelines.
The judicial power to postpone or adjourn the proceedings is to be exer 823 cises only it from the absence of witnesses or any other reasonable cause the court considers it necessary or desirable to do so.
It has to record its reasons for so doing.
Similarly the discretion to order remand of the accused is to be exercised judicially keeping in view all the facts and circumstances of the case including the nature of the charge the gravity of the alleged offence, the area of investigation, the antecedents of the accused and all other relevant factors which may appropriately help the court in determining whether to keep the accused in custody or to release him on bail.
Reasonable cause for remand according to the explanation covers a case where sufficient evidence is obtained to raise suspicion about the complicity of an accused person in the offence and it appears likely that more evidence may be obtained by remand.
[828 C E] Further, both the order of adjournment as well as the order of remand are subject to review by the superior courts in accordance with law.
The challenge to the validity of section 344(1A) on the ground of want of guidelines must therefore fail.
[829 H 830 A] (iii)The suggestion that the explanation could not extend the substantive provisions of sub section
(1A) has merely to be stated to be rejected because the explanation merely serves to explain the scope of the expression reasonable cause.
[829 E] (iv)The argument that since section 344 falls in Ch.
24 Cr.
P.C. which contains general provisions as to inquiries and trials and therefore it cannot apply to a Case at the stage of investigation and collection of evidence is negatived by the express language of sub section
(1A) and the explanation.
Under sub section
(1A) commencement of the inquiry or trial can also be postponed.
This clearly seems to refer to the stage prior to the commencement of the inquiry.
The explanation makes it clear beyond doubt that reasonable cause as mentioned in sub section
(1A) includes the likelihood of obtaining further evidence during investigation by securing a remand.
Indeed a postponement of an inquiry on trial also seems to be within the contemplation of the general provisions as to inquiries and trials.
[829 C D] [Plea to reopen Rai Narain 's case rejected.]
|
Appeal No. 303 of 1958.
Appeal from the judgment and order dated August 3, 1956, of the Bombay High Court in Incometax Reference No. 10 of 1956.
K. N. Rajagopal Sastri and D. Gupta, for the appellant.
N. A. Palkhivala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents.
May 4.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal against the judgment and order of the High Court of Bombay dated August 3, 1956, in a reference under section 66 (1) of the Indian Income tax Act by the Appellate Tribunal, Bombay.
The Tribunal referred four questions for the decision of the High Court.
The High Court did not answer the first question because it was not pressed, and answered the remaining in the negative, after modifying them.
It has certified this case as fit for appeal to this Court, and hence this appeal.
The Com missioner of Income tax, Bombay City, is the appellant, and the Khatau Makanji Spinning and Weaving Co. Ltd., Bombay, (the assessee Company), is the respondent.
The assessee Company has its year of account ending June 30 every year.
At the close of the account year 1951, it carried forward profits amounting to Rs. 30,680.
In that year, it appears it had earned a rebate by declaring dividends below the limit fixed by the Finance Act.
For the account year 1952 its book profits were Rs. 28,67,235 less allowances for depreciation and tax.
After these and other sundry adjustments, the balance available for distribution was Rs. 5,02,915.
It may be pointed out that the Incometax Officer on processing the income found the total income to be Rs. 5,26,681.
For the account year 1952, the assessee Company declared dividends amounting to Rs. 4,78,950 and carried forward the balance of Rs. 23,965.
We are concerned with the assessment year 1953 54, and the Finance Act, 1953, is applicable.
That Finance 875 Act applied the Finance Act, 1951, with some changes.
The Finance Act, 1953, with the modifications will be referred to briefly, hereinafter, as the Finance Act.
The Income tax Officer found that the assessee Company had declared excess dividends amounting to Rs. 1,87,691.
He calculated additional income tax on it at 5 annas in the rupee after deducting income tax borne by the profits of the previous year at 4 annas per rupee, a surcharge of 5 per cent.
less rebate of one anna in the rupee as allowed by the Finance Act.
This additional tax amounted to Rs. 21,115 4 0.
The appeals of the assessee Company under the Income tax Act failed.
The Tribunal held that the excess dividends were deemed to be paid out of undistributed profits of earlier year ending June 30, 1951, amounting to Rs. 6,60,720 on which a rebate of 1 anna in the rupee was given in the assessment year, 1952 53.
Tile Tribunal observed that additional incometax was also a tax on income, and that the Finance Act could say that the tax would be payable on the income of any year preceding the previous year.
The Tribunal, however, referred four questions to the High Court, of which the first need not be quoted because it was abandoned before the High Court.
The other questions were: " (ii) If the answer to question No. 1 is in the negative whether the said provisions go beyond the ambit and scope of the Indian Income tax Act ? (iii) Whether additional income tax can be levied, assessed and recovered under the provisions of the Indian Income tax Act ? (iv) Whether at any rate the additional incometax has been legally charged under the Indian Finance Act, 1953, read with the Indian Incometax Act?" The High Court compressed the three questions into one, and it reads: " Whether additional income tax has been legally charged under clause (ii) of the proviso to paragraph B of Part 1 of the.
First Schedule to the Indian Finance Act, 1951, as applied to the assessment year 1953 54 by the Indian Finance Act, 1953, read with Section 3 of the Indian Income tax Act?" 876 This question was answered by the High Court in the negative.
In the opinion of the High Court, section 3 of the Indian Income tax Act lays down the liability to tax, and it puts the tax on the total income of the previous year.
The method of computing this total income is also to be found in the Finance Act.
The Finance Act merely provides the rate applicable to the income so found.
According to the High Court, the Finance Act in providing that additional income tax should be paid upon the accumulated profits of the previous years goes beyond the purpose for which the Central Act is passed every year, and cannot stand by itself without the support of section 3 of the Indian Income tax Act.
The High Court held that the Finance Act had ' misfired ', because it did not resort to legislation which would have conformed to the object for which the Finance Act was passed every year.
The learned Chief Justice, who delivered the judgment of the High Court, stated that there were several methods open to the legislature to achieve that purpose but that it had not resorted to any of them.
This is what the learned Chief Justice observed: " The Legislature could have achieved this object by one of three methods.
It could have treated the excess dividend declared by the company as a notional income and made it apart of the total income of the previous year.
It could have provided for rectification of the assessment of the year in which these profits were charged at a lesser rate, and we now find that Parliament has actually provided for this in the Finance Act, 1956.
Or, finally, it could have provided for a penalty imposed upon a company which transgressed the direction of Parliament that it should not pay dividend beyond a particular ceiling .
The ambit of Section 3 is clear and the ambit is that the tax to be levied must be a tax on income and the power of Parliament is equally clear and that is to fix the rate at which income tax is to be charged upon the total income of the previous year of the assessee.
In our opinion, the provision of the Finance Act travels beyond the ambit of Section 3, and if Parliament 877 has done so then no effective charge can be made on the total income of the previous year of the assessee under the provisions of the Finance Act which deals with additional tax on excess dividend.
" It may be pointed out that before the High Court it was conceded that in order that the provisions of the Finance Act might be effective, the Finance Act had to come within the scope of section 3 of the Incometax Act.
The point that was argued here was that it was not necessary to look only to section 3 of the Indian Income tax Act but also to the provisions of the Finance Act, through which Parliament could impose a new tax, if it so pleased.
Other arguments involved modifications of language suitable to sustain the tax independently of section 3 of the Indian Income tax Act, a procedure which we do not think is open, for reasons which we have given in Civil Appeal No. 427 of 1957, decided today.
These modifications, which were suggested, involve a recasting of the entire relevant paragraph of the Finance Act to make it independent of section 3 of the Indian Income tax Act, a course which is only open to a legislature and not to a Court.
We need not give all the modifications suggested, because, in our opinion, the words of the Finance Act must be given their due meaning, and must be construed as they stand.
The learned Chief Justice, with respect, very rightly pointed out that the Income tax Act puts the tax on income or something which it deems to be income.
In other words, the tax deals with income and income only.
It further provides that this tax shall be collected at a particular rate on the total income for which provision shall be made in an yearly Central Act.
The Finance Act also follows the same scheme, and lays down the rate at which the tax is to be collected.
In the Finance Act, the tax is laid on the total income, but two provisos modify the rate under certain circumstances.
We may at this stage read the relevant provision (Part 1, First Schedule): 878 B.
In the case of every company Rate.
Surcharge.
On the whole of Four annas One twentieth of total income.
in the rupee.
the rate specified in the preceding 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, 1953, has made the prescribed arrangements for the declaration and payment within the territory of India excluding the State of Jammu and Kashmir, of the dividends payable out of such profits, and has deducted super tax from the dividends in accordance with the provisions of subsection (3D) or (3E) of section 18 of the 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, 1953, and no order has been made under sub section (1) of section 23A of the Income tax Act, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess; (ii) Where the amount of dividends referred to in clause (i) above exceeds the total income as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, there shall be chargeable on the total income an additional income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess (hereinafter referred to as ' excess dividend ') falls short of the amount calculated at the rate of five annas per rupee on the excess dividend.
For the purpose of clause (ii) of the above proviso, the aggregate amount of income tax actually borne by the excess dividend shall be determined as follows : 879 (i) the excess dividend shall be deemed to be out, of the whole or such portion of the undistributed profits of one or more years immediately preceding; the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year; (ii) such portion of the excess dividend as is deemed to be out of the undistributed profits of each of the said years shall be deemed to have borne tax, (a) if an order has been made under sub section (1) of section 23A of the Income tax Act, in respect of the undistributed profits of that year, at the rate of five annas in the rupee, and (b) in respect of any other year, at the rate applicable to the total income of the company for that year reduced by the rate at which rebate, if any, was allowed on the undistributed profits.
" By the first Proviso, a rebate of one anna per rupee is given to a company which pays dividends less than 9 annas in the rupee out of its profits.
By the second Proviso, the rebate disappears, and an additional income tax has to be paid on dividends in excess of that limit, paid in the year.
The explanation says that " the excess dividend shall be deemed to be out of the whole or such portion of the undistributed profits of one or more years immediately preceding the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year ".
This fiction, as we have already pointed out, provides only that the dividends shall be deemed to be out of the profits not of the previous year under assessment but of some other years.
What the Finance Act fails to do is to make them " total income ", so as to take in the rate which is prescribed for the total income in the Proviso.
Unless the Finance Act stated that after the working out of the fiction the profits of the back year or years shall be deemed to be a part of the total income of the previous year under assessment, the purpose of the Act clearly fails.
Income tax is a tax on income 880 of the previous year, and it would not cover something which is not the income of the previous year, or made fictionally so.
The Finance Act could have gone further, as pointed out by the learned Chief Justice in the extract quoted, and made the profits a part of the total income of the previous year under assessment, but it did not do so.
The Finance Act could have also resorted to some other fiction, which might conceivably have met the case; but it has failed to do so.
Even if one considers the dividends as having come out of the profits of preceding years, they do not become the income of the relevant previous year, and unless the Finance Act expressly laid down that it should be taxed as part of the total income, the purpose is not achieved.
Indeed, the Finance Act continues to say that the tax shall be on the total income, as defined in the Indian Income tax Act and as determined under that Act.
It is impossible to say that the additional income tax was properly laid upon the total income, because what was actually taxed was never a part of the total income of the previous year.
For these reasons, we are of opinion that the High Court was right in answering the question which it had framed, in the negative.
In the result, the appeal fails, and is dismissed with costs.
Appeal dismissed.
| One of the persons who entered into a partnership was a minor and in the instrument of partnership he was described as a full partner with equal rights and obligations with the other adult partners.
The deed of partnership which was signed by the minor was produced before th e Registrar of Firms f or registration and he granted a certificate showing the minor as a full partner and not as one entitled merely to the benefits of the partnership.
The Income tax Officer, however, refused to register the firm under section 26A of the Indian Income tax Act and his decision was upheld by the Income tax Authorities and the Income tax Appellate Tribunal.
The High Court differed from the Tribunal and held that the firm should be registered.
On appeal by the Commissioner of Income tax, Held, that the Rules framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration.
The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application.
The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner.
For that purpose, the law of Partnership must be considered, apart from the definition in the Income tax Act.
Section 30 of the Indian Partnershi Act clearly lays down that a minor. cannot become a partner, I tough with the consent of the adult. .partners, he may be admitted to the benefits of partnership.
. .Any document which goes beyond this section cannot be regarded as valid for the purpose of registration.
Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it.
If the Income tax Authorities register the:partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out.
It is tot open to the Incometax Authorities to register a document which is different from the one actually executed and asked to be registered.
Hoosen Kassam Dada vs Commissioner of Income tax, Bengal, [1937]5 I.T.R. 182, Hardutt Ray Gajadhar Ram vs Commissioner of 104 822 Income tax, , Banka Mal Lajja Ram and Co. vs Commissioner of Income tax, , approved.
Jakka Devayya and Sons vs Commissioner of Income tax, [1952) , disapproved.
|
Appeals Nos. 2 and 4 of 1955.
Appeal by Special Leave from the Order dated the 18th day of November 1954 of the Labour Appel 1243 late Tribunal of India, Bombay in Application (Misc.) Bombay No. 773 of 1954.
H. M. Seervai, J. B. Dadachanji and Rajinder Narain, for the appellant in Civil Appeal No. 2 of 1955 and respondent in Civil Appeal No. 4 of 1955.
D. H. Buch and I. N. Shroff, for the respondents in Civil Appeal No. 2 of 1955 and appellants in Civil Appeal No. 4 of 1955.
M. C. Setalvad, Attorney General for India (G. N. Joshi and P. C. Gokhale with him), for the Intervener (Union of India).
February 3.
The Judgment of the Court was delivered by DAS J.
This is an appeal by special leave from the order of the Labour Appellate Tribunal, Bombay Bench, dated the 18th November 1954 which was made on an application made by the appellant company on the 6th September 1954 under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (Act XLVIII of 1950) which is hereinafter referred to as the 1950 Act.
The appellant company carries on business as assemblers of motor vehicles from "completely knocked down" assemblies imported into India.
There was some appeal pending before the Labour Appellate Tribunal arising out of disputes between the appellant company and its workmen.
It is alleged that the name of the appellant company had been removed by the Government of India from the list of approved manufacturers maintained by them and that, in the result, it had been unable to secure further import licenses for the import of completely knocked down assemblies of motor vehicles and that consequently on and from the 1st November 1953 the company had to lay off a number of its workmen, for it had to operate the various departments of its factory at greatly reduced strength.
As the appellant company saw no prospect of any increase in the scope of its present operation which would provide employment for the workmen who had been laid off, it had become necess 1244 sary to retrench the workmen named in Annexure A to the application.
As those workmen were concerned with the appeal pending before the Labour Appellate Tribunal the company applied to the Appellate Tribunal under section 22 of the 1950 Act for permission to retrench them.
The respondents through their Union, the Automobile Manufacturers ' Employees ' Association, Bombay, filed a written statement on the 1st November 1954 making diverse allegations against the company and contending that the company bad itself to blame for having brought about the lay off.
It was contended that there was no immediate cause for making the application, that the company was motivated by ulterior motives to deprive the workmen of their dues which even according to the company would become due and payable to the workmen on the expiry of the one year of the said lay off period.
It was further alleged that in or about April 1954 the company recalled some of the workmen out of those who had been laid off since November 1953 violating all principles on which a recall should have been made and that by such arbitrary and unscientific recall the company had imposed disproportionate work loads on the recalled workmen, thereby altering their conditions of service to their prejudice.
The respondents maintained that the application was not maintainable in law, was mala fide and should be dismissed.
In the penultimate paragraph of the written statement it was submitted that in the event of the Labour Appellate Tribunal granting the permission in whole or in part such permission should be granted subject to the following conditions: (1) Payment of full wages with dearness allowance for the entire period of lay off; (2) Payment of one month 's notice pay and retrenchment compensation at the rate of one month 's wages including dearness allowance for every completed year of service and part thereof in addition to the gratuity as per the scheme in force in the company; (3) Alternatively to (2) above and in cage the Labour Appellate Tribunal took the view that the 1245 lay off was governed by section 25 C of the , payment of compensation at 50 per cent.
of their wages plus dearness allowance for the entire period of lay off to the date of discharge in addition to the notice pay and gratuity as claimed in (2) above; and (4)Payment of leave wages as per existing rules, taking the entire period of lay off as service.
A number of documents were filed in support of the respective contentions.
The Labour Appellate Tribunal at the very outset of its judgment under appeal states its finding on the merits of the action proposed to be taken by the company as follows: "There can be little doubt that the retrenchment has been occasioned by the failure of the concern to secure sufficient work owing to absence of licenses from Government and, therefore, retrenchment must be regarded as inevitable and the application before us bona fide.
Permission to retrench cannot be refused but for the reasons that we shall state hereafter we make that permission conditional upon the fulfilment of certain terms by the concern".
The company contended before the Labour Appellate Tribunal that its function, while dealing with an application under section 22 of the 1950 Act, was only to give or withhold permission.
This contention was rejected by the Appellate Tribunal with the following observation: "That view is quite untenable as has been repeatedly held by this Tribunal.
We are the authority to whom an application has to be made for permission to retrench, and when such an application is made we must of necessity exercise our judgment and discretion and satisfy ourselves that when the company retrenches it does justice by its employees".
The Labour Appellate Tribunal was clearly influenced by the consideration which, stated in its own words, was as follows: "We do not think that we will be advancing the interest of the employees or of the concern by refusing 1246 retrenchment because the case for retrenchment has been established, and the sooner the workmen are allowed to leave and find for themselves other employment the better for them.
But in order to assure ourselves that on retrenchment the employees receive what in justice they should have, we have decided to give permission to retrench subject to cer tain conditions which in our view are inherent under the Act.
, and which apart from the Act we consider to be just and equitable in the particular circumstances of this case".
In this view of the matter the Labour Appellate Tribunal definitely declined "to leave over the question of compensation for lay off as a legacy of the present troubles; the employees to be retrenched have enough to worry them without having to make claims and have them decided after contest before a Tribunal".
In the result, the Labour Appellate Tribunal gave the appellant company permission to retrench "subject to the terms and conditions of Act XLIII of 1953, provided that each workman is paid at the rate of half basic wages and dearness allowance for the whole period from the date of lay off up to the date of retrenchment (less sums already received as lay off compensation)".
Liberty was given to the company to set off the lay off compensation protanto against the retrenchment relief given by the Act.
Aggrieved by this decision the appellant company applied for and obtained from this Court special leave to appeal against this order.
The respondents subsequently filed an application for special leave to appeal against this decision in so far as the Labour Appellate Tribunal had not allowed their full claim as surmmarised above and in so far as the names of 17 persons had been struck off on the allegation of the company that they were not workmen.
This application of the respondents was also acceded to and the two appeals have been heard together.
The Union of India asked for leave to intervene as important questions of construction of the provisions of the (hereinafter referred to as the 1947 Act) and the 1950 Act were involved.
Such 1247 leave was granted.
and we have heard learned counsel for the Union of India along with learned counsel for the parties.
The question as to the propriety of permitting the names of 17 workmen to be struck off from the application has not been seriously pressed before us.
Only two questions have been canvassed at some length before us, namely . (1)Whether under section 22 of the 1950 Act the Tribunal has jurisdiction to impose conditions when granting the permission asked for; and (2)Whether the conditions imposed in this case are in conformity with law.
It is plain, however, that in case the first question is answered in the negative, the second question will not call for any decision on the present occasion.
In order to correctly answer the questions it will be necessary to bear in mind the general scheme of the two Acts.
The purpose of the 1947 Act is, inter alia, to make provision for the investigation and settlement of industrial disputes.
In order to achieve this avowed object different authorities have been constituted under this Act.
Thus section 3 provides for the constitution of Works Committee whose duty is to promote measures for securing and preserving amity and good relations between the employers and workmen.
The appropriate Government is authorised by section 4 to appoint conciliation officers charged with the duty of mediating in and promoting the settlement of industrial disputes and by section 5 to constitute a Board of Conciliation for promoting the settlement of industrial disputes.
Section 6 empowers the appropriate Government to constitute a Court of Inquiry for enquiring into any matter appearing to be connected with or relevant to an industrial dispute.
Finally, section 7 provides for the constitution of Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of the Act.
Section 10 of this Act provides for reference of disputes to a Board, Court or Tribunal.
It will be noticed that under this section it is the appropriate 160 1248 Government which alone can make the reference and set the authority in motion.
The procedure, powers and duties of conciliation officers, Boards, Courts and Tribunals are elaborately prescribed and defined in sections I 1 to 15.
It is to be noted that the conciliation officer, Board, and Court are required to make a report to the appropriate Government while the Tribunal is enjoined to submit its award to the appropriate Government.
The report of a Board or Court and the award of a Tribunal are under section 17 to be published by the appropriate Government within a month from the date of their receipt.
Section 17 A provides that the award of a Tribunal shall become enforceable on the expiry of 30 days from the date of its publication and, subject to the provisions of sub section (1) shall come into operation from such date as may be specified therein and if no date is so specified from the date when the award becomes enforceable as aforesaid.
Section 19 prescribes the period of operation of settlements and awards.
Chapter deals with strikes and lock outs.
Sections 26 to 31 which are grouped together under the heading "Penalties" prescribe punishments.
Section 31 (I) provides that any employer who contravenes the provisions of section 33 shall be punishable with imprisonment for a term which may extend to 6 months or with fine which may extend to Rs. 1,000 or with both.
Section 33, a contravention of which is made punishable by section 31, as it stood before 1950, forbade an employer, during the pendency of any conciliation proceedings or proceedings before a Tribunal, to alter, to the prejudice of the workmen concerned in the dispute, the conditions of service applicable to them immediately before such proceedings, nor, save with the express permission of the conciliation officer, Board or Tribunal, as the case may be, to discharge, dismiss or otherwise punish during the pendency of the proceedings any workman, except for misconduct not connected with the dispute.
It may be noted that under this section the ban on the alteration of the conditions of service was absolute and that permission was necessary only in case of discharge or dismissal or 1249 punishment and even in such case no permission was necessary when the workman was guilty of misconduct not concerned with the pending dispute.
The Only deterrent against a contravention by an employer of the provisions of section 33 was the prosecution of the employer under section 31.
This was hardly any consolation for the workmen, for if an employer took the risk of a prosecution and acted in contra vention of section 33 the workmen could only raise an industrial dispute and ask the appropriate Government to refer the same to a Tribunal but if the Government declined to accede to their prayer the workmen were without any remedy.
This was the position under the 1947 Act before it was amended in 1950.
The 1950 Act was enacted for establishing an Appellate Tribunal in relation to industrial disputes.
Chapter II of the Act deals with the constitution, composition and functions of the appellate tribunal.
Section 7 formulates the jurisdiction of the appellate tribunal.
Section 9 confers on the appellate tribunal all the powers which are vested in a Civil Court when hearing an appeal under the Code of Civil Procedure, 1908.
Section 10 prescribes the period of limitation within which appeals are to be brought before the appellate tribunal.
Under section 15 the decision of the appellate tribunal becomes enforceable on the expiry of 30 days from the date of its pronouncement, provided that where the appropriate Government is of opinion that it would be inexpedient, on public grounds, to give effect to the whole or any part of the decision the appropriate Government may, before the expiry of the said period of 30 days, by order in the Official Gazette either reject the decision or modify it.
Section 22 of this Act provides: "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 sball (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 1250 (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 on which reliance is placed by learned counsel for the respondents and for the intervener, reads as follows: "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". ' Section 29 of this Act provides for penalty for con travention of the provisions of section 22, namely, imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
From what has been stated so far four things are to be noted, namely, (i) that the ordinary and primary jurisdiction of the appellate tribunal is appellate, (ii) that section 22 of this Act confers on the appellate tribunal a special jurisdiction which is in the nature of original jurisdiction, (iii) that section 23 also vests in the tribunal an additional jurisdiction to decide the complaint as if it were an appeal pending before it; and (iv) that section 23 confers on the workmen an additional remedy which they did not have under the 1947 Act.
To fill up the lacuna in the 1947 Act section 34 of the 1950 Act provided for certain amendments of the 1947 Act.
Amongst other things, it substituted a new section for the old section 33 of the 1947 Act.
The new section 33 runs as follows "33.
During the pendency of any conciliation proceedings or proceedings before a Tribunal in respect of any industrial dispute, no employer shall 1251 (a)alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings; or (b)discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the conciliation officer, Board or Tribunal, as the case may be".
It will be noticed that this section has made several changes.
Thus under this section provision is made for obtaining permission as a condition precedent both for altering the conditions of service and for discharging or punishing the workmen and no exception is made for a case of misconduct unconnected with the pending dispute.
Besides this, the following new section was added to the 1947 Act as section 33 A: "33 A. Where an employer contravenes the provisions of section 33 during the pendency of proceedings before a Tribunal, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such Tribunal and on receipt of such complaint that Tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit its award to the appropriate Government and the provisions of this Act shall apply accordingly".
It may be pointed out that the new sections 33 and 33 A thus inserted into the 1947 Act confer distinct benefits on the workmen and give some additional jurisdiction and power to the authorities mentioned therein.
Section 33 A enjoins the Tribunal to decide the complaint "as if it were a dispute referred to or pending before it" and to submit its award to the appropriate Government and provides that the provisions of the Act shall apply to the award.
It is quite clear that the provisions of these two new sections 33 and 33 A of the 1947 Act correspond to and are in pari materia with the provisions of sections 22 and 23 of the 1950 Act and are more or less in similar terms.
The question for our conside 1252 ration is: What are the meaning, scope and effect of these sections.
A cursory perusal of section 33 A of the 1947 Act as well as section 23 of the 1950 Act will at once show that it is the contravention by the employer of the provisions of section 33 in the first case and of section 22 in the second case that gives rise to a cause of action in favour of the workmen to approach and move the respective authority named in the section and this contravention is the condition precedent to the exercise by the authority concerned of the additional jurisdiction and powers conferred on it by the sections.
The authority referred to in the sections is, as we have seen, a Court of limited jurisdiction and must accordingly be strictly confined to the exercise of the functions and powers actually conferred on it by the Act which constituted it.
What, then, are the scope and ambit of the functions and powers with which it has been vested by these sections? When an employer contravenes the provisions of section 33 of the 1947 Act or of section 22 of the 1950 Act the workmen affected thereby obviously have a grievance.
That grievance is two fold.
In the first place it is that the employer has taken a prejudicial action against them without the express permission in writing of the authority concerned and thereby deprived them of the salutary safeguard which the legislature has provided for their protection against victimisation.
In the second place, and apart from the first grievance which may be called the statutory grievance, the workmen may also have a grievance on merits which may be of much more seriousness and gravity for them, namely, that in point of fact they have been unfairly dealt with in that their interest has actually been prejudicially affected by the highhanded act of the employer.
These sections give the workmen the right to move the authority by lodging a complaint before it.
This is a distinct benefit given to them, for, as we have seen, apart from these sections, the workmen have no right to refer any dispute for adjudication.
This complaint is required to be made in the prescribed manner.
Form DD prescribed by rule 51 A of the Industrial 1253 Disputes (Central) Rules, 1947, framed under section 38 of the 1947 Act, like Form E prescribed under section 35 of the 1950 Act, requires the complaining workmen to show in their petition of complaint not only the manner in which the alleged contravention has taken place but also the grounds on which the order or the act of the management is challenged.
This clearly indicates that the authority to whom the complaint is made is to decide both the issues, namely (1) the fact of contravention and (2) the merits of the act or order of the employer.
It is also clear that under section 33 A of the 1947 Act the authority is to adjudicate upon the complaint "as if it were a dispute referred to or pending before it" and under section 23 of the 1950 Act the authority is to decide the complaint "as if it were an appeal pending before it".
These provisions quite clearly indicate 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.
The extreme contention that under section 33 A of the 1947 Act, on a finding that there has been a contravention of the provisions of section 33, the Tribunal 's duty is only to make a declaration to that effect, leaving the workmen to take such steps under the Act as they may be advised to do, has been negatived by the Labour Appellate Tribunal in Serampore Belting Mazdoor Union vs Serampore Belting Co., Ltd.(1) and by the Bombay High Court in Batuk K. Vyas vs Surat Borough Municipality(1).
The same principle has been accepted and applied by a Full Bench of the Labour Appellate Tribunal to a case under section 23 of the 1950 Act in Raj Narain vs Employers ' Association of Northern India(1).
We find ourselves in agreement with the construction placed upon section 33 A of the 1947 Act and section 23 of the 1950 Act by these decisions.
In our view the scope and ambit of the jurisdiction conferred on the authority named in those (1) (2) (3) , 1254 sections is wider than that conferred on the Criminal Court by section 31 of the 1947 Act and section 29 of the 1950 Act.
The Criminal Court under the two last mentioned sections is only concerned with the first issue herein before mentioned, namely, yea or nay whether there has been a contravention of the respective provisions of the sections mentioned therein, but the authority exercising jurisdiction under section 33 A of the 1947 Act and section 23 of the 1950 Act is to adjudicate upon or decide the complaint "as if it were a dispute referred to or pending before it" in the first case or "as if it were an appeal pending before it" in the second case.
The authority is, therefore, enjoined to go into the merits of the act complained of under section 33 A of the 1947 Act and section 23 of the 1950 Act.
In this sense the jurisdiction of the authority named in these two sections is certainly wider than that of the Criminal Court exercising jurisdiction under the penal sections referred to above.
Having regard to the scope of the enquiry under section 33 A of the 1947 Act and section 23 of the 1950 Act it must follow that the power of the authority to grant relief must be co extensive with its power to grant relief on a reference made to it or on an appeal brought before it, as the case may be.
The provision that the authority concerned must submit its award to the appropriate Government and that the provisions of the respective Acts would be applicable thereto also support the view that the decision of the authority is to partake of the nature of a decision on the merits of an industrial dispute which when published by the appropriate Government will become enforceable under the respective Acts.
It follows, therefore, that the authority referred to in these sections must have jurisdiction to do complete justice between the parties relating to the matters in dispute and must have power to give such relief as the nature of the case may require and as is also indicated by the prayer clause mentioned in the two Forms DD and E referred to above.
In short, these two sections give to the workmen a direct right to approach the Tribunal or Appellate Tribunal for the 1255 redress of their grievance without the intervention of the appropriate Government which they did not possess before 1950 and they provide for speedy determination of disputes and avoid multiplicity of proceedings by giving complete relief to the workmen in relation to their grievances arising out of the action taken by the employer in contravention of the provisions of the relevant sections.
It is significant that this jurisdiction or power has been vested in the Tribunal or Appellate Tribunal whose normal duty is to decide or adjudicate upon industrial disputes and not on any conciliation officer or Board who are normally charged with the duty of bringing about settlement of dis putes.
it is submitted by learned counsel for the Respondents and of the intervener that the scope of section 33 of the 1947 Act and of section 22 of the 1950 Act is precisely the same as that of section 33 A of the 1947 Act and section 23 of the 1950 Act.
The argument is that the two last mentioned sections were enacted only in order to afford an opportunity to the workmen to do what they had been prevented from doing at the earlier stage by reason of the employer taking the law into his own hands and taking action against them without previously obtaining the sanction of the appropriate authority to do so.
If the law permits the workmen to ventilate their grievances at a later stage under section 33 A of the 1947 Act and section 23 of the 1950 Act there can be no logical reason why the law should not permit them to do so at the earlier stage under section 33 of the 1947 Act and section 22 of the 1950 Act.
It is submitted that the purpose of labour legislation being to maintain industrial peace and restore amity and goodwill between the employer and his workmen, it should be the attempt of the Tribunal or the Appellate Tribunal at every stage to try to resolve all disputes which are connected with the matter which is brought before it.
Finally, it is urged that whenever an authority is vested with the power to do or not to do an act it must be regarded as having a discretion and 161 1256 that in exercise of such discretion the authority must be presumed to be vested with power to impose suitable conditions.
Reliance is placed on the decision in The Queen vs County Council of West Riding of Yorkshire(1).
The argument is that the authority concerned may under section 33 of the 1947 Act and section 22 of the 1950 Act grant by way of imposing conditions the same relief which it can grant to the workmen under section 33 A of the 1947 Act and section 23 of the 1950 Act.
We are unable to accept this contention as correct for reasons which we now proceed to state.
The object of section 22 of the 1950 Act like that of section 33 of the 1947 Act as amended is to protect the workmen concerned in disputes which form the subject matter of pending proceedings against victimisation by the employer on account of their having raised industrial disputes or their continuing the pending proceedings.
It is further the object of the two sections 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 those pro ceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relation between the employer and the workmen.
To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law governing a contract of employment.
Section 22 of the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting of express permission in writing in appropriate cases by the authority mentioned therein.
The purpose of these two sections being to determine whether the ban should be removed or not, all that is required of the authority exercising jurisdiction under these sections is to accord or withhold permission.
And so it has been held we think rightly by the Labour Appellate Tribunal in Carlsbad Mineral Works Co. Ltd. vs Their (1) [1S96] 2, Q.B. 386. 1257 Workmen(1) which was a case under section 33 of the 1947 Act.
Even a cursory persual of section 33 of the 1947 Act will make it clear that the purpose of that section was not to confer any general power of adjudication of disputes.
It will be noticed that under section 33 of the 1947 Act the authority invested with the power of granting or withholding permission is the conciliation officer, Board or Tribunal.
The conciliation officer or the Board normally has no power, under the 1947 Act, to decide any industrial dispute but is only charged with the duty of bringing about a settlement of dispute.
It is only the Tribunal which can by its award decide a dispute referred to it. 'Section 33 by the same language confers jurisdiction and power on all the three authorities.
Power being thus conferred by one and the same section, it cannot mean one thing in relation to the conciliation officer or the Board and a different and larger thing in relation to the Tribunal.
There is no reason to think that the legislature, by a side wind as it were, vested in the conciliation officer and the Board the jurisdiction and power of adjudicating upon disputes which they normally do not possess and which they may not be competent or qualified to exercise.
Further, if the purpose of the section was to invest all the authorities named therein with power to decide industrial disputes one would have expected some provision enabling them to make and submit an award to which the provisions of the Act would apply such as is provided in section 33 A of the 1947 Act or section 23 of the 1950 Act.
There is no machinery provided in section 33 of the 1947 Act or section 23 of the 1950 Act for enforcing the decision of the authority named in those sections.
This also indicates that those sections only impose a ban on the right of the employer and the only thing that the authority is called upon to do is to grant or withhold the permission, i.e. to lift or maintain the ban.
And so it has been held by this Court in Atherton West & Co., Ltd. vs Suti Mill Mazdoor Union(1) which was a case under clause 23 of the U. P. Government Notification quoted on p. 785.
(1) (2) ; , 786 7, 1258 Section 22 of the 1950 Act is in pari materia with section 33 of the 1947 Act and the above clause 23 of the U. P. Government Notification and most of the considerations noted above in connection with these provisions apply mutatis mutandis to section 22 of the 1950 Act.
Imposition of conditions is wholly collateral to this purpose and the authority cannot impose any condition.
And it has been so held we think correctly in G. C. Bhattacharji vs Parry & Co., Ltd., Calcutta(1).
In view of the scheme of these Act summarised above and the language of these sections the general principle laid down in the case of The Queen vs
The County Council of West Riding supra can have no application to a case governed by these sections.
In our judgment the Labour Appellate Tribunal was in error in holding that it had jurisdiction to impose conditions as a prerequisite for granting permission to the company to retrench its workmen and the first question must be answered in the negative.
In the view we have taken on the first question we do not consider it necessary on this occasion to express any opinion on the other question canvassed before us.
The result, therefore, is that this appeal is allowed and the decision of the Labour Appellate Tribunal is set aside and the matter is remanded to the Labour Appellate Tribunal to deal with the application of the company and make the appropriate order according to law.
In the circumstances of this case we make no order as to costs.
Appeal No. 4 of 1955 is dismissed also without costs.
| The respondent invited tenders for supplying country spirit to retail vendors.
In the notification issued by the Commissioner, it was stated that preference will be given to manufacturers of spirit.
Several persons submitted tenders including the appellant and the 5th respondent who was a manufacturer of spirit.
The appellant offered to supply the spirit at 74 P and the 5th respondent at 95 P.
The Government was not satisfied with any of the tenders and the tenderers were called upon to intimate to the Government whether they were willing to reduce their rate.
None of the tenderers was willing to reduce the rate, except the 5th respondent who agreed to accept the rate fixed by tin Government, and the Government, reduced his rate to 74 P and accepted his tender.
The appellant challenged the order granting the contract to the 5th respondent, but the High Court dismissed the petition.
In appeal to this Court, it was contended that : (1) the impugned order could not be sustained because the Government nowhere stated that the tenders were not acceptable, on the ground that none of them, on due considerations, appeared to be satisfactory, as provided in r. 93 of the Rules framed under the Eastern Bengal and Assam Excise Act, 1910; ,and (2) under the rule, Government could not have entered into negotiations with :any of the tenderers.
Dismissing the appeal, HELD : (1) It is clear from the letter to the tenderers asking them to reduce the price quoted that the respondent Government considered the tenders to be unsatisfactory and hence unacceptable.
[205B C] (2) Rule 93 does not prohibit any negotiations with the tenderers.
On the other hand, it authorises Government to negotiate even with persons who have not tendered.
In the absence of any rule prohibiting Government from negotiating with the tenderers, Government can fall back on its powers under section 19.
In order to get country spirit at the cheapest possible rates and to have regular supplies, Government can negotiate with the tenderers or others.
[205F] (3) (a) No one has a fundamental right to get a Government contract.
In matters like this no question of hearing parties arises.
All that is required is fair play.
The appellant bad an opportunity to submit its tender which was considered and rejected on grounds which ate not irrational.
[306A] (b) Section 19 of the Act undoubtedly confers on the Government very wide powers in the matter of granting the exclusive privilege of manufacturing or of supplying to licensed vendors any country liquor or intoxicating drug within any specified local art a.
in the absence of a rule prohibiting Government from preferring one set of sellers to others, LI208 Sup.
CI/72 202 Government could rely on the section for such a power so long as the classification made by it is based on rational grounds.
Therefore, the Government could exercise that power in the manner most advantageous to it provided it did not infringe any Constitutional guarantee.
[205G] (c) It is true that the Government granted the contract to the 5th respondent at the rate quoted by the appellant and thus preferred the 5th respondent.
But the Government, as the purchaser, can prefer 'One seller to another for good reasons, though, it cannot show any undue favour to any one.
(d) In the notification calling for tenders it was mentioned that preference will be given to manufacturers; and there was justification for preferring a manufacturer to others, because, there would be a reasonable guarantee in the matter of supply of country liquor.
[205C]
|
Appeals Nos.
1968 1970 of 1966.
Appeals by special leave from the judgment and order dated July 16, 1962 of the Madras High Court in Tax Cases Nos. 117,118 and 119 of 1959.
section B. Banerjee and section N. Mukerjee, for the appellant (in all the appeals).
K. M. Mudaliyar, Advocate General for the State of Madras and A. V. Rangam, for the respondent (in all the appeals).
M.C. Setalvad, B. Sen, G. section Chatterjee and P. K. Bose, for the Intervener (in C. A. No. 1968 of 1966).
The Judgment of the Court was delivered by Hegde, J.
These appeals by special leave arise from the common order made by the Madras High Court in T. C. Nos.
117 to 119 (revisions Nos. 71 to 73) on its file.
The Indian Steel and Wire Products Ltd. a joint stock public limited company is the appellant in all these appeals.
At the instance of the steel controller the appellant supplied certain steel products to various persons in the Madras State during the financial years 1953 54, 1954 55) and part of 1955 56 (from April 1, 1955 to September 6, 1955).
The State of Madras assessed the turnovers of the appellant relating to those transactions to sales tax under the Madras Gen. Sales Tax Act, 1939 (Madras Act 9 of 1939) (to be hereinafter referred to as the Act), the law in force at that time.
The appellant has been assessed to tax on the basis of best judgment.
The authorities under the Act have determined appellant 's turnover during the year 1953 54 at Rs. 3129520/ and levied a tax of Rs. 16298/4 annas.
During the financial year 1954 55, its turnover was determined at Rs. 3759216/ .
and the assessment levied is Rs. 58737 12 0.
For the broken period in the financial year 1955 56, the appellant 's turnover was determined at Rs. 1453292/ and the same was assessed to tax at Rs. 22707 12 0.
Even according to the appellant, its turnovers during 1953 54 was Rs. 2912533 14 0, in 1954 55, Rs. 3971493/7/ and in 1955 56, Rs. 1725400/5/ .
Therefore, there is little room for controversy about its turnover in the relevant years.
The appellant is contesting the right of the State of Madras to levy tax on the turnovers in question.
According to the appellant, the turnovers in question could not have been considered as sales and consequently they could not have been brought to tax under the Act.
The appellant asserts that deliveries in question were made under compulsion of law and there was no agreement between the parties.
They were 481 made in pursuance of the orders of the Controller exercising powers under the Iron & Steel (Control of Production and Distribution) Order, 1941 (which will hereinafter be referred to as the order), which was issued under the Defence of India Act 1939.
It was argued on behalf of the appellant that it was the controller who determined the persons to whom the goods were to be supplied, the price at which they were to be supplied, the manner in which they were.
to be transported, and the mode in which the payment of the price was to be made.
In short, it was said that every facet of those transactions were prescribed by the controller and therefore those transactions cannot be considered as sales.
On the basis of those assertions support was sought from the decision of the House of Lords in Kirkness vs John Hudson & Co., Ltd.(1) the decision of this Court in M Is.
New India Sugar Mills Ltd. vs Commis sioner of Sales Tax.
Bihar(1), the decision of the Calcutta High Court in Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1) the decision of the Orissa High Court in Messrs. Cement Ltd. vs The State of Orissa(1), and a few other decisions.
It was further argued that even if those transactions are considered as sales the State before exercising its taxing power should have had in its possession material to show that the goods delivered by the appellant were delivered in that State for consumption which circumstance alone can make those transactions sales within that State; as no material was placed on record to show that the goods in question were delivered in that State for consumption it could not have brought the turnovers in respect of those transactions to tax under the Act.
These contentions of the appellant have been rejected by the authorities under the Act as well as by the High Court.
Other contentions advanced on behalf of the appellant deserve to be summarily rejected for the reasons to be mentioned hereinafter.
The principal question that falls for decision in these appeals.
is whether the transactions with which we are concerned herein are sales.
2(h) of the Act defines 'sale ' thus: " 'Sale ' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also transfer of property in goods involved in the execution of works contract and in the, supply or distribution of goods by a co operative society. club, firm or any association to its members for cash or for deferred payment or other valuable consideration but does not include a mortgage.
hypothecation, charge or pledge" (the explanations to that definition are not relevant for our present purpo se).
(1) (2) [1963] Suppl.
2 S.C.R. 459.
(3) (4) 12 S.T.C. 205.
482 This wide definition undoubtedly covers those transactions.
But then the power of a State to tax sales is derived from Entry 54 of List II of the VII Schedule in the Constitution.
That entry as it stood at the relevant time empowered the State to tax on the sale or purchase of goods.
The scope of the expression 'sale or purchase of goods ' found in entry 48 in List II of Schedule VII of the Government of India Act 1935 which is in pari materia with the aforementioned entry 54 came up for interpretation before this Court in State of Madras vs Gannon Dunkerley(1).
In that case, the question that fell for decision was whether the words 'sale of goods ' should be given their popular meaning or whether they should have the meaning attached to them under the Sale of Goods Act.
This Court held that the expression 'sale of goods ' was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and must be interpreted as having the same meaning as in the sale of Goods Act 1930: In the course of the judgment, Venkatarama Aiyar, J,who ,spoke for the Court after examining the various decisions cited at the Bar, observed, as follows: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course pre supposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in the goods.
Unless all these elements are present, there can be no sale.
Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale.
So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not sale.
And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale.
" As laid down by this decision, to constitute a valid sale, there must be concurrence of the following elements viz. (1) parties competent to contract (2) mutual assent (3) a thing the absolute or general property in which is transferred from the seller to the buyer and (4) a price in money paid or promised.
Therefore we have to see whether all these elements are found in the transactions before us.
Before doing so it is necessary to refer to the 'order ' and the manner in which those transactions were effected.
During the World War IT iron and steel goods became scarce.
Therefore it became necessary for the Government to control the production and distribution of those goods.
In order to do so, the (1) ; 483 government issued the 'order ' on July 26, 1941, and the same came into force on August 1, 1941.
The provisions in that order which are material for our present purpose are set out hereinbelow: "2. Definitions In this Order, unless there is anything repugnant in the subject context: (a) 'Controller ' means the person appointed as Iron and Steel Controller by the Central Government, and includes any person exercising, upon authorisation by the Central Government, all or any of the powers of the Iron and Steel Controller; (b) 'Producer ' means a person carrying on the business of manufacturing iron or steel.
(c) 'Registered Producer ' means a producer who is registered as such by the Controller.
(d) 'Stockholder ' means a person holding stocks of Iron or Steel for sale who is registered as stockholder by the Controller.
(e) 'Controlled Stockholder ' means a stockholder appointed by the Controller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time.
(f) 'Pressure Pipes ' include all Pipes and Tubes 1/8" nominal bore and above which will withstand or may be used for a working pressure of 25 lbs.
per square inch and above.
Application of Order (I) The provisions of this Order shall apply to all iron or steel of the categories specified in the Second Schedule to this Order.
(2) A certificate signed by the Comptroller or by any officer authorised by him in this behalf, in respect of any category of iron or steel, shall be conclusive proof that it is an article to which this Order is applicable.
Acquisition No person shall acquire or agree to acquire any iron or steel from a Producer or a Stockholder except under the authority of and in accordance with the conditions contained or incorporate d in a general or special written order of the controller.
Disposal No Producer or Stockholder shall dispose of or agree to dispose of or export or agree to export from British India any iron or steel, except in accordance with the conditions contained or incorporated in a general or special written order of the Controller.
10B. Power to direct sale The Controller may ' by a written Order require any person holding stock or iron 484 and steel, acquired by him otherwise than in accordance with the provisions of Clause 4 to sell the whole or any part of the stock to such person or class of persons and on such terms and conditions as may.
be specified in the Order.
10C. Power to prohibit removal The Controller may order any producer (including a registered producer), any stockholder (including a controlled stockholder) or any other person not to remove or permit the removal of any iron or steel, whether sold or unsold, from his stockyard or from any other part of his premises to any place outside the precincts of such stockyard or premises, except with the written permission of the Controller.
11 AA (3).
No producer, stockholder, or other person holding stocks of iron and steel shall without sufficient cause, refused to sell any iron or steel which he is autho rised to sell under this Order.
Explanation The possibility or expectation of obtaining a higher price at a later date shall not be deemed to be a sufficient cause for the purpose of this clause.
11B. Power to fix prices (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by Stockholder including a Controlled Stockholder and (c) by any other person or class of persons.
Such price or prices may differ for iron and steel obtainable from different sources and may include allowances for contribution to and payment from equalising freight, the concession rates payable to each pro ducer or class of producer under agreements entered into by the Controller with the producers from time to time.
and any other disadvantages.
(2) For the purpose of applying the prices notified under sub clause (1) the Controller may himself classify any iron and steel and may, if no appropriate price has been so notified, fix such price as he considers appropriate.
(3)No producer or stockholder or other person shall sell, or offer to sell.
(and no person shall acquire) any iron or steel at a price exceeding the maximum prices fixed under sub clause (1) or (2).
Any Court trying a contravention of this Order may, without prejudice to any other sentence which it may pass, direct that any Iron and Steel in respect of which the Court is satisfied that this order has been contravened shall be forfeited to His Majesty.
" The appellant has set out in para 4 of the statement of the case the procedure adopted for acquiring iron and/ 485 or steel products under the order.
This is what is stated therein: "That Order was at all material times administered principally by the Iron and Steel Controller having his office in the city of Calcutta in the State of West Bengal who controlled the entire production and distribution of the iron and/or steel products.
Any party desiring to acquire any product has to apply to the Controller.
Upon processing such application or requisition entirely at his option and discretion, the Controller would pass such a requisition an to the Appellant for manufacture and/or despatch.
The appellant has, upon receipt of the said requisition from the Controller to prepare a Works Order for the manufacture of the products concerned and to advise the Controller; and later on completion of the manufacture the appellant has to make the product conform to the requisition processed by the Controller and then deliver the requisite quantity in the requisite shape to the Indian State Railways siding maintained at the appellant 's own factory site, in Indranagar.
in the suburbs of Jamshedpur, in the State of Bihar, and to advise the requisitionist as well as the Controller accordingly. " The correspondence relating to the delivery of steel goods in pursuance of an order placed by one K. Thiruvengadam Chetty & Co. has been produced by the appellant evidently to show the manner in which the transactions were effected.
On December 20, 1952.
Thiruvengadam Chetty and Co., wrote follows to the Controller: 'From Name K. Thiruvengadam Chetty and Company.
Address Iron Merchants and Tata Scob Dealers 93, Rasappa Chetty Street.
Madras 3.
Date 20th December 1952.
To The Iron and Steel Controller, 33, Netaji Subas Road, Calcutta.
Through the Director of Controlled Commodities, Mount Road, Madras.
Dear Sir, Please place on our behalf and at our risk and account our order on Registered Producers for material as per specification given below for delivery in such period ,as you can arrange.
We confirm that this indent is placed 486 subject to the provisions of the Steel Price Schedule regarding prices, etc., and the terms and conditions of business (including payment) of the registered producers on whom the order is placed by you and that delivery or part/delivery from any such registered producer will be accepted by us.
Please direct the registered producers concerned to send us a copy of the works order in confirmation of having booked our Indent.
Ship to Madras Saltcotaurs.
Send R. R. to Messrs. K. Thiruvengadam Chetty and Company, Iron Merchants, 93, Rasappa Chetty Street, Madras 3, through your Madras Office.
Send original and duplicate invoice to Messrs. K. Thiruvengadam Chetty and Company, 93, Rasappa Chetty Street, Madras 3 through your Madras Office.
Date of shipment desired: Ex stock as early as possible.
Quantity Pieoes Section Lengths Complete description un tested of material indented (1) (2) (3) (4) CWT.
10. . 468 M.S. rounnd 1/4" 18 ' 13 B Category 5. . .493 " 3/16" 18 ' do 5. . .453 " 5/16" 18 ' do 20 (Twenty tons only) All P.T. free on rail Saltcotaurs and bundling charge account.
Yours faithfully, (signed). . . by Partner, For K. Thiruvengadam Chetty and Company.
" The Controller forwarded that letter to the appellant with the following remarks: "The above indent is forwarded to Indian Steel and Wire Products Limited, Tatanagar, for delivery in period 1/53 or subsequently in accordance with any general or special directions of the Iron and Steel Controller.
" It may be noted that the Controller merely asked the appellant to deliver to K. Thiruvengadam Chetty and company the goods ordered "in accordance with any general or special directions of the Iron and Steel Controller.
" Our attention was not invited to any general or special order issued by the controller excepting that 487 fixing the base price.
It is clear that it was left to the appellant to supply the goods ordered at his convenience.
On the basis of the, above communication a works order was issued by the appellant to the mill superintendent, a copy of which was sent to Thiruvengadam Chetty and Company.
That order reads: "Works Order: RS/MAD/RM/15/53 of 23rd February 1953.
Delivery: P.D.1/53.
Ship to: Saltcotaurs Book to self.
Freight: To pay.
To The Mill Superintendent.
Please supply the following to the Shipping Department, M.S. Rounds our usual commercial quality in bundles in stock lengths of 12/18 feet.
TONS 1/4" diameter 10 at Rs. 486 per ton free on rail 3/16" 5 at Rs.493 Saltootaurs, plus bundling.
5/16" 5 at Rs. 453 Charge of Rs. 5 per ton.
cc: South India Iron and Hardware Merchants Association, Armenian Street, Madras.
Notice to consignees.
Delivery must be taken within three days of the arrival of the train at destination, a certificate obtained for any wrongful delivery and a claim preferred against the Railway Company forthwith under advise to us.
In the case of non arrival of any consignment advise should be given us as soon as a reasonable time for the journey has elapsed. 'All orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods. ' 'All prices mentioned in the Works Orders are subject to revision, i.e., prices ruling at the time of despatch will be charged. '".
The works order in question specifically says that 'all orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods '.
In fact as seen from the letter of Thiruvengadam Chetty and Co., dated August 31, 1953, the buyers were willing to change by mutual agreement the specifications of the goods to be supplied.
This is what that letter says: 488 agreement the specifications of the goods to be supplied.
This is what that letter says: "If 1/4" size is not ready, please despatch 3/8" size 20 tons as requested in our previous letter.
Please treat this as very urgent.
" From the material on record it is not possible to accept the contention of Mr. S.R. Bannerjee, learned counsel for the appellant that the dealings in question were controlled at every stage, leaving no room of concensus.
From the records before us all that could be gathered is that the controller fixed the base price of the 'steel products and determined the buyers.
In other respects, the parties were free to decide their own terms by consent.
As seen from the correspondence referred to earlier, the controller allowed the appellant to supply the goods ordered either in the first quarter of the year 1953 or subsequently.
In other words, the appellant could supply the goods in question at its convenience.
It was open to the appellant to agree with its customers as to the date on which the goods were to be supplied.
From the works order dated February 23, 1953, a copy of which was sent to one of the appellant 's customers, it is clear that all orders booked were subject to appellant 's terms of business and general understanding in force at the time of 'booking the orders and despatch of goods.
It was also open to the appellant to fix the time and mode of payment of the price of the goods supplied.
Therefore it would not be correct to contend that the transactions were completely regulated and controlled by the controller leaving no room for mutual assent.
In his revision petition dealing with the question of transport of the goods supplied the appellant stated that "the transport of goods was if at all by virtue of an independent arrangement between the petitioner and the persons to whom the goods were supplied. .
This admission clearly shows that the supplies in question were made partly on the basis of mutual assent.
It was Mr. Bannerjee 's contention that for finding out the nature of the transaction we have only to look to the order and not to the documents produced in the case.
According to him, the documents produced in this case do not fully disclose the nature of the transactions; the transactions in question had to be effected under the terms of the order; the order left no room for negotiation between the supplier and its customers and therefore we should conclude that the transactions in question are not sales.
According to Mr. Bannerjee all supplies of iron and steel products could be made only in accordance with the directions given by the controller under cl.
10B of the order.
That being so, he asserted there was no room for mutual assent.
We do not think that this contention of Mr. Bannerjee is well founded.
We are unable to agree with him that the iron and steel products could not have been supplied to any person except in pursuance of an order made by the controller under cl.
10B. We think that supplies by producers can be made in pursuance of an order of the controller under cl.5.
We are not pursuaded 489 by Mr. Bannerjee 's contention that clauses 4 and 5 merely prohibit the prospective buyer and the intending seller from buying or selling without the sanction of the controller and that those provisions do not confer power on the controller to authorise a person to acquire and to permit a producer to sell.
Those provisions, in our judgment, by implication confer power on the controller to issue the necessary authority to the buyer and the seller.
This conclusion of ours is strengthened from the circumstance that cl.10B was not a part of the order till 1946.
That provision was inserted in the order by notification No. 1(1) 1(530) A dated May 26, 1946, It is nobody 's case that the provisions of the order were incapable of being implemented till that date.
The contention of Mr. Bannerjee that the controller derives his power to authorise the buyer to buy and the seller to sell exclusively under cl.
10B, suffers from another infirmity.
Under cl.
10B, the controller gets power to require any person holding stock of iron and steel acquired by him otherwise than in accordance with the provisions of cl. 4 to sell the whole or part of the stock to such person or class of persons and on such terms and conditions as may be specified in the order.
This clause does not empower the controller to issue the authority required under cl. 4.
Our attention has not been invited to any provision in the order if we exclude from consideration cl. 4, under which the controller could have the power to authorise the buyer to buy iron and steel products.
Therefore, it is obvious that he gets that power from cl. 4, itself.
The language employed in clauses 4 and 5 is simi lar.
If the controller gets power to authorise a buyer to buy iron and steel products under cl. 4, there is no reason why he should be held to have no power under cl. 5 to authorise a producer or stock holder to dispose of his stock of iron and steel products.
Further, under cl.
10B, the controller can only require any person holding stock 'of iron and steel to sell the whole or part of his stock to such person or class of persons and on such terms and conditions as may be specified in the order.
That clause does not empower him to direct any manufacturer to manufacture any steel or iron product and to dispose of the same to any person.
In other words, a direction under cl.
10B can only be given to a person holding stock of iron and steel But under cl.5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or not in accordance with the conditions contained or incorporated in a special or general written order issued by him.
the instant case, as can be gathered from the correspondence already referred to, the order issued by the controller could be complied with only after manufacturing the required material.
Hence, the order issued by the controller could not have been issued under cl.
10B. In this view of the matter it is not necessary for us to find out the true scope of cl.
10B. So far as cl.5 is concerned.
admittedly, it does not require the controller to regulate or control every facet of a transaction between a producer and the person to whom he supplies iron and steel products.
490 It is true that in view of the order, the area within which there can be bargaining between a prospective buyer and an intending seller of steel products, is greatly reduced.
Both of them have to conform to the requirements of the order and to comply with the terms and conditions contained in the order of the controller.
Therefore they could negotiate only in respect of matters not controlled by the order or prescribed by the controller.
It is true, in these circumstances, the doctrine of laisser faire can have only a limited ap.
plication.
That is naturally so.
In certain quarters the validity of that doctrine is, seriously challenged.
Under the existing economic compulsions all essential goods being in short supply in a welfare State like ours, social control of many of our economic activities is inevitable.
That does not mean that there is no freedom to contract.
The concept of freedom of contract has undergone a great deal of change even in those countries where it was considered as one of the basic economic requirements of a democratic life.
Full freedom to contract was never there at any time.
Law invariably imposed some restrictions on freedom to contract.
But due to change in political outlook and as a result of economic compulsions, the freedom to contract is now being confined gradually to narrower and narrower limits.
This aspect is vividly brought out in the 'Law of Contract ' by Cheshire and Fifoot (6th ed.) at p. 22.
Dealing with the question of freedom to contract, the learned author observes.
"As the nineteenth century waned it became ever clearer that private enterprise predicated some degree of economic equality if it was to operate without injustice.
The very freedom to contract with its corollary, the freedom to compete, was merging into the freedom to combine; and in the last resort competition and combination were incompatible.
Individualism was yielding to monopoly, where strange things might well be done in the name of liberty.
The twentieth century has seen its progressive erosion on the one hand by opposed theory and on the other by conflicting practice.
The background of the law, social, political and economic, has changed.
Laisser faire as an ideal has been supplanted by 'social security '; and social security suggest status rather than contract.
The State may thus compel persons to make contracts, as where, by a series of Road Traffic Acts from 1930 to 1960, a motorist must insure against third party risks , it may, as by the Rent Restriction Acts, prevent one party to a con tract from enforcing his rights under it; or it may empower a Tribunal either to reduce or to increase the rent payable under a l ease.
In many instances a statute prescribes the contents of the contract.
The Moneylenders Act, 1927, dictates the terms of any loan caught by its provisions; the Carriage of Goods by Sea Act, 1924, contains six pages of rules to be incorporated in every contract for 'the carriage of goods by sea from any port in Great Britain or Northern 491 Ireland to any other port; the Hire Purchase Act 1938 inserts into hire purchase contracts a number of terms which the parties are forbidden to exclude; successive Landlord and Tenants Act from 1927 to 1954 contain provisions expressed to apply 'notwithstanding any agreement to the contrary.".
It would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all.
So long as mutual assent is not completely excluded in any dealing, in law it is a contract.
On the facts of this case for the reasons already mentioned, it is not possible to accept the contention of the ,learned counsel for the appellant that nothing was left to be decid ed by mutual assent.
On the other hand, we agree with the learned Advocate General of Madras and Mr. Setalvad who appeared for.
the State of West Bengal, the intervener, that the controller 's directions were confined to narrow limits and there were several matters, which the parties could decide by mutual assent.
We shall now proceed to examine the principal decisions relied ' upon by the learned counsel for the appellant.
In Kirkness vs John, Eudson & Co. Ltd.(1), the material facts were these: On January 1, 1948, railway wagons owned by John Hudson & Co., the tax payers '.
then under requisition by the Minister of Transport. were acquired, by the British Transport Commission under section 29 of the Transport Act, 1947.
Under section 30 of that Act, compensation became payable by the Commission to the tax payers.
The amount paid as compen sation was substantially higher than the written down value of the wagons for income tax purposes and as the tax payers had received allowances under r. 6 of the rules applicable to Cases I and 11 of Sch.
D to the Income Tax Act 1918, they were assessed under section 17 of the Income Tax Act 1945 to give effect to a balancing charge in respect of the excess of the original cost of the wagons over the written down value.
The Court of Appeal held that the transfer of ' wagons under section 29 of the Transport Act 1947 was not a sale at common law, since it did not involve a mutual assent and a price;, it was an acquisition authorised by a statute and not a compulsory purchase.
Therefore, the wagons were not machinery or plant which had been 'sold ' within the meaning of section 17(1) (a) of the Act of 1945 and no, balancing charge could be made under the sub section.
This, decision was affirmed by the House of Lords by a majority.
Speak in,, for the majority, Viscount Simonds observed: "My Lords, in my opinion the company 's wagons, were not sold, and it would be a grave misuse of language, to say that they were sold.
To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which be has had no voice, to say of such a man that he has sold his ' property appears to me to be as far from the truth as to, (1) 492 say of a man who has been deprived of his property without compensation that he has given ' it away.
Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties.
So far as the ordinary use of language is concerned it is difficult to avoid being dogmatic, but for my part I can only echo what Singleton L.J. said in his admirably clear judgment: 'What would anyone accustomed to the use of the words ,sale ' or 'sold ' answer? It seems to me that everyone must say 'Hudsons did not sell '.
I am content to march in step with everyone and say 'Hudsons did not sell '.
Nor is a different result reached by an attempt to analyse the legal concept.
When Benjamin said in the passage quoted by Singleton and Birkett L. JJ.
from his well known book on Sale, 2nd ed., p. 1, that 'by the common law a sale of personal property was usually termed a 'bargain and sale of goods ', he was by the use of the word 'bargain ' perhaps unconsciously emphasizing that the consensual relation which the word 'bargain ' imports is a necessary element in the concept ', ".
From the facts set out above it is clear that the House of Lords was dealing with a compulsory acquisition and not sale.
Therefore that decision is of no assistance to the appellant.
In Messrs. New India Sugar Mills Ltd. vs Commissioner of Sales Tax, Bihar(1), this Court was called upon to consider whether ,certain transactions effected under the Sugar Control Order 1946 were sales.
By a majority this Court held that they were not sales.
The facts as found by the High Court and accepted by this Court ,are found at pp.
463 and 464 of the report.
They are as follows: "The admitted course of dealing between the parties was that the Government of various consuming States used to intimate to the Sugar Controller of India from time to time their requirement of sugar, and similarly the factory owners used to send to the Sugar Controller of India statements of stock of sugar held by them ' On a consideration of the requisitions received from the various State Governments and also the statements of stock received from the various factories, the Sugar Controller used to make allotments.
The allotment order was addressed by 'the Sugar Controller to the factory owner, direc ting him to supply sugar to the State Government in question in accordance with the despatch instructions received from the competent officer of the State Government.
A copy of the :allotment order was simultaneously sent to the State Government concerned, on receipt of which the competent authority of the State Government sent to the factory concerned detailed instructions about the destination to (1) (1963) Supp.
2 S.C.R. 459. 493 which the sugar was to be despatched as also the quantities of sugar to be despatched to each place.
In the case of the Madras Government it is admitted that it also laid down the procedure of payment, and the direction was that the draft should be sent to the State Bank and it should be drawn on Parry and Company or any other party which had been appointed as stockist importer on behalf of the Madras Government.
" On the basis of those facts, the Court came to the conclusion that there was no room for mutual assent in those transactions.
The facts of the present case are materially different from the facts of that case.
Hence the ratio of that decision does not apply to the facts of the present case.
Whether in a given case there was mutual assent or not is a matter to be decided on the facts of that case.
In Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1).
the facts were: The assessees were an electric supply company.
During the war the government requisitioned an electricity generating plant of the assessees under r. 83(1) of the Defence of India Rules.
The Government wanted to acquire that plant.
As the assessees were not willing to sell the plant, they required the government to re examine the position and to rescind the order depriving them of the plant, but the government refused to re consider that decision.
The amount which the assessees received as price or compensation for the plant exceeded the written down value of the plant by Rs. 3,27,840/ .
The taxing authorities treated the excess as assessees ' profits under section 10(2) (vii) of the Indian, Income Tax Act 1922 and assessed that amount to tax.
On a reference under section 66(1) of that Act, as to whether the amount in question can be considered as assessees ' profit, Harries, C. J. and Banerjee, J. held that the transaction by which the government acquired the plant could not be regarded as a sale within the meaning of section 10(2) (vii) and therefore the sum of Rs. 3,27,840/ was not taxable as profit under that provision.
The Court further observed that the ordinary meaning of the word 'sale ' is a transaction entered into voluntarily between two persons known as buyer and seller by which the buyer acquires the property of the seller for an agreed consideration known as 'price '.
The rule laid down in that decision is the same as that laid down by the House of Lords in Kirkness vs John Hudson & Co. Ltd.(2).
In this case also the Court was dealing with a compulsory acquisition and not sale.
In M/s. Cement Limited vs The State of Orissa(3), the Court was dealing with transactions effected under the Cement Control Order 1956.
Therein the assessee company.
a manufacturer of cement, was required to sell cement to the State Trading Corporation On payment of stipulated price.
3 of the Cement Control Order provided "Every producer shall sell (1)(a) the entire quantity of cement held in stock by him on the date of the commencement (1) , (2) (3) 12 S.T.C. 205.
494 of the order, and (b) the entire quantity of cement which may be produced by him during a period of two years from the date of commencement of this order to the Corporation and deliver the same to such person or persons as may be specified by the Corporation in this behalf from time to time, (2) notwithstanding any contract to the contrary, every producer shall dispose of cement lying in stock with him or produced by him, in accordance with the provisions of sub cl.
(1) and shall not dispose of any cement in contravention thereof".
6(1) was to the effect that the price at which a producer may sell cement shall be specified in the schedule.
The sales in this case were effected under the aforementioned clauses 3 and 6.
It is under those circumstances that the Court came to the conclusion that the transactions in question were not sales but were in the nature of compulsory transfer of title.
This case again is of no assistance to the appellant.
The appellant 's learned counsel also read to us the decisions in North Adjai Coal Company (P) Ltd. vs Commercial Tax Officer and others(1) and section K. Roy vs Additional Member, Board of Revenue, West Bengal(2).
On the facts of those cases, the Court came to the conclusion that the transactions in question were not sales.
For the reasons already stated, we are unable to accept the contention that the transactions with which we are concerned in these cases are not sales.
Out of the four elements mentioned earlier, three were admittedly established, namely, the parties were competent to contract, the property in the goods was transferred from the seller to the buyer, and price in money was paid.
The only controversy was whether there was mutual assent.
Our finding is that there was mutual assent in several respects.
Hence, we agree with the High Court that the transactions before us are sales.
That takes us to the next contention by the appellant i.e., that there was no material to conclude that the goods were delivered in the State of Madras for consumption.
There is no dispute that the goods in question were delivered in the State of Madras.
The dispute centres round the question whether it is proved that they were delivered for consumption in that State.
The learned counsel for the appellant conceded that actual consumption within the State need not be proved.
All that is required to be shown is that they were delivered for consumption in the State.
The only question is whether there was any material to support the conclusion of the Sales Tax Appellate Tribunal, the final fact finding authority, that the goods were delivered in the Madras State for consumption in that State.
The High Court rightly proceeded on the basis that "the burden is certainly upon the State to establish facts upon which a subject can be taxed under a financial enactment.
" But it accepted the finding of the Sales Tax Appellate Tribunal that from the facts and circumstances established it is a reasonable inference to draw (1) 17 S.T.C. 514.
(2) 18 S.T.C. 379.
495 that the goods were delivered for consumption in the Madras State.
This aspect was dealt with by the Tribunal in para 1 1 of its order dated April 17, 1959.
On that question this is what the Tribunal says: "It will be an onerous task to pursue the subsequent history of every inter State sale transactions to find out whether after successive change of hands the ' goods left the state; but it will be permissible in such cases to consider the broad pattern of the transaction, the surrounding circumstances and any other relevant date to draw a reasonable conclusion therefrom.
In the cases before us, it is admitted that the sales were in pursuance of a scheme of internal distribution under the control order applicable to the whole of India.
That there was necessity to draw up such a scheme, indicates that the goods were essential goods, that the supply was inadequate to meet the demand, and that unless there was control and restriction in distribution it was likely that the goods would pass into the black market, and would be sold at exorbitant rates.
It is permissible inference that controlled stockists, registered stockists and registered dealers, who are the principal buyers from the appellants and who could be expected to have been given quotas in the scheme of controlled distribution, would be people expected to meet the local demand for the consumption of the controlled goods.
It is also well known to people familiar with the operation of a controlled scheme and distribution of goods that quotas are given against proved demands, and that it is not part of the scheme of distribution to provide for goods sold in one State being exported to other states inside the Union territory because each State has got its own quota of goods and list of controlled stockists, registered stockists and so on.
Therefore we infer from the analysis given of the transactions by the appellants, that the sales to various groups of purchasers, registered stockists and controlled ' stockists and so on are all intended to meet the local demands for steel products and not for re export.
An analysis of the amount concerned in each of these transactions show that the quantity of steel involved would not be large in each individual case, a circumstance again point to the inference that the sales were intended to meet the requirements of the consumers in Madras State.
In the case of sales to local Government departments, it is obvious that sales were intended for internal consumption and not reexports".
Strangely enough, the High Court at the first instance thought that this finding was unsupported by evidence.
Consequently it remanded the case back to the Tribunal for a fresh finding on that aspect 496 after giving both the parties opportunity to adduce further evidence oral and documentary.
No fresh material was placed before the tribunal after the case was sent back to it.
But on the basis of the material already on record, the tribunal again came to the very conclusion that it had come earlier.
When the cases again came back to the High Court.
that finding was accepted as correct.
In our opinion, the High Court was not right in rejecting that finding at the first instance.
The finding of the tribunal is a reasonable finding .
The inferences drawn by it are reasonable inferences from the facts proved or admitted.
It is reasonable to assume that the supplies of iron and steel products were being made to stockists in a State for consumption in that State.
It may be, as found in this case, that a small portion of the supplies had gone out of the State.
But that is not a relevant circumstance.
What we have to see is whether the Supplies in question were made for consumption in the Madras State.
On that question the finding of the Tribunal is conclusive.
The contentions of the appellant that the findings of the tribunal about the quantum of the turnover were not based on any evidence, or that those findings were arrived at in violation of the principles of natural justice or that the decision of the High Court is perverse, are wholly untenable contentions.
At the time of the hearing no reasons were advanced in support of those contentions.
Hence those contentions do not merit any detailed examination.
In the result, these appeals fail and they are dismissed with costs hearing fee, one set.
Appeals dismissed.
| Held, that under section 7(3) (a) and (b) of the Industrial Disputes Act (XIV of 1947) as amended by section 34 of the Industrial Disputes (Appellate Tribunal) Act (XLVIII of 1950) the phrase "a Judge of a High Court and a District Judge" includes a Judge of the High ,Court and a District Judge in the former State of Jodhpur.
|
ivil Appeal No. 2992 of 1986.
From the Judgement and Order dated 22.7.1986 of the Madras High Court in W.P No 815 of 1985.
T.S. Krishnamurthy Iyer, Miss Purnima Bhat, Atul Sharma, A.V. Pillai and E.C. Agrawala for the Appellant.
P. Chidambaram, R. Ayyam Perumal, K.C. Dua, V. Krishnamurthy and R. Mohan for the Respondents.
The Judgement of the Court was delivered by S.C. AGRAWAL, J.
This appeal and the connected petitions for special leave to appeal are directed against the common judgment of the Division Bench of the Madras High Court dated July 22; 1986 whereby the judgement of the learned Single Judge has been set aside and the writ petitions filed by the appellant as well as the petitioners in the special leave petitions (referred to as 'the petitioners ' for the sake of convenience) have been dismissed.
The petitioners joined the Indian Army as Emergency Commissioned Officers (ECOs) in 1963 after the Chinese aggression.
They were discharged from the Army during the years 1967 to 1970.
After their discharge from the Army, they joined the Commercial Tax Service of the State of Tamil Nadu on being selected by the Tamil Nadu Public Service Commission through a competitive examination.
For rehabilitation of ECOs/Short Service Regular Commissioned Officers (SSRCOs) on their release from the Armed Forces, the Government of Tamil Nadu had by G.O. ms. No. 84 dated January 1, 1967, reserved 25% of the vacancies to be filled by direct recruitment during the four years 1967 1970 in respect of certain categories of posts in the State services.
By Order, G.O. Ms. No. 686 dated March 24, 1970, the Government of Tamil Nadu, in modification of the said order reserved 25% of the vacancies in non technical posts under various groups (both Gazetted and non Gazetted) to be filled by direct recruitment during five years commencing from 1969 for rehabilitation of ECOs/SSRCOs on their release from the Armed Forces.
The said order made provision for relaxation of age in case of such officers for 849 the purpose of recruitment to be reserved vacancies.
As regards seniority provision was made in paragraph 8 of the said order which prescribed as under: Inter se seniority among the candidates selected for the reserved vacancies will be determined by the Commission.
So far as the seniority in the department is concerned, the officers will take their seniority with reference to the order of preference indicated by the Commission and not with reference to the service with the "Armed Forces".
It appears that in respect of doctors who had joined the defence forces in connection with the emergency declared in 1962 and who were subsequently appointed in the cadre of Assistant Surgeons in the State of Tamil Nadu, the Government had issued an Order G.O. Ms. No. 2020 dated September 23, 1965, whereby seniority of such an incumbent was to be fixed by allotting them the year in which he would have been appointed to the post at his first possible attempt after the date of joining military service/training.
The Tamil Nadu Public Service Commission, in their letter dated February 6, 1973 addressed to the Chief Secretary to the Government of Tamil Nadu, made a reference to G.O. Ms No. 2020 Health dated September 23, 1965 with regard to fixation of seniority of candidates appointed to the post of Assistant Surgeon against vacancies reserved for ECOs/SSRCOs and expressed the view that allowing one of released persons like Doctors to enjoy the concession of their seniority being reckoned with reference to their date of appointment in the Army and at the same time denying such a concession to ECOs/SSRCOs selected to a non technical post will not be fair and such differential treatment will not also be in the interests of rehabilitating released Army personnel.
The Public Service Commission, therefore, commended that the principle followed in the matter of determining seniority in respect of released Army Doctor with reference to the date of their joining duty in the Armed Forces be extended to all services as recruitment to all the sevices are made on the basis of the competitive examinations comprising either of a written test or an oral test or a combination of both.
In the said letter, it was requested that orders in paragraph 8 of G.O.Ms. 686 may be suitably modified.
Keeping in view the aforesaid view expressed by the State Public Service Commission, the Government of Tamil Nadu passed an order G.O.Ms No. 25 dated November 16, 1976 whereby, in supersession of the earlier procedure prescribed for determining the seniority of the ECOs/SRRCOs recruited for non technical posts (both Gazetted and non Gazetted) against reserved 850 vacancies in G.O.Ms No. 686 dated March 24, 1970, the following procedure was prescribed: "(i) the seniority of the Emergency Commissioned/Short Service Regular Commissioned Officers recruited to the State Civil Services (both Ghazetted and Non Gazetted) between 24.3.1970 to 4.10.73 against reserved vacancies shall be fixed treating them as belonging to the year in which they would have been appointed to the posts in their first possible attempt after the date of joining military service/training." After the issuance of the aforesaid order dated November 16, 1976, it was represented to the State Government that the concession granted to the ECOs/SSRCOs recruited to the Civil Services of the State instead of confirming it only to those recruited between 1970 and 1973.
The State Government decided to accede to that request and issued a fresh G.O.ms No. 734 dated June 15, 1977 whereby the orders in para 1(i) of the Order dated November 16, 1976 were thus modified: "1.
(i) The seniority of Emergency Commissioned Officers/Short Service Regular Commissioned Officers recruited to the non technical posts against reserved vacancies shall be fixed treating them as belonging to the year in which they would have been appointed to the posts in their first possible attempt after the date of joining military duty.
In the case of candidates who joined Military service on or before 30th June of a year, the year of allotment would be the same; while in the case of those who joined the Military services on or after Ist July of a year, the year of allotment would be the next year.
" By the said order, it was also directed that the appointing authority should take steps to refix the seniority of the ECOs/SSRCOs recruited to the Civil Services with reference to instructions after issuing notices to all affected parties.
In accordance with the aforesaid directions, notices were issued to the other officers whose seniority was likely to be disturbed in view of the concession extended to ECOs/SRRCOs under Order dated June 15, 1977.
After taking into consideration the representations received in pursuance of the said notice 851 the State Government issued an Order G.O.Ms.
No. 233 dated March 3, 1980 whereby the orders dated November 16, 1976 and June 15, 1977 were cancelled.
In the said order, it was stated that: "The Government have carefully examined the above representations with reference to the legal position.
They consider that the vested seniority rights already accused to individuals by virtue of the rules in force cannot be divested by issuing fresh rules and giving retrospective effect to them.
The Government have therefore decided not to implement those orders by amending the special Rules governing these non technical posts.
" The petitioners as well as some other ECOs/SSRCOs filed writ petitions in the Madras High Court challenging the validity of the said order dated March 3, 1980.
The writ petitions were heard by a learned Single Judge of the High Court who allowed the same by his judgement dated December 4, 1984.
The learned Single Judge was of the view that under orders dated November 16, 1976 and June 15, 1977, which were passed on the recommendations of the Tamil Nadu public Service Commission, the petitioners had acquired certain rights in the matter of seniority and promotion and since the impugned Government order takes away the said rights of the petitioners, the petitioners should have been afforded an opportunity of a hearing before passing the impugned order which had not been done in this case.
Appeals were filed by the State Government as well as by private respondents against the said decision of the learned Single Judge.
The said appeals were decided by a Division Bench of the High Court by its judgment dated July 22, 1976, whereby it was held that the provision with regard to fixation of seniority in the cadre of Commercial Tax Officer (CTOs) in which the petitioners were appointed in governed by Rule 35 of the General Rules which are contained in Part II of the Tamil Nadu State and Subordinate Service Rules made under proviso to Article 309 of the Constitution and under the said rule, seniority is to be fixed on the basis of date of appointment to the service.
the learned Judges found that the said Rules had not been amended and in the absence of an amendment in rule 35, the orders with regard to fixation of seniority of ECOs/SSRCOs contained in Orders dated November 16, 1976 and June 15, 1977 were invalid and no rights could accure to the petitioners on the basis of the said orders which may require affording an opportunity to them.
With regard to Doctors and Engineers, the learned Judges have pointed out that suitable amendments had been made in the relevant statutory rules relating to both 852 the services.
The learned Judges, therefore, while setting aside the order of the learned Single Judge, dismissed the Writ Petitions of the petitioners but observed that the judgment would not prevent the State Government from amending the Rules made under Article 309 of the Constitution and if and when rules are made and if any persons are affected, they are entitled to challenge the said Rules.
Feeling aggrieved by the said decision of the division Bench of the High Court, the petitioners have approached this Court.
The first contention that has been urged by the learned counsel for the petitioners is that the concessions contained in the orders dated November 16, 1976 and June 15, 1977 were not invalid inasmuch as it was permissible for the State Government to issue administrative instructions with regard to determination of the seniority of the ECOs/SSRCOs and by the said orders which were issued on the recommendations of the State Public Service Commission the lacuna which was found in the existing rules was sought to be removed and that it w as permissible for the State Government to issue administrative instructions to remove such a lacuna.
In support of the said submission, reliance has been placed on the decisions of this Court in Sant Ram Sharma vs State of Rajasthan & Anr., ; ; Union of India vs H.R. Patankar 7 Ors., [[1985] 1 SCR 400 and State of Gujarat vs Akhilesh C. Bhargav & Ors. ; In the above mentioned decisions, it has been laid down that although the Government cannot amend the statutory rules by administrative instructions, but if the rules are silent on any particular point, the Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed.
in the instant case, it cannot be said that on the date of issue of orders dated November 16, 1976 and June 15, 1977, the rules were silent on the matter of fixation of seniority of persons recruited to the Tamil Nadu Commercial Tax Service.
Appointment to the said service was governed by General Rules contained in Part Ii of the Tamil Nadu State and Subordinate Rules.
Clauses (a) and (aa) of rule 35 of the said General Rules provide as under "(a) The seniority of a person in a service, class or category or grade shall unless he has been reduced to lower rank as a punishment, be determined by the rank obtained by him in the list of approved candidates drawn up by the Tamil Nadu Public Service Commission or other appointing authority, as the case may be, subject to the rule of reservation 853 where it applies.
The date of commencement of his probation shall be the date on which he joins duty irrespective of his seniority.
(aa) The seniority of a person in a service, class or category or grade shall, where the normal method or recruitment to that service, class, category or grade is by more than one method of recruitment, unless the individual has been reduced to a lower rank as a punishment, be determined with reference to the date on which he is appointed to the service, class, category or grade".
This shows that thee was an express provision in the statutory rules providing that seniority shall be fixed on the basis of the date of appointment.
By orders dated November 16, 1976 and June 15, 1977, the said principle for fixation of seniority contained in rule 35 was sought to be altered in respect of ECOs/SSRCOs and the seniority was sought to be fixed on the basis of a different criterion, namely, by treating them as belonging to the year in which they would have been appointed to the posts in their first possible attempt after the date of joining military duty.
This was inconsistent with the principle for fixing the seniority contained in rule 35 of the General Rules and this could onlybe done by suitably amending the said rules and it could not be done by issuing administrative instructions.
The High Court has, in our opinion, rightly held that the directions contained in orders dated November 16, 1976 and June 15,1977 were invalid being contrary to the provisions contained in rule 35 of the General Rules.
Since the said orders were invalid, the petioners could not claim any right on the basis of the said orders and there was, therefore, no question of affording them an opportunity of a hearing before passing the order dated March 3, 1980.
In so far as appointments to medical and engineering services are concerned, the High Court has pointed out that suitable amendments were made in the relevant Services Rules relating to those services whereby the benefit of the Army Service was given in the matter of fixation of seniority of ECOs/SSRCOs.
who had joined the medical and engineering services.
No similar amendment has been made in the rules governing the non technical services, e.g., Commercial Tax Service to which the petitioners were appointed.
The learned counsel for the petitioners have next contended that the petitioners have been subjected to arbitrary discrimination i n the matter of fixation of their seniority inasmuch as ECOs/SSRCOs who have joined the medical and engineering service of the Government of 854 Tamil Nadu have been given the benefit of their service in the Army in the matter of fixation of seniority whereas similar benefit has been denied to the petitioners even though the petitioners as well as other ECOs/SSRCOs who have joined medical and engineering service were all similarly situate.
In this connection, reliance has been placed on the decision of this Court in Union of India & Ors.
vs Dr. section Krishna Murthy & Ors. etc., [1989] Supp.
(1) SR 275.
This contention, in our view, is misconceived.
ECOs/SSRCOs who have joined medical and engineering services of the State of Tamil Nadu were technically qualified in their fields and they had worked in the Army in the same field in which they are now employed in the State service.
The benefit of the experience gained by them during the period of their service in the Army on the posts viz. medical/engineering held by them was available to the State they joined the medical/engineering services of the State of Tamil Nadu.
The same cannot be said for the petitioners because the nature of the duties discharged by them in the Army were different from the duties they are now required to perform at CTOs in the State service.
It cannot, therefore, be said that the ECOs/SSRCOs who have joined the medical and engineering services of the State of Tamil Nadu and the petitioners who have joined the Commercial Tax Department of the State are persons similarly situate in the matter of determination of seniority and for counting the earlier Army service for that purpose.
In Union of India vs Dr. section Krishna Murthy, case (supra), the ECOs/SSRCOs on discharge from the Army had joined the Indian Forest Service and the Indian Police Service and provision was made in the Regulation of Seniority Rules governing these Services whereby it w as provided that year of allotment of an officer appointed to the said Service shall be deemed to be the year in which he would have been so appointed at his first or second attempt after the date of joining pre commission training or the date of their commission where there was only post commission training.
The validity of the said rules was challenged by other direct recruits to those Services on the ground that the ECOs/SSRCOs could not be classified into a separate category.
The said contention was rejected by this Court and it was held that ECOs/SSRCOs formed a definite class, distinct from other officers of the Indian Forest Service and Indian Police Service, and that the said classification was founded on an intelligible differentia which distinguishes them from other officers and that the classification has rational relation to the objects sought to be achieved by the Rules inasmuch as it has been made for the purpose of compensating the ECOs/SSRCOs for the lost opportunity because of their joining the Army service.
855 The said decision may have a bearing in the event of rules being framed making provision for giving the benefit of Army service in the matter of fixation of seniority of the petitioners and other persons who have joined the Commercial Tax Service of the State of Tamil Nadu.
Since there is no such rule, the petitioners cannot derive any assistance from this decision.
In the circumstances, we find no ground to interfere with the decision of the High Court.
The appeal as well as the special leave petitions are, therefore, dismissed but with no orders as to costs.
| The appellant Board conducted secondary examinations in the month of March 1990.
During recounting of the marks obtained by the candidates it was found that moderators mark sheets relating to 283 examinees, which included the 53 respondents, had been tampered with.
The declaration of their results was withheld pending enquiry.
Several writ petitions were filed against non declaration of the results and the High Court directed the appellant to the expeditious action to declare the results.
The Board appointed seven enquiry officers to conduct the enquiry.
Show cause notices were issued to the students informing them of the nature of tampering, the subjects in which the marks were found tampered with, the marks initially obtained and the marks increased due to tampering, and also indicated the proposed punishment, if in the enquiry it would be found that marks were tampered with the knowledge or connivance or at the instance of the candidates or parents or guardians.
They were also informed that they would be at liberty to inspect the documents at the Divisional Board at Bombay; they were entitled to adduce documentary and oral evidence at the hearing; they would also be permitted to cross examine the witnesses of the Board, if any; they would not be entitled to appear through an advocate, and the parents or guardians would be permitted to accompany the students at the time of enquiry, but they would not be entitled to take part in the enquiry.
All the candidates admitted that the marks initially awarded by 773 the examiners had been tampered with in the moderators mark sheets; and due to tampering the marks were increased and the increase was to their advantage.
However, they denied that either they or their parents or guardians were privy to the tampering.
The Enquiry Officers submitted their reports holding that the moderators mark sheets had been fabricated and submitted the reports to the Board.
The Standing Committee constituted in this regard considered the records and the reports and resolved to withhold, as a measure of punishment, the declaration of the results of their examinations and to debar the students to appear in the supplementary examination.
The notification to that effect was published on 31.8.1990 and the report submitted to the High Court.
The High Court allowed the writ petitions.
One Hon 'ble Judge held that the Standing Committee was devoid of power, and because it did not obtain the approval of the Divisional Board, the impugned notification was without authority of law.
On merits, the learned Judge held that the Standing Committee did not apply its mind in the proper perspective to the material facts, and therefore, the finding that tampering was done at the instance of the examinees/parents/guardians was perverse.
The other Hon 'ble Judge held that the examinees were not guilty of the mal practices and their guilt had not been established.
Before this Court, it was contended on behalf of the respondents that the Act empowered that Divisional Board to deal with the use of unfair means at the final examination, and the Standing Committee was an alien body to the divisional Board; the students were minors and neither the parents nor anybody like an advocate was permitted to assist the students; answers to the questionnaire were extracted from the students to confess their guilt: no adequate opportunity was given to the students at the enquiry; the evidence without subjecting it to cross examination was of no value; the Standing Committee did not apply its mind to the facts, nor recorded reasons in support of its conclusion that the examinee/parents/guardians were parties to the fabrication; the Board should establish the guilt of the examinees beyond all reasonable doubts; the standard of proof ought to be of a high degree akin to trial in a criminal case; the test of benefit to an examinee was preposterous; no evidence was placed on record, nor was it proved and hence the findings of the Standing Committee were clearly based on no evidence; the Enquiry Report contained only conclusions bereft of the statement of facts and reasons in support thereof; and the order ought to have been a speaking order preceded by a fair enquiry and the report must 774 be based on cogent evidence.
On behalf of the Board, it was inter alia contended that all the examinees admitted in answers to the questionnaire that tampering was done and it was to their advantage, and that in view of the admission, the need to examine any person from the concerned section was obviated.
Allowing the appeals, upholding the notification subject to modifications, this Court, HELD: (1) there is no manner of doubt that unfair means were used at the final Secondary Examination by fabricating the Moderators ' mark sheet of the examinees, in concerted manner, admittedly to benefit the students.
[782C] (2) The State Board is empowered to constitute the Divisional Boards and the Standing Committees.
The State Board is also empowered to make regulations to conduct examinations and also to deal with the use of unfair means at the final examination conducted by the Board.
The Divisional Board is empowered to conduct within its area the final examination on behalf of the State Board.
The Divisional Board is also empowered to deal with the cases of unfair means according to the procedure laid down by the State Board.
[783F G] (3) The Standing Committee is an executive arm of the Divisional Board for the efficient and expeditious functioning of the Board as adumberated under the Act itself.
It is not a foreign body.
When the Standing Education Committee takes the decision its decision is on behalf of the Divisional Board, and the decision of the Divisional Board in turn is on behalf of the State Board.
[786E F] (4) On a fair and harmonious reading of the relevant provisions of the Act and the Maharashtra Secondary and Higher Secondary Education Board, Regulation, 1977 the Examination Committee of the Divisional Board is itself a statutory body which acted on behalf of the Divisional Board and is not a delegate of the Divisional Board.
[786H] State of U.P. vs Batuk Deo Pati Tripathi & Anr., ; Kargram Panchayat Samiti & Anr.
vs State of West Bengal & Ors., [1987] 3 S.C.C. 82; Baradakanta Misra vs High Court of Orissa & Anr., and Tej Pal Singh (dead) through L.rs.
vs State of U.P. & Anr., , referred to.
775 (5) The Standing Committee is an integral part of the Divisional Board and its acts are for and no behalf of the Divisional Board.
Accordingly, the Board must be deemed to have passed the impugned notification as per the scheme of the provisions of the Act and the Regulations.
Therefore, the finding of the learned Judge that the Standing Committee had no power to take the impugned decision, etc.
without approval of the Divisional Board is clearly illegal and cannot be sustained.
[789B C,F] (6) While exercising the powers under Article 226 or Article 136 of the Constitution, the High Court or this Court, is not sitting as a Court of Appeal on the findings of facts recorded by the Standing Committee (Domestic Enquiry Board) nor have power to evaluate the evidence as an appellate Court and to come to its own conclusions.
If the conclusions reached by the Board can be fairly supported by the evidence on record then the High Court or this Court has to uphold the decision, though as appellate Court of facts, it may be inclined to take a different view.
[789C] (7) Fabrication cannot be done except to benefit the examinees.
The fabricator had done it for reward in concert with outside agencies.
Therefore, the inference from these facts drawn by the Standing Committee that the examinees/parents/guardians were responsible to fabricate the moderators ' mark sheets is based on evidence.
[790G] (8) It is not open to the High Court to evaluate the evidence to come to its own conclusions.
Thereby the High Court has committed manifest error of law warranting interference by this Court.
[791A] (9) The Writ Court would not interfere with an order of educational institution.
Therefore, what the writ Court needs to do is to find whether fair and reasonable opportunity has been given to the students in the given facts.
[792F] D.M.K. Public School vs Regional Joint Director of Hyderabad, A.I.R. 1986 A.P. 204; G.B.S. Omkar vs Shri Venkateswara University, A.I.R. 1981 A.P. 163.
(10) Assistance of an Advocate to the delinquent at a domestic enquiry is not a part of the principles of natural justice.
It depends on the nature of the inquiry and the peculiar circumstances and facts of a particular case.[792H] 776 (11) The regulations and the rules of enquiry specifically excluded the assistance of an advocate at the inquiry.
Therefore, the omission to provide the assistance of a counsel at the inquiry is not violative of the principles of natural justice.
[793A] (12) The procedure adopted at the inquiry was fair and just and it was not vitiated by any procedural irregularity nor was violative of the principles of natural justice.
The absence of opportunity to the parents or guardians, in this background, did not vitiate the legality or validity of the inquiry conducted or decision of the Committee.
[793G H] (13) Unless the rule expressly or by necessary implications, excluded recording of reasons, it is implicit that the principles of natural justice or fair play does require recording of reasons as a part of fair procedure.
In an administrative decision, its order/decision itself may not contain reasons.
It may not be the requirement of the rules, but at the least, the record should disclose reasons.
It may not be like a judgement.
But the reasons may be precise.
[794F] Union of India vs Mohan Lal Capoor & Ors. ; Gurdial Singh Fiji vs State of Punjab & Ors. ; and S.N. Mukherjee vs Union of India, J.T. , referred to.
(14) The omnipresence and omniscience of the principle of natural justice acts as deterrence to arrive at arbitrary decision in flagrant infraction of fair play.
But the applicability of the principles of natural justice is not a rule of thumb or a straight jacket formula as an abstract proposition of law.
It depends on the facts of the case, nature of the inquiry and the effect of the order decision on the rights of the person and attendant circumstances.
[795F] (15) In the instant case, since the facts are admitted, the need to their reiteration was obviated and so only conclusions have been stated in the reports.
The omission to record reasons is neither illegal, nor is violative of the principles of natural justice.
[795H 796A] Khardah Co. Ltd. vs Their Workmen, ; ; A.K. Roy etc.
vs Union of India & Ors.
[1982] 1 S.C.C. 271; Pett vs Grehound Racing Association Ltd., [1968] 2 ALL Eng.
Reports 545; Union of India vs H.C. Goel, ; ; M/s. Bareilly Electricity Supply Co. Ltd. vs The Workmen & Ors. ; ; Shanti Prasad Jain vs The Director of Enforcement, ; Merla Ramanna vs Nallaparaju & Ors., ; 777 Kashinath Dikshita vs Union of India & Ors., [1986] 3 S.C.C. 229; Government Medical Store Depot, Karnal vs State of Haryana & Anr.
, ; ; M/s. Kesoram Cotton Mills Ltd. vs Gangadhar & Ors., ; ; State of Punjab vs Bhagat Ram, ; Gujarat Steel Tubesl Ltd. vs Gujarat Steel Tubes Mazdoor Sabha,, ; ; Union of India & Ors.
vs Mohd. Ramzan Khan, J.T. ; Vishwa Nath vs State of Jammu & Kashmir, ; Olga Tellis & Ors.
vs Bombay Municipal Corporation, etc.; , , referred to.
(16) Court should be slow to interfere with the decisions of domestic tribunals appointed by the education bodies like universities.
[799F] (17) In dealing with the validity of the impugned order passed by a University under Article 226 the High Court is not sitting in an appeal over the decision on this question.
Its jurisdiction is limited and though it is true that if the impugned order is not supported by any evidence the High Court may be justified to quash the order but the conclusion that the impugned order is not supported by any evidence must be reached after considering the question as to whether the probabilities and circumstantial evidence do not justify the said conclusion.
The enquiry held by domestic tribunals in such cases must no doubt be fair and the students must be given adequate opportunity to defend themselves and holding such enquiries, the tribunal must follow the rules of natural justice.
[799F G] Board of High School and Intermediate Education U.P. vs Sagleshar Persad & Ors., and Bihar School Examination Board vs Subhas Chandra Sinha & Ors. ; referred to.
(18) The examination committee has jurisdiction to take decision in the matter of use of unfair means not only on direct evidence but also on probabilities and circumstantial evidence.
There is no scope for importing the principles of criminal trial while considering the probative value of probabilities and circumstantial evidence.
The Examination committed is not bound by technical rules of evidence and procedure as are applicable to Courts.
[801E F] Seth Gulabchand vs Seth Kudilal & Ors., [1966] 3 S.C.R. 623; Ghazanfer Rashid vs Board H.S. & I. Edn.
U.P., A.I.R. 1970 Allahabad 209; Miller vs Minister of Pensions, [1947] All.
E.L.R. 372; State of Uttar Pradesh vs Chet Ram & Ors., , referred to.
778 (19) There is an unmistakable subjective element in the evaluation of the degree of probability and the quantum of proof.
Forensic probability must, in the last analysis, rest on the robust common sense and, ultimately, on the trained institutions of the Judge.
[802D] (20) Strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings of domestic tribunals.
It is open to the authorities to receive and place on record all the necessary, relevant, cogent and acceptable material facts though not proved strictly in conformity with the Evidence Act, the material must be germane and relevant to the facts in issue.
In grave cases like forgery, fraud, conspiracy, misappropriation, etc.
seldom direct evidence would be available.
Only the circumstantial evidence would furnish the proof.
Inference from the evidence and circumstances must be carefully distinguished from conjectures or speculation.
[805D E] State of U.P. vs Krishna Gopal & Anr.,, ; ; Hanumant vs The State of Madhya Pradesh, [1952] S.C.R. 1091; Reg.
vs Hodge, ; Bank of India vs J.A.H. Chinoy, A.I.R. 1950 P.C. 90; Khwaja vs Secretary of State, [1983] 1 All E.L.R. 765 (H.L.); Sodhi Transport Co. & Anr.
vs State of U.P. & Anr.
etc., [1986] 1 S.C.R. 939; Bhandari vs Advocates Committee, [1956] A.E.L.R. 742 (P.C.); Glynn vs Keale University & Anr.
; In Re: An Advocate; , ; Shri Krishan vs The Kurukshetra University, Kurukshetra, A.I.R. and Shivajirao Nilangekar Patil vs Dr. Mahesh Madhav Gosavi & Ors. & Vice Versa, ; , referred to.
(21) The standard of proof is not beyond reasonable doubt "but" the preponderance of probabilities tending to draw and inference that the fact must be more probably.
Standard of proof cannot be put in a straight jacket formula.
No mathematical formula could be laid on degree of proof.
The probative value could be gauged on facts and circumstances in a given case.
The Standard of proof is the same both in civil cases and domestic enquiries.
[805H 806B] (22) The conclusion reached by the Education Standing Committee that the fabrication was done at the instance of either the examinees or their parents or guardians is amply borne out from the record.
The High Court over stepped its supervisory jurisdiction and trenched into the arena of appreciation of evidence to arrive its own conclusion on the specious plea of satisfying 'conscience of the Court '.
[806G]
|
Criminal Appeal No. 128 of 1990.
From the Judgment and Order dated 19.8.1989 of the Patna High Court in Criminal Miscellaneous No. 2314 of 1989.
A.D. Sikri, Ranjan Mukherjee and D. Goburdhan for the Appellant.
R.K. Garg and A. Sharan for the Respondents.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
Special leave granted.
790 The legality of the order of the High Court dated 19.8.
1989 passed on an application made under section 482 Cr.
P.C. is challenged in this appeal.
In a case instituted on a private complaint by the appellant for offences under sec tions 452 and 323 I.P.C., the Judicial Magistrate First Class, Patna, in exercise of power under section 192(2) Cr.
P.C. transferred the case for enquiry under section 202 of the Code.
The Court of the Second Class Magistrate, after examining witnesses, by order dated 22.3.
1985 issued proc ess to the two accused, the respondents herein.
The order of the Magistrate issuing process was challenged by the re spondents under section 482 before the High Court.
The main ground urged before the High Court was that the First Class Magistrate had transferred the case without taking cogni zance of the offence and the subsequent proceedings were, therefore, illegal.
The High Court, by its order dated 20.8.88, dismissed the petition.
It was found that there was no such illegality.
The respondents again made Crl.
Petition 2314/89 under section 482 Cr.
P.C. before the High Court alleging, inter alia, that the record of the proceed ings on close scrutiny would indicate that the case had not been taken cognizance of before the transfer.
The learned Single Judge accepted the case of the respondents and quashed the proceedings by the impugned order.
The learned counsel for the appellant contended before us that the second application under section 482 Cr.
P.C. was not entertainable, the exercise of power under section 482, on a second application by the same party on the same ground virtually amounts to the review of the earlier order and is contrary to the spirit of section 362 of the Cr.
P.C. and the High Court was, therefore, clearly in error in having quashed the proceedings by adopting that course.
We find considerable force in the contention of the learned counsel.
The inherent power under section 482 is intended to prevent the abuse of the process of the Court and to secure ends of justice.
Such power cannot be exercised to do something which is expressly barred under the Code.
If any considera tion of the facts by way of review is not permissible under the Code and is expressly barred, it is not for the Court to exercise its inherent power to reconsider the matter and record a conflicting decision.
If there had been change in the circumstances of the case, it would be in order for the High Court to exercise its inherent powers in the prevailing circumstances and pass appropriate orders to secure the ends of justice or to prevent the abuse of the process of the Court.
Where there is no such changed circumstances and the decision has to be arrived at on the facts that existed as on the date of the earlier order, the exercise of the power to reconsider the 791 same materials to arrive at different conclusion is in effect a review, which is expressly barred under section 362.
In the present case, there had been a definite finding that the complaint was taken cognizance of by the Magistrate before he transferred the proceedings under section 192(2) for enquiry under section 202 Cr.
This finding has been arrived at after perusal of the record of the proceedings before the Magistrate and on a consideration of the report of the concerned Magistrate.
A reappraisal of the facts on record to determine whether such cognizance had been taken of in a subsequent proceeding is not, therefore, warranted.
The only ground on which relief was claimed is the alleged irregularity in the transfer of the proceedings.
It was not open to the parties to reagitate the question by a fresh application nor was the court empowered under section 482 to reconsider the matter.
Section 362 of the Code expressly provides that no court when it has signed its judgment or final order disposing of a case, shall alter or review the same except to correct a clerical or arithmetical error save as otherwise provided by the Code.
Section 482 enables the High Court to make such order as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.
The inherent pow ers, however, as much are controlled by principle and prece dent as are its express powers by statute.
If a matter is covered by an express letter of law, the court cannot give a go by to the statutory provisions and instead evolve a new provision in the garb of inherent jurisdiction.
In Superintendent & Remembrancer of Legal Affairs vs Mohan Singh, , this Court held that section 561A preserves the inherent power of the High Court to make such orders as it deemed fit to prevent abuse of the process of the Court or to secure the ends of justice and the High Court must therefore exercise its inherent powers having regard to the situation prevailing at the particular point of time when its inherent jurisdiction is sought to be invoked.
In that case the facts and circumstances obtaining at the time of the subsequent application were clearly different from what they were at the time of the earlier application.
The question as to the scope and ambit of the inherent power of the High Court vis a vis an earlier order made by it was, therefore, not concluded by this decision.
The inherent jurisdiction of the High Court cannot be invoked to override bar of review under section 362.
It is clearly stated in Sooraj 792 Devi vs Pyare Lal, ; that the inherent power of the court cannot be exercised for doing that which is specifically prohibited by the Code.
The law is therefore clear that the inherent power cannot be exercised for doing that which cannot be done on account of the bar under other provisions of the Code.
The court is not empowered to review its own decision under the purported exercise of inherent power.
We find that the impugned order in this case is in effect one reviewing the earlier order on a reconsideration of the same materials.
The High Court has grievously erred in doing so.
Even on merits, we do not find any compelling reasons to quash the proceedings at that stage.
We allow the appeal and set aside the order of the High Court.
G.N. Appeal allowed.
| This petition under Article 32 of the Constitution of India was filed by the wife of the detenu challenging the validity of the Detention Order dated 15.8.1989 passed against her husband by the Collector and District Magistrate of Kamarajar District Virudhunagar, Tamil Nadu on allega tions inter alia that the District Magistrate had issued the impugned order for detention of her husband, who is an active member of the All India Anna Drayida Munnetra Kazha gam party, an active social and political worker and ex member of the Tamil Nadu Legislative Assembly, at the behest of Respondent No. 3 a Minister in the present DMK Govern ment, on account of personal and political animosity between the two.
Counsel for the Detenu urged two grounds to attack the order of detention.
Firstly that the order did not specify the period of detention, and secondly that the sole ground of detention as reflected in the Grounds of Detention has no relevance to the maintenance of 'Public Order ' as the facts mentioned therein donot make out any case of violation of public order.
At best, it may be a case of law and order only which exhibits non application of mind by the detaining authority.
837 Allowing the writ petition and quashing the impugned order of detention on the ground of non application of mind by the Detaining Authority in passing the Detention order, this Court, HELD: (1) Since the Act does not require the detaining authority to specify the period for which a detenu is re quired to be detained the order of detention is not rendered invalid or illegal in the absence of such specification in the Detention order.
[843E] Commissioner of Police & Anr.
vs Gurbux Anandram Birya ni, [1988] Supp.
SCC 568 Over ruled.
Ashok Kumar vs Delhi Administration & Ors., , Ujagar Singh vs The State of Punjab, ; Suna Ullah Butt vs State of Jammu & Kashmir, ; ; Suresh Bhojraj Chelani vs State of Maharashtra, and A.K. Roy vs Union of India & Ors., ; , approved.
(2) In a case where the detaining authority may not be present at the place of the incident or the occurrence, he has to form the requisite opinion on the basis of materials placed before him by the sponsoring authority but where the detaining authority was himself present at the scene of occurrence he should have relied more on his own knowledge and observation then on the report of the sponsoring author ity.
[853H; 854A] In the instant case, the detaining authority though present at the scene of occurrence does not support the incident as presented to him by the sponsoring authority, and yet he issued the detention order on the report of sponsoring authority.
In these circumstances, there was nonapplication of mind by the detaining authority in making the order of detention.
[854B] Dr. Ram Manohar Lohia vs State of Bihar, ; ; Pushkar Mukher]ee & Ors.
vs The State of West Bengal, ; ; Shyamal Chakraborty vs Commissioner of Police Calcutta & Anr., ; ; Arun Ghosh vs State of West Bengal, ; Nagendra Nath Mondal vs State of West Bengal, ; ; Sudhir Kumar Saha vs Commissioner of Police, Calcutta, ; ; S.K. Kedar vs State of West Bengal, ; Kanu Biswas vs State of West Bengal, ; ; Kishori Mohan vs State of West Bengal, ; Amiya Kumar Karmakar vs State of West Bengal, and Manu Bhusan Roy Prodhan vs State of West Bengal & Ors.
, ; , referred to. 838
|
ivil Appeal No: 446 of 1973 From the Judgment and Order dated 18.11.1970 of the Madras High Court in Writ Appeal No. 389 of 1967.
M.M. Abdul Khader and A.V. Rangam for the Appellant.
K. Ram Kumar and Mrs. J. Ramachandran for the Respondent.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
This appeal is by a certificate granted by the Madras High Court under article 133(1)(c) of the Constitution.
The appellant is the State of Tamil Nadu.
The respondent is the Ahobila Matam, a well known religious institution.
The question relates to the applicability of the Tamil Nadu Inams (Assessment) Act, 1956 in regard to some lands situated in Narasimhapuram, Papanasam Taluk, Thanjavur District belonging to the institution.
The lands are covered by Inam Title Deed No.2214 dated July 29, 1881 granted by the Inam Commissioner to the Manager for the time being of Sri Ahobila Matam.
By the title deed, the Inam Commissioner, by order of the Governor in Council of Madras acting on behalf of the Secretary of State for India in Council, acknowledged the title of the Ahobila Matam to "a religious endowment or a Matam Inam consisting of the right to the Government Revenue on land claimed to be acres 28.11 cents of dry, 58.38 acres of wet and 6.83 acres of garden and situated in the whole village of Narasimhapuram besides Poramboke in the taluk of Kumbakonam District of Tanjore and held for the support of the Ahobila Matam" and confirmed the Inam to the Manager for the time being of the Ahobila Matam and his successor "tax free to be held without interference so long as the conditions are duly fulfilled.
" The extract of the Inam Fair Register mentioned in Column 8 that the grant was made by one of the Tanjore Princes, but that the purpose of the grant was not known.
It was presumed that the inam was conferred for the benefit of the Matam.
Column 13 mentioned the original grantee as the Ahobilam Servatantra Sri 235 Srinivasa Swami, apparently, the then Jeer of the Matam.
The recommendation of the Inam Commissioner in Column 22 was that the title deed should be issued in the name of the priest for the time being of the Ahobila Matam.
It was in pursuance of this recommendation that Inam Title Deed No. 22 14 was issued.
Consequent on the enactment of the Madras Inams(Assessment) Act, 1956, the Revenue Divisional Officer, Kumbakonam made an order on February.
28, 1963 levying full assessment on the lands.
The levy of the assessment was questioned by the Ahobila Matam by a Writ Petition in the Madras High Court.
First, a learned Single Judge and then, a Division Bench of Madras High Court quashed the assessment on the ground that the proviso to s.3 (1) of the Act pre vented the levy of full assessment of lands held on service tenure.
The proviso to section 3(1) of the Act is in the follow ing terms: "Provided that in the case of an Inam granted on service tenure which is proved to consist of an assignment of land revenue only, no assessment under this sub section shall be leviable, and the inamdar shall be liable to pay only the quit rent, Jodi, Kattubadi or other amount of a like nature, if any, which he has been paying before the commencement of this Act.
" The question for consideration, therefore, is whether the Inam was granted on 'service tenure '.
The High Court took the view that the expression 'service tenure ' was not to be restricted to a service inam and that it would include any grant for the support of a religious or charitable institution.
For that purpose reliance was placed on the classification of inams in the Standing Orders of the Board of Revenue.
The Standing Orders divided inams into unenfran chised service inams and unenfranchised personal inams.
Under the heading of unenfranchised service inams, religious and charitable inams were dealt with in Paragraph 54.
Para graph 54 enjoined a duty on the Collector to see that the inams confirmed by the Inam Commissioner for the benefit of or for service to be rendered to any religious or charitable institution or for the maintenance of irrigation works or other works of public utility; were not enjoyed without the terms of the grant being fulfilled.
Religious and charitable inams were further classified and in the first category we get inams granted for the support or maintenance of Hindu religious institutions, inams granted for the performance of a charity or service connected with Hindu religious institu tions and inams granted for any other Hindu charitable trust.
In the second category came the other inams.
We do not think that the classification of grants 236 for the benefit of a religious institution along with other service inams by Paragraph 54 of the Board 's Standing Orders throws light on the interpretation of the expression 'serv ice tenure ' in Madras Inams Assessment Act.
The expression 'service ' in connection with religious institutions has acquired a special and significant meaning and we do not think that we will be justified in ignoring the well under stood meaning given to the expressions 'service inams ' and 'service tenure ' over decades of years.
We must not also forget that the object of Madras Inams Assessment Act was to impose full assessment on Inam lands hitherto wholly or partly exempt from levy of land revenue.
As far back as 1934, the Madras High Court in Subramania vs Kailasanatha AIR 1934 Madras 258 (Venkata Subba Rao, J.), pointed out that there were three possible views that might be taken of grants made in connection with religious institutions: "First, that the land was granted to the institution, sec ondly, that it was intended to be attached to a particular office, and thirdly, that it was granted to a named individ ual, burdened with service, the person so named, happening to be the office holder, at the time of the grant.
This distinction between grants to institutions as such and grants made for the performance of service either by attach ing the service to a particular office or by naming the individual grantee and burdening the grant with service, the named individual being the holder of an office, for the time being.
In Hindu Religious Endowments Board, Madras vs Thadi konda Koteswara Rao, , a Division Bench of the Madras High Court considered a number of grants bearing these distinctions in mind.
Where the grant was "for the worship of the idol in the pagoda" or "for the nithya naivedya deeparathana" or "for the offering of daily nai vaidyam and deeparathana", the grants were construed as grants in favour of the institution and not as grants in favour of the office holder or individual burdened with service.
In other words, such grants were not treated as service inams but as grants in favour of institutions.
The decision in Hindu Religious Endowments Board vs Koteswara Rao, (supra), is the leading case on the subject and has been followed consistently all these years by the Madras High Court.
Lands granted to religious institutions (not either to the office holder or to an individual burdened with service) for the performance of worship in a temple or math have never been considered as lands subject to 'service tenure '.
The High Court referred to section 44(B) of Madras Act 2 of 1927.
We find ourselves unable to derive any assistance from that provision.
Section 44B provided for resumption and regrant of inams granted for the support or maintenance of a math or for the performance of charity or service connected with a math or temple.
We do not think that it would be proper for us to interpret the expression 'service tenure ' by refer 237 ring section 44B of the Madras Act 2 of 1927 where that expres sion is in fact not used at all.
We are, therefore, of the view that the proviso to section 3(1) is inapplicable to lands held by religious institutions and, therefore, the lands are liable to full assessment.
Shri Ram Kumar, learned counsel for the respondent argued that the imposition of full assessment on lands held by the religious institution in the present case would be hit by article 26 of the Constitution which gives to every religious.denomination the right to own and acquire movable and immovable property and to administer such property inaccordance with law.
We are unable to understand how the mere imposition of assessment on lands held by a religious denominational institution can possibly attract the right guaranteed by the article 26 of the Constitution.
The burden imposed is a burden to be shared in the same manner by all the owners of the lands in the State and not a special burden imposed on the denominational institution.
Burden of that nature are outside the right guaranteed by article 26 of the Constitution.
The appeal is, therefore, allowed and the orders of the learned single Judge and the Division Bench of the Madras High Court are set aside.
The writ petition filed in the High Court is dismissed.
P.S.S. Appeal allowed.
| The Appellant Company, in a writ petition, challenged the order passed by the respondent Electricity Board levy ing surcharge of 5.5 paise per unit on electricity drawn by the Company in excess of the permissible 70% authorised by the State Government.
The writ petition having been dis missed by a Single Judge of the High Court and the Division Bench having confirmed the decision, the appellant appealed to this Court.
In the appeal, it was contended; (i) that the Electrici ty Board had no authority to charge 5.5 paise per unit in excess of the agreed rate without giving one month 's notice as contemplated by the agreement; and (ii) that the levy of the surcharge resulted in retrospective levy and was there fore not in accordance with law.
Dismissing the appeal, HELD: 1.
The Electricity Board had the legal authority to levy and collect surcharge of 5.5 paise per unit from the appellant in regard to the supply of electricity in excess of the 70% authorised in the context of section 22 B of the .
[334 C] 2.
The agreement itself does not envision the supply of electricity in violation of the ban imposed by the State Government in exercise of the power under section 22B of the Act.
[333 G H] 3.1 Section 49(3) of the Electricity Supply Act autho rises a Board to supply electricity by charging different tariff having regard to the geographical position of the area, the nature of the supply, purpose for which the supply is required and any other relevant factors, and is wide enough to cover a situation where electricity in excess of the authorised quantum is drawn in disregard of the ban imposed in view of the shortage of the supply under section 22 B of the as also to cover a situation where at the express request of 332 the consumer electricity is purchased from some other au thority and is supplied.
[334 D, B] 3.2 The combined effect of s.49 and the terms and condi tions of supply is that having regard to the nature of supply and other relevant factors particularly when there is shortage of electricity the Board has the power to enhance the rates.
If there is shortage of electricity there is justification to impose restriction on supply.
The Board can also impose higher rates by way of sanction if the quota is exceeded.
[334 E] Adoni Cotton Mills etc.
vs The Andhra Pradesh State Electricity Board and Others, ; , relied upon.
In the instant case, having regard to the fact that the supply was made after obtaining it from the Damodar Valley Corporation at a higher rate and having further regard to the fact that the impost of the surcharge is construed as having been made under the statutory authority, the stipula tion in the agreement does not come into play.
[335 A B]
|
Special Leave Petition (Civil) No. 123 17 of 1987.
From the Judgment and Order dated 2.9.1987 of the Madhya 619 Pradesh High Court in Misc.
Petition No. 3308 of 1985.
M.K. Ramamurthy and A.K. Sanghi for the Petitioners.
Vinod Bobde, P.S. Nair and K.V. Sreekumar for the Respond ents.
The following Order of the Court was delivered This petition for special leave is against the judgment dated 2.9.1987 of the High Court of Madhya Pradesh dismiss ing the petitioners ' writ petition (M.P. No. 3308 of 1985).
The petitioners demand regularisation of their services claiming to be daily rated workmen for a long time in the mines of the Diamond Mining Project, Panna of the National Mineral Development Corporation Ltd. Their demands are of regularisation and "equal pay for equal work" on the ground that they are discharging the same duties as the regular workers.
The management has throughout denied the petition ers ' claim and alleged that, in fact, the petitioners have been continued on rolls on humanitarian grounds for several years, even though there is no work for them; and as such, there is no question of regularising the petitioners and giving them the pay of regular workers when in fact they are not doing any work for a long time.
The High Court rejected the petitioners ' claim and came to the following conclusion: "The petitioners are not regular employees, they do not have any specific job to do, they are surplus to the establish ment and merely kept on the roll on humanitarian ground.
The respondents are also running in heavy losses during the last three years and it is not possible to absorb the petitioners immediately as regular workmen.
In fact, the petitioners are being paid their daily wages in spite of their being no work available for them.
" Aggrieved by dismissal of the writ petition, the petitioners have filed this petition for special leave to appeal under Article 136 of the Constitution.
In response to notice of this petition, a counter affi davit has been filed on behalf of respondent No. 2 reiterat ing the stand taken before the High Court.
It has been stated therein that there is no vacancy in the establishment to absorb the petitioners and the accumulated loss to 620 the establishment as on 31st March, 1988 is Rs. 10,29,40,583.
A copy of the balance sheet has also been enclosed with the counter affidavit.
It has been stated that the petitioners being surplus to the requirement of the Project, they cannot be regularised and their retention on the rolls is purely on humanitarian grounds so far.
Further facts have been stated in support of their contention.
It has also been stated that a Voluntary Retirement Scheme offering considerable amount to these daily rated workmen has been framed, which is Annexure R V to the counter affi davit.
This document shows the amount of retrenchment com pensation and the ex gratia payment offered to the 63 daily rated workmen under this Scheme.
The 54 petitioners are included therein.
It was stated at the hearing before us that 9 out of these 63 daily rated workers mentioned in Annexure R V have accepted this Scheme of Voluntary Retire ment and respondent No. 2 is prepared to give benefit of the same even to those who may not have agitated their claim.
We do not find any ground to interfere with the High Court 's decision in view of the clear findings supported by evidence that there are no vacancies or work available in the establishment for absorption of the petitioners and that for quite some time they have been continued on rolls and paid in spite of there being no work for them.
On these facts, the question of directing their absorption and regu larisation does not arise.
The principle of regularisation of a daily rated workman and payment 'to him of the pay equal to that of a regular workman arises only when the daily rated workman is doing the same work as the regular workman and there being a vacancy available for him, he is not absorbed against it or not even paid the equal pay for the period during which the same work is taken from him.
On the clear findings in this case, this is not the position.
This petition must, therefore, fail.
In spite of our above conclusion, keeping in view the offer made on behalf of respondent No. 2 in the counter affidavit together with Annexure R V thereto which was reiterated at the heating before us, we direct that all the 63 daily rated workmen including the 54 petitioners herein mentioned in the aforesaid Annexure R V to the counter affidavit be given the benefit of the Voluntary Retirement Scheme framed by respondent No. 2 and they be paid the specified amounts in addition to their all other dues.
Subject to this direction, the special leave petition is dismissed.
No costs.
P.S.S. Petition dismissed.
| To a question whether lamination of duty paid kraft paper with polyethylene resulting in 'polyethylene laminated paper ' would amount to 'manufacture ' and excisable under Excise Law, the Collector of Central Excise (Appeals) an swered in the negative, and held that the appellant was eligible to claim refund of duty paid by it.
In reaching this finding he followed the decision in Standard Packag ings, Nellore vs Union of India, AP.
Against the said order, the Collector of Central Excise preferred an appeal before the Customs, Central Excise and Gold (Control) Appellate Tribunal.
The Tribunal reversed the order of the Collector (Appeals) and held that the appellant was liable to duty.
Aggrieved, the appellant has preferred this appeal under Section 35 L(b) of the .
It was contended that duty was already paid on kraft paper and there was no change in the essential characteristic or the user of the paper after lamination, and that both the goods belong to the same entry.
Dismissing the appeal, HELD: 1.1.
By process of lamination of kraft paper with polyethylene different goods come into being.
Laminated kraft paper is distinct, separate and different from the kraft paper.
Lamination, indisputably by the well settled principles of excise law, amounts to manufacture.
[632C D] 631 1.2. 'Manufacture ' is bringing into being goods as known in the excise laws, that is to say, known in the market having distinct, separate and identifiable function.
[632F] 1.3.
Even if the goods belong to the same entry, the goods are different identifiable goods, known as such in the market.
If that is so, manufacture occurs, and if manufac ture takes place, it is dutiable.
[632F] Empire Industries Ltd. & Ors.
vs Union of India & Ors.
, ; and Collector of Central Excise, Kanpur vs Krishna Carbon Paper Co., , relied on.
|
Appeals Nos. 926 and 927 of 1965.
Appeals from the judgment and decree dated November 25, 1962 of the Madhya Pradesh High Court (Indore Bench) at Indore, in First Appeals Nos. 19 and 23 of 1957 respectively.
166 section V. Gupte, Solicitor General, Rameshwar Nath, section N. Andley, P. L. Vohra and Mahinder Narain, for the appellant.
section P. Sinha, Ganapat Rai, E. C. Agarwala and P. C. Agarwala, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by certificate on behalf of the defendant from the judgment of the High Court of Madhya Pradesh, Indore Bench, dated November 20, 1962 in First Appeals Nos. 19 and 23 of 1957.
The plaintiffs, Rup Chand and Hukam Chand instituted Civil Suit No. 8 of section 1999 in the Court of District Judge, Ujjain, against the defendant Vithal Das and three others, for partition of houses and for rendition of accounts.
Two of the defendants, Bheronlal and Indermal died in the course of the suit and the suit was continued against Vithal Das.
The plaintiffs alleged that the immovable property constituting Blocks Nos. 206 and 207 in Freeganj, Ujjain was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were, at one time, partners and by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm had been dissolved in the year 1937.
The plaintiffs claimed that the properties were managed by the defendant on behalf of the plaintiffs and the defendant realised rents from the tenants on their behalf and plaintiffs were, therefore entitled to receive half the amount realised as rent and the defendant was liable to render accounts thereof.
The plaintiffs also claimed parti tion of the joint properties, or in the alternative, the sale of the property by auction and after deducting the cost of auction, half of the sale proceeds.
The defendant contested the suit on the ground that at the time of the execution of the document dated July 2, 1937 there were only three blocks in partnership which were at that time open land.
The defendant claimed that Block 'No. 206 and the building constructed thereon was not a partnership property.
It was further alleged that the defendant had invested Rs. 10.000 in the three blocks of land which were held in partnership for constructing a building.
The trial court accepted the plaintiffs ' case and granted a decree for partition of the blocks and for an account of income realised in respect of the property situated on block No. 207.
As regards block No. 206 and the property standing thereon the trial court directed the defendant either to remove the construction or accept his share of money spent by the defendant over it and created a charge over the property in respect of the amount so held payable.
Both the parties preferred appeals in the High Court of Madhya Pradesh against the judgment of the trial court which partially allowed the appeals and remanded the case to the trial Court.
The High Court held that the plaintiffs were entitled to claim half share in both the properties built on blocks Nos, 206 and 207 and the defendant was liable to account 167 for the income of the properties on block No. 207 from the date of dissolution i.e., from July 2, 1937 and of block No. 206 from the year 1939.
The High Court also held that the plaintiffs were liable to pay half the costs spent by the defendant in constructing the building on block No. 206.
After the order of remand the trial Court appointed a Commissioner for examining accounts of rent realised by the defendant.
After considering the report of the Commissioner, the trial Court determined the total amount of rent of both the blocks Nos. 206 and 207 at Rs. 41,829/3/7 and the half share of the plaintiffs was determined at Rs. 20,914/4/9.
The trial Court also awarded interest to the plaintiffs on the half share of the income to the extent of Rs. 6,676/7/3 calculated upto April 11, 1957.
The total amount thus due to the plaintiffs was determined at Rs. 27,591 /1/ .
Out of this amount the trial court allowed sum of Rs. 9,755/7/3 on account of the half costs of ' construction and interest thereon and expenses incurred for house tax, water tax, legal expenses and repairs.
The net amount thus awarded to the plaintiffs was Rs. 17,670/9/9.
As regards the partition of blocks Nos. 206 and 207, the trial court held that in view of the method of construction of the blocks it was not possible to make partition in equal shares and therefore the trial court directed that the two blocks should be auctioned in separate lots and the parties should be at liberty to bid at the auction and the parties would have equal rights to the amount of the auction.
Aggrieved by the judgment of the trial court both the parties preferred appeals to the High Court of Madhya pradesh, namely, First Appeals Nors.
19 and 23 of 1957.
The defendant 's appeal was registered as Civil First Appeal No. 19 of 1957 and the plaintiffs ' appeal was registered as Civil First Appeal No. 23 of 1957.
Both, the appeals were heard and disposed of by a common judgment by the High Court which modified the trial court 's finding, as to the income of blocks 206 and 207 to the extent of Rs. 803/ '5/3 by reducing the income of the two blocks by that figure. 'The total income was thus reduced from Rs. 41,829/3/7 to Rs. 41 015,/14/4 with the corresponding,reduction in the amount of interest.
The High Court affirm the finding of the trial court that tile defendant was liable to pity interest on the half share of the rental income on the ground that the relationship between the parties was in the nature of a truest under section 90 of the Trusts Act (Act 11 of 1882).
The plaintiffs ' appeal No. 23 of 1957 was allowed to the extent of Rs. 4,942/9/after adjustment, the plaintiffs ' claim was decreed for Rs. 22,103/ .
The first question for consideration in these appeals is whether the High Court was right in granted interest to the plaintiffs on their share of rental income to the extent of Rs. 6,676 / 7 / 3 for the period prior to the institution of the suit.
It was argued by the Solicitor Geiieral on behalf of the appellant that the High Court was in error in appellant that the relationship between the prince was governed by section 90 of the Trusts Act and the plaintiffs were therefore entitled to interest on their share of rent under the provi LIS5SCI 13 168 sions of section 23 of that Act.
In our opinion, the contention put forward by the Solicitor General is well founded and must be accepted as correct.
It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance section 80 of Negotiable Instruments Act or section 23 of the Trusts Act.
It is admitted in the present case that the two agreements between the parties dated July 2, 1937 and July 16, 1937 did not provide for payment of interest on the rental realised by the defendant on the joint properties.
Nor is interest payable by virtue of any provision of the law governing the case.
Under the Interest Act, 1839, the Court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument.
But it is conceded that the position in the present case is different.
It was suggested by Mr. section P. Sinha on behalf of the respondents that interest may be awarded under the Interest Act which contains a provision that "interest shall be payable in all cases in which it is now payable by law".
But this provision only applies to cases in which the Court of Equity exercises jurisdiction to allow interest.
The legal position has been explained by the Judicial Committee in Bengal Nagpur Rly.
Co. Ltd. vs Ruttanji Ramji(1) at p. 72 as follows: "As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. vs Hart, , at p. 640; (AIR 1939 PC 185 at p. 188), 'In order to invoke a rule of equity It is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as, for example, the non performance of a contract of which equity can give specific performance '.
" The decision of the Judicial Committee in Bengal Nagpur Rly.
Co. Ltd. vs Ruttanji Ramji(1) was relied upon by this Court in Thawardas Pherumal vs Union of India(1) in rejecting a claim for interest.
In that case, a contractor entered into a contract with the Dominion of India for the supply of bricks.
A clause in the contract required all disputes arising out of or relating to the contract to be referred to arbitration.
The dispute having arisen, the matter was referred to arbitration and the arbitrator gave an award in the contractor 's favour.
The Union of India which has succeeded to the rights and obligations of the Dominion, contested the award on various grounds one of which was the liability to pay interest on the amount awarded.
It was held by this Court that the interest awarded to the contractor could not, in law, be awarded and the arbitrator is not a Court within the meaning of the Interest Act, 1839 and.
in any event, interest could only be awarded if there was (1) 65 I.A. 66.
(2) 169 a debt or a sum certain payable at a certain time or otherwise by virtue of some written contract and there must have been a demand in writing stating that interest will be demanded from the date of the demand.
The same view has been expressed by this Court in two later cases Union of India vs Rallia Ram(1) and Union of India vs Watkins Mayor and Co.(2).
It was, however, pointed out for the respondents that the defendant was in possession of the entire properties as co owner after the dissolution of the partnership by the document dated July 16, 1937.
It was argued that the defendant was realising rents of all the properties and he was in the position of a constructive trustee under section 95 of the Trust Act and was liable therefore to pay interest on the plaintiffs ' share of rent under section 23 read with section 95 of the Act.
We do not consider there is any justification for this argument.
Section 90 of the Act states: "Where a tenant for life, co owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to payment by such persons of their due shares of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage." Section 95 provides as follows: " The person holding property in accordance with any of the preceding sections of this Chapter must, so far as may be, perform the same duties and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it: Provided that (a) where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill and loss of time in such cultivation or employment , and (b) where he holds the property by virtue of a contract with a person for whose benefit he holds it, or with any one through whom such person claims, he may, without the permission of the Court, buy or become lessee or mortgagee of the property or any part there of.
" Section 23 reads as follows: "Where the trustee commits a breach of trust, he is liable to make good the loss which the trust property or the beneficiary has thereby sustained, unless the beneficiary has by (1) A.I.R. 1963 S.C. 1636.
(2) A.I.R. 1966 S.C. 275.
170 fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his rights as against the trustee.
A trustee committing a breach of trust is not liable to pay interest except in the following cases: (a) where he has actually received interest; (b) where the breach consists in unreasonable delay in paying trust money to the beneficiary; (c) where the trustee ought to have received interest, but has not done so; (d) where he may be fairly presumed to have received interest.
He is liable, in case (a), to account for the interest actually received, and, in cases (b), (c) and (d) to account for simple interest at the rate of six per cent.
per annum, unless the Court otherwise directs. . . " We do not agree with the contention of the respondents that section 90 of the Trusts Act applies to this case.
A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants.
If the co owner is to be clothed with the status of a trustee it must be shown that he has gained some advantage in derogation of the other co owners interested in the property and that he gained such an advantage by availing himself of his position as co owner.
In the present case, there is no allegation made by the plaintiffs that the defendant has gained any advantage in derogation of the rights of the plaintiffs, nor is there any finding of the lower courts that the defendant gained any advantage by availing himself of his position as co owner.
We shall, however, assume in favour of the respondents that the defendant is in the position of a constructive trustee in view of the provisions of section 90 of the Trusts Act.
Even upon that assumption we are of opinion that the defendant is not liable to pay interest to the plaintiffs for their share of the rent of the properties.
The reason is that the trustee is liable to pay interest only if he commits a breach of trust under section 23 of the Trusts Act.
There is also the restriction contained in section 23 of the Trusts Act, namely, that a trustee committing a breach of trust is not liable to.
pay interest except in the cases mentioned in that section.
It was argued by Mr. section P. Sinha for the respondents that the defendant was liable to pay interest under section 23(b) of the Trusts Act because there was unreasonable delay in paying the trust money to the beneficiary.
We are unable to accept this argument as correct.
In 171 our opinion, section 23(b) contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand.
In our opinion, there is no question of breach of trust on the part of the, defendant in the present case and the provisions of section 23(b) of the Trusts Act are not attracted.
The view that we have expressed is borne out by several authorities.
In Blogg vs Johnson(1), Lord Chelmsford, L.C. stated that "the Court will not charge an executor who has been guilty of delay in accounting, with interest on arrears of income unpaid by him".
In that, case, X was entitled to a life income from the estate of her husband, and died in 1861.
A bill was filed by her executor, in 1862, against the executor of her husband 's will, who had been his partner in business, for an account of income due to her estate; in 1863 accounts were directed.
In 1866 a certificate was made, finding that a large sum was due from the husband 's executor.
It was held by Lord Chelmsford, L.C. that he was not chargeable with interest before the date of the certificate.
Again, in Silkstone and Haigh Moor Coal Co. vs Edey(2), it was held by the Chancery Court that upon the setting aside of a sale by a trustee of trust property to himself, and the reconveyable of the property to the beneficiaries, it is not the practice of the Court to charge the trustee with interest on the rents and profits received by him since the date of the sale.
Interest was, however, charged on arrears in some cases as in Malland vs Gray(1) and Guildrey vs Stevens(1), but these cases fall within the range of another principle of equity that where an executor or a trustee unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it, he will have to pay interest for it.
As Lord Chelmsford, L.C. observed in Blogg vs Johnson(1) at p. 228: "Where money is thus improperly retained, it appears to me to be immaterial how the sum has arisen, whether from a legacy, or a distributive share, or a residue, or the arrears of income.
In the latter case, the claim for interest is not made on account of the arrears, but for the improper keeping back or a sum of money, from whatever source derived, which the executor or trustee ought to have paid over.
" We have already given reasons for holding that the provisions of section 23(b) of the Trusts Act do not apply to the present case and the plaintiffs are not entitled to claim any interest on arrears of rent and the High Court has fallen into an error in granting such interest.
The next contention raised on behalf of the appellant is that the Commissioner examined the accounts and submitted his report from July 2, 1937 to December 31, 1954 and the High Court was not justified in granting a decree to the plaintiffs for the subsequent (1) 1867 2 Ch.
A. 225.
(3) E.R. 744.
(2) (4) 172 period from January 1, 1955 to April 11, 1957 on the basis of the figures found from the Commissioner 's report.
It was argued that the High Court had no basis for assuming that the same rental income was received by the defendant for the period from January 1, 1955 to April 11, 1957 as for the prior period.
In our opinion, there is great force in this argument and we should, in the normal course, remand the case to the High Court for a finding as to the accounts of the subsequent period.
Mr. Sinha, however, pointed out that the litigation commenced in 1942 and has already been pro tracted too ]on .
We do not, therefore, wish to remand the case to the High Court for further inquiry.
Having examined the evidence on the record of this case, we consider that, in the circumstances, a sum of Rs. 2,400/ (instead of Rs. 3,100/ ) for the period from January 1, 1955 to April 11, 1957 should be granted to the plaintiffs as their share of profits.
We direct that the interest may be granted to the plaintiffs at the rate of 6 per cent p.a. from November 20, 1962 which is the date of the final decree on the amount found due to the plaintiffs.
Two other points were raised by the Solicitor General in the course of argument.
It was pointed out, in the first place, that First Appeal No. 23 of 1957 filed by the plaintiffs in the High Court was barred by limitation and the High Court should have dismissed the appeal on that ground.
It was argued that the trial courts judgment was delivered on April 11, 1957 and the appeal to the High Court was filed on July 22, 1957.
A certified copy of the judgment was delivered to the plaintiffs on May 4, 1957 but the endorsement on the certified copy with regard to the date was fraudulently made.
An application was made by the defendant to the High Court on November 20, 1961 drawing the attention of the High Court with regard to the endorsement on the certified copy of the judgment.
There is, however, no reference in the judgment of the High Court on the question of limitation and it should, therefore, be taken that the point was not pressed on behalf of the defendant at the time of the hearing of the appeal by the High Court.
It is, therefore, not possible for us to entertain the argument of the appellant at the present stage, in the absence of any finding of the High Court.
The other objection put forward by the Solidtor General is that the High Court has not taken into account vacancies in the computation of the rental income due to the plaintiffs.
It was said that the High Court was wrong in holding that the defendant was liable as a trustee for the rents he ought to have realised even though there was no letting of the building.
The Solicitor General may be right in his argument that the defendant cannot be held liable as a constructive trustee for the rent he has not realised from the tenants and for the premises which were not let out to tenants and which had been lying vacant, but the ground upon which the High Court has made the defendant liable is different.
The High Court has taken the view that the defendant has 173 not kept proper accounts of the income of the rents realised from the shops.
In the absence of proper accounts it is not possible to accept the case of the defendant regarding the vacancies.
In our opinion, the finding of the High Court on this point is not vitiated by any error of law and the argument of the Solicitor General must be rejected on this aspect of the case.
For the reasons already expressed, we hold that these appeals should be partly allowed with proportionate costs and the decree of the High Court dated November 20, 1962 should be modified to the extent indicated in this judgment.
Appeals allowed in part.
| The appellant sought a declaration that certain premises belonged to his family as private property and did not constitute a temple within the meaning of the Madras Hindu Religious and Charitable Endowments Act (19 of 1951).
The District Court decreed the suit but the High Court found that the property in question was a temple.
The appellant then filed a petition for leave to appeal to this Court under article 133(1) (a) and (b) of the Constitution and submitted that the property was more than Rs. 20000 in value.
The High Court dismissed the application on the ground, inter alia, that the subject matter of the dispute whether as a private or a public temple was incapable of valuation as it could have in either case no market value.
The appellant by special leave came to this Court.
HELD:The High Court was not right in assuming that whether the property was a private or a public temple, it was incapable of valuation.
The subject matter of the dispute had to be ascertained with reference to the claim made by the plaintiff in his plaint and since according to the plaint the property was the private property of the appellant 's family capable of alienation, the High Court ought to have valued the property accordingly.
[157 A, B]
|
Appeals Nos. 557 & 558 of 1965, Appeal by special leave from the judgment and order dated September 19, 1962 of the High Court of Judicature at Madras (in Tax Case No. 87 of 1960).
R. Ganapathy lyer, for the appellant.
R. M. Hazarnavis and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Sree Meenakshi Mills Ltd. a company incorporated under the Indian Companies Act with its registered office at Madurai carries on business of cotton spinning and weaving.
In the premises "of the factory of the Company there are installed 80 handloorns 393 These handlooms were found inadequate to weave the yarn pro duced by the factory and a part of the yarn produced was distributed to weavers outside the factory who were engaged by the Company to weave the yarn into cloth.
Under cl.
18 B of the Cotton Cloth and Yarn (Control), Order, 1945, issued by the Government of India, the Textile Commissioner was authorized to direct ally manufacturer or dealer or any class of manufacturers or dealers, inter alia, not to sell or deliver any yarn or cloth of specified description except to such person or persons and subject to such conditions as the Textile Commissioner may specify.
On February 7, 1946, the Textile Commissioner issued an order directing the Company not to sell or deliver any yarn manufactured by the Company except to such person or persons as the Textile Commissioner may specify.
It was recited in the order that "nothing in this Order shall apply to a sale or delivery made, in pursuance of clause 18 A of the said order, to any dealer in yarn not engaged in the production of cloth on handlooms or powerless".
The Company addressed a letter on February 13, 1946 to the Textile Commissioner submitting that the prohibition in general terms was ultra wires the authority conferred by the Cotton Cloth and Yarn (Control) Order.
The Company continued notwithstanding the prohibition to deliver yarn to weavers and did so till February 20, 1946.
This yarn was seized under the orders of the Textile Commissioner.
On February 20,1946, the Provincial Textile Commissioner, purporting to act in exercise of authority conferred upon him by a notification issued by the Government of India, issued an order addressed to the Company that: "You should accordingly confine your delivery to the categories of persons notified below: (a) Licensed yarn dealers (in accordance with the said 18 A of the Control Order).
(b) to consumers who purchased yarn directly from you during the basic period 1940 42 (in accordance with my circular letter dated 4th January 1946 referred to above).
(c) your handloom factory situated in the premises of your Mill at Madurai (just the quantity of yam required).
"Note: Any other delivery of yarn by you which is not covered by a special order or permission of the Textile Control Authorities will accordingly be a contravention of the Textile Commissioner 's order under clause 18 B referred to above." After this order was issued, the Company did not deliver any yarn to weavers.
On March 4, 1946 the Company filed a petition for a writ of nandamus in the High Court of Madras under section 45 of the Specific 394 Relief Act praying for an order directing the Provincial Textile Commissioner, Madras to desist from seizing the yarn supplied to the weavers at or around Madurai and Rajapalayam for the purpose of converting the yarn belonging to the Company into cloth; to restore to the Company or to direct the Provincial Textile Commissioner and his subordinates to restore the yam already seized; and to forbear from seizing or to direct the subordinates of the Provincial Textile Commissioner to forbear from seizing the yarn that may be entrusted to the weavers by the Company in the usual course of business according to the practice already obtaining for conversion into cloth.
This petition was dismissed by Kunhi Raman, J, and the order of dismissal was confirmed in appeal by the High Court.
The matter was then carried in appeal to the Privy Council.
The Judicial Committee dismissed the appeal filed by the Company.
They held, agreeing with the High Court, that the expression "deliver" in cl.
18 B sub cl. 1(b) of the Cotton Cloth and Yarn (Control) Order, 1945, is used in its ordinary broad sense of handing over possession, as distinct from passing of property, and would include delivery of possession to a bailer.
Accordingly, delivery of part of its yarn by the Company to owners of handlooms outside the mill premises for conversion of the yarn into cloth for the Company was in contravention of the order made under cl.
18 B sub.
(1) (b).
The Judicial Committee also held that a petition under section 45 of the , directing the Provincial Textile Commissioner to desist from seizing the yam supplied to the weavers and to restore to the Company the yarn already seized was incompetent as the acts in respect of which relief was asked for took place outside the limits of the ordinary original civil jurisdiction of the High Court.
The Company spent Rs. 20,035/ in prosecuting the proceed ings under section 45 of the and had also to pay Rs. 5,912/ as costs to the Government of the unsuccessful appeal to the Judicial Committee.
In its returns of income the Company claimed deduction of the amounts of Rs. 20,035/ and Rs., 5,9121/for the assessment years 1949 50 and 1950 51 respectively as being expenditure wholly and exclusively laid out for the purpose of its business.
The claims were rejected by the departmental authorities, and by the Income tax Appellate Tribunal.
The Tribunal then referred the following question to the High Court of Judicature at Madras : "Whether the expenses of Rs. 20,035/ incurred in the assessment year 1949 50 and Rs. 5,912/ (relating to the assessment year 1950 5 1) being the cost paid to Government as directed by the Privy Council were expenses incurred in the ordinary course of business and allowable as deductions?" 395 The question as framed is somewhat vague.
But it is common ground that the Company claimed deduction under section 10(2) (xv) of the Indian Income tax.
Act, 1.922 on the footing that the two amounts represented expenditure laid out wholly and, exclusively by the Company for the purpose of its business.
The High Court answered the question in the negative. 'With special leave, the Company has appealed to this Court.
The Tribunal has found that after the order dated February 20, 1946 was issued, the Company did not deliver yarn to any weaver.
it is recited in the judgment of the Tribunal that a "correct order by the proper authorities was passed" on February 20, 1946 and, thereafter the Company did not distribute any yarn to weavers.
The averments made by the Company in the petition under section 45 of the , are somewhat involved, but in substance the claim of the Company was that the Provincial Textile Commissioner was incompetent to pass the order dated February 20, 1946 which placed restrictions on the business of the Company and the order was "likely to cause irreparable and irretrievable injury", and it was prayed that an order do issue under section 45 of the restraining the Provincial Textile Commissioner from enforcing the order and the Textile Commissioner be prohibited by an order from seizing the yarn delivered to the weavers outside the factory and be further ordered to restore the yarn already seized.
No clear averment was made in the petition about the date on which the yarn seized had been delivered by the Company to the weavers.
This petition failed, because the High Court had no jurisdiction to entertain the petition, and also because the expression "deliver" used in cl.
18 B of the Control Order included handing over of yarn to the weavers outside the premises of the factory for conversion into cloth.
But expenditure incurred in prosecuting a civil proceeding relating to the business of an assessee is admissible as expenditure laid out wholly and exclusively for the purpose of the business even if the proceeding is decided against the assessee.
It was held by this Court in Commissioner of Income Tax, West Bengal vs H. Hirjee(1) that the deductibility of expenditure under section 10(2) (xv) must depend on the nature and purpose of the legal proceeding in relation to the business whose profits are under computation and cannot be affected by the final outcome of that.
proceeding.
The proceeding started by the Company was in relation to the business of the Company.
The Company was thereby seeking relief against interference by the executive authorities in the conduct of its business in the manner in which it was being carried on previously.
It was also seeking to obtain an order for restoration of its goods which were seized.
It may be (1) ; : ; M15Sup CI/66 12 396 granted that the Company was, in starting the proceeding, ill advised.
However wrongheaded, ill advised, unduly optimistic, or overconfident in his conviction the assessee may appear in the light of the ultimate decision, expenditure in starting and prosecuting the proceeding may not be denied admission as a permissible deduction in computing the taxable income, merely because the proceeding has failed, if otherwise the expenditure is laid out for the purpose of the business wholly and exclusively, i.e. reasonably and honestly incurred to promote the interest of the business.
Persistence of the assessee in launching the proceeding and carrying it from Court to Court and incurring expenditure for that purpose again cannot be a ground for disallowing the claim.
Under section 10(2)(xv) of the Indian Income tax Act as amended by Act 7 of 1939 expenditure even though not directly related to the earning of income may still be admissible as a deduction.
Expenditure on civil litigation commenced or carried on by an assessee for protecting the business is admissible as expenditure under section 10(2) ((xv) provided other conditions are fulfilled, even though the expenditure does not directly relate to the earning of income.
Expendi ture incurred not with a view to direct and immediate benefit for purposes of commercial expediency and in order indirectly to facilitate the carrying on of the business is therefore expenditure laid out wholly and exclusively for the purposes of the trade.
In Morgan (Inspector of Taxes) vs Tate & Lyle Ltd.(1) the House of Lords held that expenditure incurred by a Company engaged in :sugar refining, in a propaganda campaign to oppose the threatened nationalization of the industry was a sum wholly and exclusively laid out for the purpose of the Company 's trade and was an admissible deduction from its profits for income tax purposes.
majority of the House held that the object of the expenditure being to preserve the assets of the Company from seizure and so to enable it to carry on and earn profits, the expenditure was a permissible deduction under r. 3(a) of the Rules applicable to cases (1) & (2) of Sch.
D of the Income tax Act, 1918.
The object of the petition filed by the Company was to secure a declaration that the order dated February 20, 1946 insofar as it sought to put restrictions upon the right of the Company to carry on its business in the manner in which it was accustomed to do was unauthorized and to prevent enforcement of that order: thereby the Company was seeking to obtain an order from the Court ,enabling the business to be carried on without interference.
Expenditure incurred in that behalf would without doubt be expenditure laid out wholly and exclusively for the purpose of the business of the Company.
(1) : 397 It was argued however that the any delivered by the Company to the weavers contrary to the prohibitory order dated February 20, 1946 was attached under the order of the Provincial Textile Commissioner, and since the Company violated the prohibitory order, the primary object of the petition for mandamus instituted by the Company was to secure protection against prosecution of the Company and an order for return of the goods in respect of which an offence was committed.
Expenditure incurred,in prosecuting that claim was, it was said, not laid out wholly and exclusively for the purpose of the business.
Reliance was placed upon the judgment of this Court in H. Hirjee 's case(1) in which it was held that a person who was prosecuted for an offence under section 13 of the Hoarding and Profiteering Ordinance, 1943, on a charge, of selling goods at prices higher than were reasonable, in contravention of the provisions of section 6 thereof, and a part of his stock was seized and taken away, was not entitled to claim deduction under section 10(2)(xv) of the Income tax Act for the sums spent in defending the criminal proceedings against him because the expenditure could not be said to have been laid out and expended wholly and exclusively for the purpose of the business.
But the assumption underlying the argument is not true.
The Tribunal has in the statement of the case observed in paragraph 2 : "Subsequently, on 20th February 1946, a proper order by the appropriate authority was passed and it is common ground that after that date, at any rate no further distribution of yarn was made by the assessee.
In the interim (period) between 7th February 1946 and 20th February 1946, the yarn which was distributed to the handloom weavers was the subject of seizure by the provincial Textile Commissioner and this the assesse sought to resist by filing an application under section 45 of the 1, of 1877 In the view of the Tribunal the Company did not act in violation of the terms of the order dated February 20, 1946; it cannot there fore be said that the Company was seeking to protect itself against a criminal prosecution and the consequences arising from infringement of the order dated February 20, 1946.
It is true that in the judgment in appeal from the order refusing mandamus, Leach, C.J. speaking for the Court observed: (see Sree Meenakshi Mills vs Provincial Textile Commissioner, Madras(2): "In spite of the fact that this order in effect prohibited the appellant delivering yarn to owners of handlooms situate outside the mill premises, the appellant continued to deliver yarn to such weavers.", and (1) ; (2) A.I.R. 1947 Mad. 82, 398 the Judicial Committee observed: "Despite.
the prohibition the appellant continued to deliver yarn to such owners in order (as already mentioned) that they might turn the yarn into.
cloth and bring the article back to the mills.
" (See Sree Meenakshi Mills Ltd. vs Provincial Textile Commissioner; Madras(1).
But the Tribunal has observed in its order dismissing the appeal filed by the Company that it was "not disputed before" them that, after February 20, 1946 the Company did not distribute any yam.
The question referred in this case must be decided not on what was found or observed by the High Court in appeal from order, in the proceedings under section 45 of the or by the Judicial Committee, but upon findings of fact recorded by.
the Tribunal.
It is unfortunate that the High Court took the facts, not from the statement of the case, but apparently from the judgment.
of the Judicial Committee.
The High Court assumed that the Company had contravened the law because it delivered yarn to weavers in contravention of the order dated February 20, 1946.
But the assumption on which the discussion is founded is erroneous.
The High Court also thought that expenditure to fall within the terms of section 10(2)(xv) must be one for the purpose of earning income, and there was no material on the record to show that the expenditure was so incurred.
If it is intended thereby to imply that the primary motive in incurring the expenditure admissible to deduction under section 10(2)(xv) must be directly to earn income thereby, we are with respect unable to agree with that view.
This Court in Commissioner of Income tax, Kerala vs Malaya lam, Plantations Ltd.(2) observed: "The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits".
It 's range is wide: it may take in not only the day to day running of a business, but also the rationalizationof administration and modernization of its machinery: it may include measures for the preservation of the business or for the protection of its assets and property from expropriation coercive process or assertion of hostile title: it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for carrying (1)L.R. 76, I.A. 191, 195.
(2)[1964] 7 S.C.R. 693,705:53 I.T.R. 140, 150.
399 on of a business; it may comprehend many other acts incidental to the carrying on of a business.
" Expenditure incurred to resist in a civil proceeding the enforcement of a measure legislative or executive, which imposes restrictions on the carrying on of a business, or to obtain a declaration that the measure is invalid would, if other conditions are satisfied, be admissible, in our judgment, under section 10(2)(xv) as a permissible deduction in the computation of taxable income.
The appeals are therefore allowed.
The question referred is answered in the affirmative.
The appellant Company will be entitled to its costs in this Court and the High Court.
One hearing fee.
y. P. Appeals allowed.
| The tenant of a flat was in arrears of rent for more than six months.
The landlord served a notice on the tenant demanding the rent.
The tenant did not pay it within one month of the notice, but tendered it after the expiry of the month.
The landlord refused to receive it and filed a suit for eviction under section 12(3) (a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The tenant claimed the protection of section 12(1) of the Act on the ground that she was ready and willing to pay the rent before the institution of the suit.
HELD : Under section 12(3) (a), the landlord is vested with the right to recover possession of the premises if the rent is in arrears for six months or more, the tenant neglects to pay it until after the expiry of one month after notice demanding the rent and other conditions of sub s.(3) (a) are saitisfied.
This right cannot be defeated by showing that the tenant was ready and willing to pay the rent after the default but before the institution of the suit.
In a case falling within sub section
(3) (a), the tenant must be dealt with under its special provisions and he cannot claim any protection from eviction under the general provisions of sub section
(1): and the court was bound to pass a decree for eviction.
[137 E, F] Bhaiya Punjalal Dhagwanddin vs Dave Bhagwat Prosad Prabhuprasad, [19631 3 S.C.R. 312, followed.
Mohanlal vs Maheshwari Mills Ltd. and Ambala, vs Babaldas, , overrules.
|
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