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Civil Appeals Nos.
1309 1310 of 1978.
Appeals by Special Leave from the Judgment and Order dated 29 6 1978 of the Patna High Court in C.W.J.C. Nos.
204 205 of 1978.
L. M. Singhvi, and section K. Verma for the Appellants.
Dr. Y. section Chitale, section K. Sharma, R. K. Jain, R. A. P. Singh, R. P. Singh and B. P. Singh for the Respondent Nos.
3 10, 12, and 13 in CA 1309/78.
R. K. Jain and R. A. P. Singh for RR 4, 6, 7 & 9 in CA 1310/78.
R. K. Garg, R. A. P. Singh and B. P. Singh for the RR 8 in both the appeals.
D. Goverdhan for the R 1 in both the appeals.
The Judgment of the Court was delivered by GUPTA J.
The controversy in these two appeals by special leave relates to the question of seniority between the direct recruits and the promotees in the rank of Deputy Superintendent of Police in the Bihar Police Service.
The appellants the same persons in both appeals are promotees who question the correctness of the judgment of the Patna High Court by which the High Court allowed the two writ petitions made by two different groups of direct recruits challenging the gradation list of permanent Deputy Superintendents of Police published on February 24, 1978.
Fifty four temporary posts of Deputy Superintendent of Police created between 1948 and 1970 were made permanent "from the dates of their creation" by the Government of Bihar in December, 1977.
Earlier, the Government had decided that continuous officiating service of the promoted Deputy Superintendents of Police in these posts should be the basis of their seniority.
Following this decision, after the temporary posts had been made permanent, the gradation list in question was prepared and published.
Admittedly there is no statutory rule governing seniority inter se of direct recruits and promotees.
In the absence of any such rule 453 prescribing a different criterion, it cannot be disputed after Patwardhan 's case(1) that continuous officiation is a reasonable basis for fixation of seniority.
The High Court, however, allowed the writ petitions filed by the direct recruits on the view that the gradation list was invalid as it infringed rule 3 of the Bihar Police Service (Recruitment) Rules, 1953 framed under the Proviso to Article 309 of the Constitution of India.
Rule 3 is in these terms: "The Governor shall decide in each year to number of vacancies to be filled in that year.
Provided that the number of vacancies to be filled by promotion in the service in any one year shall not, unless the Governor is satisfied that there is not a sufficient number of officers fit for promotion, be less than half the total number of vacancies to be filled in any such year.
" Before we proceed to consider the scope of this rule and its effect on the question of seniority in this case, it would be necessary to refer to a few more provisions of the Bihar Police Service (Recruitment) Rules and some facts forming the background to the controversy.
It is the Governor 's duty under Rule 3 to decide "in each year" the number of vacancies in the Bihar Police Service required to be filled "in that year".
The proviso to the rule states that the promotees be to be appointed in any particular year shall not be less than half of the total number of vacancies to be filled in that year unless sufficient number of officers fit for promotion is not available.
It is important to remember that rule 3 does not prescribe a fixed quota for each of the two categories, direct recruits and promotees, but only insists that at least half the vacancies in any year should be reserved for the promotees.
Rule 2 of these Rules states that recruitment to Bihar Police Service shall be made by direct recruitment and by promotion.
A third source of recruitment was later added in the Rules in 1975 with which we are not concerned in this case.
The Rules as regards direct appointment are included in part II of the Rules.
Rules 22, 23 and 24, occurring in part III of the Rules lay down the method of recruitment by promotion.
Under rule 22 a preliminary selection of officers for promotion is made in each Range by Range Selection Board.
Those selected by the Range Selection Board have to appear before the Inspector General 's Selection Board.
The Inspector General 's Selection Board has to nominate for appointment twice as many candidates as there are vacancies to be filled by 454 promotion and to send all relevant papers relating to the candidates nominated by it to the Bihar Public Service Commission and, at the same time, submit a list of such candidates to the Governor.
The Public Service Commission after examination of the Papers is required to submit its recommendations to the Governor.
Rule 24 says that the final selection of officers to be promoted shall be made by the Governor after considering the recommendations made by the Public Service Commission.
The appellants in both these appeals were appointed as Inspectors of Police in 1953.
After working as Inspectors for about 12 years, they were promoted by notification issued on June 16, 1965 to officiate as Deputy Superintendents of Police.
Before promotion they were subjected to the scrutinies prescribed by rules 22, 23 and 24 of the Bihar Police Service (Recruitment) Rules, 1953.
Rule 648 B of the Bihar and Orissa Police Manual (Volume I) requires a promoted Deputy Superintendent of Police to pass an examination in accounts.
This rule further says that a promotee shall be on probation for one year and at the end of the period, if he has passed the said examination and is found fit, he will be confirmed.
The rule adds that if he has officiated as Deputy Superintendent for one year or more he may be confirmed without further probation on his passing the examination in accounts.
The appellants passed the examination and thus satisfied all the requirements for confirmation.
However the posts in which they were officiating were temporary posts.
It appears from a memorandum issued by the State Government on December 28, 1955 that the Government considered it "desirable that all temporary posts of all categories, gazetted as well as non Gazetted, which are in existence at present and which will be necessary for an indefinite period should be made permanent with effect from 1st April, 1956".
This was followed by another memorandum on September 9, 1967 addressed to "All Departments of Govt." and "All Heads of Departments" on the "Policy regarding making temporary posts under Govt.
in existence from a long period, permanent" which said that the Government had taken a decision that "steps should immediately be taken . to make all those posts permanent which are in existence for more than three years and are likely to continue in future.
" A third memorandum on the subject issued on November 19, 1971 expressed dissatisfaction that "no effective step" had been taken to make the temporary posts permanent and requested all heads of departments to take "necessary steps" "immediately" to implement the Government decision.
Apparently even the third memorandum failed to have any effect.
455 By a notification dated August 22, 1974 the State Government confirmed appellants and other similarly situated officers as Deputy Superintendents of Police with effect from dates which according to these officers were arbitrarily chosen.
On September 1, 1974 the Government published a combined gradation list in which these promotees were placed even below the direct recruits who were appointed in 1974.
The appellants challenged this gradation list in the Patna High Court by a writ petition (C.W.J.C. 2011 of 1976).
While that writ petition was pending, the Government of Bihar constituted a high power committee, known as the Saran Singh Committee, to assess the promotional prospects of different State services, examine the problem of "stagnation", and suggest remedial measures.
The recommendations made by the Committee were accepted by the Government by resolution dated April 11, 1977.
One of the decisions taken by the Government upon the recommendations of the Committee, which were set out in the schedule annexed to the resolution, was as follows: "The seniority of promoted officers vis a vis direct recruits should be determined by taking into account the continuous officiating service instead of on the basis of the length of substantive service in the cadre.
" On behalf of the State Government it was submitted before the High Court at the hearing of the aforesaid writ petition (C.W.J.C. 2011 of 1976) that the Government proposed to re examine the gradation list in the light of the Committee 's recommendations.
On this statement the High Court directed the State Government to re examine the matter and prepare a fresh gradation list.
None of the parties appealed against this order.
Thereafter, on December 30, 1977, the State Government wrote to the Accountant General, Bihar, saying that on the basis of the Government decision that continuous officiating service of the promoted Deputy Superintendents of Police was to be the basis of their seniority, the Government had decided that "the temporary posts created in the Home (Police) Department would be made permanent from the dates of their creation." Accordingly 54 temporary posts brought into existence between 1948 and 1970 were converted into permanent posts by Government order No. 16161 also dated December 30, 1977.
By notification dated January 7, 1978 the State Government appointed on probation the officers who had been officiating in those posts with effect from the dates mentioned against their names in the notification and the notification issued previously promoting these officers on officiating basis was cancelled.
The dates from which these officers were said to have been appointed 456 on probation were the dates of their promotion as officiating Deputy Superintendents of Police.
The names of the appellants figure against serial numbers 23, 24 and 25 in the list given in the notification dated January 7, 1978.
It is difficult to see why this method of converting the officiating appointment into one on probation was thought necessary.
Rule 648 B of the Bihar and Orissa Police Manual (Volume I) to which reference has been made earlier in this judgment provides that if a promotee has officiated as Deputy Superintendent for one year or more, he may be confirmed without further probation on his passing the examination in accounts.
It has been already stated that all the appellants had passed the examination.
However, the revised gradation list which is under challenge was thereafter issued.
This list, it was stated in a letter dated January 31, 1978/February 24, 1978 addressed by a Joint Secretary of the State Government to the Inspector General of Police, Bihar, Patna, had been "prepared on the basis of the date of appointment, officiating or permanent, whichever is earlier, in the Bihar Police in the light of Finance Department Resolution No. 3521 dated 11 4 77 and judgment of the High Court in C.W.J.C. No. 2011/76. " In the context of the present controversy two important facts which have to be kept in mind are: (i) the appellants were promoted to officiate as Deputy Superintendents of Police in the year 1965 (other promotees like the appellants had also been officiating as Deputy Superintendents of Police from different dates between 1948 and 1970) and (ii) by Government order dated December 30, 1977 fifty four temporary posts of Deputy Superintendent of Police created between 1948 and 1970 were made permanent from the dates these posts were created.
The only question here is whether there was anything wrong in fixing the inter se seniority of the promotees and the direct recruits on the basis of continuous officiation by the promotees.
It is well settled that in the absence of any legislation on the subject, or a rule framed under the Proviso to Article 309 of the Constitution, the State Government can regulate its public services in the exercise of its executive power.
(see B. N. Nagarajan vs State of Mysore and Sant Ram Sharma vs State of Rajasthan(2).
In the case before us there is no statute or any rule framed under the Proviso to Article 309 to determine the seniority as between the direct recruits and the promotees.
The determination of seniority on the basis of continuous officiation has been held valid in section B. Patwardhan 's case 457 (supra).
The gradation list cannot therefore be challenged on the ground that an arbitrary date was taken as its basis or that it offends Article 14 of the Constitution.
It is however contended on behalf of the respondents who were the writ petitioners in the High Court that rule 3 of the Bihar Police Service (Recruitment) Rules, 1953 framed under the Proviso to Article 309 of the Constitution, though it is not a seniority rule, does not permit the course adopted in this case by the Government, namely, converting the temporary posts created between 1948 and 1970 into permanent posts in the year 1977 with effect from the dates on which the temporary posts had been created.
Under rule 3 the Governor has to decide in each year the number of vacancies to be filled in that year and to secure not less than half of the total vacancies for the promotees.
The argument is that for the year 1965 or for that matter for any year prior to 1977 when the notification under challenge was issued, the Governor had duly exercised his power under rule 3 in that very year, and adding to the number of existing permanent posts by an order made in a subsequent year after the Governor had ascertained the number of vacancies required to be filled and had them filled according to the ratio prescribed by rule 3, would disturb that ratio and contravene rule 3.
We are unable to accept this contention as correct.
In the year 1977 exigencies of the situation prompted the Government to convert the temporary posts created between 1948 and 1970 into permanent posts with effect from the dates on which the temporary posts had been created.
The appellants were promoted in 1965 to officiate as Deputy Superintendents of Police in posts which were then temporary.
The Governor while exercising his powers under rule 3 in the year 1965 could not naturally take into account the number of posts made permanent in 1977 with effect from 1965.
Whatever was done subsequently to increase the strength of the cadre in 1965 under compulsion of the situation cannot be said to have affected the validity of the action taken by the Governor in 1965.
In section G. Jaisinghani vs Union of India & Ors.(1) this Court held that when the quota was fixed for the two sources of recruitment, it could not be altered according to exigencies of the situation.
But rule 3 is not really a quota rule, it does not lay down a fixed proportion, all it does is to insist that the number of vacancies to be filled by promotion should not be less than half of the total number of vacancies to be filled in any year.
Adding to the number of vacancies and filling them by promotees does not certainly violate the rule requiring that not less than half of the vacancies must be 458 filled by promotees.
What the Governor had done in a previous year in exercise of his powers under rule 3, if it was valid then, is not invalidated by the subsequent conversion of some posts which were temporary at the time into permanent posts with effect from the earlier year.
If for administrative reasons such a measure was considered necessary, there is nothing in rule 3 to suggest a bar.
Rule 3, as already mentioned, does not prescribe a fixed proportion of promotees and direct recruits for the vacancies to be filled in any year but only ensures not less than half of the vacancies for the promotees; that being so, filling more than half of the vacancies by promotees, cannot be an infringement of that rule.
In the view we have taken, it is unnecessary to consider two other subsidiary questions raised: (1) whether the cadre consisted only of permanent posts or included both permanent and temporary posts: according to the appellants the cadre should include both temporary and permanent officers in the absence of any rule to the contrary.
In this Judgment in reaching the conclusion stated above we have assumed that the cadre consisted of permanent officers only; (ii) Whether rule 3 has ever been followed since the Rules were framed in 1953; according to the appellants rule 3 has really not been observed in any of those years and that no question of contravention of the rule can therefore be raised in this case.
In the result we allow the appeals, set aside the judgment of the High Court and dismiss the writ petitions C.W.J.C. 204 of 1978 and C.W.J.C. 205 of 1978 filed in the High Court.
It appears from an affidavit sworn by Shri Ashok Kumar Sinha, Under Secretary, Home (Police) Department, on behalf of the State of Bihar on August 31, 1979 and filed in this Court on the same day that the gradation list in question contains certain mistakes; these shall be corrected by the concerned authority.
In the circumstances of the case we make no order as to costs.
N.K.A. Appeals allowed.
| Dismissing the petitions, the Court ^ HELD 1.
"Coal Mine" in the 1976 Act includes coking coal mine and section 3(3) of that Act clamps down the ban on extraction of Coking Coal also [601B C] History may illumine but cannot imprison interpretation.
It is true that in 1971 when Parliament was faced with a crisis regarding need for coking coal in iron and steel industries, on an emergency footing was made solely confined to coking coal mines.
The plan of the nation in regard to these natural resources was then embryonic and later final and there was step by step legislation to implement the policy on a phased programme.
The culmination came in the blanket ban of 1976.
[599D E] The expression in Section 3(3) is semantically sweeping and is wide in meaning so as to spare no class of coal, including even coking coal, because coking coal is a species of coal, coal itself being the genus.
Section 2(b) of the 1973 Act defines coal mine to mean "a mine in which there exists one or more seams of coal".
Even a coking coal mine is a coal mine because the definition is broad and this is clear from the definition of coking coal mine in Section 3(c) of the .
[600E G] Coking coal is more precious, strategically speaking, than other forms of coal and it would be an error, nay a blunder, to prevent private extraction of common coal and to permit removal of coking coal.
It would be pathetic and bathetic for any policy maker to be so egregious.
Parliament may err but not be absurd! So construed, it is obvious that coking coal, which is more importantly needed for the nation than other supplies of coal, must be the last to be squandered away by permitting it to be privately exploited.
[601A B] 3.
Even assuming there is a fire clay or other layer somewhere in the bowels of the earth tho statutory mandatory is that once you come up on a coal seem you shall stop extracting it to proceed beyond.
May be some injury may be caused, fancied or real, but it is permissible for Parliament to make provision to prevent evasion of the purpose of the statute by prohibition of mining other minerals which may incidentally defeat tho coal nationalisation measure.
[601D F] 596 4.
Section 3(3) of the 1976 Act, being all inclusive and having been constitutionally upheld it is no longer permissible for any Court In India to appoint a receiver for or otherwise permit extraction of coal or coking coal.
The Court cannot sanction the commission of a crime.
[601G, H, 602A]
|
Appeals Nos. 1061 and 1627 to 1629 of 1966.
Appeals by special leave from the judgment and order dated March 9, 10, 1965 of the Bombay High Court in Revision Applications Nos.
1428, 1427, 1430 and 1676 of 1961.
M. C. Chagla, J. L. Hathi, K. L. Hathi and K. N. Bhat for the appellants (in all the appeals).
R. P. Bhat, Janendra Lal, R. A. Gagrat and B. R. Agarwala, for the respondent (in all the appeals).
The Judgment of the Court was delivered 'by Shah, J.
Under an indenture dated August 2, 1950, Dossibai respondent in this appeal granted a lease of 555 sq. yards in village Pahadi, Taluka Borivli to Mathura Prasad appellant herein for constructing buildings for residential or,business purposes.
The appellant constructed buildings on the land.
He then submitted an application in the Court of the Civil Judge, Junior Division, Borivli, District Thana, that the standard rent of the land be determined under section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The Civil Judge rejected the application holding that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for constructing buildings for residence, education, business, trade or storage.
This order was confirmed on September 28, 1955, by a single Judge of the Bombay High Court in a group of revision applications : Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar : Nos. 233 to 242 of 1955.
But in Vinayak Gopal Limaye vs Laxman Kashinath Athavale(1) the High Court of Bombay held that the question whether section 6(1) of the Act applies to any particular lease must be determined on its terms and a building lease in respect of an open plot is not ex (1) I.L.R. 832 cluded from section 6(1) of the Act solely because open land may be used for residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh petition in the Court of the Small Causes, Bombay, for an order determining the standard rent of the premises.
The application was filed in the Court of Small Causes because the area in which the land was situated had since been included within the limits of the Greater Bombay area.
The Trial Judge rejected the application holding that the question whether to an open piece of land let for the purpose of constructing buildings for residence.
education, business or trade section 6 (1) of the Act applied was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by a Bench of the Court,of Small Causes and by the High Court of Bombay.
With special leave, the appellant has appealed to this Court.
The view expressed by the High Court of Bombay in Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar (Civil) Revision Application No. 233 of 1955 (decided on September 28, 1955) was overruled by this Court in Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1).
In the latter case the Court affirmed the view expressed by the Bombay High Court in Vinayak Gopal Limaye 's case (2).
But all the Courts have held that the earlier decision of the High Court of Bombay between the same parties and relating to the same land is res judicata.
Section II of the Code of Civil Procedure which enacts the general rule of res judicata, insofar as it is relevant, provides : "No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court." The Civil judge, Junior Division, Borivli, was competent to try the application for determination of standard rent, and he held that s 6(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for construction of residential and business premises.
The rule of res judicata applies if "the matter directly and substantially in issue" in a suit or proceeding was directly and sub (1) I.L.R. (2) 833 stantially in issue in the previous suit between the same parties and had been heard and finally decided by a competent Court.
The Civil Judge, Junior Division, Borivli, decided the application between the parties to the present proceeding for determination of standard rent in respect of the same piece of land let for construction of buildings for residential or business purposes.
The High Court has held that a decision of a competent Court may operate as res judicata in respect of not only an issue of fact, but mixed issues of law and fact, and even abstract questions of law.
It was also assumed by the High Court that a decision relating to the jurisdiction of the Court to entertain or not to entertain a proceeding is binding and conclusive between these parties in respect of the same question in a later proceeding.
But the doctrine of res judicata belongs to the domain of procedure : it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby.
A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties : the "matter in issue" may be an issue of fact, an issue of law, or one of mixed law and fact.
An issue of fact or an issue of mixed law and fact decided by a competent court is finally determined between the parties and cannot be re opened between them in another proceeding.
The previous decision on a matter in issue alone is res judicata : the reasons for the decision are not res judicata.
A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto.
A pure question of law unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue.
When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties.
A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the , transaction which is the foundation of the right and the relevant law applicable to the determination of the transactions which is the soured of the right is res judicata.
A previous decision on a matter in issue is a composite decision: the decision of law can not be dissociated from the decision on facts on which the right is founded.
A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent Proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor 834 when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law.
The authorities on the question whether a decision on a question of, law operates as res judicata disclose widely differing views.
In some cases it was decided that a decision on a question of law can never be res judicata in a subsequent proceeding between the same parties : Parthasardhi Ayyangar vs Chinnakrishna Ayyangar(1); Chamanlal vs Bapubhai (2) ; and Kanta Devi vs Kalawati(3).
On the other hand Aikman, J., in Chandi Prasad vs Maharaja Mahendra Mahendra Singh(1) held that a decision on a question of law is always res judicata.
But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee vs Kedar Nath Haldar(5) : "Questions of law are of all kinds and cannot be dealt with as though they were all the same.
Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law.
In such questions the rights of parties are not the only matter for consideration.
" We may analyse the illustrative cases retating to questions of law, decisions on which may be deemed res judicata in subsequent proceeding.
In Bindeshwari Charan Singh vs Bageshwari Charan Singh(1) the Judicial Committee held that a decision of a court in a previous suit between the same parties that section 12A of the Chota Nagpur Encumbered Estates Act 6 of 1876 which renders void a transaction to which it applies was inapplicable, was Yes judicata.
In that case the owner of an impartable estate, after his estate was released from management, executed a maintenance grant in favour of his minor son B, but without the sanction of the Commissioner as required by section 12A of the, Act.
B on attaining majority sued his father and brothers for a maintenance grant at the rate of Rs. 4,000 per annum.
The claim was decreed, and the plaintiff was awarded a decree for a grant of Rs. 4,000 inclusive of the previous grant of 1909, and the Court held that the grant of 1909 was valid in law.
The father implemented the decree and made an additional maintenance grant upto the value of the decreed sum.
In an action by the sons of B 's brothers challenging the two grants on the plea that the grants were illegal and not binding upon them, the Judicial Committee held that the plea was barred as res judicata in respect of both the grants in respect of the first because there was an express decision on the validity of the first grant in the earlier suit, and in respect of the second the (1) I.L.R. (3) A.I.R. [1946] Lah. 419.
(5) I.L.R. (2) I L.R, (4) I.L.R. 23 All.
(6) L.R. 63 I.A. 53.
83 5 decision in the first suit was res judicata as to the validity of the second grant which was made in fulfillment of the obligation under the Court 's decision.
The Judicial Committee held that in respect of the first grant, the decision that section 12A did not apply to the grant, was res judicata, and in respect of the second grant the construction between the same parties of section 12A was res judicata.
Validity of the second grant was never adjudicated upon in any previous suit; the second grant was held valid because between the parties it was decided that to the grant of maintenance of an impartible zamindari section 12A of the Chota Nagpur Encumbered Estates Act had no application.
This part of the judgment of the Judicial Committee is open to doubt.
Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same, parties : Tarini Charan Bhattacharjee 's case(1).
It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different.
In a case relating to levy of tax a decision valuing property or determining liability to tax in a different taxable period or event is binding only in that period or event, and is not binding in the subsequent years, and therefore the rule of, res judicata has no application; see Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill(2) A question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit.
Rankin, observed in Tarini Charan Bhattacharjee 's case(1) : "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has 'been finally decided.
" A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does.
not possess under the statute, the question cannot operate as res judicata bet (1) I.L.R. (2) 83 6 ween the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
It is true that in determining the application of the rule of res judicata the Court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be, reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned a subsequent proceeding between the same parties.
But, where the decision is on a question law, i.e. the interpretation of a statute, it will be res judicata in a subsequent proceeding between the same parties where the cause of action is the same for the expression "the matter in issue" in section 11 Code of Civil Procedure means the right litigated between the parties, i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata,for a rule of procedure cannot supersede the law of the land.
In the present case the decision of the Civil Judge, Junior Division, Borivli, that he had no jurisdiction to entertain the application for determination of standard rent, is, in view of the judgment of this Court, plainly erroneous : see Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1) If the decision in the previous proceeding be.
regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction 'of the Court in derogation of the rule declared by the Legislature.
The appeals are allowed, and the orders passed by the High Court and the Court of Small Causes are set aside and the proceedings are remanded to the Court of First Instance to deal with and dispose them of in accordance with law.
There will be no order as to costs throughout.
Y.P. Appeals allowed.
| In proceedings against the accused respondents the prosecution case was that on certain land belonging to one B where some of his men were gathering fruits, the respondents, armed with bhallas, lathis, etc., attacked these men killing two of them and injuring others.
The trial court convicted the respondents under section 302 read with section 149 I.P.C. of the murder of the two deceased persons and of offences for inflicting injuries on other persons.
The respondents ' appeal to the High Court was allowed and that Court set aside all the convictions and sentences.
The High Court found that the land in question was in the possession of one of the respondents and that on the date of occurrence, the members of the prosecution party including the murdered victims committed thefts of fruits on the land and that the respondents had the right of private defence of property against the theft; the theft of the fruits was committed under such circumstances as might reasonably cause apprehension that death or grievous bodily hurt would be the consequence if the right of private defence was not exercised.
Accordingly, the respondents ' right of private defence of property extended under section 103 I.P.C. to voluntarily causing death of the two murdered victims subject to the restrictions mentioned in section 99.
In appeal to this Court against the acquittal of the respondents, it was contended that they were members of an unlawful assembly prosecuting the common object of forcibly preventing the two deceased from collecting 'fruit from the land in question and if necessary in causing the murder of the said two persons for the purpose; that some of them caused the murder of the two victims and that thereby all of them committed offences under section 302 read with section 149.
HELD : The respondents could not be convicted under section 302 read with section 149 I.P.C., nor was it possible to convict them under section 302 read with section 34.
In order to attract the provisions of section 149 the prosecution must establish that there was an unlawful assembly and that the crime was committed in prosecution of the common object of the assembly.
Under the fourth clause of section 141 an assembly of five or more persons is an unlawful assembly if the common object of its members is to enforce any right or supposed right by means of criminal force or show of criminal force to any person.
Section 141 must be read with Ss. 96 to 106 dealing with the right of private defence.
Under section 96 nothing is an offence which is done in the exercise of the right of private defence.
The assertion of a right of private defence within the limits prescribed by law cannot fall within the expression "to enforce any right or supposed right" in the fourth clause of section 141.
[362 C] 359 As it had been found 'in the present case that the land in question was in the possession of one of the respondents, the object of the respondents ' party was to prevent the commission of theft of the fruits in exercise of their right of private defence of property.
This object was not un lawful.
Nor was it possible to say that their common object was to kill the two deceased victims.
Those who killed them exceeded the right of private defence and may be individually held responsible for the murders.
But the murders were not committed in prosecution of the common object of the assembly or were such as the members of the assembly knew to be likely to be committed in prosecution of the common object.
The accused respondents could not be made constructively responsible for the murders under section 302 read with section 149.
[363 B] Kapildeo Singh vs The King, ; Kishori Prsad & Ors.
vs State of Bihar Cr.
Appeal No. 191 of 1966 decd.
on 5 12 1968; and.
Gurudittamal vs State of U.P.
A.I.R. 1965 S.C. 257; referred.
|
Appeal No. 319 of 1958.
Appeal from the judgment and order dated September 5, 1956, of the Bombay High Court in Income tax Reference No. 31 of 1956.
H. N. Sanyal, Additional Solicitor General of India, 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.
N. A. Palkhivala, section section Shukla and Mrs. Eluri Udayaratnam, for the intervener (The Punjab National Bank Ltd.) 128 990 1960.
May 6.
The Judgment of section K. Das and J.L. Kapur, JJ., was delivered by Kapur, J. Hidayatullah, J., delivered a separate Judgment.
KAPUR, J. This is an appeal against the judgment and order of the High Court of Bombay passed in Income Tax Reference No. 31 of 1956.
The appellant is the Commissioner of Income tax and the respondent is a firm carrying on business in Bombay and the question for decision arises under the Business Profits Tax Act (Act 21 of 1947), hereinafter referred to as the Act.
The assessment relates to the year of assessment 1949 50 and the chargeable accounting period was from November 13, 1947, to October 31, 1948.
On January 12, 1953, the lncome tax Officer issued a notice on the respondent under section 11(1) of the Act in respect of the above mentioned chargeable accounting period which was served on the respondent on January 21, 1953.
The respondent filed a return under protest.
The assessment was completed by the Income tax Officer on November 30, 1953.
Against this order the respondent took an appeal to the Appellate Assistant Commissioner on the ground that the respondent was not liable to Business Profits Tax because it was beyond the period of four years limitation under section 14 of the Act.
This plea was upheld by the Appellate Assistant Commis sioner.
The Income tax Officer then appealed to the Appellate Tribunal and it confirmed the order of the Appellate Assistant Commissioner.
At the instance of the appellant a case was stated to the High Court of Bombay on the following two questions of law : (1) " Whether the Income tax Officer had jurisdiction to assess the assessee firm under the Business Profits Tax Act by issue of a notice under Section 11 (1) of the Business Profits Tax Act on 12 1 1953 in respect of the chargeable accounting period 13 11 1947 to 31 10 1948 without having recourse to Section 14 of the Business Profits Tax Act ? (2) If the answer to Question No. 1 is in the negative whether the B. P. T. assessment could be considered to have been validly made ? " 991 The High Court modified the first question by deleting the words "without having recourse to Section 14 of the Business Profits Tax Act " and answered both the questions in the negative.
The Income tax Appellate Tribunal had held that as under section 14 of the Act the period of limitation commenced from the end of the chargeable accounting period in question the notice under section 11 (1) had to be issued before that period.
The High Court did not accept this view.
It held that both sections 11 and 14 had to be read together and the mention of four years in section 14 was an important indication of the period of limitation in regard to the issue of notice under section 11 also and further if profits which escaped assessment, as in the present case, could only be taxed within four years of the end of the chargeable accounting period because of section 14 of the Act, then inferentially the escape of assessment must be at sometime anterior to the period mentioned in section 14 and as on the facts of the present case the notice had been issued four years after the close of the chargeable accounting period the notice under section 11 wag not valid.
Against this order the appellant has come in appeal to this Court on a certificate of the High Court.
It is submitted by the appellant that though sections 11 and 14 may have to be read together, they apply to different sets of circumstances; section 11 applies to a case where the Income tax Officer requires any person whom he believes to be engaged in any business to which the Act applies or to have been so engaged during any chargeable accounting period and calls upon him to furnish a return with respect to such chargeable accounting period; and section 14 applies to a case where, in consequence of definite information possessed by him, the Income tax Officer discovers in regard to any chargeable accounting period that the profits of any business have escaped assessment.
In other words, section 11 applies to original assessments after the first notice calling upon an assessee to make a return in regard to the profits of any chargeable accounting period and section 14 applies where such notice was issued, and it either ended in no assessment at all or there was under assessment, 992 etc.
According to the argument of the appellant, therefore,there is no period of limitation prescribed by the Act for the first notice to furnish a return in regard to any chargeable accounting period but if such notice was given and a return was made and for any reason whatsoever the profits were not assessed or were under assessed, etc., then section 14 comes into operation and notice has to be served within four years of the end of the chargeable accounting period in question.
The provisions of the Act which arise for consideration are sections 2, 4, 5, 11 and 14.
Section 2 is the definition section; section 4 the charging section and section 5 deals with the applicability of the Act.
Section 11 provides for the " Issue of notice for assessment and section 14 is headed " profits escaping assessment Section 2 (2) defines accounting period and section 2(4) chargeable accounting period.
Section 4 provides that in respect of any business to which the Act applies there shall be charged, levied and paid on the amount of taxable profit during any chargeable accounting period a tax equal to sixteen and twothird percent of the taxable profits, which in later years was fixed at a lower figure by the Finance Acts of 1948 and 1949.
Under section 5 the Act applies to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax under section 4 (1) (b) (i) and (ii) or subcl.
(c) of that sub section.
Sections 11(1) and 14 of the Act may now be quoted : section 11(1).
" The Income tax Officer may, for the purposes of this Act, require any person whom he believes to be enaged in any business to which this Act applies, or to have been so engaged during any chargeable accounting period, or to be otherwise liable to pay business profits tax, to furnish within such period, not being less than forty five days from the date of the service of the notice, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) with respect to any chargeable accounting period specified in the notice, 993 the profits (taxable profits) of the business or the amount of deficiency, if any, available for relief under section 6 section 14.
" If, in consequence of definite information which has come into his possession, the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have escaped assessment, or have been underassessed, or have been the subject of excessive relief, he may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 11, and may proceed to assess or reassess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section ".
These sections lead to the conclusion that every business to which the Act applies is liable to the risk of being assessed to Business Profits Tax and it is well settled that income escapes assessment when the process of assessment has not been initiated as also in a case where it has resulted in no assessment after completion of the process of assessment.
In our opinion, the High Court was right when it held that sections 11 and 14 of the Act have to be read together.
The Act and the Indian Income tax Act are both taxing statutes operating on the same source.
, i.e., profits of business which is similarly defined in the two statutes.
If the provisions relating to escaping of assessment in the two statutes, i.e., in section 14 of the former and in section 34(1) of the latter as it existed after the amendment of 1939, employ the same language, they must receive the same interpretation and not be construed differently.
Section 34(1) of the Indian Income tax Act as amended in 1939 provided: section 34(1).
"If in consequence of definite information which has come into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have 994 been assessed at too low a rate, or have been the subject of excessive relief under this Act the Incometax Officer may, in any case in which he has reason to believe, that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess such income, profits or gains and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section The words " escaping income " in the Indian Income tax Act were interpreted as being applicable to a case where a person received notice under section 22(2) of the Income tax Act but the process ended in no assessment as to a case where there was no assessment at all because no notice was issued under section 22(2) of the Income tax Act; in other words, it includes cases where the process of assessment did not commence because no notice was given under section 22(2) of the Income tax Act due to inadvertence, oversight, negligence or any other cause as to cases where such notice proved abortive or ineffective.
Both are cases of escaped assessment: Commissioner of Income tax, Bombay vs Pirojbai N. Contractor (1).
In this Court these words were considered and interpreted in Kamal Singh vs Commissioner of Income tax (2 ).
They were interpreted to comprise a case of no notice being given for the assessment and notice being given and resulting in no assessment.
Gajendragadkar, J., observed We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted.
In our opinion, even in a case where a return has been submitted, (1) (2) [1959] Supp. 1 S.C.R. 10, 18, 19. 995 if the Income tax Officer erroneously fails to tax a part of assessable income, it is a case where the, said part of the income has escaped assessment.
The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word ' escape ' in section 34(1)(b) cannot therefore succeed ".
This passage was quoted with approval in another case by this Court in Maharajadhiraj Sir Kameshwar Singh vs State of Bihar (1) (per Hidayatullah, J.).
Chatturam Horilram Ltd. vs Commissioner of Income tax(2) was a somewhat different case.
There assessment proceedings had been taken but had failed to result in a valid assessment owing to some lacuna other than that attributable to the Assessing Authorities and it was hold to be a case of chargeable income escaping assessment and not a case of mere nonassessment of income tax.
All these cases show that the words " escaping assessment " apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee and, therefore, there was no assessment of his income.
It is also clear from the language of section 14 of the Act that when a notice is issued under that section all the requirements of the notice under section 11 apply and the Income tax Officer has to proceed in the manner as if the notice was issued under section 11.
Therefore, any advantage or relief which was available to the assessee under section II as to allowable deductions, deficiency, etc., would be equally available, if the notice is issued under section 14.
The legislature has adopted the language of section 34(1) of the Income tax Act in section 14 of the Act and it must, therefore, be considered to have adopted the construction of that section applied by the courts.
Secondly, this Court has construed the words " escaping assessment " as used in section 34(1) of the Income tax Act.
The same words in the same context as employed in section 14 of the Act must have the same meaning.
It was submitted that in the present case a different meaning (1) ; (2) ; 996 should be given because although in section 34 of the Indian Income tax Act and section 14 of the Act, the word.
,; " escaping assessment " are used the language of section 11(1) of the Act and of section 22(2) of the Indian Incometax Act is different in.
so far in the former the notice requires an assessee to furnish a return of the income of the previous year and in the latter he has to furnish the particulars with respect to any chargeable accounting period of the profits of the business.
It becomes necessary, therefore, to examine the provisions of the Act as to the chargeable accounting periods and other provisions relevant thereto.
In section 2(2) of the Act " Accounting period " in relation to any business means any period which is or has been determined as the previous year for the purpose of the Indian Income tax Act.
Under section 2(4) of the Act Chargeable accounting period " means : (a) " any accounting period falling wholly within the term beginning on the first day of April, 1946, and ending on the thirty first day of March, 1947; (b) where any accounting period falls partly within and partly without the said term, such part of that accounting period as falls within the said term ".
According to this definition, therefore, where the previous year was the financial year 1946 47 then the accounting period and the chargeable accounting period would be coincident, i.e., they would both be 1946 47; but if the previous year was the calendar year or the Diwali year the accounting periods of nine months in the former case, i.e., April 1, 1946, to December 31, 1946, and 7 months in the latter, i.e., April 1, 1946, to November 1, 1946, would be the chargeable accounting periods for the purposes of the Act.
The extent of the periods will vary according to the determination of the previous year under the Incometax Act.
It might be a full year or less which appears to be the reason for adopting the nomenclature which has been adopted in the Act instead of the previous year.
It would be incongruous to call a period of less than a year as the previous year.
For the chargeable accounting periods mentioned above the Business Profits Tax would be charged, levied and paid in the 997 financial year 1947 48 at the rate mentioned in section 4 of the Act on every business falling under section 5.
But for all these periods the assessment year would be the financial year 1947 48.
Keeping this in view we may now see what changes were made by the Finance Act of 1948.
By that Act the Act was continued for another one year and for the figure " 1947 " in the definition of chargeable accounting period in section 2(4)(a) the figure " 1948 " was substituted and the following proviso was added: " Provided that where an accounting period falls partly before, and partly after, the end of March, 1947, so much of that accounting period as falls before, and so much of that accounting period as falls after, the end of March, 1947, shall be deemed each to be a separate chargeable accounting period ".
By this proviso the accounting period or the previous year was split up in cases where it was not the preceding financial year or 1947 48.
Thus the calendar year 1947 became two chargeable accounting periods of 3 months and 9 months, i.e., from January 1, 1947, to March 31, 1947, and April 1, 1947, to December 31, 1947, and the same would apply to accounting period from Diwali to Diwali, i.e., 5 months and 7 months.
In effect the whole year 's profits thus became chargeable to Business Profits Tax instead of only of a part of the year as was the case for the financial year 1947 48.
Other changes made by the Finance Act of 1948 were in section 4 where under section 10 of the Finance Act the rate of tax for the chargeable accounting.
period up to the end of March, 1947, remained at 16 2/3 per cent.
but for the chargeable accounting period after that date was to be fixed by the Annual Finance Act and by section 11(1) of that Act the rate was fixed at ten per cent.
Thus Business Profits Tax rates also were to be fixed by the Annual Finance Act as were the Income tax rates.
Then came the Finance Act of 1949 which continued the Act for another year and under section 4 fixed the rate chargeable in respect of any chargeable accounting period after March 31, 1948.
The Finance Act of 1950 did not continue the Act and it thus came to 129 998 an end except for liabilities which had already arisen or accrued under the Act.
As the tax under the Act is charged, levied and paid on the taxable profits of a chargeable accounting period but assessment is in respect of the financial year in which the Act operates it is not an unreasonable inference that notice for the chargeable accounting period must issue in the financial year following that period.
.No difficulty would arise in regard to accounting periods which coincide with previous years, i.e., 1946 47, 1947 48 and 1945 49.
For these years the notice will issue in the following chargeable accounting period which again will be the financial year in which the Act would be operative.
But the question is how the proviso to section 2(4) added by the Finance Act of 1948 would affect this rule.
Taking a calendar year 1946 as the accounting period, for the financial year 1947 48 the chargeable accounting period would be the nine months period from April 1, 1946, to December 31, 1946, and notice under section 11(1) of the Act must issue in the financial year because the tax is leviable and assessment is made for the year beginning April 1, 1947, when the Act came into force and remained operative during the year 1947 48.
After the Finance Act of 1948 the accounting year, if it was a calendar year, became divided into two parts and both were assessable in the assessment year beginning with April 1, 1948, and, therefore, notice had to be given in the financial year 1948 49.
Similarly in the financial year 1949 50 notice would have to be given in that year for the preceding chargeable accounting period.
In this view of the matter the contention that there is no provision in section 11(1) of the Act as to the chargeable accounting period as there is for the previous year in section 22(2) of the Income tax Act is not well founded.
That the notion of the previous year or the accounting period is as much applicable to the Act as to the Indian Income tax Act is shown by reference to Computation of Profits Rules in the Schedule to the Act.
There the computation is related to the accounting periods.
The previous year is shown applicable by reference to the Rules under the Act, 999 by which some of the Rules of the Income tax Act are made applicable to the Act; and some of the sections of that Act are made applicable by section 19 and by the Rules under the Act.
Amongst the Rules applicable is r. 8 which, inter alia, related to allowances under section 10(2)(vi) of the Indian Income tax Act.
The first and the second provisos to this rule are as follows : " Provided that if the buildings, machinery, plant or furniture have been used by the assessee in his business for not less than two months during the previous year, the percentage shall be increased proportionately according to the number of complete months of user by the assessee : Provided further that in the case of a seasonal factory worked by the assessee during all the working seasons of the previous year, the percentage shall be increased as if the buildings, machinery, plant, or furniture had been in use throughout the period the assessee was the owner thereof during the previous year ".
Both these provisos use the word previous year which is same as the accounting year under the Act.
By r. 4(A) of the Rules made under the Act certain sections of the Indian Income tax Act have been adapted with modifications therein mentioned.
Of those section 50 of the Income tax Act is one.
In the Act it has been substituted by the following: " No claim to any refund of tax under the Act shall be allowed unless it is made within four years from the last day of the financial year commencing next after the expiry of the accounting period which constitutes or includes the chargeable accounting period in respect of which the claim to such refund arises ".
All these sections show not only that the two statutes, i.e., the Act and the Indian Income tax Act, have to be read together but also that the notion of the previous year has been inducted into the Act.
The modified section 50, as introduced into the Act by the rules, means this that the refund, if any, can only be allowed within four years of the financial year which commences after the expiry of the accounting 1000 period which itself constitutes the chargeable accounting period or includes in it the chargeable accounting period in respect of which the refund is claimed.
If the contention of the appellant is correct then this section will be wholly otiose where the assessment is levied after say 10 years from the end of the chargeable accounting period because by no method of calculation will a refund of tax in that circumstance be claimable under section 50.
This furnishes a key to when a notice under section 11(1) has to be given.
It must be given within the financial year which commences next after the expire of the accounting period or the previous year which is by itself or includes the charge able accounting period in question.
Section 48 of the Income tax Act, as amended and applied to the Act, does not affect the operation of section 50 because the two sections have to be read together and the assessee must apply for the refund within the period specified by section 50: Adam Haji Dawood & Co. Ltd. vs Commissioner of Income tax, Burma (1).
The language of section 14 and particularly the words may proceed to assess or reassess the amount of such profits to Business Profits Tax " support the contention of the respondent that it applies to cases of no assessment due to notice not being given as to cases of no assessment after notice was given and proceedings proved ineffective.
The words " assess " and "reassess" do not mean the same thing and signify two different cases.
The former applies to cases where there was no assessment to tax due to notice not being given and the process has to commence with the issuing of such notice and the latter to cases where the assessment process is recommenced by issuing a second notice, the previous notice having proved abortive or resulting in under assessment, etc.
Construing in this manner effect is given to the words " profits of any chargeable accounting period . . have escaped assessment " and it also avoids the anomaly that some cases where there was no assessment can be dealt with under one section with a time limit as under section 14 but other equally clear cases of non assessment are dealt with under section 11 (1) [1936]4 I T.R. 100 (Rang.).
1001 without there being any limitation of time.
If the contention of the appellant is accepted then it would come to this that it would depend upon the Incometax Officer as to which of the two sections he uses for the purposes of assessment and would lead to this absurdity that in a case of definite information of profits having escaped assessment there will be a limitation of four years and in cases where there is no such information but only belief there will be no such limitation.
If the words " profits escaping assessment " are applicable to original assessments, i.e., where the process of assessment did not commence, as also to assessments where the process of assessment was commenced but proved wholly abortive or partially so, then section 14 would apply to both such cases.
Thus construed section II would apply to normal original assessments and section 14 to profits escaping assessment as construed above whether the assessment is an original assessment or is a re assessment.
In determining the scope of section 14 of the Act reference may be made to another statute which is relevant for the purpose, i.e., the Excess Profits Tax Act (Act XV of 1940), sections 13 and 15 of which are identical in language with sections 11 and 14 of the Act.
Section 13 deals with the issue of a notice for assessment and section 15 with profits escaping assessment.
Before the Income Tax and Excess Profits Tax (Amendment) Act, 1947 (Act 22 of 1947), there was a 5 years ' period of limitation prescribed in section 15 in the following terms: " within five years of the end of the chargeable accounting period in question ".
By the aforesaid amendment these words were deleted.
The Act, being Act 21 of 1947, as well as the Amendment Act above referred to were enacted about the same time one after the other.
The legislature thought it necessary to remove the period of limitation and thereby made profits escaping assessment liable to taxation under the Excess Profits Tax Act without any period of limitation but in the Act the legislature thought it expedient to prescribe the period of limitation of four years in section 14.
It cannot be said that this was 1002 without any purpose and the argument that prescribing the period of limitation in section 14 of the Act was deliberate and was intended to prevent taxing under the Act of profits which had escaped assessment for four years from the end of the chargeable accounting period in question is not without substance.
It was argued for the appellant that section 11(1) construed according to the plain meaning of the words used therein applies to original assessments and section 14 to assessments in which notice was given but due to any cause whatsoever the proceedings resulted in no assessment or in under assessment.
He referred to the words " require any person whom he believes to be engaged in any business or to have been engaged during any chargeable accounting period or to be otherwise liable ", and submitted that these words mean that if an Income tax Officer has such belief in regard to a person who is engaged in any business or was engaged in any business during any chargeable accounting period in question he can issue a notice at any time without limitation of time requiring a return to be filed, etc.
In support counsel for the appellant relied upon two judgments, Gokuldas Ratanji Mandavia vs Commissioner of Income tax (1) which was an appeal from East Africa and Telu Ram Jain & Co. vs Commissioner of Income tax (2 ), a case decided by the Punjab High Court.
In the former case a notice was issued to the assessee under section 59(1) of the East African Income Tax (Management) Act, 1952, which provided: The commissioner may, by notice in writing, require any person to furnish him within a reasonable time, not being less than thirty days from the date of service of such notice, with a return of income Sections 71(1) and 72 provided: section 71(1).
The commissioner shall proceed to assess every person chargeable with tax as soon as may be after the expiration of the time allowed to such person for the delivery of his return. . " " section 72 Where it appears to the commissioner that any person liable to tax has not been assessed (1) (2) 1003 person at such amount as, according to his judgment, ought to have been charged. .
The notice requiring the assessee to furnish returns of his income for the years of assessment 1943 53 was issued but no return was filed and assessment was made under section 72 of the East African Act for the years 1943 51.
The assessee contended that section 72 did not apply until the machinery under section 71 had been put into operation and that the assessments were ultra vires and void because they were made before the time allowed by section 71.
It was held that section 71 applied to all original assessments and s: 72 with reopening of cases which had been settled under a normal procedure.
Accepting the contention of the assessee Lord Somervell of Harrow observed: If the power to make an assessment under section 72 applies to the making of an orginal assessment their Lordships are unable to imply a term restricting it to back cases or making it ultra vires to operate it at any time.
One would expect an opportunity to make a return to be a condition precedent to assessment.
This is supported by the provisions for personal allowances in Part VI of the Act.
If the respondent is right any person can be assessed without having any such opportunity.
There would be two concurrent jurisdictions one providing reasonable protection for the taxpayer and the other providing no protection quoad the original assessment, apart from a right to appeal.
Such a construction seems to their Lordships inconsistent with the general and mandatory provisions of section 71.
That section is providing how all original assessments are to be made ".
The language of these sections 59(1), 71 and 72 is differs it from that of sections 11 and 14 of the Act.
Section 72 was held not applicable because there would be two concurrent jurisdictions, one providing reasonable protection for the taxpayer and the other providing no protection which would be contrary to the provisions of section 71.
According to the Privy Council it was necessary to restrict the words of section 72 to cases in which the machinery of section 59(1) having been operated 1004 no assessment resulted.
The words of section 14 are entirely different.
It applies to cases of profits escaping assessment and the words " escaping assessment " have already been interpreted under section 34 of the Income tax Act and there is no reason why the same words occurring in a statute which is in pair material should be given a different meaning in the two Acts.
Further the difficulty which the Privy Council felt in regard to there being two jurisdictions, one giving protection to the assessee and the other not giving such protection, does not exist in the present case because the process of assessment under section 14 of the Act is exactly the same as it is where notice is given under section 11(1) of the Act and all the advantages which an assessee would have under section 11(1) are available to him under section 14.
The Punjab case to which our attention has been drawn was a case under the Excess Profits Tax Act and it was held that because of the removal of the limitation clause in section 15 of that Act assessments were not hit by any period of limitation and a further observation not necessary for the decision of the case was made that even otherwise the language of section 13 of that Act was wide and there was no substance in the contention that after the assessment period a notice under section 13 of that Act could not be issued and that the only notice which could be given was one under section 15.
In view of the construction we have placed on section 14 of the Act on the words " profits escaping assessment " that they apply to assessments where notice has been given and has resulted in no assessment and where due to inadvertence, oversight or other circumstances no notice was given, it is difficult to interpret section 11 in the manner contended for by the appellant.
In our opinion, the assessment which was sought to be made was without jurisdiction and the appeal must, therefore, fail.
We accordingly dismiss the appeal with costs.
HIDAYATULLAH, J. The Commissioner of Incometax, Bombay has filed this appeal against the judgment and order of the High Court of Bombay dated September 5, 1956, with the certificate of the High 1005 Court granted under section 19 of the Business Profits Tax Act, 1947 (hereinafter called the Act) read with section 66(1) of the Indian Income tax Act, 1922.
Messrs. Narsee Nagsee & Co., Bombay (hereinafter referred to as the assessee firm), are the respondents.
The ssessee firm, at all material times, was doing business ' in Bombay.
For the chargeable accounting period, November 13, 1947, to October 31, 1948, a notice was issued on January 12,1953, by the Incometax Officer under section 11(1) of the Act calling upon the assessee firm to submit its return.
This notice was served on the assessee firm on January 21, 1953, and it filed a return under protest, stating that the notice was barred under section 14 of the Act.
It may be men tioned that the assessment for purposes of income tax for the same year was completed on February 17, 1953.
The objection of the assessee firm was overruled by the Income tax Officer, who completed the assessment under section 12(1) of the Act on November 30, 1953.
The assessee firm then appealed to the Appellate Assistant Commissioner, who upheld the objection that the notice was invalid under section 14(1) of the Act.
On appeal taken by the Commissioner of Income tax, Bombay, the Appellate Tribunal concurred with the Appellate Assistant Commissioner.
At the instance of the Commissioner, however, the Tribunal stated a case, and referred two questions for the decision of the Bombay High Court which were as under: " (1) Whether the Income tax Officer had jurisdiction to assess the assessee firm under the Business Profits Tax Act by issue of a notice under Section 11(1) of the Business Profits Tax Act on 12 1 1953 in respect of the chargeable accounting period, 13 11 1947 to 31 10 1948, without having recourse to section 14 of the Business Profits Tax Act ? (2) If the answer to question No. 1 is in the negative, whether the Business Profits Tax assessment could be considered to have been validly made? " The High Court modified the first question by deleting its last 12 words.
Both the questions were then answered by the High Court in the negative.
The 130 1006 Commissioner of Income tax obtained a certificate from the High Court, and filed this appeal.
Before dealing with the reasons given by the High Court and the Tribunal and considering arguments urged in this appeal, it will be convenient to reproduce sections 11(1) and 14 of the Act: " 11(1).
The Income tax Officer may, for the purposes of this Act, require any person whom he believes to be engaged in any business to which this Act applies, or to have been so engaged during any chargeable accounting period, or to be otherwise liable to pay business profits tax, to furnish within such period, not being less than forty five days from the date of the service of the notice, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) with respect to any chargeable accounting period specified in the notice, the profits (the taxable profits) of the business or the amount of deficiency, if any, available for relief under section 6 Provided that the Income tax Officer may, in his discretion, extend the date for the delivery of the return.
If, in consequence of definite information which has come into his possession, the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have escaped assessment, or have been under assessed, or have been the subject of excessive relief, he may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section II, and may proceed to assess or reassess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section.
" The Tribunal construe(] both these sections together, and expressed the opinion that the notice under section 11 in respect of a chargeable accounting period should 1007 issue before the commencement of the next chargeable accounting period, and that if the notice was not so issued, profits must be considered to have escaped assessment, and that action could only be taken under section 14 within four years of the close of the chargeable accounting period in respect of which it was sought to tax the assessee.
The Tribunal, therefore, held that inasmuch as the notice in this case was issued in January, 1953, more than four years after October 31, 1948, when the chargeable accounting period came to an end, the notice and the assessment.were barred by time.
The Tribunal also pointed out that the intention of the legislature could be gathered from the fact that though in section 15 of the Excess Profits Tax Act the limitation of five years was deleted by Act 22 of 1947, a similar amendment was not made in section 14 of the Act, which corresponds to section 15 of the Excess Profits Tax Act, though the Act was passed at the same time being Act 21 of 1947.
Holding, therefore, that the profits which were not taxed at all and were never brought under assessment must be deemed to have " escaped assessment " because notice under section 11 was not issued in time, the Tribunal was of opinion that action could only be taken under section 14 of the Act within the time specified there.
The Bombay High Court did not accept that the notice under section 11 had to be given before the end of the chargeable accounting period, but held that the two sections must be interpreted together, and observed : " Inasmuch as section 11 does not indicate any period of time with regard to the issue of a notice, would it or would it not be right for us to import into section 11 the consideration which led the Legislature to fix a limitation of time for the purpose of issuing a notice under section 14 ? If we were not to do that we would arrive at this rather extraordinary conclusion that the Legislature while saving the subject from harassment of proceedings with regard to escaped assessment or under assessment, permitted that harassment with regard to the very initiation of the proceedings after the lapse of four years.
It is contended that the period of four years mentioned in section 14 supplies an 1008 important indication for what the period of limitation should be with regard to the is ,,tie of a notice under section 11.
If income which has escaped assessment can only be taxed within four years by reason of section 14, then it must inferentially follow that income must escape assessment at some point of time anterior to the period of four years mentioned in section 14.
On efects of this case the most significant and salient fact is that the notice has been issued four years after the close of the chargeable accounting period and as that notice is beyond the time mentioned in section 14, in our opinion, the notice is not a valid notice under section 11." The Commissioner has contended that section 11 deals with the issuance of a notice for the first time before any income has been returned or brought to tax.
The notice under section 11, it is submitted next, is without any limit of time, and a limitation cannot be read into a section, when the legislature has not thought it fit to lay it down.
According to the Commissioner, section 14 deals with " escaped assessment ", which, under the scheme of the Act, must be given a narrow meaning as indicating the escapement of profits from tax either wholly or partly for any reason, after the process of assessment has taken place.
Section 14, it is argued, operates after one set of proceedings for assessment of tax have taken place, and applies only where the profits either escape assessment, or are under assessed or excessive relief has been granted, while section 11, on the other hand, applies to all cases, where the assessee has not been called upon to file a return or has not filed one himself.
As against this, the assessee firm adopts the reasons given by the Tribunal and the High Court, and adds that whereas under section 14 some definite information must be possessed by the Incometax Officer before he can issue the notice, the Incometax Officer has only to entertain a belief that business was carried on in the chargeable accounting period to enable him to serve the notice under section 11.
The assessee firm, therefore, contends that it would be open to the Income tax Officer to ignore section 14 1009 altogether and to issue a notice under section 11 in a case even after the expiry of a considerable time.
The Commissioner contends that the liability to pay tax arises under section 4 of the Act, and it remains till the liability is discharged by payment of tax, and the legislature has, therefore, advisedly left the power to the Income tax Officer to assess the tax where there has been no proceeding to assess it, without imposing any limit as to time.
Section 14, on the other hand, has been so framed that persons whose profits have been brought to assessment once should not be exposed to a double peril, except within the stated period.
The two sections must be reconciled.
The learned Chief Justice of the Bombay High Court, who delivered the judgment of the Bench, stated that it was not an easy matter to give a rational meaning to them.
He, however, felt that between the two rival contentions, the argument of the assessee firm was the more reasonable, and that where two constructions were possible, one strict and the other beneficial to the assessee, the latter should be preferred if it was equally reasonable.
The scheme of the Act, in so far as asking for a return is concerned, is entirely different from that of the Indian Income tax Act.
Under the latter Act, a general notice is issued calling upon every assessee whose income exceeds the minimum which is exempt under the Income tax Act, to file a return within the period stated in the notice.
The Income tax Officer has further power to issue a notice to any individual assessee during any assessment year calling for a return of his income during the previous year.
An assessee under the Income tax Act is, therefore, bound, if his income is liable to tax, to file a return whether it be in answer to the general notice or to the special notice issued to him.
The assessee may even file a return voluntarily before the special notice is issued to him.
Even before 1939, though there was no general notice the distinction between the previous year and the assessment year obtained.
The notice under section 22 of the Indian Income tax Act must issue before the 1010 close of the assessment year and cannot be issued thereafter.
The scheme of the Business Profits Tax Act is different.
Business profits follow the assessment of income tax, and are payable for any chargeable accounting period in which, the assessee having carried on business, assessable profits have resulted Under the Act, the Income tax Officer, if he has reason to believe that the assessee was engaged in any business to which the Act applied, or to have been so engaged during any chargeable accounting period or to be otherwise liable to pay business profits tax, can call upon the assessee to furnish a return.
That is section 11.
Then comes section 14, which says that if in consequence of definite information which has come into his possession the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have ' escaped assessment ', he may at any time within four years from the end of the chargeable accounting period in question serve on the person liable to such tax, a notice.
There is no compulsion to file a return except in answer to a notice issued either under section 11 or section 14.
There is no period comparable to the assessment year.
Mr. Palkhivala attempted to bring in the conception of an ' assessment year ' into the Act by saying that the next chargeable accounting period could be taken to be the assessment year for the previous chargeable accounting period.
When it was pointed out to him that where the chargeable accounting period of a business ended, say, on March 15 every year the last charge able accounting period would be compressed to 15 days, he had no adequate answer.
The Tribunal also stated that the chargeable accounting year was also the 'assessment year '.
This cannot be correct, because section 11(1) speaks of the current as well as the back chargeable accounting periods, as will be explained in detail later.
The question thus is whether a narrow meaning should be given to the words " profits which have escaped assessment " as denoting only those profits which by reason of a prior notice under section 11 were sought to be assessed but had escaped assessment or a wide meaning to include those profits 1011 which were never sought to be assessed or brought under assessment by the issuance of a notice under section 11.
The question is primarily one of construction of the two sections of the Act.
Before dealing with it is necessary to look at the scheme of some of the basic provisions of the Act.
The accounting period under the Act is equated to the previous year of the business for the purposes of the Indian Income tax Act, 1922.
The tax is laid on the taxable profit s of the 'chargeable accounting period ', which means an accounting period failing wholly within the term beginning on the first day of April, 1946, and ending on the thirty first day of March, 1949, or where any accounting period falls partly within and partly without the said term, such part as falls within the said term.
A proviso further says that if the accounting period falls partly before, and partly after, the end of March, 1947, then the period before and the period after shall be deemed to be separate chargeable accounting periods.
Then comes section 4, which is the charging sections That section, omitting the provisions about exemptions which do not concern us, reads : " Subject to the provisions of this Act, there shall, in respect of any business to which this Act applies, be charged, levied and paid on the amount of the taxable profits during any chargeable accounting period, a tax (in ' his Act referred to as 'business profits tax ') which shall, in respect of any chargeable accounting period ending on or before the 31st day of March, 1947, be equal to sixteen and two thirds per cent.
of the taxable profits, and in respect of any chargeable accounting period beginning after that date, be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act.
Provided. . . (omitted).
Section 5 deals with the application of the Act.
That section, omitting again the provisos that do not affect the present matter, provides : " This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by 1012 virtue of the provisions of sub clause (i) or subclause (ii) of clause (b) of subsection (1) of section 4 of the Indian Income tax Act, 1922, or of clause of that sub section: Provided. . (omitted).
It will appear from these sections quoted that the business profits tax comes in the wake of the incometax.
That is to say, the assessability to profits tax follows the assessability to income tax.
The tax is laid on the taxable profits accruing within a stated period which may include not more than four accounting periods corresponding either wholly or partly to the previous year under the Income tax Act.
The chargeability to income tax is a condition precedent to the chargeability to profits tax, but not every business which pays income tax necessarily pays business profits tax.
The Act, however, does not prescribe a period comparable to the assessment year under the Indian Income tax Act.
It does not lay down any term within which the assessment should be completed.
The short question thus is whether in section 11 of the Act a limitation corresponding to the limitation contained in section 14 must necessarily be read.
It seems to be agreed on all hands, and it was not denied at the Bar before us that if section 11 is to be interpreted according to its own terms, then no such limitation can be read in it.
The Tribunal and the High Court resort to section 14 to do so.
It is always a serious matter to read into a section what the legislature has not chosen to put there.
As pointed out by Lord Esher, M. B., in Curtis vs Stovin (1) : It is, no doubt, very easy for a judge to say that lie is introducing words into an Act only by way of construing it, while be is really making a new Act Such procedure is wholly out of place if the language of the section does not admit of any extension.
The question invariably is Dot what the legislature might have said, or might be supposed to have intended to say, but what it did say.
This is more so in an (1) 1013 Act which imposes a tax, and which cannot be added to or subtracted from except perhaps for the most clear and compelling reasons.
Bearing these principles, which have received recognition on many an occasion, in mind, I address myself to the task.
Under the scheme of the Act analysed above, it is quite clear that the liability to tax depends not on any action to be taken tinder the Act to recover the tax, but it attaches itself to the taxable profits when they have been made in any chargeable accounting period.
Once this liability attaches, it can only be dissolved either by payment of the tax or by the levy becoming impossible due to lapse of stated time.
The Commissioner contends that the liability to pay the tax in the case of a business not brought to tax does not cease by reason of any passage of time.
It ceases only when by reason of an attempted assessment once, the proceedings under section 14 cannot be initiated again after the expiry of four years from the end of any chargeable accounting period.
The Commissioner contends that the phrase " profits have escaped assessment" in section 14 must be limited to those cases only.
For this purpose, reliance is placed upon a recent decision of the Privy Council in a case from Africa, Gokuldas Ratanji Mandavia vs Commissioner of Incometax (1), which will be referred to in some detail.
The Income tax authorities in Nairobi in that case wrote on May 26, 1953, asking Mandavia for information and a deposit of pound 2,000 and saying: As you do not appear at any time to have made a return of total income and claim for allowances, I am sending under separate cover forms covering years of assessment 1943 to 1953.
These should be completed and submitted to me along with the accounts of your professional activities and of your property dealings as set out in the preceding paragraphs ".
Mandavia was at that time in England, and wrote on June 4, asking for time till the end of July.
On June 15, 1953, the Regional Commissioner wrote to inform him that he was proceeding to assess him and impose penalties on the basis of such information as (1) 1014 had been submitted.
These assessments were made on June 18, but were dated June 26 apparently to give the taxpayer more time in which to pay.
Under section 59 of the East African Income Tax (Management) Act, 1952, it was provided: " 59(1).
The commissioner may, by notice in writing require any person to furnish him within a reasonable time, not being less than thirty days from the date of service of such notice, with a return of income and of such particulars as may be required for the purposes of this Act with respect to the income upon which such person appears to be chargeable Under the third sub section of that section, a duty was laid upon every person to give notice to the Commissioner before October 15 in the year following the year of income that he was so chargeable, where no notice had been served under sub section
(1) and no return had been furnished within nine months of the close of the year of account.
Then followed two sections, which need to be quoted partly.
Section 71 provided, inter alia: " (1).
The commissioner shall proceed to assess every person chargeable with tax as soon as may be after the expiration of the time allowed to such person for the delivery of his return.
" The section provided by sub section
(2) for cases in which a return was made which was (a) accepted and (b) not accepted, and by sub section
(3), for cases where no return was filed.
Then followed section 72 which provided (leaving out the proviso): " Where it appears to the commissioner that any person liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, the commissioner may, within the year of income or within seven years after the expiration thereof, assess such person at such amount or additional amount as, according to his judgment, ought to have been charged, and the provisions of this Act as to notice of assessment, appeal and other proceedings under this Act shall apply to such assessment or additional assessment and to the tax charged thereunder.
" 1015 Now, the Commissioner in the cited case justified the assessments under section 72, because it was contended that the assessments were ultra vires and void, in that they were made before the " time allowed ".
He relied upon the general words of section 72, and submitted that they covered even a case where a person was not assessed whether he had a notice and a "time allowed " under sections 59 and 71 or not.
The, argument on behalf of the taxpayer was that section 72 only dealt with cases where subsequent information led either to an assessment after a prior assessment or to an additional assessment but had no application to cases in which the machinery of section 59(1) had not been operated.
The Privy Council accepted the contention of the taxpayer.
It held that before assessments could be made, the " time allowed " had to elapse.
It, however, gave a narrow meaning to the words as to assessing for the first time in section 72, as restricted to " cases in which, the machinery of section 59(1) having been operated, no assessment has been made ".
Their Lordships gave three reasons for this conclusion, which may be set out in their own words: " If the power to make an assessment under section 72 applies to the making of an original assessment their Lordships are unable to imply a term restricting it to back cases or making it ultra vires to operate it at any time.
One would expect an opportunity to make a return to be a condition precedent to assessment.
This is supported by the provisions for personal allowances in Part VI of the Act.
If the respondent is right any person can be assessed without having any such opportunity.
There would be two concurrent jurisdictions, one providing reasonable protection for the taxpayer and the other providing no protection quoad the original assessment, apart from a right to appeal.
Such a construction seems to their Lordships in consistent with the general and mandatory provisions of section 71.
That section is providing how all original assessments are to be made.
Section 72 deals, inter alia, with additional assessments, with cases in which, owing presumably to subsequent information, the Revenue desires to 1016 reopen what had apart from section 72 been settled.
Having regard to the wording of section 71 it seems to their Lordships necessary to restrict the words as to assessing for the first time in section 72 to cases in which, the machinery of section 59 (1) having been operated, no assessment has been made.
So far as the taxpayer is concerned, after be bad made his return or had an opportunity of doing so, it was settled that be was under no liability to tax for that year.
Subsequent information leads the Revenue to reopen the matter and decide that he ought to be assessed.
Section 72 is dealing with the reopening of cases which had been settled under the normal procedure.
This explains the fact that section 72 contains a prima facie limitation of seven years whereas section 71 contains no limitation.
On the respondents ' arguments this seems inexplicable.
On the other argument it seems reasonable that there should after a certain time be no reopening of what has been settled unless there has been fraud or willful default.
The construction also gains support from the words 'ought to have been charged ', when they occur for the second time in section 72.
They there apply to ' such amount ' as well as ' such additional amount '.
" The case, though it is easily distinguishable on the ground that the African Act and the Act are not in pari material shows that by the compulsion of the language employed and the scheme of taxation, a restricted meaning may have to be given to certain general words.
When such a claim is made, only the statute under which the claim is made, can be the guide and not another not in pari material.
The decision is also distinguishable on the ground that there a notice under section 59 (1) was pending and the " time allowed " had not expired.
The assessee relies upon a decision of the Bombay High Court in Commissioner of Income tax vs P. N. Contractor (1), where the previous year ended on March 3l,1934.
No notice was served on the assessee under s.22(2)of the Indian Income tax Act during (1) 1017 the year of assessment.
Then a notice under section 34 of the Income tax Act was served on June 26, 1935.
It was held by Beaumont, C. J., and Rangnekar, J., that section 34 of the Indian Income tax Act was wide enough to include those cases in which there was no notice under section 22 or a first assessment.
Beaumont, C. J., dissented from the observations of Sir George Rankin in are Lachhiram Basantlal (1) made obiter that " income cannot be said to have escaped assessment except in the case where an assessment has been made which does not include the income ", and observed : " Under section 34 what must be escaped is assessment and that means the whole process of assessment, which, in the case of individuals, starts with the service of a notice under section 22(2).
The liability to assessment is a risk to which every person in British India entitled to income is liable, and I cannot see why the process of assessment has not been just as much escaped by a person who receives no notice under section 22(2) as by a person who receives such a notice which proves in fact ineffective.
It seems to me that a person who receives no notice under section 22(2) has escaped assessment, although, through no fault of his own, the process of assessment has never been set in motion. " The assessee also relied upon Commissioner of Income tax, Burma vs Ved Nath Singh (2), where Roberts, C. J., Mya Bu and Dunkley, JJ., observed: " We are of opinion that section 34 is applicable to cases in which either no assessment at all has been made upon the person who received the income, profits or gains liable to assessment, or, where an assessment has been made in the course of the year, but some portion of the income, profits or gains of such assessee for some reason or other has not been included in the order of assessment; such income is income which has ' escaped assessment ' in the year, and falls within the ambit of section 34 of the Act. " These cases arose before the amendments of 1939 and in those days there was no provision for a general (1) Cal.
909, 912.
(2) ; , 1018 notice such as is now issued under section 22(1).
Even in those days, the return asked for the particulars of the total income during the previous year.
Thus, at the end of the assessment year it was not possible to issue a notice for a back period beyond the previous year.
By the force of section 22(2) it could be said at the end of any assessment year that in so far as the income of the corresponding previous year was concerned, it had escaped assessment.
The logical result of this was that if no notice calling for a return under section 22 was issued within the assessment year, then section 34 was the only means to get at the tax: See Rajendra Nath Mukerjee vs Commissioner of Income tax (1).
The scheme of the Indian Income tax Act is entirely different, and by fixing a time limit for the issuance of a notice under section 22(2) makes it clear that in section 34 of the Indian Income tax Act the words "escaped assessment " ex facie covered all cases of escaped assessment whether within or without a prior assessment.
The assessment there 'escapes ' when once the assessment year expires.
The cases under the Incometax Act which expound section 34 are, thus, not in point.
The cases of this Court relied upon by the assessee also do not help.
In Kamal Singh vs Commissioner of Income tax (2), it was held that the word " information " was wide enough to include information as to the true and correct state of the law and the word " escaped " was wide enough to cover cases of inadvertence or oversight on the part of the assessing authorities.
In Commissioner of Income tax vs Ranchhoddas Karsondas (3), the respondent assessee had submitted a 'voluntary ' return showing no taxable income ' and it was held that the Income tax Officer could not ignore the return and proceed under section 34 of the Income tax Act.
In Maharajadhiraj Sir Kameshwar Singh vs State of Bihar (4), the income returned was not brought to tax and later under section 26 of the Bihar Agricultural , it was sought to be assessed.
Section 26 of that Act was held to cover such a case, and the language of that section was extremely wide.
These cases are hardly in point.
(1) L R. (1933) 61 I.A. 10.
(2) [1959] Supp. 1 S.C.R. 10.
(3) ; (4) ; 1019 We are thus thrown back upon the construction of the two sections, and must find out where the compulsion of the language employed and the general scheme of the provisions lead to.
Before doing so, I shall discuss one other extraneous consideration called in aid by both the Tribunal and the High Court.
The Act followed the, Excess Profits Tax Act, 1940, which provided for the levy of tax on excess profits made during the chargeable accounting periods within the term beginning on the first day of September, 1939, and ending on the thirty first day of March, 1941.
By succeeding Finance Acts, the year 1941 was changed to 1942, 1943, 1944, 1945 and 1946.
Thereafter came the Act.
Sections 13 and 15 of the Excess Profits Tax Act correspond respectively to sections 11 and 14 of the Act with the difference that the limitation in section 15 was five years.
By Act 21 of 1947 (which immediately preceded the Act) this period of limitation was removed, by deleting retrospectively the words " within five years of the end of the chargeable accounting period in question" from section 15 of the Excess Profits Tax Act.
Thus, by the amendment there was no limitation for bringing to tax profits which had escaped assessment, and it was so held by Falshaw and Kapur, JJ., in Telu foam Jain & Co. vs Commissioner of Income tax (1).
Now, the Tribunal and the High Court reason that it was the simplest matter for the legislature to have ,deleted similar Words from section 14 of the Act, if the intention was to create no limitation for the assessment of profits which had not been assessed before.
The fact that there was no corresponding change in the Act, it is said, shows that no first assessment or reassessment could be made after a lapse of four years.
This argument views the matter from one angle only.
There is another side to it which is equally plausible.
The intention of the legislature in making the amendment in the Excess Profits Tax Act was manifestly to make the tax leviable by a first assess (1) rent and also by a reassessment without any limit of time.
After the amendment, no limitation existed ,either in section 13 or section 15 of the Excess Profits Tax Act.
(1) 1020 Such assessment or reassessment could be made at any time or even after considerable time.
The question of hardship involved in calling for returns after the lapse of considerable time, which has weighed heavily with the High Court, did not seem to have distressed the legislature.
It is thus impossible to think that the legislature left the Act untouched from a converse motive.
We must not forget that the Act was then freshly enacted, and the first chargeable accounting period was hardly over for any assesesee and every case of escaped assessment or under assessment was also well within the time prescribed by section 14 of the Act.
There would hardly be any present need for such a drastic provision to start with.
It might well have been thought that there would not be cases in which four years could not be considered ample, except those cases where a particular business was never brought to tax at all.
For that, it might equally have been thought that section 11, as is contended by the Commissioner, was sufficient.
The amendment in section 15 of the Excess Profits Tax Act might have been advisedly made to reach even those cases where though the profits of a business had once been brought to assessment, they needed to be re assessed even though the first assessment resulted in some tax or no tax.
For those cases it might have been felt that the limit of five years ought to go.
If this is as good an explanation of the intention of the legislature in amending section 15, then the reason given by the High Court is not the only explanation, and it cannot be accepted.
If the intention of the legislature can be gathered in two different ways, it is sheer speculation to say which is the true intention.
As said earlier, it is always inadvisable to go by a supposed intention of the legislature and construe the words of the statute in the light of that supposed intention.
The intention must be gathered from the words of the section in which the legislature has chosen to express its intention and not vice versa.
I am accordingly of the view that this ground is not valid.
The High Court and the Tribunal read section 11(1) somewhat differently.
According to the Tribunal, 1021 the notice under that section must issue before the end of the chargeable accounting period, and according to the High Court, within four years from the end thereof There is nothing in the section which justifies any of these two readings.
Three classes of persons are there mentioned.
They are (a) persons believed to be engaged in any business, (b) persons believed to have been so engaged in any chargeable accounting period, and (c) persons believed to be otherwise liable to business profits tax.
The first two categories clearly show that whereas for the first category the assessee must be engaged in business in the year of notice, for the second category the notice may issue in respect of a back chargeable accounting period.
The words " to be engaged " and " to have been so engaged during any chargeable accounting period " cannot but refer to " current " and " back " chargeable accounting periods.
The latter words plainly refer to a ,back" period and the word " any " shows that it need not be the " back " period immediately preceding the " current " chargeable accounting period only.
Indeed, it is possible to issue the notice under section 11(1) after March 31, 1949, in respect of the very first chargeable accounting period and also every succeeding period lying within the term beginning on April 1, 1946, and ending on March 31, 1949.
If this be the natural meaning of the section and this meaning is made more probable by the residuary category, viz., persons otherwise liable to pay business profits tax it is an irresistible conclusion that no period comparable to the assessment year under the was either introduced or contemplated.
The distinction between " back " chargeable accounting periods and "current" chargeable accounting periods also disappears.
Unless one can say when or after how much lapse of time profits escape assessment, section 14 cannot be made applicable at all.
Section 4 of the Act says that in respect of any business to which the Act applies, there shall be charged, levied and paid a tax referred to as the business profits tax.
The liability that is incurred can only be discharged by payment of the tax and the charging and levying 132 1022 are duties laid upon the Income tax Officers who execute them by issuing a notice under section 11 and by assessing and demanding the tax.
For this purpose, any person believed to be engaged in business to which the Act applies, or to have been so engaged or to be otherwise liable can be called upon to make a return.
Of course, the proceedings thus initiated may or may not result in tax, but that is another matter.
This is the first operation of the Act against a likely taxpayer.
For this purpose, it is admitted, on all hands, there is no express limitation in section 11(1) or elsewhere.
The question next is whether there is anything in section 14, which impliedly imposes such a limitation.
That section deals with " escaped assessment under assessment " or " excessive relief ".
The last two categories ex facie refer to an assessment after a prior assessment.
The question thus is whether the words " escaped assessment ", refer also to an assessment after a prior assessment,.
The word " assessment ", was explained by the Judicial Committee in Commissioner of Income tax vs Khemchand Ramdas (1).
It sometimes means the computation of income or profits, sometimes, the determination of the amount of tax payable, and, sometimes, the whole procedure laid down in a taxing Act for imposing the liability on an assessee.
In section 14 where the words " escaped assessment " are used, it means that there was a determination of the amount of the tax payable but some profits escaped that process either wholly or partly.
Profits cannot be said.
to have escaped assessment when there are proceedings afoot and assessment is being made.
In my opinion, they cannot be said to have escaped assessment when they are exposed to assessment and assessment has yet to be done.
It is to be noticed that section 14 requires " definite information " in the possession of the Income tax Officer and to " discovery " by him of the fact of escaped assessment as a condition precedent to action under that section.
If under section 4 the liability to tax exists and there is no limitation, and if under section 11(1) it can be (II) (1938) L.R 65 I.A 236. 1023 enforced without any limit as to time, the profits cannot be said to have escaped assessment any more than where assessment proceedings are afoot and are not yet over.
This is not a case where by the operation of some other period of limitation the assessment proceedings can be said to be out of reach of the Department.
If the profits are still assessable by reason of the charge under section 4 and are subject to the process under section 11(1), there is no " escaped assessment ".
There are here no "back" periods which cannot be reached under section 11 like the period prior to the previous year of the , for which only section 34 is available.
All chargeable accounting periods are on the same footing, and section 11 is wide enough to reach all of them.
Further, it is to be noticed that there is no time limit for completing an assessment once begun.
Also, if profits which have never been processed can be dealt with both under sections 11 and 14 and both have the limit of 4 years, why have two sections, one depending on belief and the other on definite information ? We must look to some different meaning and different fields of operation.
That can only be if the words " escaped assessment " are given a restricted meaning in section 14.
In this view of the scheme of the Act and the clear words of section II (1), it seems difficult to put a limit of time because one is contained in section 14 in respect of profits escaping assessment.
No doubt, both the sections must be construed harmoniously ; but as was observed by Sir Lawrence Jenkins in Mohammad Sher Khan vs Seth Swami Dayal (1), the provisions of one section cannot be used to defeat those of another, unless it is impossible to effect reconciliation between them.
Equally both sections must not be made to operate in the same field.
In the Act with which we are concerned, reconciliation is only possible if the words of section 11(1) and section 14 are given meanings without importing certain implications from one into the other, and the only way different fields can be found is to read them differently.
The interpretation of the High Court, if I may figuratively describe it, makes the two sections march hand in hand during the four (1) [1922] L.R. 49 I.A. 60.
1024 years which ex facie could not have been intended, as one section depends upon the entertainment of belief and the other section requires definite information leading to a positive discovery.
Read in this way, it is clear that section 11 effectuates the assessment, levy and collection of tax from persons believed to be liable, while section 14 enables a reopening of cases where after an assessment there is discovery that profits have escaped assessment due to one reason or another.
The use of the words " escaped assessment" in the context of the Act has reference only to those cases where profits of a business were brought to process once but for some reason some profits escaped assessment or were under assessed or received excessive relief.
The insistence upon definite information leading to such a discovery before action is taken under section 14, also points in the same direction.
" Definite information " denotes that there is something discovered which can demonstrate the falsity of something done previously.
The existence of belief shows the possibility of there existing some profits which need to be taxed.
Whereas " definite information " points to a state of affairs in which though there was a processing of the profits before, something definite having been found out the result of that processing is discovered to be incorrect, the word " belief " in section 11 shows that the Income tax Officer is to embark upon a first enquiry as to whether the business comes within the purview of the Act or not.
To summarise, therefore, though it is possible to make the chargeable accounting period correspond to the 'previous year ' under the Income tax law, there is no method by which the conception of an assessment year can be brought in.
To say that section 11 operates for full four years is to find not an " assessment year " but an " assessment period ".
During the course of those four years, the tax would be realisable under section 11, because the assessment period could not be said to be over.
But then, there would be no room for the operation of section 14, particularly where it speaks of " escaped assessment ".
During the whole of the four years, there would never be any escaped assessment, and there would be no further time available 1025 for the operation of section 14.
Even on this reasoning, some meaning other than what prevails under the will have to be given to the same words by the compulsion of the language employed in sections 11 and 14.
On the reasoning of the High Court, the whole of the period of four years would be the " assessment period ".
It would begin at the end of the chargeable accounting period and end after the lapse of four years.
It would embrace all the chargeable accounting periods within reach.
But then, section 14 also operates in the same manner and for the same time.
This construction renders section 14 otiose.
Nor do I think that there is any unreasonableness in the construction, which I have indicated above.
The legislature might have been solicitous that persons who have been subjected to the process of assessment once should not be exposed to a second peril except within the reasonable period of four years from the end of the chargeable accounting period; but it did not view in a similar way those persons who were never troubled before but whose liability to pay tax remained unaltered.
The motive with which limitation was introduced in one section cannot be the motive for the Courts to introduce the same period in quite another section.
To adopt the reasoning of the High Court would be to make no distinction between sections 11 and 14 and to render meaningless the fiction to be found in the last words of section 14.
For profits which have never been brought to assessment, there would be two notices possible in some cases, one under section 11 (1) and the other under section 14, one requiring only the entertainment of a belief as to a certain state of things and the other requiring definite information and discovery that profits have escaped assessment.
These two conditions cannot co exist in the same case.
Harmonious construction requires that there should arise no impossible situations.
Such situations are avoided if the operation of section 11 is confined to those cases where there has been no prior assessment and the operation of section 14 to those cases where after a prior assessment there is an escaped assessment, under assessment or excessive relief.
For the subsequent and reopened assessment there is a limit of 1026 four years, but for the assessment for the first time there is no limit.
I have looked into the Rules framed under the Act.
No doubt, R. 50 speaks of a period during which refunds can be claimed, and it may be argued that this rule has to be interpreted in harmony with the Act.
If the Rule cannot be reconciled with the Act, then the Rule must fail.
See Maxwell on Interpretation of Statutes, 10th Edn., p. 51, where the following passage occurs: " If reconciliation is impossible, the subordinate provision must give way, and probably the instrument would be treated as subordinate to the section.
" See also Institute of Patent Agents vs Lockwood and Minister of Health vs R: Ex parte Yaffe (2 ).
The breakdown of R. 50 would leave into operation R. 48, which is without any limitation of time, and refunds would be available under that Rule.
This argument receives great support from the fact that under the Excess Profits Tax Act sections 48 and 50 of the Indian , were brought in mutatis mutandis.
If, as has been shown above, there is no limitation either under section 13 or section 15 of the Excess Profits Tax Act section 50 will have to be applied to that Act without any limit as to time.
It appears to me that R. 50 is not framed in consonance with the spirit underlying section II, and if it was necessary for me to say so, I would have been disposed to thinking that being a Rule of the Board of Revenue, it would have to give way, even though under the Act it has to be read as a part thereof.
This argument, therefore, has no validity.
In my opinion, the answer to the first question should be in the affirmative.
In view of this answer, the second question would not fall to be answered.
I would, therefore, allow the appeal with costs here and below.
BY COURT: In accordance with the judgment of the majority, the appeal is dismissed with costs.
Appeal dismissed.
(1) , 360.
(2) , 503.
| The appellant was the managing agent of a company which was, at the relevant time, carrying on the business of transporting cargo in boats which touched ports in British India and in the Indian State of Cochin and other States.
Under the managing agency contract the remuneration payable to the appellant was expressed in the following terms: " That the managing agent shall as and by way of remuneration for its services receive a commission of ten per cent.
of the gross freight charged to the shippers.
Such remuneration shall be payable to the managing agents at the place where the same is earned by the company unless other wise requested by the managing agent.
" The Income tax Officer and the Excess Profits Tax Officer assessed the appellant to tax in respect of the whole of the managing commission received by it on the footing that the entire commission accrued or arose in British India.
The appellant claimed that a part of the managing agency commission accrued in the Indian States and not in British India and that it would be entitled to an apportionment of the managing agency commission and to claim exemption from tax in respect of the commission which accrued outside British India under section 14(2)(c) of the Indian Income tax Act, 1922, and the third proviso to section 5 of the Excess Profits Tax Act, 1940.
The Appellate Tribunal found that except booking and collecting some freight at Cochin, all other important and responsible work of managing the company was done from the head office at Bombay and not from Cochin: Held, that normally the commission payable to the managing agent of a company accrues at the place where the business is actually done, that is, where the services of the managing agent are performed, and as on the finding in the present case the appellant practically performed all the services at Bombay, the commission which it earned though computed on the percentage of freight, accrued or arose in British India.
Commissioner of Income tax, Madras vs K. R. M. T. T. Thia garaja Chetty and Co., , followed.
Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co., Bombay, ; and Commissioner of Income tax, Bombay Presidency and Aden vs Chunilal B. Mehta, , distinguished, 73 558 Sall and industries Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay City, , considered.
|
Appeal Nos.
491 544 of 1991.
From the Judgement and Order dated 12.12.1990 of the Bombay High Court in W.P. Nos.
2646, 2659, 2651, 2649, 2657, 2664, 2648, 2647, 2666, 2658, 2662, 2663, 2667, 2665, 2691, 2693, 2694, 4091, 4098, 4155, 2743, 2789, 2791, 2790, 2740, 4290, 2824, 2858, 2848, 3052, 2863, 2848, 2844, 2843, 2832, 2852, 4846, 4844, 3312, 5101, 5102, 3313, 3207, 3064, 3005, 3335, 3188, 5123, 3514 and 4844 of 1990.
T.R. Andhyarujana, S.N. Wakharia, P.H. Parekh, D.Y. Chandrachud and Ms. Shalini Soni for the Appellant.
P. Chidambaram, Arun Jaitley, I.R. Joshi, M.N. Shroof, Ms. Indu Malhotra, Ms. Alka Mukhija, Harish N. Salve, Ms. Shireen Jain, J.P. Cama, Mukul Mudgal, Mrs. Urmila Sirur, Dileep Pillai, P. Kesava Pillai, Kailash Vasdev and Vimal Dave for the Respondents.
The Judgement of the Court was delivered by K. RAMASWAMY, J. We have heard the learned counsel on either side and grant special leave to appeal in all the cases.
The quest for just result to save the precious academic years to the students while maintaining the unsullied examination process is the core problem which the facts have presented for solution.
The appeals arise from the common judgement of a Division Bench of the Bombay High Court in Writ Petition No. 2646 of 1990 and batch.
The appellant for short 'the Board ' conducted secondary examinations in the month of March 1990, whereat the marks awarded, after the formalities of valuation by the examiners of the answer sheets in each subject; the random counter check by the moderators and further recounting at the Board, Moderators ' mark sheets sent to Pune for feeding the computer to declare the results were found tampered with the appellant.
Thereon, admittedly, it was found that moderators ' mark sheets relating to 283 examinees which include 53 respondents in these appeals were tampered, in many a case in more than 2 to 8 subjects, and in few cases in one subject.
As a result, 214 examinees have improved their ranking, which would be in some cases exceptionally good.
The declaration of their results were 780 withheld pending further enquiry and the rest declared on June 30, 1990.
Several writ petitions were filed in the High Court against non declaration of the results and the High Court directed to take expeditious action to declare the results of the examination within the specified time.
The Board appointed seven enquiry officers to conduct the enquiry.
Show cause notices were issued to the students on July 30, 1990 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 will also be permitted to cross examine the witnesses of the Board, if any.
They would not be entitled to appear through an Advocate, but the parents or guardians would be permitted to accompany the students at the time of enquiry, but they are not entitled to take part in the enquiry.
The candidates submitted their explanations denying the tampering and appeared before the Enquiry Officers on August 8, 9, 10, 20, 21 and 22, 1990.
At the enquiry, each student inspected the record.
A questionnaire was given to be filled in writing.
Every candidate was shown his answer book, marks awarded in the subject/subjects and the tampered marks in the moderators ' mark sheets.
All the candidates admitted that the marks initially awarded by the examiner were tampered in the moderators mark sheets; 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 have been fabricated and submitted the reports to the Board.
The Standing Committee constituted in this regard considered the records and the reports on August 29, 1990, discussed pros and cons and expressed certain doubts about the possibility of the candidates/parents/guardians committing fabrication.
They sought for and obtained legal opinion in that regard.
On August 30, 1990 the standing committe resolved to with hold, as a measure of punishment, the declaration of the results of their examinations and to debar the 283 students to appear in the supplementary examination to be held in October, 1990 and March, 1991.
The notification was published on August 31, 1990 and submitted the report to the High Court.
There after the High Court considered the cases on merits.
The learned Judges by separate but concurrent judgements allowed the writ petitions.
781 Sugla, J. held that the Standing Committee of the Divisional Board under the Maharashtra Secondary and Higher Secondary Education Board Act of 1965 for short 'the Act ' was devoid of power.
It did not obtain the approval of the Divisional Board, and therefore, the impugned notification was without authority of law.
On merits also it was held that the Standing Committee did not apply its mind in the proper perspective to the material facts.
Therefore, the finding that tampering was done at the instance of the examinees/parents/guardians is perverse.
Bharucha, J. without going into the jurisdictional issue agreed with Sugla, J. and held that the preponderance of the probabilities would show that the examinees were not guilty of the malpractices.
The guilt has not been established.
The examinees might well be innocent.
Accordingly, the impugned notification dated August 31, 1990 was quashed.
Mandatory injunction was issued to Board to declare the results of 253 examinees within two weeks from the date of the judgement and marks were directed to be communicated to the examinees within a period of two weeks thereafter.
The admitted facts are that the mark sheets of the examiners were not tampered.
Only the moderators ' mark sheets were tampered.
As per the procedure, after the marks were scrutinized at the State Board and found the marks tallied and to be correct, the moderators ' mark sheets were sent to the computer at Pune, obviously in sealed packets, for feeding the results.
After the date of recounting the marks in the office of the State Board at Bombay and before the d ate of taking them to feed the computer, moderators ' mark sheets, were tampered.
The individual students were put on notice of the marks they originally obtained and the tampered marks in the subject/subjects concerned.
They were also given the opportunity to lead evidence on their behalf and if the witnesses were examined on behalf of the Board they would be permitted to cross examine them.
They inspected the records.
The questionnaire given to all the examinees at the enquiry were before us at the hearing including the 53 respondents in the appeals.
We have persued the questionnaire.
It is clear from the answers given to the questionnaire that all the examinees admitted the marks they originally got and the tampered marks on the moderators ' mark sheets.
They also admitted that the tampering was to their advantage.
Everyone denied the complicity of either of the candidates or the parents or the guardians.
Thus it is clear that at the enquiry there is no dispute that the moderators ' mark sheets were tampered, though the candidates, obviously and quite expectedly, denied their complicity in that regard.
Due to tampering 214 would have been passed and 69 accelerated their ranking and percentage to seek admis 782 sion into prestigious institutions.
The racket of large scale tampering wading through 80,000 moderators ' mark sheets obviously was done by concerted action.
It is clear that from large body of moderators ' mark sheets, it is not possible to pick the marks sheets of the concerned examinee alone unless there is concerted and deliberate efforts, in conspiracy with some members of the staff entrusted with the duties in this regard, for illegal gratification.
It is also not an innocent act of mere corrections as is sought to be made out by Sri Chidambaram, the learned counsel for the respondents.
We have no manner of doubt that unfair means were used at the final Secondary Examination held in March 1990, by fabricating the Moderators ' mark sheets of 283 examinees, in a concerned manner, admittedly, to benefit the students concerned.
The first question, therefore, is whether the Standing Committee of the concerned Divisional Board has power under the Act and Regulations to enquire into the use of unfair means committed at the final examination conducted under the Act.
Section 4 of the Act declares that the State Board of Secondary and Higher Secondary Education is a body corporate.
Section 18 enumerates the powers and duties of the State Board.
Clause (t) of Sec.
18 empowers the Board to make regulations for the purpose of carrying into effect the provisions of the Act.
Clause (g) empowers the Board to give to the candidates certificates after passing final examination.
Clause (m) empowers to recommend measures and to prescribe conditions of discipline.
Clause (w) gives residuary power to do all such acts and things as many be necessary to carry out the purposes of the Act.
Section 19 gives powers and entrust duties to the Divisional Board of each division.
Clause (f) postulates, "to conduct in the area of its jurisdiction the final examination on behalf of the State Board.
" Clause (1) provides, "to deal with cases of use of unfair means according to the procedure laid down by the State Board.
" Section 23 provides that power of appointments of the Committees by the State Board.
Sub Section (2) thereof provides that: "The State Board may appoint such other Committees as it thinks necessary for the efficient performance of its functions." Equally sub section (3) of Sec.
23 empower thus: "Each Divisional Board shall appoint Committees designated as follows: (d) Examination Committee.
783 Sub Section (5) states thus: "The constitution of every committee appointed by the State Board or a Divisional Board, the term of office of its members and the duties and functions to be discharged by it shall be such as may be prescribed.
" Section 36 empowers the State Board to make regulations for the purpose of carrying into effect the provisions of the Act.
Sub section (2) thereof states that: "In particular and without prejudice to the generally of the foregoing power, such regulations may provide for all or any of the following matters, namely: (a) the constitution, powers and duties of the Committees.
appointed under section 23; . . (f) the arrangement for the conduct of final examinations by the Divisional Board and publication of results; . . (n) any other matter which is to be or may be prescribed under this Act.
" Sub section (3) provides: "No regulation made under this section shall have effect until the same has been sanctioned by the State Government" Thus it is clear that 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 examinations 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.
The State Board made regulations named as Maharashtra Secondary and Higher Secondary Education Board Regulations 1977 which came into force with effect from July 11, 1977.
Regulation 9(2) (xviii) read thus: 784 "to lay down the procedure and specify the penalties to be followed by the Divisional Boards, in dealing with cases of use of unfair means by persons seeking admission to or appearing at the examinations conducted under the authority of the State Board.
" Under Regulations 14 the Standing Committee of the Divisional Board was to be constituted under sub regulation (1) thereto.
Sub regulation (2) provides: "Subject to the provisions of the Act and the Regulations, the Standing Committee shall have the following duties and functions, namely . . (x) to deal with cases of use of unfair means by persons seeking admission to or appearing at the final examinations, according to the procedure laid down by the State Board.
" By a resolution passed at the meeting of the State Board held on October 26, 1985, Exhibit 'z ' provides the procedure for enquiry.
Clause 3(f) defines 'misconduct ' as follows: "Misconduct" shall mean any illegal or wrongful act or conduct which is alleged to have been resorted to by any candidate and/or any member of staff, at, for or in respect of the final examination and, without prejudice to the generality of the foregoing, shall include. . tampering with the documents issued by the Board or otherwise howsoever changing a candidate 's results in any manner whatsoever and generally acting in such a manner so as to affect or impede the conduct of the final examinations and fair declaration of results thereof.
" Clause (4) empowers to conduct an enquiry either suo moto or on a complaint about any misconduct and the procedure in that regard so that the Chairman of the Divisional Board may entrust the enquiry into the alleged misconduct to any member or members of the Divisional Board other than the members of the Standing Committee.
Clause (5) empowers to entrust the enquiry.
The Enquiry Officer shall give a notice in writing to the candidate . setting forth the nature of the misconduct alleged against the candidate and call upon the candi 785 date to show cause within the time specified therein.
It also empowers to set out the punishment proposed to be imposed on a candidate.
Clause 5(b) gives an opportunity to the candidates to inspect the relevant documents proposed to be relied upon at the enquiry.
Clause 6 gives opportunity to the delinquent to submit an explanation; to produce his witnesses as well as documentary evidence and to be heard in person, if he/she so desires, but shall not be entitled to be represented by an Advocate or any other persons.
The delinquent shall be bound to answer truthfully to all questions relevant to the subject of enquiry that may be put to him/her by the Enquiry Officer .
Clause (10) provides that the concerned Enquiry Officer shall submit the report in writing including the findings and the proposed punishment.
Clause 11 provides thus: "The Standing Committee shall consider the report and decide the case as it may deem fit.
The Standing Committee will take the decision in the same meeting.
" Clause (12) states thus: "The Standing Committee shall not be bound to give detailed reasons in support of its order or decision but shall record its reasons if it disagrees with the findings of recommendations of the inquiry officer and under such circumstances the Standing Committee need not give hearing to the delinquent concerned." Other clauses are not relevant for the purpose of this case.
Hence omitted.
The Board also in its meeting held on October 26, 1985 framed rules in Appendix 'A ' providing under different heads the nature of the offence and the quantum of punishment, the relevant item 16 reads thus: "Tampering with the Secondary/Higher Secondary School Certificate and/or statement of marks or their copies and any other documents issued by the Board.
" Cancellation of performance of the Examination and debarring the candidate for five more examinations and/or to lodge complaint by the concerned institution/Authority to Police Department.
Thus a conspectus of these relevant provisions of the Act, regulations 786 and resolutions clearly cover the entire field of operation regarding the use of unfair means at the final examinations specified the competent authorities and the procedure to deal with the same.
The Divisional Board undoubtedly has been empowered under Sec.
19 of the Act to deal with the use of unfair means at the final examination.
It may be made clear at this juncture that the Standing Committee consists of six members of the Divisional Board and none of them associated with the enquiry.
Enquiry Officers are also the members of the Divisional Board.
The regulations provide the procedure in this regard.
It is undoubtedly true as contended by Shri Chidambaram, that the Act empowers the Divisional Board to deal with the use of unfair means at the final examination.
But to give acceptance to the contention that the Standing Committee is an alien body to the Divisional Board is to do violence to the scheme of the Act and Regulations.
It is seen that under the scheme of the Act and Regulations the State Board is empowered to constitute the Standing Committee.
Equally the Divisional Board is empowered to constitute the committees which include the Examination Committee.
The members thereof are only members of the Divisional Board.
Equally the Inquiry Officers are also the members of the Divisional Board other than the members of the Education Standing Committee.
The Standing Committee is an executive arm of the Divisional Board for the efficient and expeditious functioning of the Board as adumbrated under the Act itself.
It is not a foreign body.
Therefore, when the Divisional Board is acting in conducting the examinations and dealing with the use of unfair means at the final Examination, it is acting on behalf of the State Board as its agent.
When the enquiry was conducted by some members and the Standing Committee was taking the decision thereon, it is acting on behalf of the Divisional Board.
There is no dichotomy but distribution of the functions.
Therefore, when the Standing Education Committee takes the decision its decision is on behalf of the Divisional Board to which they are members and the decision of the Divisional Board to which they are members and the decision of the Divisional Board in turn is on behalf of the State Board.
This is the integral scheme woven by the Act and Regulations.
Thus under the scheme of the Act, for the efficient and expeditious function of the concerned Boards; implementation of the provisions of the Act, and to prevent use of unfair means at the final examination including tampering the result of the examination, the Standing committee is clearly within its power to take final decision.
On a fair and harmonious reading of the relevant provisions and given their due scope and operational efficiency, we are of the considered view that the Examination Standing Committee of the Divisional Board itself a statutory body acted on behalf of the Divisional Board and is not a delegate of the Divisional Board.
787 In State of U.P. vs (Batuk Deo Pati Tripathi & Anr.,) the respondent was appointed as a Munsif in the State Judicial Service and was later promoted as a District Judge.
The Administrative Committee of the High Court reviewed the service and the Committee recommended to the State Government and communicated to all the Judges of the recommendation to compulsarily retire the respondent from service.
The Govt.
accordingly retired the respondent compulsarily which was challenged in a writ petition.
A Full Bench of the Allahabad High Court held that the District Judge cannot be retired from service on the opinion formed by the Administrative Committee and all the Judges should have considered and made recommendation.
Accordingly, the order was set aside.
On appeal, the Constitution Bench of this Court held that article 235 of the Constitution provides control over the District Judges and the Court subordinate thereto shall be vested in the High Court.
It is open to the High Court to make rules to exercise the power of control feasible, convenient and effective.
Accordingly the High Court regulated the manner of appointment of a Committee to screen the service record.
Thus, the rules framed prescribed the manner in which the power has to be exercised.
Truely, it is regulatory in character and the powers were exercised by the Committee and recommended to the State Govt.
to compulsarily retire the respondent and it amounts to taking a decision on behalf of the High Court.
In (Khargram Panchayat Samiti vs State of West Bengal & Ors.,) [1987] 3 SCC 82 at p. 84 the facts were that the cattle fairs run by the two rival organisations would be held on specified different dates which were impugned in the jurisdiction to pass such a resolution.
The High Court held that the Samiti was vested with power to grant licence to hold the fair under Sec. 117 of West Bengal Panchayat Act, 1973.
In the absence of any rules framed in that regard it had no power to specify dates on which such Hat or fair shall be held.
While reversing the High Court 's judgement, this Court held that the general administration of the local area vested in the Samiti which had power to grant licences to held fair or hat under Sec. 117 of the Act.
Necessarily it carries with it the power to supervise, control and manage such a hat or fair within its territorial jurisdiction.
The conferment of the power to grant a licence for holding of a hat or a fair includes the power to make incidental or consequential order for specification of a date on which such a Hat or fair shall be held.
Accordingly, the resolution of the Samiti was upheld.
In (Baradakanta Misra,) vs (High Court of Orissa & Anr.,) [1976]B Suppl.
SCR 561 relied on by Sri Chidambaram, the facts were that then appel 788 lant while acting as a District Judge, an enquiry into certain charges was held against him, and was reduced to Addl.
District Magistrate (Judicial).
He refused to join the duty.
Fresh proceedings were initiated against him and after enquiry the High Court dismissed him on the ground that he was convicted on a charge of a criminal attempt.
An appeal was filed to the Governor and a Writ petition followed thereafter filed in the High Court were dismissed, while allowing the appeal filed under Article 136.
The scope of the words "control" and "deal" used in Article 235 were interpreted at page 576 P&G and held that the word 'control ' includes something in addition to the disciplinary jurisdiction.
The control is with regard to conduct and discipline of the District Judges and Subordinate Courts and includes right to appeal against the order of the High Court in accordance with the condition or service includes an order passed thereon.
The word 'deal ' also includes the control over disciplinary and not mere administrative jurisdiction.
The control which is vested in the High Court is complete control subject only to the power of the Governor in the matter of appointment including initial posting and promotion of the District Judge and dismissal, removal and reduction in rank of the District Judges within the exercise of the control vested in the High Court.
The High Court can hold enquiries, impose punishments other than dismissal or removal subject, however, to the conditions of service to a right of appeal, if granted by the conditions of service, and to the giving of an opportunity of showing cause as required by Clause (2) of article 311 unless such an opportunity is dispensed with by the Governor acting under the provisos (b) and (c) to that clause.
The High Court alone could make enquiries into disciplinary conduct.
It was held that the High Court had no jurisdiction to dismiss the District Judge.
Accordingly it was quashed.
That ratio has no application to the facts in this case since the Act, Regulations and the Resolutions empowered the Divisional Board and its Standing Committee to deal with use of unfair means at final examinations including fabrication of documents issued by the Board as an integral part of the power of the Divisional Board.
Similarly, the ratio in (Taj Pal Singh (dead) through Lrs) vs State of U.P. & Anr., also is inapplicable to the facts of this case.
In that case, the facts were that while the appellant was working as the District and Sessions Judge, the Stage Govt.
moved the High Court to his premature retirement.
The Administrative Judge agreed with Government 's proposal to retire the appellant after giving him three months ' notice, the Governor passed the impugned order compulsorily retiring the appellant.
Three days thereafter the Administrative Committee had approved the opinion of the Administrative Judge which was transmitted to the Government.
789 Assailing the action of the Government the writ petition was filed which was dismissed by the High Court, but on appeal this Court held that the Administrative Judge was not competent to recommend to the Governor or compulsorily retire the District and Sessions Judge and the order of the Government made pursuant thereto was declared illegal.
This Court reiterated that the High Court has power under article 235 to make rules for its administrative convenience, but since the impugned action was not in pursuance of that rule, the action was not upheld.
That ratio also renders little assistance to the respondents for the reasons that the Standing Committee, as stated earlier is an integral part of while exercising the powers, under article 226 or article 136 of the Constitution, by the High Court or of this Court, are not sitting Committees (domestic enquiry body), 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, may be inclined to take different view.
The contention of M/s. Chidambaram, Jaitley, Salve and Cama, the learned counsel for the students, is that the students were minors; 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.
No one on behalf of the Board acquainted with 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 Sugla, J. 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.
The question then is whether the candidates or their parents or guardians are privy to the fraudulent fabrication.
Since we are informed that investigation in this regard by the Police is in progress, we refrain to express any final opinion in this regard.
Suffice to state that the records clearly establish that there was a fraudulent fabrication of the moderators ' marks sheets of 283 candidates including the respondents herein.
The question, therefore, emerges whether the conclusion reached by the Standing Committee that the fabrication was done at the behest of either the candidate or the parents or the guardians to 790 their advantage is based on records.
We remind ourselves that the facts was examined to explain as to how the moderators ' sheets were dealt with after the board screened the marks, but before taking to Pune to feed the computer, nor an opportunity was given to cross examine them.
The evidence without subjecting it to cross examination is of no value.
Enquiry report is not a report in the eye of law.
It does not contain any statement of facts, nor reasons recorded.
It merely records conclusions.
When seven members were appointed it is not expected that all of them would submit uniform stereo typed reports to the Standing Committee.
The Standing Committee did not apply its mind to the facts, nor recorded reasons in support of its conclusions that the examinees/parents/guardians were parties to the fabrication and the fabrication was done at their behest.
Sri Chidambaram further contended that the Board should establish the guilt of the examinees beyond all reasonable doubts.
Shri Jaitley, Sri Cama and Sri Salve though did not support Sri Chidambaram that the standard of proof must be beyond all reasonable doubt, they argued that Standard of proof must be a high degree akin to trial in a criminal case.
The Board did not discharge its duty, on the other hand the Board had presumed that fabrication was done for the benefit of the examinees.
The test of benefit to an examinee is preposterous.
There is no presumption that the fabrication was done at the behest of either the examinees/parents/guardians.
It must be established by the Board as of fact that the examinees/parents/guardians were responsible for fabricating the Moderators ' mark sheets.
Thus no evidence was placed on record, nor wait proved; that, therefore, the findings of the Standing Committee are clearly based on no evidence.
The learned Judges of the High Court were justified in reaching the conclusion that the Board had not established that the fabrication was done at the behest of the examinees/parents/guardians.
This was resisted by Sri T.R. Andhyarujana, learned counsel appearing for the Board.
It was his contention that all the examinees admitted in answers to the questionnaire that tampering was done and it was to their advantage.
In view of the admission, the need to examine any person from the concerned section was obviated.
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 ' marks sheets is based on evidence.
Proper enquiry was conducted giving reasonable opportunity to the candidates.
Show cause notices set out the material facts on which the Board intends to place reliance.
The examinees submitted their explanations and also answered the questionnaire.
On consideration 791 thereof the Standing Committee had reached the conclusions of the guilt of the examinees/parents/guardians.
This is based on record.
It is not open to 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.
article 51A of the Constitution enjoins every citizen, as a fundamental duty, to promote harmony and spirit of common brotherhood among the people, to develop the scientific temper, humanism and the spirit of inquiry and reform; to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement.
article 29(2) declares education as fundamental right.
The native endowments of men are by no means equal.
Education means a process which provides for intellectual, moral and physical development of a child for good character formation; mobility to social status; an opportunity to scale equality and a powerful instrument to bring about social change including necessary awakening among the people.
According to Bharat Ratna Dr. Ambedkar education is the means to promote intellectual, moral and social democracy.
In D.M.K. Public School vs (Regional Joint Director of Hyderabad,) AIR 1936 (A.P.) 204 one of us (K. Ramaswamy, J.) held that education lays foundation of good citizenship and a principal instrument to awaken the child to intellectual and cultural pursuits and values in preparing the child for latter professional training and help him to adjust to the environment.
In nation building activities, education is a powerful level to uplift the poor.
Education should, therefore, be co related to the social, political or economic needs of our developing nation fostering secular values breaking the barriers of casteism, linguism, religious bigotry and it should act as an instrument of social change.
Education system should be so devised as to meet these realities of life.
Education nourishes intellectual advancement to develop dignity of person without which there is neither intellectual excellence nor pursuit of happiness.
Education thus kindles its flames for pursuit of excellence, enables and ennobles the young mind to sharpen his/her intellect more with reasoning than blind faith to reach intellectual heights and inculcate in him or her to strive for social equality and dignity of person.
Teacher occupies pride of place next below the parents as he/she imparts education and disciple the students.
On receiving salary from public exchequer he/she owes social responsibility and accountability 792 to disciple the students by total dedication and sincere teaching.
It would appear that their fallen standards and rectitude is also a contributory factor to the indiscipline among the students.
The students, too, instead of devoting his or her precious time to character building and to pursue courses of study studiously and diligently in the pursuit of knowledge and excellence, dissipate their precious time and many indulge in mass copying at the final examinations or use unfair means.
Some even do not hesitate to threaten the dutiful invigilators with dir consequences.
In G.B.S. Omkar vs Shri Venkateswara University, AIR 1981 A.P. 163 P.A. Choudhary, J., in the context of finding the student guilty of mal practices held, that "I regretfully note that standards of discipline and education presently detaining in many Universities in our country leave a good lot to be desired.
They are low and falling lower every day.
the fall out of these low standards of university education on liberal profession is proving to be nearly catastrophic . .
It is no wonder that some of our Universities have ceased to be centres of learning and have grown into battle fields for warring Caste groups.
" It was held that what the Writ Court under article 226 need to consider is whether fair opportunity had been given to a petitioner and he had been treated squarely and whether the student had a fair deal with the University.
Once the procedural formalities are complied with, in the absence of any allegation of mala fide, it must be presumed that the University had acted bona fide and honestly so long as there is the evidence justifying the inference arrived at without there being a serious procedural irregularity.
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.
From this background the question emerges whether the impugned notification is vitiated by any procedural irregularity under the provisions of the Act, regulations and the Resolutions referred hereinbefore or violative of the principles of natural justice.
The students involved at the examination of secondary education are by and large minors but that by itself would not be a factor to hold that the students were unfairly treated at an inquiry conducted during the domestic inquiry.
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.
The regulations and the rules of enquiry 793 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.
The show cause notice furnished wealth of material particulars on which the tampering was alleged to be founded and given the opportunity to each student to submit the explanation and also to adduce evidence, oral or documentary at the inquiry.
Each student submitted the explanation denying the allegation.
At the inquiry the questionnaire in the proforma was given to each student.
It is undoubted that the allegation of fabrication was stated to have been done at the behest of either the student/parents or guardians and the parents or guardians were not permitted to participate in the inquiry.
Inspection of documents was given.
Their answer sheets and marks secured were perused by the students and were asked to testify whether the answer books belongs to him or her and to identify the marks awarded by the examiner to each answer to the question and the total marks awarded.
It was also asked to verify and state whether the moderator 's mark sheets were tampered in the concerned subject or subjects as the case may be.
The student could easily identify and in fact identified his or her answer books and verified the marks awarded and answered positively that the marks were fabricated in the moderators ' mark sheets.
The questionnaire was also given to indicate their educational background in the previous school years and also the marks they expected at the final examinations.
The need of the assistance of the parents/guardians was thus absolutely nil.
Further question in the proforma was to ascertain from the students, due to tampering, whether or not the marks were increased to his or her advantage.
It could be answered by a mere look at the marks.
No outside assistance is needed.
All the students have admitted that the answer books belong to them.
They also admitted the marks initially awarded by the examiner or added or subtracted, if any, by the moderators.
They also admitted that the fabrication in the moderators ' mark sheets in the subject or subjects and the marks were increased to their advantage.
They also denied the complicity of him or her or of parents or guardians.
It is not the case of the respondents that they were coerced to answer the questions in a particular manner.
It is obvious from the record that they had prior consultations with the counsel.
Thus it could be seen that the procedure adopted at the inquiry is fair and just and it is not vitiated by any procedural irregularity nor is violative of the principles of natural justice.
The absence of opportunity to the parents or guardians, in this background does not vitiate the legality or validity of the inquiry conducted or decision of the Committee.
794 It is true, as contended by Sri Chidambaram and reiterated by other counsel, that the Inquiry Report does contain only conclusions bereft of the statement of facts and reasons in support thereof.
As pointed out by Sri Cama that in some of the reports, the body was written in the hand writing of one or other person and it was signed by the Inquiry Officer concerned.
But when an inquiry against 283 students was conducted, it is not expected that each Inquiry Officer alone should write the report under his/her hand.
In the circumstances the Inquiry Officer obviously had the assistance of the staff in the office to write the body or the conclusions to his/her dictation and he/she signed the report.
The reports cannot be jettisoned on the ground that the Inquiry Officer mechanically drew the conclusions in the reports without applying his/her mind to the facts.
The Enquiry Reports are not, therefore, bad in law.
In (Union of India) vs (Mohan Lal Capoor & Ors.,) this court speaking through M.M. Beg, J., for a Bench of two Judges held in paragraph 28 at page 854 that the reasons are the links between the materials on which certain conclusions are based to the actual conclusions.
They disclose how mind is applied to the subject matter for a decision, whether it is purely administrative or quasi judicial.
They would reveal nexus between the facts considered and the conclusions reached.
This view was reiterated in (Gurdial Singh Fijji) vs (State of Punjab & Ors.,) ; Those two cases relied on by Sri Chidambaram, the rules/regulations required recording of reasons in support of the conclusion as mandatory.
Unless the rule expressly or by necessary implications, excludes 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.
In S.N. Mukherjee vs Union of India, J.T. the Constitution Bench of this Court surveyed the entire case law in this regard, and we need not burden the Judgement to reiterate them once over and at page 643 in paragraph 40 it held that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi judicial functions is required to record the reasons for its decision.
In para 36 it was further held that recording of reasons excludes changes of arbitrariness and ensure a degree of fairness in the process of decision making.
The said principle would apply 795 equally to all decisions and its applications cannot be confined to decisions which are subject to appeal, revision or judicial review.
"It is not required that the reasons should be as elaborate as in the decision of a Court of law.
" The extent and nature of the reasons would depend on particular facts and circumstances.
What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given the consideration to the points in controversy.
The need for recording reasons is greater in a case where the order is passed at the original stage.
The appellate or revisional authority, if it affirms such an order, need not give separate reasons.
If the appellate or revisional authority disagrees, the reasons must be contained in the order under challenge.
Thus it is settled law that the reasons are harbinger between the mind of the maker of the order to the controversy in question and the decision or conclusion arrived at.
It also exclude the chances to reach arbitrary, whimsical or capricious decision or conclusion.
The reasons assure an inbuilt support to the conclusion/decision reached.
The order when it effects the right of a citizen or a person, irrespective of the fact, whether it is quasi judicial or administrative fair play requires recording of germane and relevant precise reasons.
The recording of reasons is also an assurance that the authority concerned consciously applied its mind to the facts on record.
It also aids the appellate or revisional authority or the supervisory jurisdiction of the High Court under article 226 or the Appellate jurisdiction of this Court under article 136 to see whether the authority concerned acted fairly and justly to meet out justice to the aggrieved person.
From this perspective, the question is whether omission to record reasons vitiates the impugned order or is in violation of the principles of natural justice.
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.
It is seen from the record and is not disputed, that all the students admitted, the factum of fabrication and it was to his or her advantage and that the subject/subjects in which fabrication was committed belong to him or her.
In view of these admissions the Inquiry Officer, obviously did not find it expedient to reterate all the admissions made.
If the facts are disputed, necessarily the authority or the Inquiry Officer, on consideration of the material on record, should record reasons in support of the conclusion reached.
Since the facts are admitted, the need to their 796 reiteration was obviated and so only conclusions have been stated in the reports.
The omission to record reasons in the present case is neither illegal, nor is violative of the principles of natural justice.
Whether the conclusions are proved or not is yet another question and would need detailed consideration.
In Khardah Co. Ltd. vs Their Workmen, ; at p. 514 the ratio that the Enquiry Report must contain reasons in support of the findings drawn neatly and briefly is of no assistance for the aforestated facts of this case.
The ratio in A.K. Roy, etc.
vs Union of India & Ors.
, ; that the aid of friend could be taken to assist the detenu and in Pett vs Grehound Racing Association Ltd., [1968] 2 All Eng.
Reports 545 the right to appoint an Agent to represent the case of the petitioner are also of no assistance since the rule expressly excluded such a representation.
The ratio in Union of India vs H.C. Goel, ; also does not help the respondents for the reason that it is not a case of no evidence and the conclusions were reached on the basis of the admission made by the respondents.
The ration in M/s. Bareilly Electricity Supply Co. Ltd. vs The Workmen & Ors., ; also does not apply to the facts of this case for the reasons that the need to examine the witnesses on behalf of the Board was obviated by the admissions made by the examinees.
The ratio in Shanti Prasad Jain vs The Director of Enforcement, is equally of no assistance to the respondents since the contention that the circumstances under which the fabrication of the moderators ' mark sheets came to be made is not a relevant fact.
Therefore, there is no need to examine the concerned officials in the State Board to explain as to how and who dealt with the papers from the time recounting was done in the office till the moderators ' mark sheets were sent to Pune to feed the computer.
The ratio in Merla Ramanne vs Nallaparaju & Ors, and Kashinath Dikshita vs Union of India & Ors., also do not assist the respondents for the reason that the answer books of the concerned students, the marks awarded by the examiners or addition or alteration, if any, made by the moderators and fabrication of the moderators ' mark sheets were admittedly given for personal inspection to the concerned students and given them an opportunity to inspect the record and thereafter they made admission.
The further contention of Sri Cama that the Standing Committee did not deal individually the answers given by each student and the decision was not based on evidence is without force as the conclusions are based on the admissions.
Equally the need to consider each case on merits is obviated by the admission made by every student.
The ratio in (Government medi 797 cal Store Depot, Karnal) vs (State of Haryana & Anr.,) ; at p. 454 that the charges are vague is also of no assistance to the facts of this case.
The ratio in (M/s. Kesoram Cotton Mills Ltd.,) vs (Gangadhar & Ors.,) ; at p. 825 that the documents must be supplied at least 48 hours in advance is also of no help to the respondents in view of the admissions made by the respondents.
The ratio in Tej pal Singh 's case (supra) that mere inspection of the documents will not cure the defect of procedure or violation of principles of natural justice also does not apply to the facts of his case.
The ratio in (State of Punjab) vs (Bhagat Ram) ; that the supply of synopsis of the material is not sufficient compliance with the principle of natural justice, also does not render any assistance to the respondents.
The ratio in (Gujarat Steel Tubes Ltd.,) vs (Gujarat steel Tubes Mazdoor Sabha,) ; at p. 202 that the conclusion and the findings are in different hand writings, which would show the non application of the mind to the facts and it violates the principle of natural justice also does not apply to the facts of this case.
The ratio in (Union of India & Ors.) vs (Mohd. Ramzan Khan,) JT also does not apply to the facts in this case as the report is solely based on the admission made by the examinees and no new material has been relied upon by the Enquiry Officers.
Undoubtedly, it is settled law that the right to life includes right to reputation and livelihood and that the individual as an entity is entitled to the protection of article 21, but in view of the facts of this case the ratio in (Vishwa Nath) vs (State of Jammu & Kashmir,) and (Ogla tellis & Ors.,) etc.
vs (Bombay Municipal Corporation & Ors., etc.,) ; also do not help the respondents.
The further contention of Sri Salve that the order must be a speaking order preceded by a fair enquiry and the report must be based on cogent evidence, and in this case all the requirements are lacking is also an argument of despair.
Therefore, for the reasons given earlier, the argument stands rejected.
The next contention that the notification is vitiated for the reasons that the Standing Committee itself did not record any reason in support of its conclusion that the examinees or the parents or the guardians are parties to the fabrication cannot be sustained for the reason that the regulation itself postulates that if the Committee disagrees with the Inquiry Officer then only it is obligatory to record reasons.
Since the Committee agreed with the report, there is no need, on their part, to record the reasons.
The impugned notification, therefore, is not vitiated by violation of rules of natural justice.
The crucial question, therefore, is whether the conclusions 798 reached by the authorities that the examinees, their parents or guardians were parties to the fabrication and whether their complicity was established from record and whether the evidence was sufficient to support such conclusion reached by the Standing Committee or the Enquiry Officer.
Counsel on either side generated considerable debate on "the standard of proof" in a domestic enquiry.
Mr. Jaitely placed reliance on paragraph 18 of Vol.
17 of Halsbury 's Law of England, Fourth Edition, at page 16, which reads thus "To succeed on any issue the party bearing the legal burden of proof must (1) satisfy a judge or jury of the likelihood of the truth of his case by adducing a greater weight of evidence than his opponent, and (2) adduce evidence sufficient to satisfy them to the required standard or degree of proof.
The standard differs in criminal and civil cases.
In civil cases the standard of proof is satisfied on a balance of probabilities.
However, even within this formula variations in subject matter or in allegations will affect the standard required; the more serious the allegation, for example fraud, crime or professional misconduct, the higher will be the required degree of proof, although it will not reach the criminal standard.
In criminal cases, the standard required of the prosecution is proof beyond reasonable doubt.
This standard is also requisite in case of committal for contempt, and in pension claims cases.
In matrimonial cases it seems that proof on balance of probabilities is sufficient.
Once a matter is established beyond reasonable doubt it must be taken for all purposes of law to be a fact, as there is no room for a distinction between what is found by inference from the evidence and what is found as a positive face." and contended that the standard of proof of fabrication of record in a domestic inquiry does not differ from criminal charge and it must be of a higher degree.
In the Board of High School and Intermediate Education U.P. vs Bagleshar Persad & Ors., relied on by Sri Andhyarjuna the facts were that the appellant Board accepting the findings of the committee that the respondents used unfair means in answering the subjects, cancelled the declaration of the results of the respondent in the High School Certificate Examination held in 1960.
The charges were based on the facts that in the Hindi paper the 799 respondent gave wrong answers to a particular question in the same way in which the answers have been given by another candidate who was having consecutive number.
The High Court held that the findings of the Committee were based on no evidence and quashed the cancellation of the results.
On appeal, this Court held that the respondent admitted that the mistakes in answers in the two papers were identical and he pleaded that he could not say anything as to why this happened.
The proof of charges was inferred that as either the respondent copied from the answer book of the candidate or that both of them had copied from any other source.
It was accordingly held that is would amount to the adoption of unfair means.
The High Court, therefore, committed error in assuming that there is no evidence in proof of it.
At page 774 this Court further held that in dealing with question as to whether the Committee was justified in arriving at its conclusion against the respondent it would not be reasonable to exclude from the consideration of the circumstances on which the whole enquiry came to be held and the general background of the atmosphere in the examination hall.
It was also further held at page 775 that educational institutions like the universities set up enquiry committees to deal with the problem of adoption of unfair means by candidate and normally it is within the jurisdiction of such domestic tribunals to decide all relevant questions in the light of the evidence adduced before them.
In the matter of the adoption of unfair means direct evidence may sometime be available but cases may arise where direct evidence is not available and the question will have to be considered in the light of the probabilities and circumstantial evidence.
This is the problem with the educational institution.
How to face it, is a serious problem and unless there is justification to do so, court should be slow to interfere with the decisions of domestic tribunal appointed by the education body like universities.
In dealing with the validity of the impugned order passed by the universities 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.
Accordingly, it was held that the appeal was allowed and the order of the High Court was set aside and 800 that of the domestic tribunal was confirmed.
In (Bihar School Examination Board) vs (Subhash Chandra Sinha & Ors.,) ; this Court emphasised that the essence of an examination is that the worth of every person is appraised without any assistance from an outside source.
The academic standards require that the authority 's appreciation of the problem must be respected.
A full fledged judicial inquiry was not required.
It is not necessary to conduct an inquiry in each individual case to satisfy itself who are the candidates that have adopted unfair means when the examination as whole had to go.
It was further held at p. 968 E to H that "while we do not wish to whittle down the requirement of natural justice and fair play in case where such requirement may be said to arise, we do not want that this court should be understood as having stated that an enquiry with a right to representation must always precede in every case, however, different.
The universities are responsible for their standard and conduct of the examination.
The universities are responsible for their standard and conduct of the examination.
The essence of the examination is that the worth of every person is appraised without any assistance from an outside source.
It cannot be held that a detailed quasi judicial enquiry with right to its alumini to plead and lead evidence, etc. is preceded before the result are withheld or examinations cancelled.
If there is sufficient material on which it could be demonstrated that the Authority was right in its conclusion that the examination ought to be cancelled then academic standards require that the Authority 's appreciation of the problem must be respected.
It would not be for the courts to say that we should have examined all the candidates or even their representatives with a view to ascertaining whether they had received assistance or not.
To do this, would encourage indiscipline, if not also prejury.
It is true as stated by Sri Chidambaram that the above ratio was laid in the context of the cancellation of examination of the entire centre.
But the general principles must be kept in view while dealing with the problem faced by the academic institutions.
In (Seth Gulabchand) vs (Seth Kudilal and Ors.,) ; this Court held that there is no difference between cases in which charges of a fraudulent or criminal character are made and cases in which such charges are not made.
While striking the balance of probability, the court would keep in mind the presumption of honesty and innocence or the nature of the crime or fraud charged.
The rules applicable to circumstantial evidence in criminal cases would not apply to civil cases.
The ordinary rules governing civil cases of balance of probabilities will continue to apply.
801 In (Ghazanfar Rashid) vs (Board, H.S. & I. Edn. U.P. & Ors.,) AIR 1970 Allahabad 209 a full Bench, speaking through ours learned brother K.N. Singh, J. (as he then was) dealing with the standard or proof of the charge of use of unfair means at the examination, it was held that it was the duty of the Examination Committee, etc., to maintain purity of examination and if examinee is found to have used unfair means at the examination, it is the duty of the Examination Committee to take action against the erring examinees to maintain the educational standard.
Direct evidence is available in some cases but in a large number of cases, direct evidence is not available.
In that situation the Examination Committee as of necessity to rely on circumstantial evidence which may include the answer given by the examinee, the report of the Superintendent of the centre, the invigilator and the report of the experts and other attending circumstances.
The Examination Committee, if relies upon such evidence to come to the conclusion that the examinee has used unfair means in answering questions then it is not open to the High Court to interfere with that decision, merely because the High Court may take a different view on re assessment of those circumstances.
While it is open to the High Court to interfere with the order of the quasi judicial authority, if it is not supported by any evidence or if the order as passed in contravention of the statutory provisions of the law or in violation of the principles of natural justice, the court has no jurisdiction to quash the order merely on the ground that different view could possibly be taken on the evidence available on the record.
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 Committee is not bound by technical rules of evidence and procedure as are applicable to Courts.
We respectfully agree with the ratio.
In Miller vs Minister of Pensions, [1947] All Eng.
Law Reports 372 at p. 374 Denning J., as he then was, reiterated that the evidence against the petitioner must have the same degree of cogency as is required to discharge a burden in a civil case.
It must carry a reasonable degree of probability, but not so high as is required in a criminal case.
If the evidence is such that the tribunal can say: "We think it more probable than not the burden is discharge but, if the probabilities are equal, it is not discharged." 802 In State of Uttar Pradesh vs Chet Ram & Ors., relied on by Sri Chidambaram, this Court dealt with the proof of guilt of the accused at a criminal trial.
This Court held that when two views are plausible, the view being taken must have some content of plausibility in it and without the same, the other view cannot be countenance in law as a plausible alternative.
It must be remembered that at a criminal trial the burden of proof is always on the prosecution.
It must establish the guilt of the accused beyond all reasonable doubts.
If there exist a plausible alternative view, its benefit must be extended only to the accused and not to the prosecution.
Therefore, the ratio therein is inapplicable to a proceeding either in the civil case or in an enquiry before a domestic tribunal.
State of U.P. vs Krishna Gopal & Anr., ; at p. 314 also relates to criminal trial.
In paragraph 26 in assessing the evidence adduced by the prosecution, this Court laid that the concept of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt.
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.
In evaluating the circumstantial evidence in Hanumant vs The State of Madhya Pradesh, [1952] SCR 1091 at p. 1097 the Court approved the statement of Baron Alderman in Reg vs Hodge, that: "The mind was apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts, of one connected whole; and the more ingenious the mind of the individual the more likely was it, considering such matters, to over reach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete.
" It was held that in evaluating the evidence of circumstantial nature it is the duty of the prosecution that all the circumstances must be fully established circumstances should be consistent only with the hypothesis of the guilt of the accused.
This standards of proof also is not relevant not to be extended to consider the evidence in an inquiry by the domestic tribunal.
The ratio in (Bank of India vs J.A.H. Chinoy,) AIR 1950 PC 90 that the appellate court would be reluctant to differ from conclusion of the trial Judge if his conclusion is based on 803 the impression made by a person in the witness box is also not germane for the purpose of this case.
It was laid therein that inferences and assumptions founded on a variety of facts and circumstances which, in themselves, offer no direct or positive support for the conclusion reached, the right of the appellate court to review this inferential process cannot be denied.
While dealing with proof of fraud it was held that speculation is not enough to bring home a charge of fraudulent conspiracy.
In Khwaja vs Secretary of State, [1983] 1 All Eng.
Law Reports 785 (H.L.) dealing with the functions of the Immigration Authorities and of the Courts, Lord Wilberforce at p. 7877, laid the law that the allegation that permission to enter into the country by an immigrant was obtained by fraud or deceit being of a serious character and involving issues of personal liberty requires a corresponding degree of satisfactory evidence.
If the Court is not satisfied with any part of the evidence, it may remit the matter for reconsideration or itself receive further evidence.
It should quash the detention order where the evidence was not such as the authority should have relied on or where the evidence received does not justify the decision reached or, of course, for any serious procedural irregularity.
At p.784 Lord Scarman held that it is not necessary to import in the civil proceedings of judicial review the formula devised by Judges for the guidance of juries in criminal cases.
The reviewing court will, therefore, require to be satisfied that the facts which are required for the justification of the restraint put on liberty do exist.
The flexibility of the civil standard of proof suffices to ensure that the court will require the high degree of probability which is appropriate to what is at stake.
The nature and gravity of an issue necessarily determines the manner of attaining reasonable satisfaction of the truth of the issue.
Therefore, the civil standard of flexibility be applied to deal with immigration cases.
In Sodhi Transport Co. & Anr., etc.
vs State of U.P. & Anr., etc.
, [1986] 1 SCR 939 at p. 954 this Court dealing with rebutable presumption held that: "A presumption is not in itself evidence but only makes a prima facies case for party in whose favour it exists.
It is a rule concerning evidence.
It indicates the person on whom the burden of proof lies.
When presumption is conclusive, it obviates the production of any other evidence to dislodge the conclusion to be drawn on proof of certain facts.
But when it is rebuttable it only points out the party on whom 804 lies the duty of going forward with evidence on the facts presumed, and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of presumption is over.
Then the evidence will determine the true nature of the fact to be established, the rules of presumption are reduced from enlightened human knowledge and experience and are drawn from the connection, relation and coincidence of facts and circumstances.
" Bhandari vs Advocates Committee, [1956] All Eng.
Law Reports 742 (PC) is also a case concerning the professional misconduct.
In proof of the charge it was held that it is the duty of the professional domestic tribunal investigating the allegation to apply a high standard of proof and not to condemn on a mere balance of probabilities.
In Glynn) vs (Keele University & Anr., [1971] 2 All Eng.
Law Reports, 89 (Chancery Division) relied on by Sri Salve, the question arose whether failure to give an opportunity to the students before the suspension is violative of the principles of natural justice.
It was held that the student did not deny commission of the offence, therefore, it was held that the student suffered no injustice by reason of the breach of the rules.
Further while dealing with the scope of the inquiry by the domestic tribunal, it was held that the society is charged with the supervision and upbringing of the pupil under tution, be the society, a university or college or a school.
Where this relationship exists it is quite plain that on the one hand in certain circumstances the body or individual acting on behalf of the society must be regarded as acting in a quasi judicial capacity expulsion from the society is the obvious example.
On the other hand, there exists a wide range of circumstances in which the body or individual is concerned to impose penalties by a way of domestic discipline.
In those circumstances the body or individual is not acting in a quasi judicial capacity at all but in a ministerial capacity, i.e. in the performance of the rights and duties vested in the society as to the upbringing and supervision of the members of the society.
No doubt there is a moral obligation to act fairly, but this moral obligation does not, lie within the purview of the court in its control over quasi judicial acts.
The ratio relied on by Shri Salve, far from helping the respondents, is consistent withour view.
The ration in In Re: An Advocate ; also concerned with professional misconduct of an Advocate and higher standard of proof of the charge of misconduct was insisted upon.
Equally so in Shri Krishan vs The Kurukshetra University, Kurukshetra.
; , These decisions relied on by Sri Jaitley also do not assist us.
805 The contention of Sri Cama placing any reliance on Shivajirao Nilangekar Patil vs Dr. Mahesh Madhav Gosavi & Ors. and vice versa, that the Vice chancellor would not have done what he did except with the instructions of the Chief Minister who was to be benefitted by getting his daughter passed in M.D. was not accepted by this Court and that it was further contended that the benefit test is preposterous one and the preponderence of probabilities is not possible to be deduced from the test, does not appear to be sound.
This Court noted that the Chief Minister was not prepared, as suggested by the Division Bench, to face an inquiry and that, therefore, substituted to the findings of the Division Bench, in the penultimate paragraph of the judgment that the court would be cognizant of the steep decline of public standards, public moral and public morale which have been contaminating the social environment and emphasised that "where such situation cry out the Court should not and cannot remain mute and dumb" and it is necessary to cleanse public life.
It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal.
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.
In our considered view inference from the evidence and circumstances must be carefully distinguished from conjectures or speculation.
The mind is prone to take pleasure to adapt circumstances to one another and even in straining them a little to force them to form parts of one connected whole.
There must be evidence direct or circumstances to deduce necessary inference in proof of the facts in issue.
There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish.
In some cases the other facts can be inferred with as much practical as if they had been actually observed.
In other cases the inferences do not go beyond reasonable probability.
If thee are no positive proved facts, oral, documentary or circumstantial from which the inferences can be made the method of inference fails and what is left is mere speculation on conjecture.
Therefore, when an inference of proof that a fact in dispute has been held established there must be some material facts or circumstances on record from which such an inference could be drawn.
The standard of proof is not proof beyond reasonable doubt 806 "but" the preponderance of probabilities tending to draw an inference that the fact must be more probable.
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 from facts and circumstances in a given case.
The standard of proof is the same both in civil cases and domestic enquiries.
From this legal setting we have to consider whether the inference deduced by the Education Standing Committee that the fabrication of moderators ' mark sheets was done at the behest of either the examinee or the parent or guardian is based on the evidence on record.
It is already found that the examinees admitted the forgery of their concerned moderators ' mark sheets resulting the increase of marks to their advantage.
The fabrication of the moderators 'mark sheets was done after the scrutiny by the concerned officials in the office of the State Board at Bombay and before the moderators ' mark sheets were taken out to Pune to feed the computer.
Why one is expected or interested to wade through eighty thousand moderators ' marks sheets to locate only the 283 examinees mark sheets and add marks by fabrication? Unless either the examinee or parent or guardian approached the fabricator; given the number and instructed him/them to fabricate the marks, it would not be possible to know their number to fabricate.
The act of fabrication is an offence.
Merely it was done in one subject or more than one makes little difference.
Its gravity is not mitigated if it is committed in one subject alone.
This is not an innocent act or a casual mistake during the course of performance of the official duty as is sought to be made out.
It was obviously done as a concerted action.
In view of the admitted facts and above circumstances the necessary conclusion that could unerringly be drawn would be that either the examinee o r the parent or guardian obviously was a privy to the fabrication and that the forgery was committed at his or her or parent 's or guardian 's behest.
It is, therefore clear that 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 in our view over stepped is supervisory jurisdiction and trenched into the arena of appreciation of evidence to arrive its own conclusions on the specious plea of satisfying 'conscience of the court '.
The question then is whether the rules relating to mode of punishment indicated inthe Appendix 'A ' to the resolution are invalid.
We have given our anxious thought to the contention and to the view of the High Court.
In our view the punishments indicated in 807 the last column is only the maximum from which it cannot be inferred that it left no discretion to the disciplinary authority.
No axiomatic rule can be laid that the rule making authority intended that under no circumtances, the examination Committee could award lesser penalty.
It depends on the nature and gravity of the misconduct to be dealt with by the disciplinary authority.
In a given case, depending on the nature and gravity of the misconduct lesser punishment may be meted out.
So by mere prescription of maximum penalty rules do not become invalid.
We have no hesitation to conclude that when the evidence justified the examination Standing Committee to record the finding that the examinees, parents or guardians are parties to the fabrication, it is not open to the High Court under article 225 to itself evaluate the evidence and to interfere with the finding and to quash the impugned notification.
This Court under article 136 has to correct the illegalities committed by the High Court when it exceeded its supervisory jurisdiction under article 226.
In view of the fair attitude adopted by the counsel for the Board, it is not necessary to go into the question of quantum of punishment.
In the light of the above finding, normally the appeals are to be allowed, the judgement of the High Court is set aside and the impugned notification dated August 31, 1990 upheld in toto.
But we modify the High Court 's order as per the directions given in our order dated January 30, 1991, wherein we accepted the signed statement by the counsel for the Board without prejudice to their contention and directed the Board (a) to allow all the candidates referred to in the Notification of August 31, 1990 to appear at the S.S.C. examination to be conducted in March, 1991 by the Board; and (b) to declare the untampered results of nine named candidates therein.
The failed candidates covered by the notification and willing to appear in ensuing examination of March 1991, there applications will be accepted if the same are submitted on or before 13th February, 1991 through Heads of their respective schools.
So far as the other candidates are concerned, their results shall not be declared, but they will be permitted to appear in the ensuing examination of the Board to be held in March, 1991 in case their applications are received before 13th February, 1991, through Heads of their respective schools.
In this regard the Board shall inform all the concerned schools and will also give due publicity in the two local newspapers within 3 days.
The Board was further directed to consider the cases of such candidates out of 283 who are similar to the nine named candidates other than respondent 808 No. 17, Deepa V. Agarwal and in their cases also the untampered result shall be declared on or before 6th February, 1991 and we are informed that results of 18 more candidates were declared.
The notification dated August 31, 1990 is upheld subject to above modification and shall be operative between the parties.
Before parting with the case we impress upon the appellant to have indepth investigation made expeditiously, if need be, with the assistance of C.B.C.I.D., of the racket of fabrication and bring the culprit to justice.
The appeals are allowed accordingly, but in the circumstances parties are directed to bear their own costs.
R.S.S. Appeals allowed.
| The appellant/petitioners joined the Army as Emergency Commissioned Officers in 1963 and were discharged during the year 1967 to 1970.
After their discharge they joined the Commercial Tax Service under the Respondent State on selection by the State Public Service Commission.
It was provided under R.35 of the Tamil Nadu State and Subordinate Service Rules that their seniority in the department would be fixed in the order of preference indicated by the Service Commission and not with reference to the service in the Armed Forces.
However, in respect of similar candidates who were appointed as Assistant Surgeons, the government order provided that their seniority would be fixed by allotting them the year in which they would have been appointed to the post at the first possible attempt after the date of joining military service/training.
Thus, the concession of seniority reckoned with reference to date of appointment in the Army, which has been extended to Asstt.
Surgeons was denied to similar candidates selected to other services categorised as non technical.
On a suggestion made by the Public Service Commission, the 846 Respondent State passed orders extending the benefit to the other services also.
The Respondent State further extended the benefit of fixation of seniority to all such candidates irrespective of their year of recruitment.
The appointing authorities were directed to take steps to refix the seniority of such officials after issuing notice to all the affected parties.
Accordingly notices were issued, and in response thereof representations were received by the Respondent State, which, after due to consideration decided not to implement the orders extending the benefits to other candidates in the non technical category.
Aggrieved by the said order issued on 3.8.1980 the affected persons filed Writ Petitions before the High Court.
A Single Judge allowed the Writ Petitions holding that under orders dated November 16, 1976 and June 15, 1977, which were passed on the recommendations of the Public Service Commission,, the petitioners had acquired certain rights in the matter of seniority and promotion and since the Government order dated 3.31980 took away the said right of the petitioners, they should have been afforded an opportunity of hearing before passing the said order.
On appeal, the Division Bench set aside the judgement of the Single Judge.
In the appeal and special leave petitions preferred against the said judgment it was contended that it was permissible for the State Government to issue administrative instructions with regard to determination of the seniority and to remove the lacuna which was found in the existing rules, viz. discrimination between the Medical/Engineering service and other services.
Dismissing the matters, this Court, HELD: 1.
Although the Government cannot amend the statutory rules by Administrative instructions, 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.
[852E F] (Sant Ram Sharma) vs (State of Rajasthan & Anr.,) ; of India) vs (H.R. Patankar & Ors.,) [1985] 1 SCR 400 and (State of Gujarat) vs (Akhilesh C. Bhargav & Ors.) ; referred to.
847 2.
There was an express provision in the statutory rules viz. Rule 35 of the Tamil Nadu state and Subordinate Service 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 Emergency Commissioned Officers/Short Service Regular Commissioned Officers 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 and this could only be done by suitably amending the said rules not by issuing administrative instructions.
The directions contained in orders dated November 16, 1976 and June 15, 1977 were invalid being contrary to the provisions contained in Rule 35.
Since the said orders were invalid the appellant petitioners 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 suitable amendments were made in the relevant Service Rules relating to those services whereby the benefit of the Army service was given in the matter of fixation of seniority.
No similar amendment has been made in the rules governing the non technical services e.g., Commercial Tax Service to which the appellant petitioners were appointed.
[853C G] 3.
Emergency Commissioned Officers/Short Service Regular Commissioned Officers who have joined Medical and Engineering Services of the Respondent State 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 post viz. Medical/Engineering held by them was a vailable to the State when they joined the Medical/Engineering Services of the Respondent State.
The nature of the duties discharged by the appellant/petitioners in the Army were different from the duties they are now required to perform as Commercial Tax Officers in the State service.
It cannot, therefore, be said that the Emergency Commissioned officers/Short Service Regular Commissioned Officers who have joined the medical and Engineering Service of the State and the appellant/petitioners who have joined the Commercial Tax Department of the State are persons similarly situated in the matter of determination of seniority and for counting their earlier Army Service for that purpose.
[854B D] 848 Union of India & Ors. etc.
vs Dr. section Krishna Murthy & Ors. etc., [1989] Supp. 1 SCR 275, distinguished.
|
Civil Appeal No. 2613 of 1980.
Appeal by Special leave from the Judgment and Order dated the 18th April, 1980 of the Delhi High Court in Regular Second Appeal No. 33 of 1977.
Petitioner in Person.
Anand Prakash, C.S. Vaidyanathan, Probir Chowdhry Ms. Laxmi Anand and Samir Prakash for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
This appeal by special leave is directed against a judgment of the High Court of Delhi dismissing the appellant 's second appeal.
The appellant was appointed in 1968 to the post of Research Officer of the Institute of Constitutional and Parliamentary Studies, New Delhi, as a society registered under the , and was later designated as Assistant Director.
Subsequently, he was given additional charge of the Library of the Institute.
In March, 1974 the appellant submitted a bill of Rs. 350 to the Institute claiming reimbursement of medical expenses incurred by him in the delivery of a child to his wife during the previous month.
The Institute, however, framed a charge on November 5, 1974 against the petitioner, alleging that he was attempting to draw the sum by tendering a false bill.
A member of the Executive Council of the Institute was appointed to enquire into the charge and the appellant participated in the enquiry proceedings.
During the pendency of the proceedings the appellant appealed to the Executive Council of the Institute to change the Enquiry officer but, it is alleged by the appellant, while the appeal was pending consideration 155 the appellant received a Memorandum dated July 17/18, 1975 from the Executive Chairman of the Institute placing the appellant under suspension.
The Enquiry officer completed his report on August 9, 1975 holding that the charge of presenting a false bill was proved against the appellant.
On October 15/16, 1975 a second charge was framed against the appellant alleging that he was guilty of disobeying an officer order requiring him to hand over charge of the Library.
The appellant was also served with a notice of the same date, along with a copy of the enquiry report, requiring him to show cause why he should not be dismissed from service.
The appellant then filed a suit for declaration and injunction in the Court of the learned Subordinate Judge, Delhi on November 15, 1975 and obtained an ex parte order restraining the Institute and its officers from dismissing him.
When the matter came on for final disposal on August 24, 1976 the learned Subordinate Judge dismissed the suit without trial on the preliminary point that it was not maintainable.
He expressed the view that the appellant 's remedy lay in damages and not in a suit for declaration.
The appellant appealed, and during the pendency of the appeal the learned Senior Subordinate Judge passed an order dated August 28, 1976 declining to grant an ex parte stay order.
On September 3, 1976 the Institute filed a reply stating that the stay application had become infructuous as the appellant had been dismissed from service.
The appeal filed by the appellant was dismissed by the learned Senior Subordinate Judge on January 22, 1977, who endorsed the view of the trial court that the remedy of the appellant lay in damages instead of by a suit for declaration.
The appellant filed a second appeal in the High Court of Delhi.
During the pendency of the appeal he moved an application for amendment of the plaint.
On April 18, 1980 the High Court rejected the amendment application and also dismissed the second appeal.
And now this appeal.
The appellant attempted to place his case before us on its merits, but strong objection was taken by the respondents to the maintainability of the appeal on the ground that the order dismissing the appellant had not been challenged by him, that the order had become final and that the continued existence of the order constituted an impediment to the consideration of the reliefs claimed in the suit.
The appellant strenuously urged that the appeal continues to survive, and he attempted to establish that among the reliefs claimed in his amendment application filed in the High Court he had included a relief for declaring the order of dismissal invalid and, he said, the amendment had been wrongly refused.
Shortly before 156 concluding his submissions in this Court, he filed an application in this appeal praying for amendment of the plaint by the inclusion of such relief.
We have examined the record of the case and we find that at no stage upto the dismissal of his second appeal did the appellant attempt to include a relief in his plaint against the order of dismissal.
On the contrary, the reliefs sought to be included through the amendment application filed in the High Court proceeded on the assumption that the appellant was still continuing in service, for we find that one of the reliefs specifically mentioned in the amendment application was: "(c) "A decree for perpetual injuction he granted to the plaintiff against the defendants, restraining the defendants from dismissing the plaintiff from the post of Assistant Director and Incharge of the Library of the Institute and taking any action on the basis of the enquiry report or show cause notice and holding any second enquiry on the basis of the second charge sheet or taking any action whatsoever in these matters." Plainly, once an order of dismissal was passed against him, a different cause of action arose and it was not possible for the appellant to maintain the proceeding on the original cause of action.
The original reliefs claimed in the suit consisted of a decree of declaration that the proceedings taken against the appellant upto the framing of the second charge on October 15/16, 1975 were invalid, and a decree for perpetual injunction restraining the respondents from dismissing the appellant.
The appellant contended that the order of dismissal had not been served on him and, therefore, no occasion had arisen for challenging the order.
It was alleged that an unsigned copy of an order of dismissal had been received by him and nothing more.
We cannot accept the contention, because we find ample evidence on the record indicating that the appellant treated the order served on him as an effective order and that otherwise also he was aware that he had been dismissed.
Indeed, he took proceedings in court charging the respondents with contempt of court for passing an order of dismissal while his suit was still pending.
As regards the application now filed before us praying for leave to amend the plaint, we are constrained to reject it inasmuch 157 as it is for the first time throughout this protracted proceeding commencing with the institution of the suit in 1975 that the appellant is now seeking to include the relief although he had come to know several years ago that he had been dismissed.
No circumstance has been shown explaining why the appellant should be permitted at this late stage to amend the plaint.
It has also not been established by the appellant that if a suit is filed now against the order of dismissal it would be within the period of limitation.
Upon the aforesaid considerations, we are of opinion that the present appeal is liable to be dismissed as not maintainable.
We find it unnecessary to enter into the question whether the charge framed against the appellant, on the basis of which he has been dismissed, stands proved.
We express no opinion in the matter.
While concluding, we may record that the appellant claims arrears of pay from the Institute.
We believe it would be just and proper that the Institute should examine the claim of the appellant, and if it finds that any amount is due to the appellant it should make payment thereof with all reasonable expedition.
It is hoped that in this regard the Institute will not seek the advantage of any technical objection, including the period of limitation.
In the result, the appeal is dismissed as not maintainable.
There is no order as to costs.
H.S.K. Appeal dismissed.
| With a view to encourage national integration, a few States including respondent states agreed upon an arrangement by which a certain percentage of the seats in medical colleges was reserved for candidates from other States on a reciprocal basis.
In the year 1982 83 the respondent States made some nominations under the above arrangement.
The validity of these nominations was challenged in these writ petitions and civil appeals on the ground, inter alia, that these nominations had been made by the State Governments in their absolute and arbitrary discretion, without reference to any objective criterion, or any controlling norms or guidelines.
Partly allowing the writ petitions and the appeals, ^ HELD: The principle adopted by the State Governments of nominating candidates in their absolute and unfettered choice to seats in Medical Colleges outside the State is invalid.
But the nominations already made will not be affected.
[991 F G; E] The exercise of all administrative power vested in public authority must be structured within a system of controls informed by both relevance and reason relevance in relation to the object which it seeks to serve, and reason in regard to the manner in which attempts to do so.
article 14 of the Constitution is violated by powers and procedures which in themselves result in unfairness and asbitrariness.
There is no doubt that in the realm of administrative power the element of discretion may properly, find place, where the statute or the nature of the power intends so.
But there is a well recognised distinction between an administrative power to be exercised within defined limits in the reasonable discretion of designated authority and the vesting of an absolute and uncontrolled power in such authority.
One is power controlled by law countenanced by the Constitution, the other falls outside the Constitution altogether.
Proceeding from there, it is evident that if the State 986 Government desires to advance the objective of national integration it must adopt procedures which are reasonable and are related to the objective.
In this Age of Reason, all law must measure upto that standard, and necessarily so also must all executive acts.
[989 E F; 989 G; 990 A D] In the present cases, viewed in this context and tested on the touchstone of our constitutional values, the claim of the State Government that the nature of the objective and the means adopted to serve it entitle it legitimately to vest in itself an absolute power in choosing candidates for nomination is to deny a fundamental principle of our constitutional life and cannot be allowed to prevail.
[990 D E] Chitra Ghosh and Anr.
vs Union of India and Ors.
, ; , 420; Maneka Gandhi vs Union of India, [1978] 2 S.C.R. 621; and Ramana Dayaram Shetty vs The International Airport Authority of India & Ors., , referred to.
The Medical Council of India is directed to formulate a proper constitutional basis for determining the selection of candidates for nomination to seats in Medical Colleges outside the State in the light of the observations contained in this judgment.
Until a policy is so formulated and concrete criteria are embodied in the procedure selected, the nominations shall be made by selecting candidates strictly on the basis of merit, the candidates nominated being those, in order of merit, immediately below the candidates selected for admission to the Medical Colleges of the home State.
[991 G H; 992 A]
|
ition Nos 5880 82, 6176 A 77, 5921, 5922, 6220, 6426 27, 6355 56, 6264 70,6276, 6178 79, 6191, 1718 of 1980 and 220 22, 2113 of 1981.
(Under Article 32 of the Constitution) K K Venugopal, (6355 56 of 1980) (In W P. Nos. 6212, 6427 & 5880 82/80) F.S. Nariman, (In W.P. Nos. 6264 70/80) R.K Gargo, (In W.P. Nos. 6191 & 6426/80), S.N. Kackar, (In W.P.
Nos: 5921/80 & 220/81 and G.L. Sanghi, (In W.P. No. 1718/81) for the Petitioners.
C.S. Vaidyanathan, Vineet Kumar, Parthasarathi, A.T.M. Sampath.
Miss Lily Thomas, N.A. Subramanium, Naresh Kumar, Mahakir Singh and section Srinivasan for the Petitioners.
Lal Narayan Singh, Attorney General (In W.P.
No 5880180) M.R Banerjee, Addl.
Solicitor General (In W.P. No. 6355/80) R. Rrishnamoorthy, Adv.
T.N. (In W.P. Nos.
1718 & 6276/ 1980) for the Respondents.
D Dr. Y. section Chitale, (In W.P. No. 6426/80), L. M. Singhvi, (In W.P. 6264/80) Mr. Laxmi Kant Pandey and S.S. Ray, (In W.P. 6212 of 1980) for the Respondents.
A.V. Rangam, (In all matters) for the Respondents.
In these writ petitions, the petitioners who were holders of posts of part time village officers in the State of Tamil Nadu or associations of such persons have questioned the constitutional validity of the Tamil Nadu Abolition of posts of part time Village officers ordinance, 1980 Tamil Nadu ordinance No. 10 of 1980) (hereinafter referred to as 'the ordinance ') and the Tamil Nadu Abolition of posts of part time Village officers Act, 1981 (Tamil Nadu Act No. 3 of 1981) (hereinafter referred to as 'the Act) which replaced the ordinance.
The total number of posts abolished by the Act is 23,010 In Tamil Nadu, as in other parts of India, the village has been the basic unit of revenue administration from the earliest times of which we have any record.
The administration was being carried on at the lowest level by a chain of officers in regular gradation one above the other at the commencement of the Christian era.
The 634 same system has been in vogue uptil now.
It was generally known as the borabaluti system ordinarily consisting of twelve functionaries.
In Tamil Nadu, these functionaries were known as (I) headman, (2) karnan or accountant, (3) shroff or notazar, (4) nirganti, (5) toty or taliary, (6) potter, (7) smith, (8) jeweller, (9) carpenter, (10) barber, (11) washerman and (12) astrologer.
Of them, the first five only rendered service to Government.
The headman who goes by various names such as monigar, potail, naidoo, reddy, peddakapu etc.
is an important officer.
He represented the Government in the village, collected the revenue and had also magisterial and judicial powers of some minor nature.
As a magistrate he could punish persons for petty offences and as a Judge could try suits for sums of money or other personal property upto Rs. 10/ in value, there being no appeal against his decision.
With the consent of the parties, he could adjudicate civil claims upto Rs. 100 in value.
The headman has been generally one of 1 the largest landholders in the village having considerable influence over its inhabitants.
The karnam or the village accountant maintained all the village accounts, inspected all fields in the village for purposes of gathering agricultural statistics, fixation of assessment and prevention and penalisation of encroachments, irregular use of water and verification of tenancy and enjoyment.
The nirgantis guarded the irrigation sources and regulated the use of water.
The toty or taliary assisted the village accountant in his work.
By the end of the nineteenth century, two Acts were brought into force in the Presidency of Madras for the purpose of regulating the work of some of the village officers.
The Madras Proprietary states ' Village Service Act, 1894 (Madras Act No. II of 1894) dealt with three classes of village officers viz. village accountants, village headmen and village watchmen or police officers in permanently settled estates, in unsettled palaiyams and in inam villages.
It provided for their appointment and remuneration and for the prevention and summary punishment of misconduct or neglect duty on their part and generally for securing their efficiency.
The Madras Hereditary Village offices Act, 1895 (Madras Act No. III of 1895) regulated the succession to certain other hereditary village offices in the Presidency of Madras; for the hearing and disposal of claims to such offices or the emoluments annexed thereto; for the appointment of persons to hold such offices and the control of the holders thereof.
The Village officers dealt with by this Act were (i) 635 village munsifs, (ii) potels, monigars and peddakapus, (iii) karnams, (iv) nirgantis, (v) vettis, totis and tar dalgars and (vi) talayaris in ryotwari villages or inam villages, which for the purpose of village administration, were grouped with ryotwari villages.
Under both these statutes, the village offices were considered as hereditary in character and the succession to all hereditary village offices devolved on a single heir according to the general custom and rule of primogeniture governing succession to impartible zamindaris in Southern India.
When the person who would otherwise be entitled to succeed to a hereditary village office was a minor, such minor was being registered as the heir of the last holder and some other person qualified under the statutes in question to discharge the duties of the office was being appointed to discharge the duties of the office until the person registered as heir on attaining majority or within three years thereafter was qualified to discharge the duties of the office himself when he would be appointed thereto.
If the person registered as heir remained otherwise disqualified for three years after attaining majority, he would be deemed to have forfeited his right to office and on such forfeiture or on his death, the vacancy had to be filled up in accordance with the provisions of the statutes as if he was the last holder of the office.
It is stated that in cases to which the above two statutes were inapplicable, provision had been made by the Standing orders promulgated by the Board of Revenue which were known as the Board 's Standing orders for appointing village officers again generally on a hereditary basis.
Some of the other distinct features of the service conditions of the village officers appointed under the Madras Act No. II of 1894 of the Madras Act No. III of 1895 or the Board 's Standing orders were that they were part time employees of the Government; that the records maintained by them were allowed to be retained in their houses that there was no attendance register and no fixed hours of duty were prescribed in their case.
They were appointed directly by the Revenue Divisional officer and against his order, an appeal lay to the District Revenue officer and then a revision to the Board of Revenue and a second revision to Government.
They were not constituted into any distinct service, There was no provision for reservation of posts of village officers G for Scheduled Castes/Scheduled Tribes and backward classes There was no minimum general qualification prescribed prior to the year 1970 for persons to be appointed as village officers under the said statutes or the Board 's Standing orders.
It was enough if they were able to read and to write.
No period of probation was pres 636 cribed after they were appointed.
The Fundamental Rules applicable to all other State Government servants, the Pension Rules and the Leave Rules were not applicable to these village officers.
They could take up part time work or occupation after securing necessary permission from the concerned Revenue authorities.
There was no age of superannuation fixed in their case and they were not entitled to retirement benefits such as gratuity and pension.
All village head men including those who belonged to Scheduled Castes and Scheduled Tribes had to furnish security in the form of property or cash the estimated value of which was not less than half the amount of land revenue and loan demand of the village.
They could not be transferred outside their district.
In fact very rarely they were transferred.
During the period of leave, no honorarium was paid to them and during the period of suspension, no subsistence allowance was paid.
The honorarium paid to them was a fixed amount with no element of dearness allowance.
In M. Ramappa vs Sangappa & Ors.
where this Court had to consider whether the officers holding the hereditary village offices under the Mysore Village offices Act, 1908 which contained provisions similar to the provisions of the two Madras Acts referred to above were qualified for being chosen as members of the State Legislative Assembly, it was held that such officers who were appointed to their offices by the Government, though it might be that the Government had no option in certain cases but to appoint an heir of the last holder, held offices of profit under the State Government since they held their office by reason of appointment made by the Government and they worked under the control p and supervision of the Government and that their remuneration was paid by the Government out of the Government funds and assets.
Accordingly this Court came to the conclusion that such village officers were disqualified under Article 191 (I)(a) of the Constitution from contesting at an election to the State Legislative Assembly.
In Gazula Dasaratha Rama Rao vs The State of Andhra Pradesh & Ors this Court held that section 6(1) of the Madras Hereditary Village offices Act, 1895 (Madras Act No. 3 of 1895) which Provided that in choosing Persons to fill the new village offices of 637 an amalgamated village under that Act, the Collector should select the persons whom he considered to be the best qualified from among the families of the last holders of the offices in the villages which had been abolished as a consequence of such amalgamation was void as it contravened Article 16 (2) of the Constitution.
After the above decision, instructions were issued by the Madras Board of Revenue on March 12, 1962 to the effect that in respect of future vacancies in village offices governed by the Madras Act No. II of 1894 and the Madras Act No. III of 1895 the appointments should be made on temporary basis only following the procedure prescribed under the Board 's Standing order No. 156.
Since it was felt that the above two Madras Acts which contained provisions providing for appointment to village offices on hereditary basis were violative of Article 16 of the Constitution in view of the pronouncement of this Court in Gazula Dasaratha Rama Rao 's case (supra), the State Legislature passed the Madras Proprietary Estates ' Village Service and the Madras Hereditary Village offices (Repeal) Act, 1968 (Madras Act No. 20 of 1968) repealing the above two statutes viz. the Madras Act No. II of 1894 and the Madras Act No. III of 1895.
The said Act was brought into force with effect from December 1, 1968.
It extended to the whole of the State of Madras, except the Kanyakumari district and the Shencottah taluk of the Tirunelveli district (vide section I (2) of the Madras Act No. 20 of 1968).
Sub section (3) of Section 2 of that Act, however, provided that every holder of a village, office, appointed under the Acts repealed by it would, notwithstanding the repeal continue to hold office subject to such rules as may be made under the proviso to Article 309 of the Constitution.
Section 3 of that Act directed that any vacancy arising after the date of the commencement of that Act in the village once referred to in subsection (3) of section 2 thereof should be filled up in accordance with the provisions of the Rules made under the proviso to Article 309 of the Constitution.
On December 1, 1968, the Governor of Tamil Nadu promulgated a Rule under the proviso to Article 309 of the Constitution providing that "the Standing orders of the Board of Revenue applicable to non hereditary village offices shall apply to every holder of a village office to which the Madras Proprietary Estates Village Service Act, 1894 (Madras Act No. II of 1894) or the Madras Hereditary Village offices Act, 1895 (Madras Act No. Ill of 1895) was applicable immediately before the 1st day of December, 1968" on which date the Madras Act No. 20 of 1968 came into force.
Pursuant to section 3 of the Madras Act No. 20 of 1968, the Governor of Tamil Nadu 638 promulgated under the proviso to Article 309 of the Constitution the Tamil Nadu Village officers Service Rules, 1970 providing for the constitution of the Tamil Nadu Village officers Service consisting of (i) village headman, additional village headman, (ii) village karnam, additional village karnam and (iii) talayari and nirganti and the method of recruitment to the said posts.
The said Rules came into force on December 16, 1970 and they extended to the whole of the State of Tamil Nadu except the Kanyakumari District and the Shenootah taluk of the Tirunelveli district and the city of Madras.
Rule 18 of the said Rules, however, stated that nothing contained in them would apply to persons, who on the date of coming into force of the said Rules, were holding the posts of village headman or additional village headman, village karnam or additional village karnam either temporarily or permanently.
Consequently the said Rules were not applied to the holders of village offices who had been appointed temporarily or permanently under the two repealed Acts and under the Board 's Standing orders before the date on which the said Rules came into force.
These Rules prescribed that every person who made an application for appointment the post of village headman or additional village headman or village karnam or additional village karnam should possess the following qualifications, namely (i) he should have completed the S.S.L.C. Examination held by the Government of Tamil Nadu and (ii) he should have secured a pass in the special tests specified in cl.
(2) of the table given in Rule S thereof in respect of the posts specified in column (I) thereof.
On the same date, the Tamil Nadu Village officers (Classification, Control and Appeal) Rules, 1970 and the Tamil Nadu Village officers Conduct Rules, 1970 promulgated under the proviso to Article 309 of the Constitution by the Governor of Tamil Nadu came into force.
These Rules were applicable not merely to the village officers appointed after that date but also to those who had been appointed under the repealed Acts and under the Boards Standing order prior to December 16, 1970.
The Tamil Nadu Civil Services (Classification, Control and Appeal) Rules dealt with the disciplinary proceedings that might be instituted against the village officers governed by the them.
The Tamil Nadu Village officers Conduct Rules provided that the Tamil Nadu Government Servants Conduct Rules, 1960 as amended from time to time would apply to the village officers subject to the modification specified in rule 3 thereof which provided that the village officers being part time Government servants might take up part time work or occupation 639 provided that (I) such part time work or occupation did not interfere A with their legitimate duties as village officers and (2) the previous permission in writing had been applied for and obtained from the Revenue Divisional officer concerned if the work or occupation was confined to the charge village and from the District Collector concerned if the work or occupation extended beyond the charge village.
From November 15, 1973 all the three sets of Rules which came into force on December 16, 1970, as stated above, became applicable to the village officers in the Kanyakumari district and the Shencottah taluk of the Tirunelveli district also.
They, however, continued to be inapplicable to the city of Madras.
In the year 1973, the Administrative Reforms Commission headed by Mr. T.A. Verghese, I.C.S. recommended that the existing part time village officers should be replaced by regular whole time transferable public servants and that they should form part of the Revenue hierarchy, disciplined in the tradition of that department and motivated by the incentive of career advancement available in that department.
They also recommended that 16,585 survey villages in the State of Tamil Nadu should be grouped into 11,9554 revenue groups.
The Commission further recommended that the 11,954 revenue groups should be regrouped into larger village panchayats with a population of about 5,000 and the 8 annual panchayat tax demand of the order of Rs. 5,000.
The Commission envisaged that with some marginal adjustment the enlarged village panchayat would be of the order of 4,000 in the State of Tamil Nadu and that there should be a village officer, a village clerk and a village peon in respect of each such enlarged village panchayat and on appointment to these offices, the holders of village offices appointed under, the two repealed statutes and the Board 's Standing orders should be removed and the former village offices should be abolished since the Commission felt that "the administration at the grass root level, provided by the present generation of village officers with feudal traditions, is inconsistent with the egalitarian principles aimed at in our democratic constitution".
The Commission further felt that "the reform of village administration has high priority, as it would benefit the whole mass of rural population." The Commission, however, took note of the fact in paragraph 2.11 of its Report that the Government had, in the recent years, attempted to remedy the situation by repealing the Madras Hereditary Village offices Act, 1895 and by framing a set 640 Of new service rules for village establishment under Article 309 of the Constitution.
But it was of the opinion that the said Rules, however, did not go far enough as they were not applicable to the existing set of village officers.
It was of the view that full time officers could be expected to service a much larger area than the existing villages or groups of villages and such regrouping of villages into larger groups had to be done carefully taking into account local conditions such as compactness of the group, easy intercommunications, nature of land, number of holdings etc.
The Commission, however, was of the view that such of those among the existing village headmen and karnams, who had passed the S.S.L.C. Examination might be considered for the posts of the village officers and village clerks on their past performance.
Similarly as regards village officers working in the Kanyakumari district and the Shencottah taluk of the Tirunelveli district which came over to the State of Tamil Nadu from Kerala in 1956 on the reorganisation of States, the Commission observed that l most of the village officers of those transferred territories who were qualified and full time Government servants should be absorbed in the new set up as envisaged by the Commission.
On May 17,1975, the Governor of Tamil Nadu promulgated the Tamil Nadu Village officers (appointed under B.S. Os) Service Rules, 1974 under the proviso to Rule 309 of the Constitution in respect of the village officers appointed prior to December 16, 1970.
The above Rules were, however, kept in abeyance by an order made on July 1, 1975 on receipt of representations from the village officers in regard to the fixation of the age of superannuation at SS years.
On August 24,1977, the Chief Minister of Tamil Nadu announced on the floor of the Legislative Assembly that the Government proposed to set up a Committee to .
examine whether the posts of karnams could be dispensed with.
Thereafter on October 9,]978, the Tamil Nadu Village officers (appointed under B.S.Os) Service Rules, 1978 were issued fixing the age of retirement of the village officers at 60 years.
Sub rule (2) of & Rule I of the said Rules stated that the said Rules would apply to all village officers holding the posts of village headman or additional village headman, village karnam or additional village karnam, talayari, vetti or nirganti either permanently or temporarily on December 16, 1970 provided that at the time of their appointment, they were qualified under the Board 's Standing orders.
The Government thought that the said Rules would be applicable to all village officers who were holding village offices on December 16,1970 refer 641 red to in Rule 1(2).
But some of the holders of the village offices who had been appointed under the Madras Act No. III of 1895 prior to the decision of this Court in Gazula Dasaratha Rama Rao 's case (supra) which as rendered on December 6, 1960, filed writ petitions on the file of the High Court of Madras stating that the Tamil Nadu Village officers (appointed under the b.) Service Rules, 1978 which fixed the age of superannuation of village officers at 60 years were not applicable to them since on a true construction of the said Rules, they were inapplicable to them.
The High Court of Madras allowed the said writ petitions by its judgment dated August 18, 1980 holding: "We have already extracted sub rule (2) of rule 1 of the rules.
That rule expressly states that the rules will apply to village officers, who, at the time of their appointment, were qualified under the Board 's Standing orders applicable to them and their appointment had been made by the authority competent under the Board 's Standing orders.
In respect of these petitioners, who were appointed under the provisions of Madras Act 3 of 1895 before 6th December, 1960, there was no question of their being qualified to be appointed to the village office under the Board 's Standing orders applicable to them, and their qualifications and appointment rested solely on the provisions contained in Section 10 of the Act.
Consequently the petitioners herein will not answer the description contained in sub rule (2) of rule (1) of the rules.
If they do not answer the description contained in sub rule (2) of rules, the rules are not applicable to them and therefore, they can not be required to retire under rule 4 (1) of the rules.
" It would appear that some of the other village officers to whom the said Rules had been made applicable had also filed writ petitions on the file of the High Court questioning the validity of the Rules on the ground that the said Rules made a discrimination between them and the village officers who were holding office prior to December 16, 1970 to whom the said Rules were held to be inapplicable by the judgment of the High Court delivered on August 18, 1980 and those petitions were posted for hearing during the first week of December, 1 980.
Before the said petitions were taken up for hearing the Governor of Tamil Nadu issued the ordinance on November 13, 1980 abolishing the posts of part time village officers in the State of Tamil Nadu.
Immediately after the promulgation of the ordinance, steps were taken to take possession of all the records with the village officers who were holding offices on that day and to replace them by Officers appointed under 642 section 14 of the ordinance.
Immediately after the promulgation of the said ordinance, some of the village officers who were affected by it questioned its validity before this Court in Writ Petitions Nos.
5880 82 of 1980 and 5921 of 1980.
The other connected writ petitions came to be filed thereafter.
In the meanwhile the Tamil Nadu State Legislature passed the Act which is impugned in these petitions replacing the ordinance.
The petitioners have challenged in these writ petitions the Act also by seeking appropriate amendment of their petitions.
The broad features of the Act are these: The object of the Act is set out in its preamble.
Because the State Government was of the opinion that the system of part time village officers was outmoded and did not fit in with the modern needs of village administration and the State Government had after careful consideration taken a policy decision to abolish all the posts of part time village officers on grounds of administrative necessity and to introduce a system of whole time officers to be incharge of village administration, the Act came to be enacted with effect from November 14, 1980 in the place of the ordinance.
The Explanatory Statement attached to the ordinance also contained a statement to the same effect indicating the object of the Ordinance.
The expression 'part time village officers ' is defined in section 2 (e) of the Act as village headman (including additional village (headman village) karnam (including chief karnam and additional village karnam) or Triune officer (who was exercising functions of three different village officers) appointed under the Madras Act II of 1894, the Madras Act III of 1895, the Board 's Standing orders, the Tamil Nadu village Service Rules, 1970 officers Kuvalar, or any other law but does not include, Grama Kavalar Grama Paniyalar and Pasana Kavalar.
Village Administrative officer means an officer appointed under section 4(1) of the Act.
By sec.
3 of the Act, the posts of part time village officers were abolished with effect from November 14, 1980 and every officer holding post so abolished ceased to hold such post.
The Act provided for appointment of Village Administrative officers.
Section 5 of the Act provided for payment of compensation to those who ceased to be part time village officers calculated in accordance with the formula mentioned in it.
Section 10 of the Act provided that the Act would not apply to the posts of karnams which were held by whole time Government servants in the city of Madras and the posts of village officers and village assistants which were held by the whole 643 time Government servant in the Kanyakumari district and Shencottah taluk of the Tirunelveli districts.
Three principal points are urged before us by the petitioners in these petitions (i) that the ordinance and the Act are violative of article 19(1)(g) of the Constitution, (ii) that they are violative of Article 311 (2) of the Constitution and (iii) that they contravene Article 14 of the Constitution.
The State Government contends that since by the ordinance and the Act, certain posts have been abolished, the officials who were incumbents of the abolished posts cannot raise any of the grounds raised by them.
Entry 41 in List II of the Seventh Schedule to the Constitution confers the power on the State Legislature to make laws with respect to State public services subject to the provisions of the Constitution.
Article 309 of the Constitution provides that subject to the provisions of the Constitution, the State Legislature may regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the State.
Article 311 (2) of the Constitution states that no person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the State shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a L reasonable opportunity of being heard in respect of those charges.
Article 14 of the Constitution guarantees equality before the law and equal protection of the laws.
It is not disputed that any law that is passed in relation to a Government employee should not contravene any of these provisions Article 19 (1)(g), Article 311 (2) and Article 14 of the Constitution.
We shall now proceed to examine the case with reference to each of them.
The power to abolish a civil post is inherent in the right to create it.
The Government has always the power, subject, of course, to the constitutional provisions, to reorganise a department to provide efficiency and to bring about economy.
It can abolish an office or post in good faith.
The action to abolish a post should not be just a pretence taken to get rid of an inconvenient incumbent.
We have the following statement of the law in American Jurisprudence 2nd, Vol. 63 at Pages 648 649 : 644 "37.
Manner, sufficiency, validity, and effect.
It is not always easy to determine whether a public office has been abolished.
It is not sufficient merely to declare that a particular office is abolished, if in fact it is not abolished, and the duties thereof are continued.
An office is abolished when the act creating it is repealed.
But the repeal of the statute creating an office, accompanied by the re enactment of the substance of it, does not abolish the office.
Abolition of an office may also be brought about by a constitutional provision, or by a new constitution or a constitutional amendment.
A non constitutional office may be indirectly abolished as by legislating away the duties and emoluments of the office.
The legislature may not evade constitutional provisions by a sham or pretended abolition of an office, as where there is mere colorable abolition of the office for the purpose of getting rid of its incumbent.
This may happen where an office is abolished in terms and promptly recreated under the same or a different name, provided the legislature does not attach duties and burdens to the new office of a character such as to make it in reality a different office.
Where an office is duly abolished by the legislature or the people, it ceases to exist and the incumbent is no longer entitled to exercise the functions thereof, or to claim compensation for so doing, unless he is under contract with the state so as to come within the protection of the constitutional inhibition against impairment of the obligation of contract.
Since a de jure office is generally essential to the existence of a de facto officer, persons cannot act as de facto officers of an office which has been abolished.
" H. Eliot Kaplan writes in his book entitled "The Law of Civil Service" at pages 214 115 thus : "8. "Good Faith" in Abolition of Positions There of course, is no vested right to employment in the public service.
The notion, much too prevalent, that any one who has been appointed after a competitive examination is entit 645 led to be retained in the service is erroneous.
Where there is any reasonable justification for eliminating positions in the public service, even where such abolition of positions may be subject to judicial review, the inclination of the courts is not to interfere, avoiding substitution of judicial wisdom or judgment for that of the administrator.
A position is not lawfully abolished solely because it has been left vacant for a short period of time and subsequently filled by another appointee than the one laid off and entitled to re employment.
Good faith of a head of department in abolishing a position on alleged grounds of economy has often been challenged.
Most courts have held that the issue of good faith on the part of an administrative official is one of law solely for the court to pass on, and not an issue of fact which may be submitted to a jury for determination.
The jury may determine the facts, which the court in turn may find as a matter of law constitute bad faith; but a verdict by a jury that a department head had acted in bad faith in abolishing a position was set aside as a conclusion of law, and not properly finding of fact.
What constitutes bad faith as a matter of law in abolishing positions must be determined by the precise facts in each case.
As a general rule, where positions are purported to be eliminated and incumbents laid off, and thereafter identical or similar positions are re established and the positions filled by others not entitled under the Civil service law and rules to such employments, the courts will not hesitate to order re employment of the laid off employees.
" The above passages sum up the law on the question of abolition of posts in civil service as it prevails in United States of America.
In England too there is provision for compulsory premature retirement in the public interest on structural grounds, grounds of limited efficiency and redundancy.
(Vide paragraph 1303, Vol.
8 Halsbury 's Laws of England 4th Edn.) 646 In the instant case, the abolition of the posts of village officers is sought to be achieved by a piece of legislation passed by the State Legislature.
Want of good faith or malafides cannot be attributed to a Legislature.
We have only to see whether the legislation is a colourable one lacking in legislative competence or whether it transgresses any other constitutional limitation.
So far as the argument based on Article 19 (1) (g) of the Constitution is concerned, we are bound by the view expressed by the Constitution Bench of this Court in Fertilizer Corporation Kamgar Union (Regd), Sindri & Ors.
vs Union of India & Ors.
in which Chandrachud, C.J. has observed at pages 60 61 thus : "The right to pursue a calling or to carry on an occupation is not the same thing as the right lo work in a particular post under a contract of employment.
If the workers are retrenched consequent upon and on account of the sale, it will be open to them to pursue their rights and remedies under the Industrial Laws.
But the point to be noted is that the closure of an establishment in which a workman is for the time being employed does not by itself infringe his fundamental right to carry on an occupation which is guaranteed by Article 19 (1) (g) of the Constitution.
Supposing a law were passed preventing a certain category of workers from accepting employment in a fertiliser factory, it would be possible to contend then that the workers have been deprived of their right to carry on an occupation.
Even assuming that some of the workers may eventually have to be retrenched in the instant case, it will not be possible to say that their right to carry on an occupation has been violated.
It would be open to them, though undoubtedly it will not be easy, to find out other avenues of employment as industrial workers.
Article 19 (1) (g) confers a broad and general right which is available to all persons to do work of any particular kind and of their choice.
It does not confer the right to hold a particular job or to occupy a particular post of one 's choice.
Even under Article 311 of the Constitution, the right to continue in service falls with the abolition of the post in 647 which the person is working.
The workers in the instant case can no more complain of the infringement of their fundamental right under Article 19 (1) (g) than can a Government servant complain of the termination of his employment on the abolition of his post.
The choice and freedom of the workers to work as industrial workers is not affected by the sale.
The sale may at the highest affect their locum, but it does not affect their locus, to work as industrial workers.
This is enough unto the day on article 19 (1) (g).
" In view of the above ruling, it is not possible to hold that the Act violates Article 19 (1) (g) as it does not affect the right of any of the incumbents of the posts to carry on any occupation of their choice even though they may not be able to stick on to the posts which they were holding.
We shall next examine the argument based on Article 311 (2) of the Constitution.
We have already seen in the Fertilizer Corporation Kamgar Union 's case (supra) the observation to the effect 'Even under Article 311 of the Constitution, the right to continue in service falls with the abolition of the post in which the person is working. ' It is said that the 'act of removing a person from a chair is different from the act of removal of the chair itself ' although the incumbent loses the chair in both the cases.
Since it is.
strenuously urged before us that there is some amount of contradiction in some of the rulings of this Court, we shall review the legal position to the extent necessary before reaching our own conclusion on the question.
The doctrine that the tenure of a holder of a civil post is dependent upon the pleasure of the Crown is peculiar to English law.
In India, Article 310 of the Constitution of India provides : "310 (1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of an all India service or holds any post connected with defence or any civil post .
under the Union holds office during the pleasure of the President, and every Person who is a member of a civil 648 service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State.
(2) Notwithstanding that a person holding a civil post under the Union or a State holds office during the pleasure of the President or, as the case may be, of the Governor of the State, any contract under which a person, not being a member of a defence service or of an all India service or of a civil service of the Union or a State, is appointed under the Constitution to hold such a post may, if the President or the Governor, as the case may be, deems it necessary in order to secure the services af a person having special qualifications, provide for the payment to him of compensation, if before the expiration of an agreed period that post is abolished or he is, for reasons not connected with any misconduct on his part, required to vacate that post.
" While the doctrine of pleasure incorporated in Article 310 cannot be controlled by any legislation, the exercise of that power by the President or the Governor, as the case may be, is however made subject to the other provisions of the Constitution, one of them being Article 311, which is not made subject to any other provision of the Constitution and is paramount in the field occupied by it.
The contention urged before us is that every kind of termination of employment under Government would attract Article 311 (2) of the Constitution and a termination on the abolition of the post cannot be an exception.
While construing Article 311 (2) of the Constitution, as it stood then, in Parashotam Lal Dhingra vs Union of India, Das, C.J. Observed : "The Government cannot terminate his service unless it is entitled to do so (I) by virtue of a special term of the contract of employment, e.g., by giving the requisite notice provided by the contract or (2) by the rules governing the conditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfillment of rule conditions for compulsory retirement or subject to certain safeguards, on the abolition of the post or on being 649 found guilty, after a proper enquiry on notice to him, of misconduct, negligence, inefficiency or any other disqualification." (emphasis added) Again at pages 857 858 in the same judgment, the learned Chief Justice observed : "The foregoing conclusion, however, does not solve the entire problem, for it has yet to be ascertained as to when an order for the termination of service is indicted as and by way of punishment and when it is not.
It has already been said that where person is appointed substantively to a permanent post in Government service, he normally acquires a right to hold the post until under the rules, he attains the age of superannuation or is compulsorily, retired and in the absence of a contract, express or implied, or a service rule, he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or other disqualifications and appropriate proceedings are taken under the service rules read with article 311 (2).
" (emphasis added) It may be mentioned here that the words "subject to certain safeguards" found in the earlier extract are not used with reference to abolition of posts in the above extract.
Later on, Das, C.J observed that the Court should apply two tests namely (1) whether the servant had a right to the post or the rank or (2) whether he had been visited with evil consequences such as loss of pay and allowances, a stigma affecting his future career in order to determine whether the removal of an officer from a post attracted Article 311 (2).
The decision in Parshotam Lal Dhingra 's case (supra) was reviewed by a Bench of seven Judges of this Court in Moti Ram Deka etc.
vs General Manager, N.E.F. Railways, Maligaon, Pandu vs etc.
In that case the question which arose for consideration was whether Rules 148 (3) and 149 (3) of the Indian Railway Establishment Code violated either Article 311 (2), or Article 14 of the Constitution.
Sub rules (1) and (2) of Rule 148 dealt with temporary railway servants and apprentices respectively.
The relevant part of Rule 148 (3) read thus : 650 "148 (3) other (non pensionable) railway servant: The service of other (non pensionable) railway servants shall be liable to termination on notice on either side for the periods shown below.
Such notice is not however required in cases of dismissal or removal as a disciplinary measure after compliance with the provisions of Clause (2) of Article 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity.
" Rule 149 was brought into force in the place of Rule 148 in the case of pensionable servants in November, 1957.
Here again, sub rules (1) and (2) of Rule 149 dealt with temporary railway servants and apprentices.
Rule 149 (3) read thus: "149 (3) other railway servants: The services of other railway servants shall be liable to termination on notice on either side for the periods shown below.
Such notice is not however, required in cases of dismissal or removal as a disciplinary measure after compliance with the provisions of clause (2) of Article 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity.
" The majority judgment in this case, however, observed that a Government servant on being appointed to a post permanently acquired a right to hold the post under the Rules until he attained the age of superannuation or was compulsorily retired or was found guilty of an act of misconduct in accordance with Article 311(2).
It disapproved the statement found in Parshotam Lal Dhingra 's case (supra) at pages 857 858 to the extent it recognised the removal of a permanent Government servant under a contract express or imp lied or a service rule.
After referring to one passage at page 841 and another at page 843 in Parsotam Lal Dhingra 's case, Gajendragadkar, J. (as he then was), who delivered the majority judgment in Moti Ram Deka 's case (supra) observed at pages 718 719 thus: 'Reading these two observations together, there can be no doubt that with the exception of appointments held under special contract, the Court took the view that wherever a civil servant was appointed to a permanent post substantively, he had a right to hold that post until.
he reach ed the age of superannuation or was compulsorily retired, 651 or the post was abolished.
In all other cases, if the services of the said servant were terminated, they would have to be in conformity with the provisions of article 311(2), because termination in such cases amounts to removal.
The two statements of the law to which we have just referred do not leave any room for doubt on this point." (emphasis added) It may be noticed that removal of a Government servant from a post on its abolition is recognised in the above passage as a circumstance not attracting Article 311(2) of the Constitution.
The Court after a review of all the decisions before it including the decision in Parshotam Lal Dhingra 's case (supra) held that the above two Rules 148 (3) and 149 (3) which authorised the removal officers holding the posts substantively by issuing a mere notice infringed Article 311 (2) of the Constitution.
The question of abolition of posts did not arise for consideration in this case.
The validity of removal of a Government servant holding a permanent post on its abolition was considered by Desai, J. and Chandrachud, J. (as he then was) in P.V. Naik & Ors.
vs State of Maharashtra & Anr.(1) The learned Judges held that the termination of service of a Government servant consequent upon the abolition of posts did not involve punishment at all and therefore did not attract Article 311(2).
Since much reliance is placed by the petitioners on the decision of this Court in State of Mysore vs H. Papanna Gowda & Anr.
etc.(2) it is necessary to examine that case in some detail.
The facts of that case were these: The respondent in that case was holding the post of a chemical assistant in the Agricultural Research Institute, Mandya in the Department of Agriculture of the State of Mysore.
Under the Mysore University of Agricultural Sciences Act, 1963 which came into force on April 24, 1964, the University of Agricultural Sciences was established.
Sub section (5) of section 7 of that Act provided: "7.
(5) Every person employed in any of the colleges specified in sub section (1) or in any of the institutions referred to in sub section (4) immediately before the appointed 652 day or the date specified in the order under sub section (4), as the case may be, shall, as from the appointed day or the specified date, become an employee of the University on such terms and conditions as may be determined by the State Government in consultation with the Board.
" The Board referred to in the above sub section was the Board of Regents of the University.
By a notification dated September 29, 1965 issued under section 7(4) and (5) of that Act, the control and management of a number of research and educational institutions under the Department of Agriculture were transferred to the University.
Alongwith them, the Institute in which the respondent was working was also transferred to the University.
The result was that the respondent ceased to be an employee of the State Government and became an employee of the University.
Thereupon he questioned the validity of sub sections (4) and (5) of section 7 of the said Act on the ground that they contravened Article 311(2) of the Constitution before the High Court of Mysore, which upheld his plea.
The State Government questioned the decision of the High Court before this Court in the above case.
This Court affirmed the decision of the High Court holding that Article 311(2) of the Constitution had been contravened as the prospects of the respondent in Government service were affected.
In this case the parties proceeded on the basis that there was no abolition of post as such as can be seen from the judgment of the High Court.
The only ground was whether when the post continued to exist though under a different master, in this case it being the University, it was open to the State Government to transfer its employee to the control of a new master without giving an option to him to state whether he would continue as a Government employee or not.
The court was not concerned about the consequences of abolition of a post as such in this case.
As can be seen from the judgment of the High Court in this case (vide Papanna Gowda vs State of Mysore(1) one serious infirmity about the impugned provisions was that whoever was holding the post in any of the institutions transferred to the University automatically ceased to be the Government servant.
Even if the case was one where abolition of the post was involved, the law should have made provision for the determition of the employees in the cadre in question who would cease to be 653 Government employees with reference to either the principle of 'last come, first go ' or any other reasonable principle and given them an option to join the service under the new master instead of just transferring all the employees who were then working in the institutions to the University.
The impugned provisions were not rules dealing with the age of superannuation or compulsory retirement.
Nor the case was dealt with on the principle of abolition of posts.
The decision in this case takes its colour from the peculiar facts involved in it.
One principle that may be deduced from this decision is that if a post is not a special post and its incumbent is a member of a cadre his rights as a member of the cadre should be considered before deciding whether he has cased to be a government employee on the abolition of the post.
It is likely that on such scrutiny the services of another member of the cadre may have to be terminated on its abolition or some other member of the cadre may have to be reverted to a lower post from which he may have been promoted to the cadre in question by the application of the principle of 'last come, first go '.
If, however, where the post abolished is a special post or where an entire cadre is abolished cadre and there is no lower cadre to which the members of the abolished can reasonably be reverted, the application of this principle may not arise at all.
In the circumstances, the petitioners cannot derive much assistance from this decision.
The question whether Article 311(2) would be contravened if Government servant holding a civil post substantively lost his employment by reason of the abolition of the post held by him directly arose for consideration before this Court in M. Ramanatha Pillai vs The state of Kerala & Anr.(1) Two points were examined in that case: (i) whether the Government had a right to abolish a post in a service and (ii) whether abolition of a post was dismissal or removal within the meaning of Article 311 of the Constitution.
The Court held that a post could be abolished in good faith but the order abolishing the post might lose its effective character if it was established to have been made arbitrarily, mala fide or as a mask of some penal action within the meaning of Article 311 (2).
After considering the effect of the decisions in Parashotam Lal Dhingra 's case (supra), Champaklal Chimanlal Shah vs The Union of India,(2) 654 Moti Ram Deka 's case (supra), Satish Chandra Anand vs The Union of India (1) and Shyam Lal vs State of U.P. and Union of India.(2) This Court observed in this case at page 526 thus: "The abolition of post may have the consequence of termination of service of government servant.
Such termination is not dismissal or removal within the meaning of Article 311 of the Constitution.
The opportunity of showing cause against the proposed penalty of dismissal or removal does not therefore arise in the case of abolition of post.
The abolition of post is not a personal penalty against the government servant.
The abolition of post is an executive policy decision.
Whether after abolition of the post, the Government servant who was holding the post would or could be offered any employment under the State would therefore be a matter of policy decision of the Government because the abolition of post does not confer on the person holding the abolished post any right to hold the post.
" The true effect of the decision in Moti Ram Deka 's case (supra) on the question of applicability of Article 311 (2) of the Constitution to a case of abolition of post has been clearly explained in this case and we have very little to say anything further on it.
Suffice it to say that the Moti Ram Deka 's case (supra) is no authority for the proposition that Article 311 (2) would be attracted in such a case.
The above view was followed by this Court in State of Haryana vs Des Raj Sangar & Anr.(1) to which one of us (Murtaza Fazal Ali, J.) was a party.
Khanna, J. speaking for the Court observed at pages 1037 38 thus: "Whether a post should be retained or abolished is essentially a matter for the Government to decide.
As long as such decision of the Government is taken in good faith the same cannot be set aside by the court.
It is not open to the court to go behind the wisdom of the decision and substitute its own opinion for that of the Government on the point as to whether a post should or should not be 655 abolished.
The decision to abolish the post should, however, as already mentioned, be taken in good faith and be not used as a cloak or pretence to terminate the services of a person holding that post.
In case it is found on consideration of the facts of a case that the abolition of the post was only a device to terminate the services of an employee, the abolition of the post would suffer from a serious infirmity and would be liable to be set aside.
The termination of a post in good faith and the consequent termination of the services of the incumbent of that post would not attract Article 311.
" Before concluding our discussion on this topic, it is necessary to refer to a decision of the Jammu and Kashmir High Court in Abdul Khalik Renzu & Ors.
vs The State of Jammu and Kashmir(1) to which one of us (Murtaza Fazal Ali, J. (as he then was) was a party in which the validity of the abolition of posts constituting the special police squad of the State of Jammu and Kashmir was questioned.
In that case, the High Court while recognising the power of the State Government to abolish the posts and to terminate the services of the incumbents of such posts held that such action could be validly taken only subject to certain safeguards and in the absence of any such safeguards the abolition was bad.
The High Court did not clearly spell out the nature and extent of safeguards referred to therein.
The High Court relied on the words 'subject to certain safeguards, on the abolition of posts ' in the passage occurring at page 841 in Parshotam Lal Dhingra 's case (supra) which is extracted above to reach the conclusion that unless the abolition of posts was accompanied by such safeguards, Article 311 would be infringed.
With respect, it should be stated that the High Court did not notice that in another passage at pages 857 858 in the same decision, which is also extracted above, the abolition of posts referred to therein was unqualified.
In this passage there is no reference to any safeguards at all.
Probably the 'safeguards ' referred to in the passage at page 841 in Parshotam Lal Dhingra 's case (supra) meant an abolition of posts which was in good faith and not a pretence of abolition of a post resorted to in order to get rid of its incumbent and the creation of the same post with a different form or name with a new incumbent.
The above view of the High Court of Jammu and Kashmir is however, in conflict with the decision in Ramanatha 656 Pillai 's case (supra) and hence must be considered as having been overruled by this Court.
In modern administrations, it is necessary to recongnise the existence of the power with the Legislature or the Executive to create or abolish posts in the civil service of the State.
The volume of administrative work, the measures of economy and the need for streamlining the administration to make it more efficient may induce the State Government to make alterations in the staffing patterns of the civil service necessitating either the increase or the decrease in the number of posts.
This power is inherent in the very concept of governmental administration.
To deny that power to the Government is to strike at the very roots of proper public administration.
The power to abolish a post which may result in the holder thereof ceasing to be a Government servant has got to be recognised.
But we may hasten to add that any action legislative or executive taken pursuant to that power is always subject to judicial review.
It is no doubt true that Article 38 and Article 43 of the Constitution insist that the State should endeavour to find sufficient work for the people so that they may put their capacity to work into economic use and earn a fairly good living.
But these articles do not mean that every body should be provided with a job in the civil service of the State and if a person is provided with one he should not be asked to leave it even for a just cause.
If it were not so, there would be no justification for a small percentage of the population being in Government service and in receipt of regular income and a large majority of them remaining outside with no guaranteed means of living.
It would certainly be an ideal state of affairs if work could be found for all the able bodied men and women and everybody is guaranteed the right to participate in the production of national wealth and to enjoy the fruits thereof.
But we are today far away from that goal.
The question whether a person who ceases to be a Government servant according to law should be rehabilitated by giving an alternative employment is, as the law stands today, a matter of policy on which the Court has no voice.
On a fair construction of the provisions of Article 311 (2) of the Constitution and a consideration of the judicial precedents having a bearing on the question, we are of the view that it is not possible to hold that the termination of service brought about by 657 the abolition of a post effected in good faith attracts Article 311 (2).
An analysis of Article 311 (2) shows that it guarantees to a person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post the right to defend himself in any proceeding leading to his dismissal, removal or reduction in rank.
It requires that in such a case an inquiry should precede any such action, at that inquiry he should be informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges.
Where it is proposed after such inquiry to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such inquiry and it shall not be necessary to give such person any opportunity of making representation on the penalty proposed.
The second proviso to Article 311 (2) of the Constitution sets out the circumstances when that clause would not apply.
These provisions show that Article 311 (2) deals with the dismissal, removal, or reduction in rank as a measure of penalty on proof of an act of misconduct on the part of the official concerned.
This fact is emphasised by the introduction of the words 'an inquiry in which he has been informed of the charges against him ' in article 311(2) when it was substituted in the place of the former clause (2) of Article 311 by the Constitution (Fifteenth Amendment) Act, 1963 which came into force on October 5, 1963.
In the circumstances, it is difficult to hold that either the decision in Moti Ram Deka 's case (supra) or the decision in Papanna Gowda 's case (supra) lays down that the provisions of Article 311 (2) should be complied with before the services of a Government servant are terminated as a consequence of the abolition of the post held by him for bona fide reasons.
In view of the foregoing, it cannot be said that the Act impugned in these petitions by which the village offices in the State of Tamil Nadu were abolished contravenes Article 311(2) of the Constitution.
We have now to consider the submission based on Article 14 of the Constitution.
This aspect of the case has to be examined from two angles (i) whether the step taken by the Legislature to abolish the village offices in question is so arbitrary as to conflict with Article 14 of the Constitution and (ii) whether unequals have been treated as equals by the Legislature.
While dealing with the first point it is to be observed that the posts of village officers which were governed by the Madras Act II of 1894, the Madras Act III of 1895 and the Board 's Standing Orders 658 were feudalistic in character and the appointments to those posts were governed by the law of primogeniture, the family in which the applicant was born, the village in which he was born, and the fact whether he owned any property in the village or not.
Those factors are alien to modern administrative service and are clearly opposed to Articles 14 and 16 of the Constitution.
No minimum educational qualifications had been prescribed.
It was enough if the applicants knew reading and writing in the case of some of them.
The posts were not governed by the regular service rules applicable generally to all officials in the State service.
Rightly therefore, the Administrative Reforms Commission recommended their abolition and reorganisation of the village service.
The relevant part of the Report of the Administrative Reforms Commission reads thus: "The concept of service was conspicuously absent in this relationship.
Village officers were part time employees and not subject to normal civil service discipline.
They do not function from public offices where they were expected to receive people and transact public business.
All accounts, survey and registry records were in their private custody.
Villagers had to go to the residences of Village officers and await the latter 's convenience for referring to public records or for getting extracts from them.
This reduced the accessibility particularly of "high caste" village officers to the poor farmers of the "backward and untouchable" communities.
Their emoluments for the part time service, were meagre and appeared to be an honorarium rather than a living wage.
Communications and living conditions in villages being difficult, subordinate inspecting officers were dependent on the private hospitality of village officers during their official visits.
These factors led to the village officers developing an attitude of condescension in their dealings with villagers.
Even though the hereditary principle was held to be unconstitutional recently, the members of their families still get preferential treatment, even if informally, in filling up vacant offices.
In recent times, village officers have generally ceased to be leading and affluent riots and are reduced to earn their livelihood largely through the misuse of their position.
" 659 The problems involved in the reorganisation of Revenue villages in Tamil Nadu were also discussed in the Report of Mr. S.P. Ambrose, I.A.S. submitted to the State Government in January, 1980.
In the course of the Report, he observed: "4.2 Reorganization of Revenue Villages 4.2.1.
In view of the considerable increases in the total beriz of villages, particularly those with extensive irrigated areas, new rules for the regulation and distribution of water in the project areas and in old ayacut areas, and the reduced work and responsibilities of the talayaris on account of the increase in the strength of the regular Police establishments the norms, for determining the strength of the villagee establishment, as laid down in B.P. Ms. No. 324, dated the 9th December 1910, read with B.P. Ms. No. 231, dated the 23rd February 1921, no longer held good.
4.2.2.
The size of the survey villages vary widely; 4.77 hectares is the extent of the smallest village and 20,947 hectares is the extent of the biggest village.
In terms of population, the smallest has population of 33, while the largest has a population of 12,777.
Even though survey villages have been grouped to form convenient revenue groups for purposes of village administration, the size of revenue groups also vary widely.
With the increases in the area cultivated, area irrigated (both from Government and private sources) and the number of pattas the work load in most villages has increased considerably now.
The question for consideration is whether a comprehensive exercise to reorganise the revenue villages into convenient and viable village administrative units with reference to the existing work load should be attempted, and thereafter to revise the strength of the village establishment by laying down fresh norms for determing its strength.
This will be a major administrative exercise.
If convenient village administrative units with, more or less, equal work load are to be constituted, several factors like area cultivated (gross and net), area irrigated, crop pattern, population, number of pattadars and beriz have to be taken into account 660 Before this is attempted, the major policy issue is whether to continue the present part time system of village officers or to have regular, transferable Government servants as Village Officers in charge of bigger administrative units as recommended by the Administrative Reforms Commission." Having regard to the abolition of similar village offices in the neighbouring States of Karnataka and Andhra Pradesh and the agitation in the State of Tamil Nadu for reorganisation of village service, it cannot be said that the decision to abolish the village offices which were feudalistic in character and an achronisms in the modern age was arbitrary or unreasonable.
Another aspect of the same question is whether the impugned legislation is a colourable one passed with the object of treating the incumbents of village offices in an unjust way.
A similar contention was rejection by this Court in B.R. Shankaranarayana and Ors.
vs The State of Mysore and Ors.(1) in which the validity of the Mysore Village Offices Abolition Act (14 of 1961) which tried to achieve more or less a similar object arose for consideration, with the following observations at pages 1575 1576: "(13) As pointed out by this Court in Gajapati Narayan Deo 's case; , , the whole doctrine of colourable legislation resolves itself into the question of competency of a particular legislature to enact a particular law.
If the legislature is competent to pass the particular law, the motives which impel it to pass the law are really irrelevant.
It is open to the Court to scrutinize the law to ascertain whether the legislature by device, purports to make a law which, though in form appears to be within its sphere, in effect and substance, reaches beyond it.
(14) Beyond attempting the argument that the impugned Act is a piece of colourable legislation, learned Counsel for the appellant has not succeeded in substantiating his contention that the Act and the rules made there under are merely a device for removing the present incumbents from their office.
The provisions of the Act and the 661 rules made thereunder plainly provide for the abolition of hereditary village offices and make those offices stipendiary posts.
The Act makes no secret of its intention to abolish the hereditary posts.
(15) It is argued that even after abolition, the same posts are sought to be continued.
It is no doubt true that the names of the offices have not been changed but there is a basic structural difference between the posts that have been abolished.
The posts created by the new Act are stipendiary posts.
They carry salaries according to the grades created by the rules.
The incumbents are transferable and their service is pensionable.
Different qualifications are prescribed for the new posts.
From a consideration of the incidents attaching to the new posts it is clear that the old posts have been abolished and new posts have been created and that the whole complexion of the posts has been changed.
(16) The result is that in our opinion the impugned Act cannot be held to be a piece of colourable legislation and as such invalid.
" A learned discussion on all the points raised in the above case is found in the judgment of the High Court of Mysore in B.H. Honnalige Gowda vs State of Mysore and Anr.(1) Hence the above contention has to be rejected.
The next contention of the petitioners which is of some substance and which is based again on Article 14 needs to be examined here.
It is seen from section 2 (e) of the Act that the expression 'part time village officer ' is defined as follows: "2.
(e) "part time village officer" means Village Headman (including Additional Village Headman, Village Karnam (including Chief Karnam and Additional Village Karnam) or Triune Officer appointed under 662 (i) the Madras Proprietary Estates ') Village Service Act, 1894 (Madras Act II of 1894) or the Madras Hereditary Village offices Act, 1895 (Madras Act III of 1895); (ii) the Board 's Standing orders; (iii) the Tamil Nadu Village officers Service Rules, 1970 or any other rules made under the proviso to Article 309 of the Constitution; or (iv) any other law, but does not include Grama Kuvalar, Grama Paniyalar and Pasana Kavalar;" By section 3 of the Act, the posts held by the part time village officers, as defined above, are abolished.
As a consequence of the above provision not merely posts of officers appointed under the Madras Act No. II of 1894, the Madras Act No. III of 1895 and the Board 's Standing orders prior to December 16, 1970 but also the posts held by officers appointed after that date under the Rules made under the proviso to Article 309 of the Constitution i.e. The Tamil Nadu Village Officers Service Rules, 1970 or any other rule made by the Governor have been abolished.
It is argued that the abolition of posts of officials appointed after December 16, 1970 under the Rules made under the proviso to Article 309 of the Constitution is violative of Article 14 of the Constitution.
We have given our anxious consideration to this submission.
Any classification should satisfy two tests (i) that there exists an intelligible differentia between those who are grouped together and those who are not included in the group and (ii) that there exists a reasonable nexus between the differentia and the object for which classification is made.
As stated earlier the object of the impugned legislation is to abolish posts which were part time in nature and which had come into existence under laws which were feudalistic in character and to replace them by posts held by new incumbents who are recruited under it.
The question for consideration is whether the grouping together of the part time posts mentioned in section 2 (e) of the Act is unconstitutional.
There is no dispute that upto December 16, 1970 all appointments to village offices were being made under the two Madras Acts referred to above and the Board 's 663 Standing orders on the basis of factors dealt with above.
But after December 16, 1970, recruitment was being made in accordance with the Tamil Nadu Village Officers Service Rules, 1970 By the said Rules a new service of part time village officers was constituted.
Rule 5 thereof prescribed the minimum educational qualification and the tests which an applicant had to be eligible for being appointed.
The Rules fixed the age of superannuation at 55 years.
But even under these Rules, the persons who were appointed were part time village officers who were paid a fixed amount every month by way of remuneration.
The nature of duties performed by them and the responsibilities they had to discharge were also the same.
The posts held by them were non pensionable posts.
Under the Act and the Rules framed thereunder, the village administrative officers to be appointed are to be recruited directly.
No person shall be eligible for appointment to the post of a village administrative officer unless he possesses the minimum general educational qualification referred to in Rule 12 (a) (i) of Part II of the Tamil Nadu State Subordinate Services Rules and prescribed Schedule I to the said Part II.
Every person appointed to the post has within a period of one year from the date on which he joins duty to undergo the training and pass the tests prescribed by Rule 9 of the Rules made under the Act.
Every person appointed as a village administrative officer is liable to be transferred from one place to another.
The age of superannuation is fixed at 58 years.
The said posts are no longer part time posts and the holders thereof are full time Government officials entitled to draw salary every month in the scale of Rs. 350 10 420 15 600 and other allowances and these posts are pensionable posts.
It is also to be seen from the recommendations of the Administrative Reforms Commission and other material placed before us that the revenue village will be reorganised so as to form viable administrative units which would require the services of a whole time village administrative officer.
The area under a village administrative officer is much larger than many of the existing revenue villages.
When such reorganisation of the village administration is contemplated, it would not be possible to allow charges of diverse sizes to continue to remain in any part, of the State of Tamil Nadu.
In these circumstances, even though the village officers appointed after December 16, 1970 are in a way different from the village officials appointed prior to that date, they too cannot be equated with the new village administrative officers who will be appointed under the Act and the Rules made thereunder.
664 It cannot, therefore, be held that Article 14 of the Constitution has been violated in abolishing the posts held by those appointed after December 16, 1970.
The petitioners in Writ Petitions Nos. 6191, 6355 and 6356 of 1980 who are holders of village offices in Tiruttani Taluk and Pallipatu area have questioned the impugned Act on the ground that the State Legislature could not pass the law without the previous approval of Central Government as required by the proviso to sub section (4) of section 43 of the (Central Act 56 of 1959).
The area in which these petitioners were working as village officials forms part of the transferred territories transferred from Andhra Pradesh to Tamil Nadu under the aforesaid Act.
Their contention is that since they were working as village officials in the said area prior to the commencement of the above said Act the conditions of their service could not be altered to their prejudice without obtaining the previous approval of the Central Government.
Section 43 of the reads: "43.
Provisions relating to services (1) Every person, who immediately before the appointed day, is serving in connection with the affairs of Andhra Pradesh or Madras shall, as from that day, continue so to serve, unless he is required by general or special order of the Central Government to serve provisionally in connection with the affairs of the other State.
(2) As soon as may be after the appointed day, the Central Government shall by general or special order, determine the State to which every person provisionally allotted to Andhra Pradesh or Madras shall be finally allotted for service and the date from which such allotment shall take effect or be deemed to have taken effect.
(3) Every person who is finally allotted under the provisions of sub section (2) to Andhra Pradesh or Madras shall, if he is not already serving therein, be made 665 available for serving in that State from such date as may be agreed upon between the two State Governments or in default of such agreement, as may be determined by the Central Government.
(4) Nothing in this section shall be deemed to affect, after the appointed day, the operation of the provisions of Chapter I of of the Constitution in relation to the determination of the conditions of service of persons serving in connection with the affairs of Andhra Pradesh or Madras.
Provided that the conditions of service applicable immediately before the appointed day to the case of any person provisionally or finally allotted to Andhra Pradesh or Madras under this section shall not be varied to his disadvantage except with the previous approval of the Central Government.
(5) The Central Government may at any time before or after the appointed day give such directions to either State Government as may appear to it to be necessary for the purpose of giving effect to the foregoing provisions of this section and the State Government shall comply with such directions.
" The answer of the State Government to the above contention is that the petitioners in these petitions are not allotted under section 43 (2) of the above said Act to the State of Tamil Nadu and hence the proviso to sub section (4) of section 43 is not applicable.
The petitioners have not shown any such order of allotment under section 43 (2).
Hence the proviso to sub section (4) of section 43 is not attracted.
Under section 43 (4) of the above said Act, the State Government is entitled to deal with all the officials in the areas transferred to them in accordance with Chapter I of Part XIV of the Constitution.
The above contention is, therefore, rejected.
In the course of the hearing on a suggestion made by the Court, the learned Attorney General filed a memorandum which reads as follows: 666 "All the erstwhile Village officers who possess the minimum general educational qualification as required under the Abolition Act and irrespective of their age (but subject to the rule of retirement framed under the Abolition Act and the Rules framed thereunder) will be screened by a Committee to be appointed by the Government.
They need not make any application and they need not also appear for any test conducted by the Tamil Nadu Public Service Commission for the post of Village Administrative officer.
Guidelines to the Committee will be as follows: (1) Punishment (2) Physical condition.
All the persons selected by the Committee will be appointed by the competent authorities and relaxation in respect of age will be given.
They will be new appointees under the Abolition Act and will be governed by the provisions of the Act and the rules made thereunder.
Compensation will not be available to those who are so appointed.
The remaining vacancies will be filled up from among the candidates already selected by the Tamil Nadu Public Service Commission.
" After the above petitions were filed under the interim order passed in these cases all the officials involved in these cases are being paid the honorarium by the State Government.
Those who fail in these petitions would have become liable to repay the amount which they have thus drawn in excess of the compensation, if any, they may be entitled to.
It is submitted by the learned counsel for the State of Tamil Nadu that the State Government will not take steps to recover such excess amount.
The above statement is recorded.
The attitude displayed by the State Government in filing the memorandum referred to above and in making a statement to the effect that the amount paid pursuant to the interim orders in in excess of the compensation payable the village officials concerned will not be recovered is a highly commendable one and we record 667 our deep appreciation for the laudable stand taken by the Government.
It was, however, strenuously urged by Shri R. K. Garg that those who have to vacate the posts would be without any work and some of them have large families and that compensation, if any, payable to them is very inadequate He urged that it was the duty of the State Government to make adequate provision pursuant to Article 38 and Article 43 of the Constitution.
These Articles are in Part IV of the Constitution.
They are not enforceable by the courts but they are still fundamental in the governance of the country.
The nature of the relationship that exists or ought to exist between the Government and the people in India is different from the relationship between the ruler and his subjects in the West.
A study of the history of the fight for liberty that has been going on in the West shows that it has been a continuous agitation of the subjects for more and more freedom from a king or the ruler who had once acquired complete control over the destinies of his subjects.
The Indian tradition or history is entirely different.
The attitude of an Indian ruler is depicted in the statement of Sri Rama in the Ramayana thus: Kshatrirairdharyate chapo nartshabdo bhavaideeti (Ramayana III 10 3) (Kshatriyas (the kings) bear the bow (wield the power) in order to see that there is no cry of distress (from any quarter).
The duty of the administrator, therefore, is that he should promptly take all necessary steps to alleviate the sufferings of the people even without being asked to do so.
While attending to his duties an administrator should always remember the great saying of the Tamil saint Tiruvalluvar: 668 Do nought that soul repenting must deplore, If thou hast sinned, "its well if thou dost sin no more.
(Let a minister never do acts of which he would have to grieve saying, "What is this I have done", (but) should he do (them), it were good that he grieved not.) (No. 655 in Tirukkural: Translation by Rev. Dr. G.U. Pope and others (Reprint 1970) p. 175).
An administrator 's actions should be such as he is not driven to repent for the mistakes he may have committed.
But if he has committed any mistakes in the past he should try to avoid a repetition of such mistakes.
It is significant that in Tamil language the equivalent of the word 'people ' is 'Makkal ' which is also sometimes used as the equivalent of 'children '.
It is for the State Government to consider what can be done to those who fail in the petitions.
This observation is made particularly in regard to those who were recruited after December 16, 1970 under the rules made under the proviso to Article 309 of the Constitution in view of the fact that their recruitment was not made on the hereditary principle.
Those who have passed S.S.L.C. examination amongst them come within the scope of the statement made by the learned Attorney General.
But those who have merely completed S.S.L.C. examination but not passed it fall outside the scope of that statement even though they have gained experience while they were in office.
We hope and trust that the State Government will look into this matter purely from a humanitarian point of view.
This is only a suggestion and not a direction.
In the result the petitions are dismissed subject to the following: (i) The State Government will give effect to the memorandum filed on its behalf which is incorporated in this judgment in the case of those who possess the minimum general qualifications prescribed under the Act and the Rules made thereunder and who were holding the posts of part time village officers immediately before the Act came into force.
The State Government shall re employ all such persons who have not crossed the age of superannuation and who are selected as per the 669 memorandum in the new cadre within four months from today.
Until they are so selected, they will not be paid any remuneration.
Even if they are re employed, the amount paid to them pursuant to the interim orders will not be recovered from them.
(ii) The compensation, if any, payable by the State Government under section 5 of the Act to those who cease to be village officers shall be adjusted against the amount paid pursuant to the interim orders passed in these cases.
The State Government will not recover from them any amount paid to them pursuant to the interim orders passed in these cases in excess of the compensation, if any, payable to them.
(iii) The interim orders stand vacated with effect from April 15, 1982.
(iv) No costs.
| The Rajasthan Children Act, 1970, provides that any person below the age of 16 years should be presumed to be a child and that a delinquent child should be tried by a Children 's court in accordance with the procedure laid down therein.
The appellant was charged under sections 364 and 302, I.P.C., in connection with an occurrence that took place in Tonk district on March 12, 1973.
A preliminary objection that the Sessions Judge was not competent to try the case of The appellant as he was a child under the provisions of the Children Act was overruled by the trial court.
The revision filed by the appellant against the decision of the trial court was dismissed by the High Court which held that the Children Act was not applicable to the appellant as that Act had not been enforced in Tonk district on the date of the occurrence.
The High Court further held that the appellant had failed to prove that he was below the age of 16 years.
On being directed by this Court to ascertain the actual date of birth, the High Court held that the date of birth of the appellant was September 22, 1956; and, therefore, he was over 16 years on the date of the occurrence.
The High Court rejected the documents produced from the first two schools attended by the appellant which showed his date of birth to be June 22, 1957, for the reason that those documents had not been kept or made by a public officer; it relied on an affidavit furnished by the father of tho appellant while admitting him to the third school in which the date of birth had been changed to September 22, 1956.
The explanation of the appellant 's father that the date of birth had been changed to fulfil the requirement of age under the Rajasthan Board of Secondary Regulations to enable the appellant to appear in the Higher Secondary Examination at the appropriate time was not accepted.
Allowing the appeal, 584 ^ HELD: 1.
(a) The relevant date for applicability of the Rajasthan Children Act, 1970 so far as the age of the accused, who claims to be a child, is concerned, is the date of the occurrence and not the date of the trial as is clear from the provisions of sections 3 and 26 of the Act.
[594 C] (b) At the time of the occurrence, the appellant was undoubtedly a child within the provisions of the Act.
[592 H] (c) The question whether the appellant could be tried as a child if he had become more than 16 years by the time the case went up to the court, does not survive as the Act has now been enforced in the entire State.
A combined reading of sections 3 and 26 clearly shows that the statute takes care of contingencies where proceedings in respect of a child were pending in any court on the date on which the Act came into force.
Section 26 in terms lays down that the court should proceed with the case but after having found that the child has committed the offence it is debarred from passing any sentence but is obliged to forward the child to the Children 's court for passing orders in accordance with the Act.
[592 H; 593 A; 593 F G] (d) The judgment of the Sessions Judge as affirmed by the High Court be set aside and the Additional Sessions Judge, Jaipur, be directed to try the accused and if he gave a finding that the accused was guilty, he shall forward the accused to the Children 's court for receiving sentence in accordance with the provisions of the Act.
[594 E] 2.
There is no legal requirement under section 35 of the Evidence Act that the public or other official book should be kept only by a public officer; all that is necessary is that the document should be maintained regularly by a person whose duty it is to maintain the document.
[588 G; 589 C] Mohd.
Ikram Hussain vs State of U.P., [1964] 5 S.C.R. 86, 100 & Abdul Majid vs Bhargavam, A.I.R. 1963 Ker. 18 referred to.
The Rajasthan Children Act being a piece of social legislation is meant for the protection of infants who commit criminal offences and, therefore, its provisions should be liberally and meaningfully construed so as to advance the object of the Act.
The Children Act was enacted to protect young children from the consequences of their criminal acts on the footing that their mind at that age could not be said to be mature for imputing mens rea as in the case of an adult.
[524 D; 593 H; 594 A] In the instant case there are two documents of two different schools showing the date of birth of the appellant as June 22, 1957 and both these documents have been signed by his father and were in existence ante litem motam.
Hence, there could be no ground to doubt the genuineness of these documents.
At the time when the age of the appellant was first mentioned in the admission form, there was absolutely no dispute about the date of birth and there could Dot have been any motive on the part of the parents to give a false date of birth because it was his first admission to a school at a very early age.
The school to which the appellant was admitted enjoyed good reputation of authenticity.
585 there had been any element of suspicion, the admission register and the scholar 's register would have been corrected by the headmistress of the school.
[591 D; 590 D; 590 H] M/s. Gannon Dunkerlay & Co. Ltd. vs Their Workmen, referred to.
The appellant 's father has given a cogent reason for changing the date of birth and there is no reason for not accepting his explanation particularly because the offence was committed seven years after changing the date of birth.
[592 C]
|
iminal Appeal No.124 of 1966.
Appeal by special leave from the judgment and order dated February 17, 1966 of the Punjab High Court (Circuit Bench) Delhi in Criminal Appeal No. 63 D of 1964.
184 M. C. Chagla E. C. Agarwala, Santosh Agarwala and P. C. Agarwala, for the appellant.
D. Narsaraju and R. N. Sachthey, for the respondents.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Punjab High Court dated February 17, 1966 in Criminal Appeal No. 63 D of 1964 affirming the conviction of the appellant under section 5(2) of the Prevention of Corruption Act (Act 11 of 1947) and section 161 of the Indian Penal Code.
The case of the prosecution is that Miss Eylene (P.W. 2) used to live in 1962 with her father at Fazilka.
She developed illicit connection with someone and became pregnant.
In April 1963.
she went to Ambala to her maternal aunt, who is employed as a sister in the Ambala Air Force Hospital, and give birth to a son there in July 1963.
In August 1963 Miss Eylene along with her newly born son came to the house of her uncle Russel Nathaniel in Andrews Ganj, Delhi.
Since Miss Eylene was unmarried and could not keep the son with her, she asked Russel Nathaniel and his wife to make arrangement for the bringing up of the child.
Russel Nathaniel knew Roshan Lal who had no child of his own and wanted to adopt a child.
Accordingly, on August 25, 1963 the child was handed over to Roshan Lal.
After the child was handed over to Roshan Lal, Miss Eylene went to the house of her sister 's husband, N. K. Lal, P.W. 11 and stayed there with her sister.
It is alleged that on August 29, 1963 at about 9.30 or 10 P.m.
the appellant went to the house of Russel Nathaniel in police uniform and accused Russel Nathaniel and his wife of disposing of the illegitimate child.
The appellant further warned Mr. & Mrs. Nathaniel that if they wanted to save themselves they should make some settlement with him and demanded a bribe of Rs. 1,000/ .
But Mr. Nathaniel paid him Rs. 90/ and agreed to pay later on a sum of Rs. 700/ .
The appellant thereafter compelled Russel Nathaniel and his wife to execute a document in writing that they would pay him Rs. 700/ or agree to go to prison.
It is said that the appellant asked Russel Nathaniel to bring to him Roshan Lal and when Roshan Lal was called, 'the appellant asked him to pay something to him.
Roshan Lal ex.
pressed his inability to pay anything whereupon the appellant removed a golden ring from his finger.
On the same night the appellant contacted the girl, Miss Eylene and wished to record her statement.
Russel Nathaniel and his wife expressed their reluctance to send Miss Eylene with the appellant to the police station and therefore the appellant interrogated the girl at the resi dence of N. K. Lal, her brother in law.
The appellant made her sign a paper and took the same with him.
On September 4, 185 1963 Russel Nathaniel and N. K. Lal decided to refer the matter to the anti corruption department.
Accordingly, Russel Nathaniel went to D.S.P. Mukatdhari Singh who recorded his statement and called two witnesses to witness the proceedings.
Russel Nathaniel produced seven currency notes of the denomination of Rs. 100/ each.
The numbers of those currency notes were noted and Russel Nathaniel was then instructed to pass on the money to the appellant.
Russel Nathaniel contacted the appellant and asked him to come to the house of N. K. Lal.
They arrived at the house of N. K. Lal at about 7.30 or 7.45 P.m.
The appellant sent for the girl because he wanted to reprimand her and there after he asked for the payment of the agreed amount.
Russel Nathaniel handed over the currency notes to the appellant who put them in the left side pocket of his trousers.
Russel Nathaniel then gave a signai and immediately D.S.P. Mukatdhari Singh turned up and recovered the currency notes from the pocket of the appellant.
On being questioned the appellant told the D.S.P. that he never asked for bribe and that the money was paid to him in repayment of the loan by him to Russel Nathaniel.
The appellant produced in the witness box Dharam Vir, F. C. Ram Saran, H. C. Jai Parkash and A. section Kapur.
After conclusion of the trial the Special Judge, Delhi accepted the prosecution case as correct and convicted the appellant of the charged framed against him and sentenced him to undergo rigorous imprisonment for two years and to pay a fine of Rs. 5001 or in default to undergo rigorous imprisonment for a further period of six months under section 5(2) of the Prevention of Corruption Act, and to two years rigorous imprisonment under section 161, Indian Penal Code and ordered the substantive sentences to run concurrently.
The appellant took the matter in appeal to the Punjab High Court.
The High Court maintained the conviction of the appellant under section 5(2) of the Prevention of Corruption Act and section 161, Indian Penal.
Code and also the sentence to undergo rigorous imprisonment for a period of two years awarded to the appellant on each count.
The High Court.
however, set aside the order with regard to the payment of fine or imprisonment in default.
In support of this appeal Mr. Chagla submitted in the first place that the order of sanction was bad in law as all the relevant papers and materials were not placed before the D.I.G. Police, Mr. M. P. Singh who, was the sanctioning authority.
Reference was made in this connection to the decision of the Judicial Committee in Gokulchand vs The King(1) in which it was held that a sanction which simply names the person to be prosecuted and specifies the provision of the Order which he is alleged to have contravened is not a sufficient compliance with cl. 23.
Mr. Chagla (1) A.I.R. 1948 P.C. 82.
10 Sup.
C.I 68 13 186 also referred to the evidence of P.W. 9, Sub Inspector, Ascharaj Lal who said that "all the papers relating to the case were sent to the D.I.G." When cross examined, he could not say which were the documents which were sent to the D.I.G. because they were in a sealed cover.
In our opinion, there is no substance in the argument put forward by Mr. Chagla on behalf of the appellant.
The Order of sanction dated December 10, 1963 shows on the face of it what were the facts constituting the offence charged and that a prima facie case was made out against the appellant.
The Order also further recites that Mr. M. P. Singh, D.I.G., "after fully and carefully" examining the material before him in regard to the "aforesaid allegations" in the case, considers that a prima facie case is made against the appellant.
It is manifest that the decision of the Judicial Committee has no application to the present case, for the order of sanction in that case was much more cryptic and materially different.
We are satisfied that the order of sanction in the present case fulfils the requirements of section 6 of the Prevention of Corruption Act.
We accordingly reject the argument of Mr. Chagla on this aspect of the case.
It was then contended that the concealment of the birth of an illegitimate child was not an offence under the Indian Penal Code or any other criminal statute and if the appellant had obtained money from Russel Nathaniel, it cannot be said that the appellant had obtained a gratification for doing or forbearing to do any official act, or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any per son.
In other words, the argument was that the appellant could not prosecute either Miss Eylene or Russel Nathaniel or anybody else for any offence and obtaining of money by the appellant for refraining from any such imaginary prosecution cannot be said to be an offence under section 161, Indian Penal Code or section 5(1)(d) of the Prevention of Corruption Act.
We are unable to accept this argument as correct.
When a public servant is charged under section 161, Indian Penal Code and it is alleged that the illegal grati fication was taken by him for doing or procuring an official act, it is not necessary for the Court to consider whether or not the accused public servant was capable of doing or intended to do such an act: see the decision of this Court in Mahesh Prasad vs The State of Uttar Pradesh(1).
In the second place, the charge against the appellant is also under section 5(1)(d) of the Prevention of Corruption Act which states "5.(1) A public servant is said to commit the offence of criminal misconduct (1) [1955] 1 S.C.R.965.
187 (d) if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage or," Section 5(2) states : "(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to, fine X X : Provided that the court may, for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year.
" Upon the facts which have been found by the High Court to be proved there can be no doubt that the appellant was guilty of grossly abusing his position as public servant within the meaning of section 5(1)(d) of the Prevention of Corruption Act and thereby obtained for himself a valuable thing or pecuniary advantage, and the charge under that section is established.
We are therefore of the opinion that Mr. Chagla is unable to make good his argument on this aspect of the case also.
Lastly, Mr. Chagla submitted that the sentence of imprison ment was excessive.
We are unable to accept this contention.
Upon the finding of the High Court in this case it is manifest that the appellant grossly abused his position as a police officer and extorted money from Russel Nathaniel and his wife and also a gold ring from Roshan Lal.
The appellant in his official capacity as a police officer was expected to maintain a high standard of integrity and to uphold the maintenance of law.
Instead them proved facts disclose that there was a gross abuse of his official position on the part or the appellant and in the circumstances of the case we are satisfied that the sentence imposed is not excessive.
For the reasons expressed we affirm the judgment of the High Court of Punjab dated February 17, 1966 in Criminal Appeal No. 63 D of 1964 and dismiss this appeal.
| An unmarried woman gave birth to a child and on her request, her uncle and aunt made arrangements for the child being brought up by some one who wanted to adopt a child.
The appellant, who was a police officer, accused the uncle and aunt of having disposed of an illegitimate child and demanded a bribe.
The anti corruption department was thereupon informed, a trap laid and currency notes which were given as bribe were recovered from the appellant.
He was prosecuted and convicted for offences under section 5(2) of the Prevention of Corruption Act and section 161, I.P.C. The High Court confirmed the conviction and sentenced him to 2 years R.I.
In appeal to this Court, HELD : (1) The order of sanction showed on the face of it what were the facts constituting the offence, that 'a prima facie case was made out, and that the sanctioning authority had fully and carefully examined the material Therefore,, the order of sanction fulfilled the requirements of section 6 of the Prevention of Corruption Act.
[186 B, D] Gokukhand vs The King, A.I.R. 1948 P.C. 82, distinguished.
(2) (a) When a public servant is charged under section 161 I.P.C. and it is alleged that illegal gratification was taken by him for doing or procuring an official act, it is not necessary for the court to consider whether or not the accused public servant was capable of doing or intended to do such an act.
[186 F G] Mahesh Prasad vs The State of U.P. ; , followed.
Therefore, though the concealment of the birth of an illegitimate child is not an offence and the appellant could not have prosecuted any one, it could not be said that the obtaining of money by the appellant for refraining from an imaginary prosecution was not an offence under 161 I.P.C. [186 E F] (b) In any event, the appellant was guilty of an offence under section 5(1)(d) of the Prevention of Corruption Act, in that he grossly abused his position within the meaning of the section and thereby obtained for himself pecuniary advantage and so, the sentence imposed on him was not excessive [187 D, E]
|
Civil Appeals Nos.
1152, 1153, 1268, 1708, 1733 & 2539 of 1969.
From the judgment and decree dated the 23rd January 1968 of the Andhra Pradesh High Court in A.A.O. Nos. 210 and 374/67.
M. C. Bhandare, A. V. Rangam and A. Subhashini, for the appellant (In C.As.
1152 1153) & respondent No. 2 (in C.A. 1709/69).
B. D. Bal and P. P. Rao, for the appellants (in C.As.
1268 and 1733) and respondents Nos. 11 (in C.A. No. 1152), 11 and 12 (in 1153) .
S V. Gupte, A. Adil and K. J. John, for the appellants (In C.As.
1708 & 2539 and respondents 2 10 in C.As.
1152 1153, and for respondents 1 9 in C.A. 1268/69).
V. V. Nair, for the respondent No. 11 in C.A. 1733.
161 The Judgment of the Court was delivered by RAY, C. J.
These six appeals are by certificate from the judgment dated 23 January, 1968 of the High Court of Andhra Pradesh at Hyderabad in C.M.A. No. 210 and 374 of 1967 in that High Court.
Two questions arise for decision in these appeals.
First, whether in the circumstances of the case, there was any property of the Hyderabad Co perative Commercial Corporation Ltd. hereinafter referred to as the Co operative Society.
Which could be attached by the decree holders, the appellants in Civil Appeal No. 1708 of 1969 and Civil Appeal No. 2539 of 1969 in the hands of the Director of Civil Supplies.
Second, whether the dissolution of the Hyderabad Cooperative Commercial Corporation Ltd. by the Registrar of Co operative Societies was competent.
Syed Mohiuddin Khadri, hereinafter referred to as the decree holder, obtained on 24 August, 1959 a decree from the City Civil Court, Hyderabad against the Co operative Society for a sum of Rs. 6,91,293 11 Ps.
with interest.
On 23 November, 1959, the decree holder filed an Execution Petition before the City Civil Court against the Co operative Society for attachment inter alia of a sum of Rs. 4,50,000/ belonging to the Co operative society and in the custody of the ' Commissioner of Civil Supplies and the Accountant General, Hyderabad.
On 27 November, 1959, the City Civil Court issued a prohibitory order to the Commissioner of Civil Supplies to hold the said sum until further orders.
Pursuant to 'the order, on 2; December, 1959, the accountant General wrote to the Commissioner of Civil Supplies that in view of the order of the Court, no payment relating to the Co operative Society would be made by his office without the concurrence of the Court.
The decree holder contends that the attachment is valid.
The State contends that there was no debt due to the Co operative Society and therefore, there was no valid attachment.
The facts and circumstances under which the City Civil Court made an order for attachment are these.
The State budget for 1959 60 provides for payment of Rs. 4,50,000/ to the Co operative Society.
In the Execution Application, the decree holder stated that the sum of Rs. 4,50,000/ mentioned in the budget was a debt due to the Co operative Society.
The decree holder further alleged that the sum Of Rs. 4,50,000/ belonging to the Co operative Society was in the custody and control of the Commissioner of Civil Supplies and the Accountant General, Hyderabad as evidenced by the budget provision and a letter dated 12 June, 1959 issued by the Commissioner of Civil Supplies to the District Treasury officers.
The letter dated 12 June, 1989 written by the Assistant Chief Accounts officer and approved by the Commissioner and addressed to District Treasury officers stated that "the fol lowing provisions for the Civil Supplies department are made under the above major head (meaning thereby Trading Civil Supplies) in ' the budget estimates for the year 1959 60: (1) payment to Hyderabad Co 162 operative Commercial Corporation Rs.
4,50,000/ .
You are requested to kindly make the payments under the above heads as per rules and intimate to this office the full particulars of the amounts and expenditure incurred in your district every fortnight on the 5th and 20th of the succeeding month to which they relate for watching the expenditure as a whole against the above provision".
The City Civil Court on these facts issued a prohibitory order on 27 November, 1959 directing the Commissioner of Civil Supplies to hold the sum until further orders.
The Accountant General, pursuant to the said prohibitory order, wrote to the Court on 2 December, 1959 that no payment relating to the Co operative Society would be made by his office without the concurrence of the Court.
The High Court held that the mere fact that the Commissioner of Civil Supplies directed the Treasury officer to make payments to the Co operative Society as and when occasion arose did not mean that the amount as a whole became the property of the Co operative Society in the hands of the Disbursing officer namely, the Commissioner of Civil Supplies.
The High Court held that the provisions of order 21, Rule 52 of the Code of Civil Procedure did not apply and the attachment affected and the prohibitory order made by the City Civil Court and the directions to deposit the amount were not valid.
It may be stated here that the State filed a suit C. section No. 1 of 1962 under order 21, Rule 63 of the Code of Civil Procedure challenging the order of attachment.
The suit was withdrawn by the Government.
The High Court held that the withdrawal of the suit did not preclude the Government from questioning the validity of the attachment.
On behalf of the State, it was contended that the budget appropriation of Rs. 4,50,000/ for the financial year 1959 60 did not make the sum the property of the Co operative Society in the custody of the Public officer.
It was also contended by the State that the said sum was not a debt due to the Co operative Society.
The State also contended that the rules require claim being made, bill being processed, scrutinity as to whether there is sufficient fund credited to the appropriation for payment and in the present case, there was no order for actual payment.
Another contention on behalf of the State was that even if the attachment was legal, it would cease to be so by the end of the financial year because the property was not brought into Court and the amount lapsed.
The documents in the present case and in particular the letter dated 12 June, 1959 and the letter dated 2 December, 1959 written by the Accountant General to the Court establish that there was a debt due to the Co operative Society and the attachment was validly made.
The letter dated 12 June, 1959 provided for payment and the payment was approved by the Commissioner.
The officers disbursing the amount were to pay in accordance with the rules and inform the Department about the expenditure incurred in that behalf.
There is intrinsic evidence in the letter dated 12 June, 1959 that the approval by the Commissioner is not only sanction of the payment but also approval of the same.
Payment in accordance with rules means that documents are to be 163 vouched and there should be particulars of payment and identification of the persons to whom payment is to be made.
The letter dated 2 December, 1959 written by the Accountant General to the Court is tantamount to the money being nationally brought to the Court.
The Accountant General said that the payment was not to be made except with the concurrence of the Court.
Thus it came into the control of and was held on behalf of the Court.
The amount of Rs. 4,50,000/ was not a mere budget provision but the documents show that the amount had ripened into a debt and an order for payment to the Co operative Society.
The sum of Rs. 4,50,000/ was impressed with the character of a debt due to the Co operative Society and it was validly attached.
The contention on behalf of the State that the amount was not brought into Court and therefore, the provision lapsed is devoid of substance.
The letter dated 12 June, 1959 provided for payment of the sum of Rs. 4,50,000/ .
The letter of the Accountant General dated December 2, 1959 indicated that the Accountant General pursuant to the order of the Court dated 27 November, 1959 brought the money to the Court.
Attachment of debts is a process by means of which a judgment creditor is enabled to reach money due to the judgment debtor which is in the hands of a third person.
These are garnishee proceedings.
To be capable of attachment, there must be in existence at the date when the attachment becomes operative something which the law recognises as a debt.
So long as there is a debt in existence, it is not necessary that it should be immediately payable.
Where any existing debt is payable by future instalments, the garnishee order may be made to become operative as and when each instalment becomes due.
The debt must be one which the judgment debtor could himself enforce for his own benefit.
A debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation (See Webb vs Stenton(1).
In the present case, the letter dated 12 June, 1959 proves that there is an obligation to pay the specified sum of Rs. 4,50,000/ to the Co operative Society.
The budget provision fastened on to the claim of the Co operative Society against the State and it ripened into a debt payable to the Co operative Society.
Therefore, in the circumstances, the attachment levied by he City Civil Court was perfected by bringing money to the Court.
The second question which falls for determination is whether the dissolution of the Co operative Society by the Registrar of Co operative Societies was competent.
The State Registrar of Co operative Societies on 6 September, 1960 cancelled the registration of the Co operative Society under section 53 of the Hyderabad Co operative Societies Act, 1952 and appointed a liquidator.
The decree holder filed Writ Petition No. 763 of 1960 on 2 November, 1960 before the High Court and impugned the validity of the order of liquidation.
The High Court on 19 September, 1961 dismissed the writ petition and upheld the order of liquidation.
164 Though the High Court dismissed the writ petition, the High Court had to deal with the question of liquidation of the Co operative Society in C.M.A. No. 210 of 1967 and C.M.A. No. 374 of 1967.
These two out of the order of the City Civil Court dated 11 July, 1967 in the decree holder 's Execution Petition No. 95 of 1959.
The City Civil Court held that the judgment of the High Court upholding the validity of the order of dissolution and appointment of the liquidator in Writ Petition No. 763 of 1960 did not prevent the decree holder from contending that the State Registrar had no jurisdiction to pass the order of liquidation.
The High Court in the appeal in C.M.A. No. 210 of 1967 and C.M.A. No. 374 of 1967 held that though the High Court had decided in Writ Petition No. 763 of 1960 upholding the validity of the liquidation yet the order of liquidation could not be sustained because the delegation made under section SB of the Multiunit Co operative Societies Act, 1942 was incompetent.
The liquidator in Civil Appeal No. 1268 of 1969 and Civil Appeal No 1733 of 1969 submitted that the liquidator was interested only in sustaining the validity of the order of liquidation.
The liquidator is not interested in the dispute between the State and the decree holder in regard to the order of attachment.
In order to appreciate the rival contentions of the decree holder and the liquidator on the validity of the order of liquidation, it is necessary to refer to the provisions of Multi unit Co operative Societies Act, 1942.
The 1942 Act applies to Co operative Societies registered before the commencement of the Act and also to Societies which became registered after the commencement of the Act of 1942.
The Co operative Society was a Society registered before the Reorganisation of the States in 1956.
As such the Society is a Multi unit Society governed by the 1942 Act.
The decree holder did not challenge this position.
The contention of the decree holder is that under section 4 of the 1942 Act, the Central Registrar of Co operative Societies shall exercise in respect of any Co operative Society and to the exclusion of State Registrar, the powers and functions exercisable by the Registrar of Cooperative Societies of the State in which such Society is registered.
Section 5B of the 1942 Act which speaks of delegation of any power or authority exercisable by Central Registrar to be exercisable by Registrar of Co operative Societies of a State is contended by the decree holder to exclude the State Registrar from acquiring any power by delegation.
The decree holder contended that the power of delegation contemplated in section SB was confined only to matters mentioned in section 5A of the 1942 Act.
Under the 1942 Act Multi unit Co operative Societies whether registered before or after the coming into force of the Act were governed by the Co operative Societies Act of the States in which they were registered.
Under the 1942 Act and in particular sections 2 and 3 thereof, some powers like those of inspection, audit were given to Registrars of other States where such Societies had branches.
Under section 4(1) of the 1942 Act, the Central Government may, if it thinks fit, appoint a Central Registrar of the Co operative Societies.
165 Section 4(2) of the 1942 Act provides that the Central Registrar of Co operative Societies, if appointed, shall exercise in respect of any co operative society to which the 1942 Act applies, to the exclusion of State Registrars, the powers and functions exercisable by the Registrar of Co operative Societies of a State in which such Society is actually registered.
The powers which the Central Registrar is to exercise under the 1942 Act are powers under the Co operative Societies Act of the State where a particular Society is registered.
The powers exercisable by the State Registrar under the Co operative Societies Act are by reference under section 4(2) of the 1942 Act incorporated into the 1942 Act and exercisable by the Central Registrar where the Central Registrar is appointed by the Central Government.
The State Registrar was admittedly competent to exercise hl respect of the Co operative Society all powers under the Hyderabad Co operative Societies Act, 1952 referred to as the 1952 State Act.
Under the 1952 State Act, the State Registrar had the power to dissolve the Cooperative Society and appoint a liquidator.
The Central Government appointed a Central Registrar of Co operative Societies for the first time on 29 December, 1956.
If the matters had rested there, the State Registrar would have been divested of his powers over the Society under the State Act as from that date.
The matters, however, did not rest there.
Section 5B of the 1942 Act empowers the Central Government to delegate any power or authority exercisable by the Central Registrar under the Act to State Registrars and certain other officers by a Notification published in the official Gazette.
Simultaneously with the appointment of the Central Registrar, the Central Government published a Notification on 29 December, 1956 delegating the powers or authority under the 1942 Act in relation to certain, matters including dissolution to the State Registrars and other officers mentioned in the Notification in respect of Societies registered in their respective States.
The Registrar of Societies, Andhra Pradesh was specifically mentioned in the Notifications The result of the Notification was that the powers under the State Act of 1952 of which the State Registrar was divested by the appointment of the Central Registrar were immediately restored to him.
[t is in exercise of these powers under the State Act of 1952 which were restored to the State Registrar that he passed the order of dissolution of the Society and appointed a liquidator on 6 September, 1960.
Section 5B of the 1942 Act empowers the Central Government to Delegate "any power or authority exercisable by the Central Registrar of Co operative Societies under this Act" (meaning thereby the 1942 Act) to the State Registrars and other officers.
The language in section 5B of the 1942 Act is plain.
There are no words of limitation or reservation.
The expression "any power or authority exercisable by the Central Registrar of Co operative Societies under this Act" takes in all powers under the ]942 Act including those under section 4(2) which are the powers under the State Act embodied by reference in that section.
The simultaneous introduction of section 5A and section 5B into the 1942 Act in the year 1956 with effect from 1 November, 1956 point 166 to the fact that section 5B follows section SA but does not confine section SB only to matters mentioned in section 5A of the 1942 Act.
The contention on behalf of the decree holder that the expression "any power or authority exercisable by the Central Registrar of Co operative Societies under this Act" in section SB means only powers or authority under section 5A of the Act is unsound.
Section 5A of the 1942 act is a transitional provision regarding certain Cooperative Societies affected by the Reorganisation of States.
The provisions contained in section 5B of the 1942 Act do not have any words of restriction in their application only to Section 5A of the 1942 Act.
on the contrary, the provisions in section 5B of the 1942 Act speak of delegation of power or authority exercisable by the Central Registrar under the 1942 Act.
Whatever powers are exercisable by the Central Registrar by reason of section 4(2) of the 1942 Act are capable of being delegated by reason of provisions contained in section SB of the 1942 Act.
The delegation by the Central Government of the powers exercisable by the Central Registrar to be exercised by the State Registrar is supported by the provision of the 1942 article The order of delegation being valid, the State Registrar was competent to dissolve the Co operative Society by the order dated 6 September, 1960.
It is, therefore, not necessary to express any opinion as to whether the contention of the decree holder challenging the validity of the order of dissolution of the Co operative Society and appointment of liquidator is barred by reason of constructive resjudicata on account of the dismissal of the Writ Petition No. 763 of 1960 filed by the decree holder in the High Court.
For these reasons, the judgment of the High Court is set aside.
The attachment of the sum of Rs. 4,50,000 is upheld.
The order of dissolution of the Co operative Society and appointment of the liquidator are held to be valid.
The High Court stated that "it will be open to the decree holder to take up execution against the Government.
for the amount due to him from the Co operative Society on the ground that the Government has taken over the entire assets and liabilities of the Co operative Society. ' We affirm that finding of the High Court.
Under the interim order of this Court, the liquidator deposited an amount of Rs. 90,000/ in the Court.
That amount was allowed to be withdrawn by the legal representative oil the decree holder on furnishing bank guarantee.
The liquidator asked for refund of that amount to the liquidator to enable him to discharge his duties according to law.
The decree holder will prefer the claim on account of attachment of Rs. 4,50,000/ before the Liquidator.
If in liquidation, it will appear that there are prior claims or that the decree holder will be entitled to any rateable distribution out of Rs. 4,50,000/ , the liquidator will make appropriate orders for payment of appropriate amount to the decree holder.
We make it clear that after payment by the liquidator to the decree holder whatever amount will remain due to the decree holder, it will be 167 open to the decree holder to take up execution against the Government for the amount due by the Co operative Society on the ground that the Government has taken over entire assets and liabilities of the Co operative Society subject, of course, to such contentions as the Government may have.
The appeals filed by the State are dismissed.
The decree holder will be entitled to costs in these appeals to be paid by the State.
The liquidator will retain costs out of the assets in his hands.
The amount of Rs. 90/ which has been withdrawn by the decree holder will now be refunded to the liquidator.
There will be one set of costs for the decree holders.
There will be similarly one set of costs for the liquidator.
P.B.R. Appeals dismissed.
| The licenses for sale of country liquor were granted under the Rajasthan Excise Act, 1950.
For the years 1962 63 and 1963 64 licenses for sale of country liquor were given to contractors under a guaranteed system.
There was a total Guarantee amount.
Where the contractors failed to fulfil the guaranteed amount and there was a short fall, demand notices were issued for the total short fall.
There was no levy of excise duty prior to 6 March, 1964.
For the years 1967 68, 1968 69 and 1969 70 the liquor contractors obtained licences for sale of country liquor at a specified amount of licence fee under the exclusive privilege system.
Where the contractors failed to pay the guaranteed amount there was a demand for a shortfall.
The appellants who were the liquor contractors challenged the demand for short fall of the guaranteed amount by way of writ petitions in the High Court.
Their contention was that what was being demanded as short fall amounted to levy of excise duty. 'the State on the other hand, contended that what was being realised from the liquor contractors was the guaranteed amount in the licence for the exclusive privilege of selling country liquor.
The State further contended that what was being demanded for the year 1967 68 and thereafter as short fall was the stipulate guaranteed amount which was excise revenue.
The High Court accepted the contentions of the State and dismissed the writ petitions.
These appeals have been preferred on the basis of the certificate granted by the High Court.
It was contended for the appellants: (i) The issue prices in the licence are exclusive of prices of container but inclusive of excise duty levied under the.
Government notification and therefore, enforcement of the guaranteed amount meant realisation of excise duty.
(ii) A promise to give income to the Government by purchasing a. minimum quantity of liquor from the Government were house was not equivalent to the Payment of sum of money in consideration of grant of such privilege within the meaning of section 30 of the Act; (iii) 'The amounts of money sought to be recovered from the licensee under the exclusive privilege system introduced from the year 1968 as well as under the guarantee system.
prevalent prior to the year 1968 are nothing but demands for excise duty on uplifted liquor; (iv) 'the word 'issue price ' occurring in the conditions attached to the licences granted upto the year.
1967 68 was a composite name for 'cost price of liquor ' and 'excise duty leviable thereon ' and therefore an agreement by the licensees under the guarantee system to pay 'issue price ' was tantamount to an agreement to pay 'cost price ' and 'excise duty ' as distinct items though described as issue price; (v) 'the licences under both system of Guarantee and Exclusive Privilege contain a term about the payment and adjustment of excise duty and under both systems 'excise duty ' ii a distinct item agreed to be paid as such in terms of the licences.
Rejecting the contentions and dismissing the appeals (except C.A. No. 1433.
of 1974 and C.A. No. 1871 of 1974).
^ HELD: (1) Provisions of section 24, 28, 29 and 30 of the Act and rules 67 A, 67 I, 67 S, 67 K and 67 L of Rajasthan Excise Rules, 1956, clearly established that the licence fee stipulated to be paid by the appellants is the price or consideration or rental which the Government charges from the licensees for parting with its privilege in stipulated lump sum payment and is a normal incident of trading or business transaction.
[225A B] 220 Nashirwar and Ors.
vs State of Madhya Pradesh and ors.
[1975] Vol.
I S.C.C. 29, Hari Shanker V. Deputy Excise and Taxation Commissioner decided on 21 January, ]975 in Civil Appeal No. 365 of 1969, Madhavan V. Assistant Excise Commissioner.
Palghat and ors.s.
Kerala 71, Central Province Barer sale of Motor Spirit and Lubricants Taxatation Act 1938.
case reported in 11939] F.C.R. 18, M/s. Guruswaamy & Co. etc.
vs State of Mysore & ors,. , State of Orissa and ors.
vs Harinarayan Jaswal and ors.
[1972]3 S.C.R. 784 and Coverjee B. Bharuchua vs The Excise Commissioner and the Chief Commissioner, Ajmer.
and ors.
; , referred to.
(2) The licences in the present case are contracts between the parties.
The licensees voluntary accepted the contracts.
They fully exploited to their advantage the contracts to the exclusion of others.
The High Court rightly said that it was not open to the appellants to resile from the contracts on the ground that the terms of payment were onerous.
[225D] (3) There is no levy.
Of excise duty in enforcing the payment of the guaranteed sum or the stipulated sum mentioned in the licenses.
Because, (1) The licences were granted to the appellants after offer and acceptance or by accepting their lenders or auction bid.
The appellants stipulated to pay lump sum amount.
as the price for the exclusive privilege of vending country liquor.
they agreed to pay that they considered to be equivalent of the right; (ii) The liability for excise is on the distillery and the liquor contractors are not concerned with it.
Before: 1965; there was no excise duty.
After the imposition of excise duly: the position is not altered because the privilege of selling is granted 'by auction or by.
Offer and acceptance before the goods came into existence.
and (iii) 'The stipulation, amounts payable by the appellants have relation only to what they foresaw they could recoup by the sale of country liquor from the liquor shops licensed to them.
There are several varieties of country liquor and rates of excise levy on these varieties are different.
The appellants are not bound to take any particular quantity or any particular quality of any variety.
Without reference to any quantity or quality, it is impossible to predicate the alleged levy of excise duty.
[226G 227 E] (4) The lump sum amount stipulated under the agreement is not to 'be equated with issue price.
The issue price is payable only when the contractors take delivery of a particular quantity of specified value of country liquor.
the issue price relates only to liquor drawn by the contractors and does not pertain to undrawn liquor.
No excise duty is or can be collected on undrawn liquor.
The issue price is the price at which country liquor is sold to the liquor contractors.
So far as the liquor contractors are concerned, they pay the price of the liquor even though the price may include the component of excise duty in respect of which they have no direct liability.
[228B D] (5) In the present case, the State Government has not imposed any excise duty On the licensee.
On the contrary, the license only takes into account the excise duty component of the issue price for the purpose of giving a concession or remission to the contractors.
The scheme of remission is that is the liquor contractor purchased liquor of the value, the excise duty whereof equalled the price of the exclusive privilege, the liquor contractor is to be given credit therefore.
The question.
Of adjustment arises only when liquor is drawn, otherwise the formula of remission does not come into the picture at all.
In essence what is sought to be recovered from the liquor contractor is the shortfall occasioned on account of failure on the part of liquor contractor to fulfill the terms of license.
[228G;229BC, F H] Bimal Chandra Banerjee vs State of Madhya Pradesh ; , referred to.
|
l Appeals Nos. 1277 to 1279 and 1280 to 1282 of 1966.
Appeals by special leave from, the judgment and order dated ,October 14, 1966 of the Punjab High Court in Income tax Refer ence No. 16 of 1962.
B. Sen, section K. Aiyar, B. D. Sharma and R. N. Sachthey, for the appellant (in C.As.
1277 to 1279 of 1966) and the respondent (in C.As.
Nos. 1280 to 1282 of 1966).
Bishan Narain and A. N. Goyal, for the respondents (in C.As.
1277 to 1279 of 1966) and the appellants (in C.As.
Nos. 1280 to 1282 of 1966).
The Judgment of the Court was delivered by Shah, J.
Balkishan Das, Debi Prasad and Jai Ram Das were partners in a trading venture, conducted in the name of the 12 Sup.
C 1/70 11 390 Ambala Flour Mills, Ambala.
On April 29, 1948, Jai Ram Das commenced an action for dissolution and for account of the partnership business.
The Trial Court decreed the suit.
In appeal to the District Court, the decree was reversed.
On appeal under the Letters Patent from the judgment of a single Judge, the High Court of Punjab by order dated September 26, 1951 restored the decree of the Trial Court and declared that the partnership stood dissolved on April 29, 1948.
The High Court observed: ". notwithstanding the dissolution of 'the firm Debi, Parshad and Balkishan Dass carried on the business of the firm with the property of the firm.
On these facts, Jairarn Dass plaintiff is entitled at the option of himself to such share of the profits made since he ceased to be a Partner as may be attributable to the use of his share of the property of the firm or interest at the rate of six per cent per annum on the amount of his share in the property of the firm.
" During the pendency of the suit Balkishan Dass severed his connection with the business and the business was carried on thereafter by Debi Parshad alone.
In the assessment year 1950 51, Debi Parshad filed three returns of income (i) on 4 10 1950 in the status of a firm, (ii) on 14 4 1951 in the status of an individual and (iii) on 1 7 1951 in the status of firm consisting of Jai Ram Das and Debi Parshad, partners.
For the assessment year 1951 52, Debi Parshad filed a return in the status of an unregistered firm.
For the assessment year 1952 53 Debi Parshad submitted a return in the status of a Hindu Undivided Family.
The Income tax Officer assessed the Ambala Flour Mills in the three years of assessment in the status of "an association of persons".
In appeals by Debi Parshad, the Appellate Assistant Commissioner, "annulled" the , orders of ' assessment of the assessee in the status of association of persons be set aside and that the case be remanded to the Income tax Officer to assess the income as "the income of the family of Debi Parshad".
In appeals by Debi Parshad, the Income tax Appellate Tribunal confirmed the orders of the Appellate Assistant Commissioner annulling the assessment made by the Income tax Officer and directed that the direction for assessing the income in the hands of Debi Parshad be deleted.
The Tribunal referred the following three questions at the instance of the Commissioner of Income tax.
1 "Whether L. Debi Parshad was a stranger in respect of the income tax proceedings against Ambala Flour Mills ? 391 2.
Whether the Appellate Assistant Commissioner could give a direction in the case of Ambala Flour Mills to the effect that the income should be assessed in the hands of L. Debi Parshad after annulling the assessment in the case of Ambala Flour Mills 3.
Whether on the facts and in the circumstances of the case the appeals.
filed by Shri Debi Parshad were maintainable in law The High Court answered the first question in the negative; the second in the affirmative with the rider that the assessment against Debi Parshad "could only be in individual capacity"; and the third question in the affirmative.
Debi Parshad was competent to maintain the appeals filed by him to the Tribunal because by the order of the A appellate Assistant Commissioner, it was directed that he may be personally assessed by the Income tax Officer in respect of the Income of the Ambala Flour Mills.
Counsel for Debvi Parshad, however, contended that Debi Parshad was a stranger to the assessment proceedings and the, Appellate Assistant Commissioner had no jurisdiction to direct after setting aside the order of assessment that Debi Parshad be assessed personally in respect of the income of the Ambala Flour Mills.
The relevant provisions of the Income Tax Act may be: noticed.
The relevant provisions of section 31 of the Income Tax Act, 1922, are these : "In disposing of an appeal, the Appellate Assistant Commissioner may, in the case of an order of assessment : (a) confirm, reduce, enhance or annual the assessment; (b) set aside the assessment and direct the Income tax Officer to make a fresh assessment after making such further inquiry as the Income tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income tax Officer shall thereupon proceed of make such fresh assessment. . (4) "Where as the result of an appeal, any change in, the assessment of a firm or association of ' persons or new assessment of a firm or associa 392 tion of persons is ordered to be made, the Appellate Assistant Commissioner may authorise the Income tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association '.
All the returns have been filed by Debi Parshad but in dif ferent capacities.
The Income tax Officer was of the view that the business was carried on by an association of persons and the income from the business was liable to be brought to tax on that footing.
The Appellate Assistant Commissioner was of the view that the income belonged to Debi Parshad and he was liable to be assessed personally in respect of the income.
Evidently the Income tax Officer held that Debi Parsbad was a member of an association of persons.
Since the Appellate Assistant Commissioner set aside the ' order assessing the income in ' the status of " association of individuals", he had to give directions with regard to the assessment of the income, provided the assessment was not barred by the law of Limitation.
Section 34 subsection 3 prescribes for the period in which assessment proceedings shall be completed.
The section at the date of assessment by the Income tax Officer read as follows: "No order of assessment or re assessment, other than an order of assessment under section 23 to which clause (c) of sub section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub section (1) or sub section (IA) of this Section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable: Provided further that nothing contained in this section limiting the time within which any action may be taken.
or any order, assessment or re assessment may be made, shall apply to a re assessment made under section 27 or to an assessment or re assessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A".
The assessment of tax had according to the law at the rele vant time.
in force, ordinarily, to be completed by the Income tax Officer within four years from the last date of the year of assessment in which the income, was first assessable.
But to this 393 rule there were several exceptions.
If the assessment had to be made on the assessee or any person 'm consequence of or to give effect to any findings or direction contained in an order of the Appellate Assistant Commissioner or of the Appellate Tribunal or of the Commissioner in revision or of an order made in a reference, the assessment could be made even after the expiry of the four years.
The exception applied to an assessment made against the assessee or any person in consequence of, or to give effect to any finding or direction contained in the order of any superior tribunal, or 'the High Court or this Court.
This Court in section C. Prashar and another vs Vasantsen Dwarkadas and others(1) held that the second proviso to section 34(3) of the Incometax Act, 1922, insofar as it authorised the assessment or reassessment of any person other than the assessee after the expiry of the period of limitation specified in section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of the proceeding in relation to the assessee violated the provisions of article 14 of the Constitution and was invalid to that extent.
In a later case Income tax Officer, Award, Sitapur vs Murli dhar Bhagwan Das(1) this Court explained the connotation of the expression "any person" as used in section 34 sub section
(3) proviso 2 at p. 346 : "Theexpression 'any person ' in its widest connotation may take in any person, whether connected or not with theassessee, whose income for any year has escaped assessment, but this construction cannot be accepted, for the said expression is necessarily circum scribed by the scope of the subject matter of the appeal or revision as the case may be.
That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision.
If so construed, we must turn to section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said assessment years.
A combined reading, of section 30(1) and section 31(3) of the Act indicates the cases where persons other than the appealing assessee might be affected by orders passed by the Appellate Commissioner.
Modification or setting aside 'of assessment made on a firm, joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu Undivided family (1) ; (1) 394 or the individual, as the case may be.
In such cases,.
though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessment of the former.
The said instances are only illustrative.
It is not necessary to pursue the matter further.
We would, therefore, hold that the expression 'any person ' in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal.
" In Commissioner off Income tax, U.P. vs Kanpur Coal Syndi cate(1) this Court held that where the income tax Officer assessed the income of an association of persons under section 31(3).(b) the Appellate Assistant Commissioner was competent to set aside the assessment and to direct the Income tax Officer to assess the members individually.
The Court observed that the Appellate Assistant Commissioner bad under the Act plenary powers in disposing of an appeal, the scope of his powers being conterminous with that of the Income tax Officer: he can do what the Income tax Officer can do and can also direct the Income tax Officer to do what he has failed to do.
Debi Parshad had submitted the returns, and Debi Parshad, appealed against the order of assessment.
He could, in the circumstances of the case, not be called a stranger to the assessment.
The income earned by the assessee was assessed to tax as income of an association of persons, of which on the finding ,of the Income tax Officer, Debi Parshad was a member.
In making a direction against Debi Parshad the Tribunal did not exercise his powers qua a stranger to the assessment proceeding.
,Civil Appeal Nos. 1280 1282 of 1966 must therefore fail.
The Appellate Assistant Commissioner had directed that the income in the three assessment years be assessed in the hands of the family of Debi Parshad, apparently on the view that Debi, Parshad represented the Hindu Undivided family of Which he was a member.
The Tribunal set aside the direction to assess the income of the Ambala Flour Mills in the hands of Debi Parshad.
personally.
for in their view Debi Parshad was a stanger to the proceeding for assessment.
The High Court held, that the ,order of the Appellate Assistant Commissioner directing assessment of "the family of Debi Parshad" was "clearly unwarranted and could relate only ot Debi Parshad in his individual capacity".
Appeals Nos. 1277 to 1279 of 1966 were filed against that part of the order of the High Court by which they sought to ,modify the order of the Appellate Assistant Commissioner.
The (1) 395 High Court exercising advisory jurisdiction was incompetent to amend the order of the Appellate Assistant Commissioner.
But on the question referred to the High Court, no inquiry into the power of the Appellate Assistant Commissioner to make the impugned direction was competent.
The second question only related to the assessment of the income in the hands of Debi Parshad after annulling the assessment of the Ambala Flour Mills.
It was not contended before the Tribunal that the income of the Ambala Flour Mills could not be assessed in the hands of the family of Debi Parshad.
The competence of the Appellate Assistant Commissioner to make the direction was not and could not be referred to the High Court.
Appeals Nos. 1277 to 1279 of 1966 filed by the Commissioner therefore fail.
There will be no order as to costs in all the appeals.
G.C. Appeals dismissed.
| D. B and J were partners in a firm which carried on the business entitled the Ambala Flour Mills.
On April 29, 1948 J filed a suit for the dissolution of the firm.
The litigation ended with the judgment of the Panjab High Court delivered on September 25, 1951.
According to the judgment the partnership stood dissolved with, effect from the date of the filing of the suit, but since the firm had continued to use J 's share in the property of the firm after that date he was held entitled to a corresponding shares in the profits of the firm after that date, or at his option, to interest at six per cent on the value of his share in the property of the firm.
During the pendency of the suit B also served his connection with the business which was thereafter carried on by D alone.
In the assessment year 1950 51 D filed three returns of income : (i) on 4 10 50 in the status of a firm; (ii) on 14 4 51 in the status of an individual; and (iii) on 1 7 51 in the status of a firm consisting of J and D partners.
For the assessment year 1951 52 D filed a return in the status of an unregistered firm.
For the assessment year 1952 53 D submitted a return in the status of a Hindu Undivided Family.
The income tax Officer assessed the Ambala Flour Mills in the three years of assessment in the status of an association of persons.
In appeals by D the Appellate Assistant Commissioner annulled the orders of assessment and remanded the case to the Income tax Officer with a direction that the income be assessed as the income of the family of D.
In appeals by D the Income tax Appellate Tribunal confirmed the order of annulment but ordered that the direction to assess the income in the hands of D be deleted.
The Tribunal 's order was based on the view that D was a stranger to the assessment proceedings.
At the instance of the Commissioner of Income tax the following questions were referred to the High Court : (i) Whether D was a stranger in respect of the income tax proceedings against Ambala Flour Mills ? (ii) Whether the Appellate Assistant Commissioner could give a direction in the case of Ambala Flour Mills to the effect that the income should be assessed in the hands of D after annulling the assessment in the case of the Ambala Flour Mills ? (iii) Whether on the facts and in the circumstances of the case the appeals filed by D were maintainable in law? 'Me High Court answered the first question in the negative, the second in the affirmative with the rider that the assessment against D 'could only be in his individual capacity '; and the third question in the affirmative.
Appeals were filed in this Court by both the parties.
In this appeal the Commissioner of Income tax questioned the order of the High Court by which they sought to modify the order of the Appellate Assistant Commissioner.
389 HELD : (i) The first and third of the questions referred to it were correctly answered by the High Court.
(a) D was competent to maintain the appeals filed by him to the Tribunal because by the order of the Appellate Assistant Commissioner it was directed that he may be personally assessed by the Income tax Officer in respect of the income of the Ambala Flour Mills.
[391 C D] (b) In making a direction against 'D ' the Appellate Assistant Commissioner did not exercise his powers qua a stranger to the assessment proceeding.
D had submitted returns and had also appealed against the orders of the assessment.
The income earned by the assessee was assessed to tax as income of an association of persons of which on finding of the Income tax Officer 'D ' was a member.
:Since the Appellate Assistant Commissioner set aside the order assessing the income in the status of association of individuals, he had to give directions with regard to the assessment of the income.
He was competent to give the directions in view of the provisions of section 31 read with section 34(3) of the Income tax Act, 1922 and the interpretation placed on the litter section by this Court in the cases of Murlidhar Bhagwan Das and Kanpur Coal Syndicate.
[392 G E; 394 D F] Commissioner of Income tax, U.P. vs Kanpur Coal Syndicate, and Income tax Officer, 'A Ward, Sitapur vs Murlidhar Bhagwan 'Das, , applied.
section C. Prashar and another vs Vasantsen Dwarkadas and others, , referred to.
(ii) The High Court exercising advisory, jurisdiction was incompetent to amend the order of the Appellate Assistant Commissioner.
On the question referred to the High Court, no inquiry into the power of the Appellate Assistant Commissioner to make the impugned direction was competent.
The second question only related to the assessment of the income in the hands of D after annulling the assessment of the Ambala Flour Mills.
it was not contended before the Tribunal that the income of the Ambala Flour Mills could not be assessed in the hands of the family of 'D The competence of the Appellate Assistant Commissioner to make the direction could not be and was not referred to the High Court.
[395 ,k C]
|
ition (Civil) No. 677 of 1991.
(Under Article 32 of the Constitution of India) WITH Civil Appeal Nos.400 403 of 1992.
Shanti Bhushan, Somnath Chatterjee, Biswarup Gupta, Bhaskar Gupta, G.L. Sanghi, Arun Jaitley, Dr. Debi Pal, Anil Diwan A.K. Sen, Harish N. Salve, H.S. Prihar, Kuldip section Parihar, Gopal Subramanium, Abhijit Chatterjee, B. Lahiri, J.B. Dadachanji, S.Sukumaran, R.F. Nariman, G.S. Chatterjee, Ms. Sumita Chatterjee, Ms. Mridula Ray, Arun Madan, Ms. Priya Hingorani, Ms. Radha Rangaswamy, C.N. Sreekumar, Rathin Das, Ranjit Ghose, Sushil Kumar Jain, Sudhanshu Atreya and Dr. A.M. Singhvi for the appearing parties.
The Judgment of the Court was delivered by KASLIWAL, J.
Special Leave granted in all the petitions.
This litigation is an upshot of the earlier case Reserve Bank of India vs Peerless General Finance and Investment Company Ltd. and Others, ; decided on January 22,1987.
In 1978 th Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short `the Banning Act, was enacted `to ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental `hereto. ' The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short `the Peerless ') fell within the definition of `Prize Chits ' within ' the meaning of Sec. 2(e) of the above Banning Act.
By a letter dated July 23, 1979, the Reserve Bank of India pointed out to the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978.
On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless.
A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal 419 Government.
A learned Single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court.
It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning Act.
Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this court.
The question considered in the above case was ``Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act? ' ' This court held that section 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act.
Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed.
Chinnappa Reddy,J. observed: ``It is open to them to take such steps as are open to them in law to regulate schemes such as those run by the Peerless Company to prevent exploitation of ignorant subscribers.
Care must also be taken to protect the thousand of employees.
We must also record our dissatisfaction with some of the schemes of the Life Insurance Corporation which appear to us to be even less advantageous to the subscribers than the Peerless Scheme.
We suggest that there should be a complete ban on forfeiture clauses in all savings schemes, including Life Insurance Policies, since these clauses hit hardest the classes of people who need security and protection most.
We have explained this earlier and we do wonder whether the weaker sections of the people are not being made to pay the more affluent sections! Robbing Peter to pay Paul? It was further observed ``We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of finance and investment companies ' ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
On January 1, 1987 one of the national newspapers published from Hyderabad, where one of us happened to be spend 420 ing the vacation, carried as many as ten advertisements with `banner headlines ' covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months, 2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interest ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking campanies which are accepting deposits, promising most unlikely return and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these business.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to make quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsover.
Action appears imperative. ' ' Khalid, J., another learned Judge aggreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under : ``I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that are attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evlove fool proof schemes to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people. ' ' Taking note of the weighty observations made by this Court, the 421 Reserve Bank of India in exercise of the powers conferred by Section 45 (J) and 45 (K) of the (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No. DFC.55/DG(O) 87 dated the 15th May, 1987 (hereinafter referred to as the `directions of 1987 ').
The constitutional validity of these directions of 1987 was challenged by Timex Finance and Investment Company Ltd. (hereinafter referred to as `Timex Company ') by filing a writ petition in the Calcutta High Court before the learned Single Judge.
The learned Single Judge granted an interim order in terms of prayers (g) and (h) of the writ petition.
The Reserve Bank of India aggrieved against the interim order filed an appeal before the Division Bench.
A stay petition was also moved on behalf of the Reserve Bank of India for staying the operation of the order dated 7th October, 1988 passed by the learned Single Judge.
After hearing the stay petition for sometime, the Division Bench of the High Court listed the appeal as well as the stay petition for final disposal.
The Division Bench of the High Court disposed of the appeal as well as the writ petition by an order dated March 23, 1990 and arrived to the following and conclusions. "(a) Reserve Bank of India is empowered to issue directions to the residuary non banking companies under the provisions of Section 45J and 45K of the for the interest of thousands of depositors.
(b) However, to the extent such directions are found to be prohibitory or not workable and as such unreasonable must be held to be beyond the powers of the Reserve Bank of India.
(c) The impugned directions providing that they represent irreducible minimum for safeguarding the interest of and for preventing exploitation of small and unwary depositors cannot be implemented without suitable modification.
It is not reasonably practicable to comply strictly with the directions as they stand by the writ petitioners and the similarly situated companies.
The Supreme Court in Peerless case (Supra). .reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees.
The impugned directions without modifications will run counter to the aforesaid directions of the Supreme Court.
(d) The business of savings and investments carried on by the company and similarly situated companies having not been declared unlawful or banned, power of the Reserve Bank of India to regu 422 late such business cannot be permitted to be prohibitory resulting in the ultimate closure of the business carried on by the writ petitioner company and other similarly situated companies.
If the modifications as suggested by us are not implemented and if ultimately the business is closed down and the company goes into liquidation, the hard earned money of thousands of depositors will be lost and the employees would also lose their job.
If even after modifications are made to the impugned directions in terms of this order, any company fails to comply with such directions, the Government may take such steps as are open to them to protect the interests of the thousands of small depositors and numerous employees.
(e) The reasons why the impugned directions cannot be complied with and held to be unworkable and unreasonable are mainly because of the definition of liability assigned in the impugned directions.
The impugned directions, as they stand now, cannot be implemented by the residuary non banking companies without incurring loss irrespective of their net worth.
According to the impugned directions, the liability is the amount of money deposited by the depositions plus the amount of interest whether or not due to them according to the terms of the respective contracts at the given point of time.
In other words, the entire collection with the interest, Bonus, etc.
whether payable or not would be the liability of the Company.
This leaves no fund for working.
If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital.
In our view, liability in clause 6 and in other clauses of the impugned directions should be construed to mean total amount of contractual dues of the depositors including interest, premium, bonus or other advantages by whatever name called, accrued on the amount according to the terms of contract.
Section 45J and 45K of the Act do not authorise the Reserve Bank of India to introduce a concept of liability which is contrary to the accepted commercial practice and trading principles.
The impugned directions have failed to make distinction between the actual liability in presenti and a liability de futuro.
Liberty must be reserved to the companies to adopt normal accountancy practice recognised and accepted in the trading circles so long as such accounting practice provides for payment of the liability to the depositors in accordance with the contractual obligations.
However, the Reserve Bank of India may, having regard to the facts and circumstances of each case issue directions regulating the administrative and management expenses and expenditure on com 423 mission and publicity.
In the impugned directions no restriction has been imposed on the expenditure by a residuary non banking company on any of these heads.
In our view, the impugned directions without modifications, instead of suppressing the mischief, will only lead to adverse unworkable and/or impracticable results inasmuch as if the residuary non banking companies cannot comply with such directions in toto, such companies have to go out of existence.
This cannot be the object of the impugned directions.
If the liability in terms of the contractual obligations is provided not only in the accounts but also by suitable investment in terms of Clause 6 of the directions, in our view, all the residuary non banking companies, irrespective of their net worth, will be able to carry on the business.
(f) Every residuary non banking company shall disclose its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract.
(g) The directions contained in clause 6 for deposit or investment and the liability shall be read subject to the modification of the designation of the liability as aforesaid.
(h) The directions are prospective.
The period of deposit and the date of return with respect to all certificates issued prior to 15th May 1987 have been excluded from the purview of the directions as per clause 18 (1).
This exemption should include all contractual obligations on those certificates.
(i) All funds prior to the issue of the directions should be allowed to be kept in the manner as was being done by the respective residuary non banking company.
The direction with regard to the investment shall be applicable from the money collected and/or received on and after 15th May 1987.
The companies shall be allowed reasonable time to make good the deficiency in the investment required to be made in terms of the directions after 15th May 1987.
(j) We are not unmindful of the fact that exercise of power by legislature and executive is subject to judicial restraint.
The only check on judicial exercise of power is the self imposed dicipline of judicial restraint.
But although the courts in exercise of judicial power are not competent to direct the enactment of a particular provision of law, if the statutory directions suffer from arbitrariness, the court is competent to issue necessary direction so that the statutory directions may be brought in conformity 424 with law.
As we have held that the Reserve Bank of India has transgressed the statutory power to the extent indicated elsewhere in the judgment, we are of the view that the Reserve Bank of India shall modify the directions and make them reasonable and workable to safeguard the interest of depositors and protect the employees. ' ' The Division Bench also considered an application filed by Favourite Small Investment Company and by order dated 20th December, 1990 directed that the Reserve Bank of India should revoke the prohibitory order and permit Favourite Small Investment Company to accept fresh deposits and carry on new business.
It may be noted that the Peerless filed a petition before the High Court for becoming a party respondent.
The High Court by order dated 31st August, 1990 allowed the said application and further ordered that the cause title and the records proceedings of appeal, memorandum of appeal and the paper book filed be amended accordingly.
The Peerless also moved an application for clarification of the judgment and order dated 23rd March, 1990.
It prayed that suitable provision should be made for a depositor who wants back the money before maturity.
If the depositor intends to get refund of the money invested before the expiry of actual contract period, he should be required to keep the funds for a minimum period in accordance with the contract.
Before maturity he can only take loan but not the principle amount with interest.
The amounts of returns should also be less than 5 per cent to provide for the collection and other expenses of the non banking companies.
The Division Bench of the High Court took the view that the order dated 23rd March, 1990 required clarification as it was not made clear as to whether non residuary banking companies are under an obligation to pay discontinued certificates before the stipulated period in the contract, if so what would be the rate of interest.
The Division Bench by order dated December 24, 1990 clarified its earlier order dated 23rd March, 1990 as under : ``(a) If the contract by and between the company and the depositor provides that no payment on discontinued certificate will be made before the expiry of the term stipulated in the contract, in such cases, if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and conditions of the contract, in other words, on the expiry of the term stipulated in the contract, such depositor shall be paid interest at the rate of 8% compound per annum, but in such a case the company will be at liberty to deduct an amount not exceeding 5% from the total return in or to provide for collection and other expenses incurred in connection with these 425 discontinued certificates (b) In cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates such refund shall be made to depositors with compound interest at the rate 8 % per annum without any deduction whatsoever.
(c) Since no payment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan, if they so intend, against the payment made till discontinuance of such terms and conditions as the company may stipulate.
" The Reserve bank of India aggrieved against all the above orders of the Calcutta High Court has filed appeals against the orders dated 23 rd March, 1990.
31st August, 1990, 20th December, 1990 and 24th December, 1990.
The Peerless General Finance and Investment Company Ltd., has also filed a writ petition No. 677 of 1991 directly before this Court under Article 32 of the Constitution of India.
In view of the fact that the questions raised in the appeals filed by the Reserve Bank of India against the orders of the High Court and in the civil writ petition filed by the Peerless Company are common, the same were heard together and are disposed of by a single order.
Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless company.
We have heard them also.
The main controversy centers round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full.
Paragraph (6) Security for depositors On and from 15th May 1987 (1) Every residuary non banking company shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (Such securities being valued at their marked value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31st December 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable: 426 Provided that of the sum so deposited or invested (a) not less than ten percent shall be in fixed deposits with any of the public sector banks.
(b) not less than 70 percent shall be in unapproved securities; (c) not more than 20 percent or ten times the net owned funds of the company, whichever amount is less, shall be in other investments, provided that such investments shall be with the approval of the Board of Directors of the Company.
Explanation : "Net owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
(2) Every residuary non banking company shall entrust to one of the public sector banks designated in that behalf, deposits and securities referred to in clauses (a) and (b) of the proviso to subparagraph (1) to be held by such designated bank for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the residuary non banking company, or otherwise dealt with, except for repayment to the depositors.
(3) Every residuary non banking company shall furnish to the Reserve Bank within thirty days from the close of business on 31st December 1987 and thereafter at the end of each half year that is as on 30th June and 31st December, a certificate from its auditiors, being members of Institute of Chartered Accountants, to the effect that the amounts deposited in fixed deposits and the investments made are not less than the aggregate amounts of liabilities to the depositors as on 30th June and 31st December of that year.
Explanation : For the purpose of this paragraph, (a) "Aggregate amounts of liabilities" shall mean total amount of deposits received together with interest, premium, bo 427 nus or other advantage by whatever name called accrued on the amount of deposits according to the terms of contract.
(b) "approved securities" means; the securities in which the Trustee is authorised to invest trust money by any law for the time being in force in India and bonds or fixed deposits issued by any corporation established or constitued under any Central or State enactments.
(c) "public sector banks" means, the State Bank of India, the Subsidiary Banks and the corresponding new banks referred to in Section 45(1) of the (2 of 1934).
(d) "unencumbered approved securities" shall include the approved securities lodged by the company with another institution for advances or any other credit arrangements to the extent to which such securities have not been drawn against or availed of.
Paragraph (12) Every residuary non banking company shall disclose as liabilities in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
We would first deal with the legal objections raised on behalf of the Peerless and other companies.
It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Section 45J and 45K of the Reseve Bank of India Act, 1934.
None of the said sections authorises the Reserve Bank to frame any directions prescribing the manner of investment of deposits received or the method of accountancy to be followed or the manner in which its balance sheet and books of accounts are to be drawn up.
It has been contended that Section 45J has no manner of application in the present case.
Section 45K (3) of the Act on which reliance has been placed on behalf of the Reserve Bank, merely provides that the Reserve Bank may, if it considers necessary in the public interest so to do, give directions to non banking institutions either generally or to any non banking institutions in particular, in respect of any matters relating to or connected with receipts of deposits, including the rate of interest payable on such deposits and the purpose for which deposits will be received.
According so Sec.
45K (4) if any non banking institution fails to comply with any direction given by the bank under sub 428 section (3) the Reserve Bank may prohibit the acceptance of deposits by that non banking institution.
It is thus submitted that on a plain reading of Sec.
45K (3) the Reserve Bank is only competent to frame the directions regarding receipt of deposits and such power of direction does not extend to providing the manner in which deposits can be invested or the manner in which the liabilities are to be disclosed in the balance sheet or books of accounts of the company.
It is further submitted that the power under subs.
(4) is to prohibit acceptance of deposits and as such the permissible field of direction making is limited to receipt of deposits and nothing more.
The Reserve Bank of India in framing the directions of 1987 which is a subordinate piece of legislation has clearly over stepped the bounds of the parent statue of Sec.
45K (3) of the Act.
It is further argued that the Reserve bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under Sec.
45L (1) (b) of the Act.
It is submitted that the Reserve Bank had at no point of time expressed its intention to invoke its powers under Sec.
45L. Even before the Division Bench of the Calcutta High Court the Reserve Bank did not rely on Sec.
45L as alleged source of its power to issue the impugned directions nor the Reserve Bank referred to Sec.
45L in its pleadings before the High Court.
Wherever the Reserve Bank of India wanted to invoke its power under Sec 45L of the Act, it has expressly mentioned that it was exercising its powers under Sec.
45L. In the case of non banking financial companies (Reserve Bank) directions 1977, or the miscellaneous non banking companies (Reserve Bank) Directions, 1977 it has expressly said that it was invoking its powers under sec.
45L of the Act, whereas in the case of the impugned directions, the Reserve Bank has only referred to sections 45J and 45K of the Act.
The Reserve Bank of India itself in the affidavit filed before the High Court had stated that the directions of 1987 were framed after careful deliberations at the highest level and now it cannot take the stand that the source of its power in framing the impugned directions was exercised under sec 45L of the Act.
It is further contended that in order to invoke the powers under sec 45L of the Act it has to state that the Reserve Bank was satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage and it was necessary to give such institutions directions relating to the conduct of business by financial institution or institutions.
In order to exercise its powers under sec.
45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction.
In fact, such recital is necessary since such satisfaction is a pre conditions for the Reserve Bank to exercise its powers under section 45L of the Act.
On the other hand it has been contended on behalf of the Reserve 429 Bank that the power of the Reserve Bank to regulate deposit acceptance activities of non banking and financial institutions under Chapter IIIB of the Act cannot be disputed.
The Reserve Bank has power to issue the impugned directions under Section 45J, 45K and 45L of the Act.
The pith and substance of Para 6 of the directions of 1987 is to ensure that deposits received from the public are invested in a manner to secure the repayment of the deposits.
A deposit is, by definition, a sum of money received with a corresponding obligation to repay the same.
Thus, the repayment of the deposit is an integral part of the transaction of a receipt of deposit.
It is contended that the expression "receipt of deposit" must be construed liberally, in the light of the nature of the provisions as well as in the light of the wide language used in the provision.
It is also argued that even if the impugned directions of 1987 are not covered under the powers conferred under Sections 45J and 45K of the Act, those are squarely covered by Section 45L of the Act.
It is submitted that various provisions under the Act are enabling in nature and confer overlapping powers.
Even if there is no recital of Sec.
45L, it would not be of much consequence, if such exercise of power can be related to Sec.
45L of the Act.
We have considered the arguments advanced by learned counsel for the parties.
Chapter IIIB laying down provisions relating to non banking institutions receiving deposits and financial institutions was inserted in the , by virtue of Act 55 of 1963 w.e.f. 1.2.1964.
Section 45J, 45K (3) & (4) and 45L 1 (b) relevant for our purpose are given as under : Sec.
45J "The Bank may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K (1) . . (2) . . (3) The Bank may, if it considers necessary in the public interest so to do, give direction to non banking institutions either generally or to any 430 non banking institution or group of non banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any non banking institution fails to comply with any direction given by the Bank under sub section (3), the Bank may prohibit the acceptance of deposits by that non banking institution.
Section 45L (1) If the bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may (a) . . (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.
A combined reading of the above provisions unmistakably goes to show that the Reserve Bank if considers necessary in the public interest so to do can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be issued.
It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
This latter power flows from sub section
(3) of Sec.
45K of the Act.
The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits (emphasis added).
In our view a very wide power is given to the Reserve Bank of India to issue directions in respect of any matters relating to or connected with the receipt of deposits.
It cannot be considered as a power restricted or limited to receipt of deposits as sought to be argued on behalf of the companies that under this power the Reserve Bank would only be competent to stipulate that deposits cannot be received beyond a certain limit or that the receipt of deposits may be linked with the capital of the company.
Such interpretation would be violating the language of Sec.
45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits.
The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company.
The word `any ' quali 431 fying matters relating to or connected with the receipt of deposits in the above provision is of great significance and in our view the impugned directions of 1987 are fully covered under Sec.
45K (3) of the Act, which gives power to the Reserve Bank to issue such directions.
As a proposition of law we agree with the contention of the learned counsel for the Reserve Bank that when an authority takes action which is within its competence, it cannot be held to be invalid merely because it purports to to be made under a wrong provision, if it can be shown to be within its power under any other provision.
Learned counsel in this regard has placed reliance on Indian Aluminium Company etc.
vs Kerala State Electricity Board; , In our view as already held above, the Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K (3) of the Act.
Having cleared the ground of ultra vires we must now turn to the main challenge posed on behalf on the Peerless and other companies and employees.
Mr. Harish Salve made the leading arguments on behalf of the Reserve Bank of India.
His main thrust of the argument was that the Reserve Bank of India had issued these directions of 1987 in order to carry out observations made by this Court in Peerless case (supra) and in the public interest of safeguarding the money of the depositors in such companies.
The Reserve Bank considered it necessary that the interest of millions of small depositors of rural areas should be made safe and may not be devoured by a mushroom of companies with no stake.
According to Mr. Salve it was not the intention of the Reserve Bank to put any restrictions in the manner or conduct of business to be done by such companies.
But the most important factor weighing in the mind of the Reserve Bank was to safeguard the money of the depositors.
It was not the concern of the Reserve Bank as to how and in what manner these companies would regulate their expenses or would be able to conduct such business for earning more profits.
According to the Reserve Bank of India these companies cannot be allowed to spend a mighty of deposits for meeting their own expenses.
They should find out their own resources for meeting the expenses.
According to the Reserve Bank the rate of interest to be paid by these companies to the depositors has been fixed as 10 per cent per annum.
They could easily invest such amount in bonds issued by public sector corporation and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits.
It was submitted that the propensity of the 432 problem has increased manifold in view of the fact that the amount of deposits and investments has gone to staggering heights worth several thousand crores of lower middle class persons living mostly in the rural areas.
A bogey of employment hazards of several thousand regular employees and still a large number of agents working in the field cannot deter the Reserve Bank to lay down some directions which may act harshly and resulting in lessening of profits of such companies.
It was also submitted that according to the affidavit submitted before this Hon 'ble Court on behalf of the Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting deposit scheme.
At present they could classify only 392 such companies as required information for classifying of the remaining companies had not been received.
Most of such companies have not designated their banks as it required under paragraph (6) of the directions and in most of such cases amounts invested in bank deposits and approved securities fall much short of deposit liabilities.
The companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "addressee not known" etc.
In some cases those who have chosen to reply have given evasive replies.
It has been further stated in the affidavit that most of these companies did not comply with the financial discipline sought to be imposed upon them and have avoided and abhorred any scrutiny into their accounts.
It has thus been submitted that to get over these difficulties, the directions of 1987 attempt to provide a steady, stable identificable and monitorable method by which the companies will be able to disclose all their true liabilities and also utilise the money raised from the depositors for investment in safe indentifiable and quantifiable securities instead of investing them in other ventures.
This will ensure complete security to the depositors at all times and will also make the accounts of the companies comprehensible and easy to monitor.
As regards the formula laid down by the High Court it has been submitted that if a variable as against a fixed and definite percentage of investment with respect to amounts collected by way of each instalment is permitted it would be impossible to find out and verify whether the amounts invested are in accordance with the directions at any given point of time when there are thousands of certificates with different and varying maturity periods.
In the circumstances, the formula laid down by the High Court is self defeating and also deprives the depositor of the security envisaged under the directions.
It was also submitted on behalf of the Reserve Bank that it is an admitted position that the business of RNBCs is to collect funds from the public and invest the same in Government securities and bank deposits.
In 433 the application forms and in the advertisement 's issued by these companies it is expressly held out to the public that their moneys are safe with the banks and in Government securities.
It is the very nature of their business which makes it non viable if they are to give fair return to the depositors and private security for the repayment of their money.
The scheme of control as provided in the directions of 1987 might be harsh but the same is in conformity with the assertions held out by these companies to the public at large.
These directions subject the companies to proper discipline by monitoring their actions and such directions cannot be considered as unreasonable.
The reasonableness of the directions when looked at from the point of view of the depositors for whose safeguard they have been issued, is beyond question.
Return provided and the security to be given through proper investment cannot be faulted on any ground.
Thus what seems to be an impossible situation for these companies is not due to the impugned directions but because of the nature of business itself.
The funds are collected at exhorbitant costs and on that account it becomes difficult for the companies to give a fair return to the depositors.
These companies are not genuine investment companies.
If they want to do genuine investment business they can do so by choosing freely their investment, but in that case Reserve Bank of India directions applicable to such companies would permit them to accept deposits not exceeding 25 per cent of paid up capital and reserve.
The directions of 1987 had not imposed any restriction on the right to carry on business but those directions only place a restriction with respect to one of the modes of raising reserves i.e. through public deposits.
It has been further argued that the reasonableness of the directions has not to be looked into from the point of view of the company to whom any such restrictions will be irksome and may therefore be regarded as unreasonable.
The framing of the directions are only regulatory in nature keeping in view the interest of the depositors without unduly jeopardising the interest of the employees.
Keeping this in mind it has been provided that the minimum return would be at 10 per cent, though there are govt.
and public sector bonds which pay interest at a much higher rate.
Even presently bank deposits and other company deposits give return varying between 13 to 15 per cent.
There is no limitation on the quantum of deposits with reference to the overall capital as shown in the case of companies governed by the Companies (Acceptance of Deposits) Rules 1975, Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The linking of deposits with capital as in the case of other regulations is a measure to secure the interest of the depositors namely e.g. Companies (Acceptance of Deposit) Rules, 1975, ensure that the assets 434 are at least three times the deposits received.
In view of the low or total non existent capital of the RNBCs, it was not possible to secure the deposits in this manner.
Instead, it has been provided that the entire liability towards the depositors should be invested and no part of the deposits be utilised for payment of commission etc.
or incurring other expense.
In any event, even if, the directions do not prescribe existence of owners capital as security, it does not imply that it is permissible to use the deposits received to bridge the time gap between income and expenditure.
Merely because the directions do not fix a ceiling on the rate of commissions it does not imply that the Reserve Bank has granted its permission to payment of high commission or incurring of large expenses on management etc.
The RNBCs are free to incur such expenses and organize their business as they desire as long as the depositors are fully secured at all times.
The contention that the business of the RNBCs will close down if the directions of 1987 are to be adhered to is not based on facts and misconceived in law.
A perusal of Directors ' Report of Peerless for the years 1988, 1989 and 1990 clearly go to show that they did not consider the company in any financial difficulty and in fact paid larger dividends even after complying with the impugned directions of 1987.
It has thus been submitted that given a wide latitude in judging the validity of economic legislation on the touch stone of reasonableness, in the absence of patent arbitrariness but having nexus with the public objective sought to be attained, the durations cannot be condemned as being violative of Article 19(1) (g).
The result of the contentions put forward on behalf of RNBCs would be that in the case of endowments repayable after, say 10 years, there will be nothing due and payable in the first nine years and as such there would be no need of investing any sums for the first nine years.
The interpretation placed by the respondent companies upon the judgment of the High Court is that it is now open to them to determine as per their own peculiar estimate, what would be sufficient to meet the liabilities towards the deposits and accordingly such amount would be their "aggregate liability".
According to the Peerless Company if it deposits 75 per cent of the first year 's subscription, it is adequate to cover its liabilities to the depositors.
On the other hand as per Timex Company a deposit of only 50 per cent of the first year 's subscription would be adequate to cover its liabilities to the depositors.
Whereas the Favourite Company contends that investment of 40 per cent of the first year 's subscription will be adequate to cover the liabilities to the depositors.
It has been submitted that according to well accepted accounting practice where any sum is received as a loan or as a deposit it has to be shown as a liability together with accrued interest irrespective of when it is due.
The amount contributed by the depositors being a capital receipt and not a revenue receipt cannot under any circumstances be shown in the 435 balance sheet otherwise then at its full value.
Moreover, being a capital receipt, it cannot be credited to the profit and loss accounts since Part II of Schedule VI to the requires that the amounts to be shown in the profit and loss accounts should be confined to the income and expenditure of the company.
Thus, crediting a part of the first and subsequent year 's deposit instalments to the profit and loss account and not showing them fully as a liability in the balance sheet would be a contravention of the provisions of the .
It has been further submitted on behalf of the Reserve Bank that the question which arises for consideration is whether liability to the depositors can be calculated on an actuarial basis.
It may be noted that actuarial basis is normally adopted (a) in respect of items of income and expenditure, (b) where there is a significant element of uncertainty.
Thus, in so far as the liability arising out of the repayment to the depositors of the amount capitalised by him is considered, the actuarial basis cannot be adopted and this liability must always be stated at its full value.
The principle of actuarial valuation is in opposite for the business of RNBCs.
It has also been submitted that the formula laid down by the High Court about the quantum of investments to be made by RNBCs is incapable of effectively monitoring and hence the provisions made in the directions of 1987 regarding security to depositors would be rendered wholly illusory.
Such impossibility in the monitoring has been demonstrated as follows: (A) These companies do not fix a definite but variable percentage of investment with respect to amounts collected by way of each instalment under the certificates of deposits; e.g. Peerless would invest 75 % of the collections made out of 1st instalment (retaining and taking to P & L A/c, 25 %) and 82 % out of 2nd instalment and so on.
At any given point of time, there will be thousands of deposit certificates with varying maturity and the amounts collected would be an impossibility to find out and verify whether the amounts invested are in accordance, with the proportion fixed by the companies with respect to each instalment.
Regulatory authority would have to depend entirely on these companies for doing its monitoring exercise.
(B) Each company fixes its own proportion of investment with respect to each instalment based on the projected yield from its investment; e.g. Favourite Finance Company claims that it needed to invest only 40 % of the amounts collected by way of 1st instalment claiming that the projected yield from its investment would be 14.8 %.
This would compound the impossibility of monitoring further.
436 It has thus been argued that the formula laid down by the High court is self defeating and depriving altogether benefits of security provisions given to depositors under the directions of 1987.
Mr. Somnat Chatterjee, learned senior counsel appearing on behalf of Peerless Company contended that the Peerless being the largest RNBC in india having an impeccable record of public service decided to give effect to the directions of 1987 as it wanted to avoid any confrontation with Reserve Bank and further not to give an impression of seeking to avoid "regulatory control", tried its best to comply with the said directions w.e.f. 15th May, 1987 till 31st March, 1989.
However, from its working results it appeared bonafide to the Board of Directors of Peerless that it was impossible to carry on its traditional business for any longer period without incurring huge losses.
The company as such decided to approach the High Court for obtaining the benefit of judgment delivered in the Timex case.
The Peerless has only challenged a part of Paragraph 6 of the directions of 1987 and the consequential direction contained in para 12 which shows that Peerless does not wish to remain outside of the regulatory controls of Reserve Bank but challenges only those directions which make the business totally unworkable.
There has been no attempt on the part of Peerless to carry on its business in a manner which may jeopardize the interest of any depositor or which will not protect fully every paisa deposited with Peerless at all points of time.
No real complaint was made by or on behalf of Reserve Bank as to any depositor of Peerless running a risk of loss of any amount or that it has carried on or is carrying on the business in an undesirable manner.
It has been submitted that Peerless should not be made to suffer for the illegality or improprieties, if any committed by any other RNBC and neither Peerless nor its 14 lac field agents, 3 thousand field officers and 4 thousand direct employees should be made to suffer.
The result of following directions of 1987 would be that all the above agents, officers and employees of the Peerless could loose their jobs and their family members will be thrown on the streets.
The Peerless had abolished the provision of forfeiture in all its schemes as early as in 1986 that is even prior to coming into force of the directions of 1987.
The Peerless has been compelled to challenge paragraphs 6 and 12 of the directions of 1987 since enforcement of these provisions would result in complete annihilation of the undertaking of Peerless in the near future.
It was further contended that it is inherent in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders.
Such business comprises in collecting subscriptions from depositors either in lumpsum 437 or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc.
in terms of the contract at the end of the stipulated term.
Through this business such companies have rendered great and commendable service to the nation in mobilizing small savings and giving a boost to the movement of capital formation in the country.
Such companies have placed at the disposal of Governmental institutions including public sector banks and other financial institutions huge deposits which could not be collected by the said financial institutions themselves or by anybody in the organised sector.
The method followed by the companies in carrying on the aforesaid business is that a certain portion of the subscriptions received by it is transferred to the profit and loss account shown as income, and the same is used to defray inevitable working capital requirements of the company, namely, payment of agent 's commission, management expenses, staff salaries and other overheads.
However, the balance of the subscriptions (excluding the appropriated part) is transferred to a fund each year and the corpus of the fund is invested in turn in interest bearing investment.
The Peerless company initially used to transfer approximately 95 % of the first year 's subscriptions to the profit and loss account and used to invest the subscriptions received from the second year onwards.
However, at present, Peerless is appropriating 25 % of the first year 's subscription to the profit and loss account and investing the balance 75 % in the manner and mode prescribed by paragraph 6 of the directions of 1987.
It has been contended that the investment is planned in such a manner that at the end of the contractually stipulated maturity period or at any other point of time when any sum of money may become contractually payable to a depositor, an RNBC is always in a position to pay all its conractual dues to the certificate holder.
There is thus no threat to the safety of the depositors money inspite of the aforesaid transfer of a portion of the subscription received to the profit and loss account showing it as income and utilising it for meeting the working capital requirements.
It was pointed out that Peerless had been assessed to income on the basis of above method of accounting and no objection has ever been taken by the revenue authorities or by the auditors of Peerless or even by R.B.I. before the issuance of the directions of 1987.
It was submitted that the Peerless was incorporated in the year 1932 when it used to carry on life insurance business.
It changed over to the present form of business from 1956 and since then it has been carrying on such business with the full knowledge of R.B.I. as well as other concerned authorities.
The R.B.I. never objected to the accounting system followed by the Peerless.
In view of the abolition of the forfeiture clause the alleged risk to the depositors has become totally non existent.
It was further argued that the R.B.I. framed regulatory measures in 1973 such miscellaneous non banking companies (Reserve Bank) Directions, 1973.
438 The Reserve Bank granted exception to Peerless from the provisions of the said Directions of 1973, by an order dated 3rd December, 1973.
The Favourite Small Investments Limited filed a writ petition challenging the refusal of Reserve Bank to grant exemption to them from the provisions of the said 1973 Directions to granting such exemption to Peerless.
In the said writ petition the R.B.I. filed an affidavit justifying the denial of exemption to Favourite Small Investments Ltd. and in the aforesaid affidavit submitted in detail the accounting procedure of Peerless including the fact that Peerless was transferring a portion of the subscriptions to the profit and loss account as income and it also certified that the said method was a permissible business method and by following the said method Peerless would be in a position to pay all contractual dues of the certificate holders at the end of the maturity period.
Thus the said system of accounting which is called an actuarial system of accounting was found satisfactory by the R.B.I. The said affidavit filed in the Favourite 's case has been quoted in the Peerless case in ; , and the said actuarial system of accounting was not held as impermissible or against any recognized method of accounting.
It was also contended on behalf of the Peerless that the interest of depositors is certainly an important consideration but the interest of the depositors is not impaired in any manner whatsoever by the method of accountancy now being followed by Peerless and in fact by all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same.
In respect of the above contention certain charts were also produced during the course of arguments and from such charts it was sought to establish that except for the first two years the principal amount paid by a subscriber is always covered by matching investment.
Further, on the date on which a deposit becomes contractually repayable, there is full coverage of such liability.
It was submitted on behalf of All India Peerless Field Officers Association that the said association represents about 14 lac field workers.
These 14 lac persons are engaged by Peerless on the basis of individual contracts of engagements and earn their livelihood solely by collecting business for Peerless.
For collecting such business Peerless pays to them commission at a contractual agreed percentage on the value of business collected.
The said field officers have to meet all expenses for procuring such business such as travelling expenses, boarding, lodging, office and administrative expenses etc.
out of such commission.
Field officers have to undertake long tours and have to travel into remote villages to reach the small depositors.
It has been submitted that if the directions of 1987 are upheld, the undertaking of Peerless will face inevitable closure and almost 439 14 lac field officers will lose their only source of livelihood and will be virtually thrown on the streets.
The field officers and their families will face starvation and extreme penury in case the validity of such directions is upheld.
Thus any restriction which would be prohibitive or which would result in closure of the undertaking of Peerless would be against public interest.
We have heard the arguments of learned counsel for the parties.
It may be made clear at the outset that questions raised in these cases regarding the validity of paragraphs 6 and 12 of the directions of 1987 cannot be determined merely by taking into consideration the working of the financial soundness of the one company alone like Peerles but the matter has to be examined in a broader perspective of all RNBCs.
We have to keep in mind, while deciding the controversies raised in the arguments, such RNBCs which are doing the same kind of business of taking deposits and returning the same to the certificate holders after a gap of 7 to 10 years along with interest, bonus etc.
In the affidavit submitted before this Court on behalf of Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting this business under various deposit schemes.
At present they could classify 392 such companies spread over across the entire country.
According to the above affidavit, as on 31st March, 1990 in the eastern zone out of 185 companies, only 35 have filed the annual returns and out of which only 30 have filed the balance sheet.
Similarly, out of 140 companies in the northern zone only 28 have filed annual returns and 32 have filed balance sheet.
A perusal of the returns given by 51 of these companies discloses that 35 companies have a negative net worth (i.e. their losses far exceed their share capital and reserves) which necessarily means that they have not only wiped out the share capital and reserves but their liabilities are far in excess.
Only 16 companies have a positive net worth including Peerless.
It has been further pointed out in the affidavit that apart from Peerless the aggregate capital investment by 15 companies is Rs. 158 lacs only.
As against this, the negative net worth of the 35 companies aggregated to Rs. 3.6 crores.
Despite large accumulated losses (in some cases with meager or nominal capital) these companies apart from Peerless, have realised deposits to the tune of Rs. 86 crores.
Apart from the financial parameters most of these small companies are family concerns.
Most of such companies have not designated their banks as is required under Paragraph 6 of the directions and in most of such cases amounts deposited in banks and approved securities fall much short of deposit liabilities.
It has also been pointed out in the affidavit that the companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "ad 440 dressee not known" etc.
Thus we have to keep in mind the above mushroom of companies also which have set foot in this sort of business.
It would also be important to note that most of the depositors in such companies belong to the rural areas and who are persons belonging to lower middle class, small agriculturists and small traders, pensioners etc.
These companies advertise their schemes widely in beguiling terms.
Through such advertisements they lure the small savings of the poor ignorant villagers through a special structure of agents, special agents, different kinds of organisers and so on.
The agents commission for the first years subscription is very high and which offers incentive to the agents on securing a fresh business and a disincentive to collect subscriptions of subsequent years.
It is a matter of common experience and knowledge that most rural folk particularly those belonging to the lower strata of society will not pay their subscriptions regularly unless somebody takes the trouble of collecting their subscription with the same enthusiasm as may be shown in enrolling the subscribers in the beginning.
It is no doubt correct that these companies do tap and collect the deposits from such areas where the agents of public sector banks or public sector companies or instrumentalities of the state are unable to reach.
Thus these companies mop up a large amount of money for ultimately investing in the nationalised bank or other Govt.
owned corporations or companies.
However, the Reserve Bank considered the safety of the money of the depositors as the paramount consideration in issuing the direction of 1987.
It cannot be disputed that the interest of the employees as well as the field officers and agents have also to be taken into consideration while deciding the reasonableness of the impugned directions.
It may be further noted that in the Reserve Bank of India vs Peerless Company case (supra) this Court though came to the conclusion that the Endowment Certificate Scheme of the Peerless company was outside the Prize Chit and Money Circulation Schemes (Banning) Act, still it was observed that it would be open to the Reserve Bank to take such steps as are open to them in law to regulate schemes such as those run by the Peerless company to prevent exploitation of ignorant subscribers though care must also be taken to protect the thousands of employees.
The Court expressed grave concern with regard to the mushroom growth of `financial investment companies ' offering staggeringly high rates of interests to depositors leading to the suspicion whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
It was clearly pointed out that if the Reserve Bank of India considers the Peerless company with 800 crores invested in Govt.
securities, fixed deposits with national banks etc.
unsafe for depositors one wonders what they have to say about the mushroom of non banking companies which are accepting 441 deposits promising most unlikely returns and as such what action was proposed to be taken by the R.B.I. to protect the investors.
In the above background the Reserve Bank came forward with the impugned directions of 1987.
Before examining the scope and effect of the impugned paragraphs 6 and 12 of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers bank is a creature of Statute.
It had large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impunged directions of 1987.
The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country.
It is the duty of the Reserve bank to safeguard the economy and financial stability of the country.
While examining the power conferred by Sec.
58A of the on the Central Govt.
to prescribe the limits upto which, the manner in which and the conditions subject to which deposits may be invited or accepted by non banking companies, this Court in Delhi Cloth and General Mills, etc.
vs Union of India, etc.
; , observed as under: "Mischief was known and the regulatory measure was introduced to remedy the mischief.
The conditions which can be prescribed to effectuate this purpose must a fortiori, to be valid, fairly and reasonably, relate to checkmate the abuse of juggling with the depositors/investors ' hard earned money by the corporate sector and to confer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit.
Can it be said that the conditions prescribed by the Deposit Rules are so irrelevant or have no reasonable nexus to the objects sought to be achieved as to be arbitrary? The answer is emphatically in the negative.
Even at the cost of repetition, it can be stated with confidence that the rules which prescribed conditions subject to which deposits can be invited and accepted do operate to extend a measure of protection against the notorious abuses of economic power by the corporate sector to the detriment of depositors/investors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation.
One need not go so far with Ralph Nadar in `America Incorporated ' to establish that political institutions may fail to arrest the control this everwidening power of corporations.
And can one wish away the 442 degree of sickness in private sector companies? To the extent companies develop sickness, in direct proportion the controllers of such companies become healthy.
In a welfare state, it is the constitutional obligation of the state to protect socially and economically weaker segments of the society against the exploitation by corporations.
We therefore, see no merit in the submission that the conditions prescribed bear no relevance to the object or the purpose for which the power was conferred under Sec.
58A on the Central Government.
" The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies.
In such matters even experts can seriously and doubtlessly differ.
Courts cannot be expected to decide them without even the aid of experts.
The main grievance raised on behalf of respondent companies is that if the provisions of paragraphs 6 and 12 of the directions of 1987 are complied with, the companies will be left without any fund to meet their working capital.
It would be impossible to run the business without a working capital and to meet even reasonable expenses incurred for payment of agents commission, management expenses and other overhead expenses.
During the course of hearing the counsel for the companies had relied on some charts to show the unworkability and unreasonableness of the impugned paragraphs 6 and 12 of the directions.
It was also pointed out that the arguments made on behalf of the Reserve Bank overlooked the fact that in case of investments in long term schemes such as Indira Vikas Patra and Kisan Vikas Patra the companies will not be able to utilise its return from such investment before the end of the minimum period for which these schemes operate.
The respondent companies will thus be left without any income during the period of operation of such schemes and cannot meet its working capital requirements.
It has been submitted that the directions of 1987 really amount to prohibition of the business in a commercial sense without reasonable basis and are thus violative of article 19(1) (g) of the Constitution.
In support of the above contention reliance has been placed on Mohammad Yasin vs The Town Area Committee, Jalalabad and another; , ; Premier Auto 443 mobiles Ltd. and anothers vs Union of India; , and on Shree Meenakshi Mills Ltd. vs Union of India ; It has also been contended that it is now well settled by plethora of judicial pronouncements that the restrictions on any business caused by regulations should not be more than what would be necessary in the interest of the general public and such restrictions should not overreach the scope of the objects achieved by the regulations.
The contention on behalf of the Reserve Bank is that the directions have been made in public interest of safeguarding the interest of millions of depositors and the Reserve Bank is not concerned and while doing so it was rightly thought necessary by the Reserve Bank that the companies cannot be permitted to incur the expenses out of the corpus of the depositors money.
The business carried on by the companies to restructure their organization by curtailing its expenses.
If such middlemen or brokers are not able to earn a large profit as was done before the enforcement of the impugned directions, it lies with the companies to continue or not such business when the margin of profit is curtailed.
These companies want to do the business without having any stake of their own.
The companies doing such business cannot be subjected to the scheme of control applied to other financial and non financial companies for the simple reason that they have no capital and their schemes are for a period much longer than three years.
After the decision of the Supreme Court in Peerless case these directions of 1987 were issued after mature consideration with the help and advice of experts.
Paragraph 6 of the impugned directions according to the Reserve Bank lays down provisions for security of depositors.
it prescribes the mode of investment of funds collected by the companies.
It cannot be disputed that while collecting deposits the companies clearly hold out to the members of the public that the moneys so collected by them shall be invested in Government securities or kept deposited with the banks and they also assure the depositors that their moneys are safe and secure.
On the basis of such representations and on the strength of exaggerated and misleading advertisements these companies collect huge amounts of deposits from a large number of small, poor and uninformed depositors and that too in such investment spread over a long period.
The contention on behalf of the Reserve Bank of India is that in the above context these companies carry on their activities wholly with the funds provided by the public by way of deposits and hardly have any capital of their own.
In these circumstances it has been urged on behalf of the Reserve Bank that the provisions made in paragraph 6 of, the impugned directions are abso 444 lutely reasonable and are for ensuring repayment of deposits.
It has been submitted that it is common knowledge that small depositors cannot have recourse to courts for recovering their amounts if the companies do not repay the deposits.
The direction in paragraph 6 enjoins on these companies to deposit in fixed deposits with public sector banks or unencumbered approved securities or in other investments, a sum which shall not, at the close of business on 31st December, 1987 and thereafter at the end of each half year i.e. 30th June and 31st December not less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
Thus according to the above provision whole of the aggregate amounts of the liabilities to the depositors whether or not such amounts have become repayable, is required to be deposited or invested.
10 % of such amount is required to be deposited in public sector banks and 70 % in approved securities and 20 % has been allowed to be invested by the company according to its own choice.
In order to understand the rigour of the directions laid down in paragraph `6 ', it would be necessary to understand the scope of other directions as well.
Paragraph 4 of the directions lays down that the deposit shall not be accepted for a period of less than 12 months or more than 120 months i.e. one years from the date of receipt of such deposits.
The normal standard applied to non financial and financial companies is that they cannot accept deposits for a period of more than 36 months (except housing finance company).
Thus the companies before us have been permitted to conduct their schemes extending over to a long period upto 120 months.
This is a special kind of concession provided to the companies of the kind before us.
Paragraph 5 of the directions relates to the minimum rate of return fixed at 10 % per annum for a deposit with a maturity of 10 years.
It is a matter of common knowledge that in the present times even the public sector corporations and banks and other financial and non financial companies pay interest at much more higher rates ranging from 14 to 18 %.
Thus according to the above scheme the respondent companies and the others doing such business can easily earn a profit of 4 to 5 % on their investments.
In case of a request of the depositors for repayment of the deposit before maturity then the amount payable by the company by way of interest etc., shall be 2 % less than what could have been ordinarily paid by the company by way of interest if the deposit had run the full contractual period.
However, the question of repayment before maturity or after how many years will depend entirely on the terms and conditions of the contract of such deposit.
Paragraph 12 of the directions of 1987 enjoins upon the company to disclose as liabilities in its books of accounts and 445 balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Under Clause (a) to the explanation to clause 3 of paragraph `6 ' "Aggregate Amounts of Liabilities" shall mean total amount of deposits received together with interest, premium, bonus or other advantage by whatever name called, accrued on the amount of deposits according to the terms of contract.
Thus the company is required to deposit or invest the aggregate amounts of its liabilities having accrued on the amount of deposits according to the terms of contract.
Without going into the figures shown in the various charts, it is clear that if the directions contained in paragraphs 6 and 12 of the directions of 1987 are to be carried out, the companies are not left to utilise any amount out of the deposits as working capital to meet the expenses.
In our view the Reserve Bank is right in taking the stand that if these companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern.
If we look at the Annual Report and Accounts of Peerles for the years 1988, 1989 and 1990 it is clear that it had conducted its business following the impugned directions of 1987 and still had earned substantial profits in these years.
It is clear that Peerless is a company having established as back as in 1932 and had substantial funds to invest the entire amount of deposits and had met the expenses out of its accumulated profits of the past years.
This shows that the business can be run and profit can be earned even after complying with the impugned directions of 1987 issued by the Reserve Bank.
It is not the concern of this court to find out as to whether actuarial method of accounting or any other method would be feasible or possible to adopt by the companies while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987.
The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the impugned directions of 1987 including those contained in paragraphs 6 and 12.
It is not the function of the Court to amend and lay down some other directions and the High Court was totally wrong in doing so.
The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
The Court can only strike down some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any Statute.
It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies.
This court has repeatedly said that matters of economic policy ought to be left to the Government.
While dealing with the validity of an order passed on September 30, 1977 fixing a retail price of mustard oil not 446 exceeding Rs. 10 per kilogram in exercise of powers conferred by Section 3 of the Essential Commodities Act, a bench of 7 Judges of this Court in M/s Prag Ice & Oil Mills and another vs Union of India and Nav Bharat Oil Mills and another vs Union of India ; observed as under: "We have listened to long arguments directed at showing us that producers and sellers of oil in various parts of the country will suffer so that they would give up producing or dealing in mustard oil.
It was urged that this would, quite naturally, have its repercussions on consumers for whom mustard oil will become even more scarce than ever ultimately.
We do not think that it is the function of this Court or of any Court to sit in judgment over such matters of economic policy as must necessarily be left to the Government of the day to decide.
Many of them, as a measure of price fixation must necessarily be, are matters of prediction of ultimate results on which even experits can seriously err and doubtlessly be differ.
Courts can certainly not be expected to decide them without even the aid of experts".
In Shri Sitaram Sugar Company Limited and another vs Union of India & others with U.P. State Sugar Corporation Ltd., and another vs Union of India & Others, ; this Court observed as under: "Judicial review is not concerned with matters of economic policy.
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either.
The Court does not supplant the "feel of expert" by its own views.
When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness.
In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably on evidence and whether such findings are consistent with the laws of the land.
In R.K. Garg vs Union of India & others, etc.
; , at p. 690 a Constitution Bench of this Court observed as under: "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, be 447 cause it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The Court should feel more inclined to give judicial defence to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Doud where Frankfurter, J. said in his Inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative Judgment.
The legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to reconstruct.
When these are added to the complexity of economic regulation, the uncertainty, the liability to error the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability".
It may also be noted that it is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc.
Even amongst the three companies viz.
Peerless, Timex and Favourite, there is a difference in this regard.
According to the Peerless 25 %, Timex 50 % and Favorite 60 % of the deposits of the first instalment would be necessary for generating the working capital for meeting the genuine expenses.
Thus it would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money.
We cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker section of the society residing in rural areas, and to stop such business after a few years and thus devouring the hard earned money of the small investors.
It cannot be lot sight that in such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments.
In these circumstances, if the Reserve Bank has issued the 448 directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid.
It has been vehemently contended before us on behalf of the Peerless employees and field agents that in case the impugned directions are not struck down, the Peerless will have to close down its business and several thousands of employees and their family and several lakhs of field agents would be thrown on the street and left with no employment.
We do not find any force in the above contention.
So far as Peerless is concerned there is no possibility of its closing down such business.
It has already large accumulated funds collected by making profits in the past several years.
Thus it has enough working capital in order to meet the expenses.
We are not impressed with the argument of Mr. Somnath Chatterjee, Learned Senior Advocate for the Peerless that after some years the Peerless will have to close down its business if directions contained in paragraphs 6 and 12 are to be followed.
The working capital is not needed every year as it can be rotated after having invested once.
If the entire amount of the subscribers is deposited or invested in the proportion of 10 % in public sector banks, 70 % in approved securities and 20 % in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years of deposits of the subscribers.
In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose.
So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital.
It is important to note that the impugned directions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively.
Thus under these directions the question of depositing the entire amount of subscriptions would only apply to the deposits made after 15th May, 1987.
We may also observe that the impugned directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed.
Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time.
So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary.
We have no doubt 449 that if in times to come the Reserve Bank feels that business of the kind run at present by Peerless and other companies, in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conducive both in the interest of the large multitude of the investors as well as the employees of such companies.
Mr. Shanti Bhushan, learned Senior Counsel appearing on behalf of the Reserve Bank made a candid statement on behalf of the Reserve Bank that the Reserve Bank would always be prepared to consider any new proposal which would observe the public interest.
In the result I set aside the orders of the High Court and allow the appeals arising out SLP Nos.
6930 30 A of 1991, 7140 of 1991 and 3676 of 1991 filed by the Reserve Bank of India and dismiss the wirt petition No. 677 of 1991.
No order as to costs.
K.RAMASWAMY, J. While respectfully agreeing with my learned brother since the issues bear far reaching seminal importance, I propose to express my views as well.
This Court in Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors.
; , for short `first Peerless case ' while holding that does not attract "Recurring Deposits Schemes", pointed out that the schemes harshly operate against the poor sections of the society who require security and protection; urgent action appeared to be called for and was imperative to protect the public and emphasized to evolve fool proof scheme to prevent fraud being played upon persons not conversant with practices of the financial enterprises who pose themselves as benefactors of the people.
In pursuance thereof the appellant, Reserve Bank of India, for short `RBI ' issued Residuary Non Banking Companies (Reserve Bank) Directions, 1987 for short `the Directions '.
The short shift with avid eye into the relevant provisions of the 2 of 1934 for short `the Act ' and "the directions" would enable us to come to grips with the scope of the scheme of the directions, its purpose and operation.
Chapter III(B) of the Act deals with the power of RBI to regulate non banking institutions receiving deposits.
Section 45 (1) (bb) defines deposit includes and shall be deemed always to have included "any receipt or money by way of deposit or loan or in any other form but does not include. " exceptions are not relevant and hence are omitted.
Section 45(1) (c) defines `financial institution ' to mean any non banking institution which carries on its business, or part of its business, in any of the following activities; clauses (i) to (v) are omitted, clause (vi) collect 450 ing for any purpose of any scheme or arrangement by whatever name called, monies in lump sum or otherwise by way of subscription. or in any other manner by awarding prizes or gifts. , whether in cash or kind or disbursing monies in any other way to persons from whom monies are collected or to any other persons but does not include. the exclusions are not relevant and hence omitted.
Section 45J empowers that RBI may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions, subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K empowers the RBI to collect information from non banking institution as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received.
Under sub section (3) thereof the RBI is entitled to issue in the public interest directions to non banking institution in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received.
The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits.
But exercise of power is hedged with and should be "in the public interest.
" Section 45L provides that if the RBI is satisfied that for the purpose of enabling it "to regulate the credit system of the country to its advantage it is necessary so to do"; it may give to such institutions either generally or to any such institution, in particular, "directions relating to the conduct of business" by them or by it as financial institution or institutions including furnishing of information of particulars "relating to paid up capital, reserves or other liabilities", the "investments" whether "in the Government securities" or "otherwise", the persons to whom, and the purposes and periods for which; finance is provided "the terms and conditions", including "the rates of interest", on which it is provided.
Section 45Q provides that the provisions of this chapter shall have effect "notwithstanding anything inconsistent therewith contained in any other law" for the time being in force or any instrument having effect by virtue of any such law.
The directions became operative from May 15, 1987.
They would apply to every Residuary Non Banking Company for short `R.N.B.C ' 451 which receive any deposit scheme in lump sum or in instalment by way of contribution or subscription or by sale of units of certificates or other instruments or "in any other manner" vide Clause II of the definition.
Clause III(A) defines deposits as defined in s.45(1) (bb) of the Act.
Paragraph 4 regulates receipt of deposits for a period not less than 12 months and not more than 120 months from the first day of the receipt of the deposit.
Paragraph 5 prescribes minimum rate of return of 10 per cent per annum (to be compounded annually) on the amount deposited.
The proviso empowers R.N.B.C. at the request of the depositor to make repayment of the deposit, after the expiry of a period of one year from the date of the deposit but before the expiry of the period the deposit with two per cent reduced rate of interest from 10 % interest.
Paragraph 6, the heart of the directions consists of three sub paragraphs with explanations.
The marginal note expresses "security for depositors".
Sub paragraph (1) thereof provides that on and from May 15, 1987 every R.N.B.C. shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (such securities being valued at their market value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31 st December, 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
The proviso specifies that the sum so deposited or invested (a) not less than 10 per cent shall be in fixed deposits with any of the public sector banks (b) not less than 70 per cent shall be in approved securities; and (c) not more than 20 per cent or 10 times the net owned funds of the company, whichever amount is less, shall be in other investments.
Provided that such investments shall be with the approval of the Board of Directors of the company, the explanation "Net Owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
Sub paragraph (2) enjoins toe R.N.B.C to entrust to one of the public sector banks designated in that behalf.
Deposits and securities referred to in clauses (a) and (b) of the proviso to sub paragraph (1) to be held by such designated bank is for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the R.N.B.C. or otherwise dealt with, except for repayment to the depositors.
Sub paragraph (3) obligates it to furnish to the R.B.I. within 30 days from the close of business on 31st December, 1987 and thereafter at the end of each half year i.e., as on 30th June and 31st December, a certificate from its auditors, being member of institute of Chartered Accountants, to the effect 452 that the amounts deposited in fixed deposits and the investment made are not less than "the aggregate amounts of liabilities to the depositors" as on 30th June and 31st December of that year.
Explanation thereto makes explicit what the "aggregate amount of liabilities"; "approved securities"; and "public sector banks" and "unencumbered approved securities" are meant to be the details of which are not necessary for the purpose of this case.
Paragraph 7 abolishes the power of the R.N.B.C. of forfeiture of deposits; paragraph 8 prescribes particulars to be mentioned in the form soliciting deposits; paragraph 9 enjoins issuance of the receipts to the depositors and paragraph 10 obligates to maintain the register with particulars of depositors mentioned therein.
Paragraph II enjoins its Board of Directors to furnish the information in their report as envisaged therein.
Paragraph 12 which is also material for the purpose of this case provides that every R.N.B.C. shall disclose as liabilities in its books of accounts and balance sheets, the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Paragraph 13 enjoins to supply to R.B.I. copies of the balance sheets and accounts together with Directors report.
Paragraph 14 obligates the company to submit returns to the R.B.I. in the manner envisaged thereunder.
R.N.B.C. has to submit balance sheet, returns etc.
to the department of the Financial Companies as per paragraph 15.
Paragraph 16 obligates R.N.B.C. to comply with the requirement of the non banking financial companies and miscellaneous non banking companies (Advertisement) Rules, 1977 etc.
and actual rate of interest etc.
to the depositor.
Paragraph 17 applies to the prospective R.N.B.C. to furnish information in Schedule C. Paragraph 18 accords transitory power and paragraph 19 empowers the R.B.I., if it considers necessary to avoid any hardship or for any other just and sufficient reasons, to grant extensions of time to comply with or exempt, any company or class of companies, from all or any of the provisions of the directions either generally or for any specified period, subject to such conditions as the RBI may impose and paragraph 20 excludes the applicability of paragraph 19 of the Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The High Court declared paragraphs 6 and 12 to be ultra vires of article 19(1)(g) and 14 of the Constitution holding that though the directions do not expressly prohibit the business of receiving any deposit under any scheme or arrangement in lump sum or in instalment by way of contribution or subscription by R.N.B.C. in effect the operation of the directions inhibit the existing business and prohibits the future companies to come into being.
As seen the public purpose of the directions is to secure for the depositors, return of the amounts payable at maturity together with interest, bonus, premium or any other advantage accrued or payable to the 453 depositors.
To achieve that object every R.N.B.C. is enjoined to deposit and keep deposited in fixed deposit and invest and keep invested in unencumbered approved securities a sum which shall not, at the close of each half year, be less than the aggregate amount of the liability to the depositors whether or not such amount has become payable.
The object, thereby, is to prohibit deployment of funds by R.N.B.C. in any other manner which would work detrimental to the interest of the depositors.
The question emerges whether paragraph 6 and 12 are ultra vires of Articles 19(1)(g) and 14 of the Constitution.
Article 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business.
6 thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights.
Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance.
It is the duty of the court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon.
When a law has imposed restrictions on the fundamental rights, what the court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation.
The Legislature cannot disobey the constitutional mandate by employing an indirect method.
The court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered.
The object of the legislation is not conclusive as to the validity of the legislation.
This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by those who are charged with its implementation.
The court cannot question the wisdom, the need or desirability of the regulation.
The state can regulate the exercise of the fundamental right to save the public from a substantive evil.
The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment.
But the court is entitled to consider whether the degree and mode of the regulation whether is in excess of the requirement or is imposed in any arbitrary manner.
The court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether over stepped the limits of social legislation.
Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method.
If it directly transgresses or substantially and inevitably effects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental.
The court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavor should be made to have the efficacy of fundamental right maintained and the legislature is 454 not invested with unbounded power.
The court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
However, there is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards.
The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done.
The court would not be over persuaded by the mere presence of the legislation.
In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrary interferes with the exercise of the right guaranteed in Part III of the Constitution.
Once it is established that the statute is prima facie unconstitutional, the state has to establish that the restrictions imposed are reasonable and the objective test which the court to employ is whether the restriction bears reasonable relation to the authorized purpose or an arbitrary encroachment under the garb of any of the exceptions envisaged in Part III.
The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adopted to that end.
The court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual 's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose.
All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction.
The court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction.
The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits.
This Court in Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors.
,[1962] Suppl.
3 SCR 632, held that the RBI is ``a bankers ' bank and lender of the last resort. ' ' Its objective is to ensure monetary stability in India and to operate regulate the credit system of the country.
It 455 has, therefore, to perform a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rule as well as apparent credit worthiness of the banks operating in the country and the interest of the depositors.
In under developed country like ours, where majority population are illiterate and poor and are not conversant with banking operations and in under developed money and capital market with mixed economy, the constitution charges the state to prevent exploitation and so the RBI would play both promotional and regulatory roles.
Thus the R.B.I. occupies place of ``pre eminence ' ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body.
It also advices the Government in public finance and monetary regulations.
The banks or non banking institutions shall have to regulate their operations in accordance with, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the power thereunder.
Chapter 3B expressly deals with regulations of deposit and finance received by the R.N.B.Cs.
The directions, therefore, are statutory regulations.
In State of U.P. vs Babu Ram, ; , this Court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they contained in the Act and are to be judicially noticed for all purposes of construction or obligations.
The statutory rules cannot be described or equated with administrative directions.
In D.V.K. Prasada Rao vs Govt.
of A.P., AIR 1984 AP 75, the same view was laid.
Therefore, the directions are incorporated and become part of the Act itself.
They must be governed by the same principles as the statute itself.
The statutory presumption that the legislature inserted every part thereof for a purpose to and the legislative intention should be given effect to, would be applicable to the impugned directions.
The R.B.I. issued the directions to regulate the operations of the R.N.B.Cs., to safeguard the interest of the depositors.
Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity.
It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow)on the part of the depositor.
Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free flow of the business of the R.N.B.Cs.
who would desire to operate in their own way.
The question, therefore, emerges whether the directions in paras 5 and 12 violate articles 14 and 19(1)(g) of the Constitution.
456 The solidarity of political freedom hinges upon socio economic democracy.
The right to development is one of the most important facets of basic human rights.
The right to self interest is inherent in right to life.
Mahatma Gandhiji, the Father of the Nation, said that ``Every human being has a right to live and therefore to find the wherewithal to feed himself, and where necessary, to clothe and house himself ' '.
Article 25 of the Universal Declaration of Human Rights provides that ``everyone has a right to a standard of living adequate for the health and well being of himself and of his family, including food, clothing, housing and medical care. ' ' Right to life includes the right to live with basic human dignity with necessities of life such as nutrition, clothing, food, shelter over the head, facilities for cultural and socio economic well being of every individual.
article 21 protects right to life.
It guarantees and derives therefrom the minimum of the needs of existence including better tomorrow.
Poverty is not always an economic problem alone.
Very often it is a social as well as human problem.
An agriculturist, an industrial worker, the daily wage earner, rickshaw puller and small self employed teacher, artisan, etc.
may have an earning but may be prone to spend his/her entire earnings, apart from on daily necessities of life, on socio religious occasions, fairs, festivals etc.
The urge for better tomorrow and prosperous future; the clamour for freedom from want of any kind and social security, make the vulnerable segments of the society to sacrifice today 's comforts to save for better tomorrow.
The habit of saving has an educative value for thrift.
It endeavors to bring an attitudinal change in life.
It enables individuals to assess future specific needs and to build up a financial provision for the purpose.
The habit of saving becomes a way of life and harnesses the meagre resources to build up better future.
During the days of rising prices, small savings serve as instrument to mop up the extra purchasing power.
In addition to wage a war against poverty, waste, unwise spending, hoarding and other activities, habit of saving also enables family budgeting and postponing expenditure which can be deffered in favour of better utilisation in future.
To strengthen the urge for thrift and streamline the social security, the disadvantaged need freedom from exploitation and Art.46 of the constitution enjoins the State to protect the poor from all forms of exploitation and social injustice.
Investment agencies or commercial banks are intermediaries between savers and investors.
They embark upon deposit mobilisation campaign to mop up the limited resources.
Commercial banks or financial investment agencies, be it public sector or private sector, are vying with one another to scale new heights in deposit growth each year, devising 457 different deposit schemes to suit the individual needs of the depositors or savers.
Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer.
But gullible depositors are lured to make deposits.
It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay.
Therefore, the need to regulate the deposits/subscriptions, in particular, in private sector became imperative to prevent exploitation or mismanagement as social justice stratagem.
The directions are, therefore, a social control measure over the R.N.B.Cs., in matters connected with the operation of the schemes or incidental thereto.
The direction to investment in the channelised schemes at the given percentage in clauses (a) and (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as to ensure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon.
The amounts deposited shall not be less than the total aggregate amounts of liabilities to the subscribers.
The deposits or securities shall not be withdrawn or otherwise be dealt with except for a repayment to the subscribers.
It should always be shown to be a liability till date of the repayment.
This court in Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
; , held that freedom to carry on trade or business is not an absolute one.
In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business, whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by article 19(1)(g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions.
The credit worthiness of R.N.B.Cs.
undoubtedly would be sensitive.
It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency.
The directions intended to promote ``freedom ' ' and ``facility ' ' which are required to be regulated in the interest of all concerned.
The directions as a part of the scheme of the Act would be protected from the attack.
Vide Latafat Ali Khan & Ors.
vs State of U.P., 458 The R.N.B.C. is required to conduct its business activities in the interest of the depositors or subscribers who are unorganised, ignorant, gullible and ignorant of the banking operations.
If, however, the acts of R.N.B.C. is detrimental to the interest of the depositors, etc.
the R.B.I. has power in Chapter 3B to issue directions and the R.N.B.C. is bound to comply with the directions and non compliance thereof visits with penal action.
Admittedly except Peerless General Insurance, the other companies do not have either paid up capital or reserve fund worth the name.
Peerless was established in the year 1932 and over the years it built up reserve fund.
R.N.B.Cs. are carrying their business by crediting the entire first year 's collections as a capital receipt under actuarial accounting method.
In the affidavit of Sri S.S. Karmic, the Chief Officer of the RBI filed on August 13, 1991, it was stated that prior to the directions, 747 R.N.B.Cs. were doing the business.
As on that date only 392 R.N.B.Cs. were notified to be existing.
Out of them 178 are in West Bengal, 15 in Assam, 26 in Orissa, 6 in Manipur and Meghalaya, 26 in Punjab, 64 in U.P., 22 in Delhi, etc.
As on March 31, 1990 out of 185, 35 R.N.B.Cs.
alone submitted annual returns, and out of them only 30 have filed their balance sheets.
28 R.N.B.Cs.
in the northern region filed their annual returns and 23 filed their balance sheets with incomplete date.
35 of them have negative net worth (loss for exceeding their share capital and reserve).
Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs.
The negative net worth of the 35 companies referred to above would aggregate to Rs.3.6 crores.
They raised, apart from Peerless, deposits to the tune of Rs. 86 crores.
Many of them have not even designated their banks as required under para 6 of the direction.
The amount invested in bank deposits and approved securities fell much short of their deposit liabilities.
Verona Commercial Credit and Investment Company, one of the respondents, have accumulated losses to the tune of Rs. 3.8 crores.
As per balance sheet their assets are inadequate to meet the liability.
Favourite Small Scale Investment, one of the respondents as on December 12, 1989, even their provisional balance sheet shows that total liability towards depositors is Rs. 44.62 crores while its investment in banks and Government security is only Rs. 13 crores.
The cash on hand was Rs. 1.74 crores.
Rs.8 crores were shown to be loans and advances.
The accumulated losses are Rs.22.19 crores as against total share capital and reserve of Rs. 20.73 lacs.
It is, thus, clear on its face that while total liabilities are Rs. 49.09 crores, the assets including doubtful loans and advances aggregate to Rs. 26 crores.
An inspection into the affairs of the said company conducted in February, 1990 disclosed that upto the end of 1989 the deposit liabilities including interest would be in the region of 459 over Rs. 132 crores.
The difference between the inspection and the balance sheet would be due to actuarial principle.
It had committed default to pay to its depositors to the tune of Rs. 5.4 crores, which is a gross under estimate.
Sri Somnath Chatterjee, the learned Senior Counsel for the Peerless and adopted by other counsel, contended that paragraphs 6 and 12 are totally unworkable.
Its compliance would jeopardise not only the existing companies but also the very interest of the depositors and large workmen.
No new company would be set up.
The direction given in the first Peerless case was to keep in view the interest of the workmen as well; in effect it was given a go bye.
At least 25% of collections would be left over as working capital of the company, to carry on its business in a manner indicated by the impugned judgment, so that no depositor would lose his money and no workmen would lose his livelihood and it will be in consonance with public interest.
Shri G.L. Sanghi, the learned Senior Counsel for Timex, contended that 50% of collection would be necessary to comply with the impugned directions and another company pleaded for 40%.
Further contention of Shri Chatterji was that the actuarial accounting neither violates any law, nor objected to by the Income tax Department.
Crediting the first year 's subscription in the accounts as capital receipt would generate company 's working capital for its successful business by meeting the expenditure towards establishment, the commission and a part of profits.
Forfeiture clause was already dated before the directions were issued.
Interest at 10% with annual compounding would be reasonable return to the subscribers which is being ensured to the depositors.
The directions issued by the High Court, subject to the above modifications, would subverse the above purpose.
Paras 6 and 12, otherwise, are arbitrary and prohibitive violating their fundamental right to do business assured by articles 19(1)(g) and 14.
Sri Harish Salve resisted the contentions with ability.
Para 12 is myocardium and para 6 ' is the heart of the directions without which the directions would be purified corpse.
On the respondents own showing, for the first two years, by actuarial accounting, the liabilities, as against deposits, are inadequate.
The regulation intends to preserve the corpus of the deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable.
Indisputably the depositors/subscribers stand as unsecured creditors.
Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company.
The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow.
460 But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground.
They remain to be helpless spectators with all disabilities to recover the amounts.
Pathetic financial position of some of the companies enumerated herein before would amply demonstrate the agony to which the poor subscribers would be subjected to.
The fixed deposits and unencumbered securities as per Clauses (a) and (b) of the proviso to paragraph 6(1) would be 80% of the collections of the year of subscription and Shri Chatterji contends to reduce it to 75% and to allow free play to use the residue in their own way.
The difference is only 5% and others at vagary.
The objects of the direction are to preserve the ability of the R.N.B.C. to pay back to the subscribers/depositors at any given time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them.
The directions cannot and would not be adjudged to be ultra vires of arbitrary by reason of successful financial management of an individual company.
An over all view of the working system of the scheme is relevant and germane.
The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest accrued thereon, whether or not payable but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law.
The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance.
The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred.
The actuarial accounting applies to revenues and costs to which the concept of the ``going concern ' ' can be adopted.
Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc.
payable in foreseeable future.
Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk.
The deposit is a capital receipt but not a revenue receipt and its full value shall be shown in the account books of balance sheet as liability of the company.
It cannot be credited to the profit and loss account.
Para II of Schedule VI of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company.
Para 12 of the directions is, thus, in consonance with the .
Moreover, in its advertisement and the application forms, 461 the R.N.B.C. expressly hold out to the public that their monies are safe with the bank and in the Government securities.
Paragraph 6(1) of the directions only mandates compliance of the promise held out by an R.N.B.C. for repayment at maturity.
Sub para (3) of para 6 keeps the deposits unencumbered and to be utilised by the company only for repayment.
In other words, paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors.
The R.B.I. cannot be expected to constantly monitor the working of the R.N.B.C. in its day to day function.
The actuarial basis cannot be adopted by the R.N.B.Cs.
and the liability must always be reflected in its balance sheet at its full value.
Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations.
No one can have fundamental right to do any unregulated business with the subscribers/depositors ' money.
Even the banks or the financial companies are regulated by ceiling on public deposits fixing nexus between deposits and net worth of the company at the ratio of 3:1, i.e. 25% of the capital net worth.
No one would legitimately be expected to get immediate profits or dividend without capital investment.
The effect of the clause (a) and (b) of the provision to paragraph 6(1) of the direction, no doubt, freezes the right to profit for a short time, and fastens an incidental and consequential obligation to mop up paid up capital or investment towards establishment and commission charges to tide over teething trouble.
But that is no ground to say that it is impossible for compliance, nor could it be said that the directions are palpably arbitrary or unreasonable.
Anyone may venture to do business without any stake of his own but is subject to the regulations.
A new company without any paid up capital, no doubt,cannot be expected to come into existence nor would operate its business at initial existence with profits.
Clause (c) of the provision to paragraph 6(1) of the directions gives freedom on leeway to invest or rotate, not more than 20 per cent of collections etc.
in any profitable manner at its choice as a prudent businessman to generate its resources to tide over the teething troubles till it is put on rail to receive succor to its existence, without inhibiting the company 's capacity to mop up small savings, and the directions do not control its operation.
The only rider is the approval of the Board of Directors which is inherent.
Absence of imposition of any limit on quantum of deposit with reference to paid up capital or reserve fund like non banking financial companies, etc.
is a pointer in this regard.
Thus there is a reasonable nexus between the regulation and the public purpose, namely, security to the depositors ' money and the right to repayment without any impediment, which undoubtedly is in the public interest.
462 Looking from operational pragmatism, the restrictions though apparently appears to be harsh in form, in its systematic working, it would inculcate discipline in the business management, subserve public confidence in the ability of the company to honour the contractual liability and assure due repayment at maturity of the amount deposited together with interest, etc, without any impediment.
In other words, the restrictions in paragraph 6 of the directions intended to elongate the twin purposes, viz.habit of thrift among the needy without unduly jeopardising the interest of the employees of the companies and the R.N.B.Cs working system itself in addition to safety and due payment of depositors ' money.
True, as contended by Shri Chatterji that there arises corresponding obligation to pay higher amount of commission to its agents and the commitment should by kept performed and the confidence enthused in the agents.
But it is the look out of the businessman.
The absence of ceiling on the rate of commission would give choice between the company and its agents to a contract in this regard and has freedom to manage its business.
The R.N.B.Cs.
are free to incur such expenses and organize their business as they desire including payment of commission as they think expedient.
But the subscribers/depositors 'liability, under no circumstances would be in jeopardy and the directions were designed to ensure that the interest of the subscribers/depositors is secured at all times, prescribing investment of an equal sum to the total liability to the subscribers/depositors.
Paragraph 12 is only a bridge between the depositors and the promise held out and the contract executed in furtherance thereof as a monitoring myocardium to keep the heart in paragraph 6 functioning without any hiatus.
It is settled law that regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition.
Vide Narendra Kumar vs Union of India, ; But the directions do not do that but act as a siphon between the subscriber/depositor and the business itself.
Therefore, they are neither palpably arbitrary nor unjust not unfair.
The mechanism evolved in the directions is fool proof, as directed by this court in first Peerles case, to secure the interest of the depositors, as well is capable to monitor the business management of every R.N.B.C.
It also, thereby, protects interest of the employees/field staff/commission agent etc.
as on permanent basis overcoming initial convulsions.
It was intended, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits.
Thus the directions impose only partial control in the public interest of the depositors.
The deposits invested or keep invested qua the com 463 pany always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract.
The effect of the impugned judgment of the Calcutta High Court namely redefinition of the aggregate liabilities as contractual liabilities due and payable would have the effect of requiring the R.N.B.Cs.
to deposit an amount equal to the sum payable only in the year of maturity allowing free play to the R.N.B.Cs.
to use the subscriptions/deposits in its own manner during the entire earlier period, jeopardise the security of the subscribers/depositors and are self defeating.
The sagging mismanagement prefaced hereinabove would be perpetrated and the depositor was always at the mercy of the company with all disabilities, killing the very goose namely the thrust to save for prosperous future or to tide over future needs.
It is well settled that the court is not a Tribunal from the crudities and inequities of complicated experimental economic legislation.
The discretion in evolving an economic measures, rests with the policy makers and not with the judiciary.
Indian social order is beset with social and economic inequalities and of status, and in our socialist secular democratic Republic, inequality is an anathema to social and economic justice.
The constitution of India charges the state to reduce inequalities and ensure decent standard of life and economic equality.
The Act assigns the power to the RBI to regulate monitory system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary.
Even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat.
Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests.
The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority.
Prejudice to the interest of depositors is a relevant factor.
Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied.
The directions designed to preserve the right of the depositors and the ability of R.N.B.C. to pay back the contracted liability.
It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount.
Thus the directions maintain the thrift for saving and streamline and strengthen the monetary operations of R.N.B.Cs.
The problems of Government are practical and do require rough accommodation.
Illogical it may be and unscientific it may seem to be, left to its working and if need be, can be remedied by the R.B.I. by 464 pragmatic adjustment that may be called for by particular circumstances.
The impugned directions may at first blush seem unjust or arbitrary but when broached in pragmatic perspective the mist is cleared and that the experimental economic measure is manifested to be free from the taints of unconstitutionality.
Para 19 of the directions empowers the RBI to extend time for compliance or to exempt a particular company or a class thereof from all or any of the provisions, either generally or for a specified period subject to such conditions as may be imposed.
Power to exempt would include the power to be exercised from time to time as exigencies warrant.
An individual company or the class thereof has to place necessary and relevant material facts before the R.B.I. of the hardship and the need for relief.
A criticism of arbitrariness or unreasonableness may not be ground to undo what was conceived best in the public interest.
What is best is not always discernible.
The wisdom of any choice may be disputed or condemned.
Mere errors of Government are not subject to judicial review.
The legislative remedy may be ineffective to mitigate the evil or fail to achieve its purpose, but it is the price to be paid for the trial and error inherent in the economic legislative efforts to grapple with obstinate social issues.
It is proper for interference in judicial review, only, when the directions, regulations or restrictions are palpably arbitrary, demonstrably irrelevant or disriminatory.
Exercise of power then can be declared to be void under article 13 of the Constitution.
So long as the exercise of power is broadly within the zone of reasonableness, the court would not substitute its judgment for that of legislature or its agent as to matters within their prudence and power.
The court does not supplement the feel of the experts by its own values.
It is settled law that so long as the power is traceable to the statute mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor considered without authority of law.
Section 114 (h) of the Evidence Act draws a statutory presumption that official acts are regularly performed and reached satisfactorily on consideration of relevant facts.
The absence of reiteration of objective satisfaction in the preamble as of one under s.45L does not denude the powers, the R.B.I. admittedly has under s.45L to justify the actions.
Though s.45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation of satisfaction of objective facts to issue the directions from the facts and circumstances it is demonstrated that the R.B.I. had such satisfaction in its consideration of its power under s.45L when the directions were issued .
Even otherwise s.45K (3) itself is sufficient to uphold the directions.
465 The impugned directions are thus within the power of the R.B.I. to provide tardy, stable, identifiable and monitorable method of operations by each R.N.B.C. and its compliance of the directions.
This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen.
The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the very existence of the company and its continued business itself.
Therefore, they are legal, valid and constitutionally permissible.
The Writ Petition is dismissed and the appeals are allowed.
The Writ Petitions filed in the High Court stand dismissed.
No costs in this Court.
G.N. Petition dismissed Appeals allowed.
| This appeal challenged the validity of the Jammu and Kashmir Big Landed Estate Abolition Act, XVII Of 2007 which was enacted by Yuvaraj Karan Singh on October 17, 1950, in exercise of the powers vested in him by section 5 of the Jammu and Kashmir Constitution Act 14 of 1996 (1930) and the final proclamation issued by Maharaja Hari Singh on June 20, 1949, by which he entrusted all his powers and function to the Yuvaraj.
The object of the Act was to improve agricultural production by abolishing big landed estates and transferring land to the actual tillers of the soil.
The suit out of which the present appeal arises was brought by the appellant in a representative capacity for a declaration that the Act was void, inoperative and ultra vires and that he was entitled to retain peaceful possession of his lands.
Both the trial Court as also the High Court in appeal found against him and dismissed the suit.
Hence this appeal by special leave.
The validity of the Act was challenged mainly on the ground that Yuvaraj Karan Singh had no authority to promulgate the Act.
It was contended that (i) when Maharaja Hari Singh conveyed his powers to the Yuvaraj by his proclamation of June 20, 1949, he was himself a constitutional monarch and could convey no higher powers, (2) the said proclamation could not confer on the Yuvaraj the powers specified therein, (3) the powers of the Yuvaraj were substantially limited by his own proclamation issued on November 25, 1949, by which he sought to make applicable to his State the Constitution of India, that was soon to be adopted by its Constituent Assembly, in so far as it was applicable, (4) as a result of the application of certain specified Articles, including article 370 of the Constitution of India to the State of Jammu Kashmir, the Yuvaraj became a constitutional monarch without any legislative authority or powers and (5) the decision of the Constituent Assembly of the State not to pay compensation was invalid since the Assembly itself was not properly constituted.
Held, that Yuvaraj Karan Singh, when lie promulgated the Act, had the power to do so and its validity was beyond question.
271 It was indisputable that prior to the passing of the Independence Act, 1947, Maharaja Hari Singh like his predecessors, was an absolute monarch so far as the internal administration of his State was concerned.
Section 3 Of the Regulation 1 of 1991 (1934) issued by the Maharaja not only preserved all his preexisting powers but also provided that his inherent right to make any regulation, proclamation or ordinance would remain unaffected.
The Constitution Act 14 of 1996 (1939) promulgated by him did not alter the position.
Sections 4 and 5 of that Act preserved all the powers that he had under section 3 of the Regulation 1 of 1991 and section 72 preserved his inherent powers so that he remained the same absolute monarch as he was before.
With the lapse of British paramountcy on the passing of the Independence Act, 1947, the Maharaja continued to be the same absolute monarch, subject to the agreements saved by the proviso to section 7 Of the Act, and in the eyes of international law could conceivably claim the status of an independent sovereign.
It was unreasonable to suggest that the provisions of the Instrument of Accession signed by the Maharaja on October 25, 1947, affected his sovereignty, in view of cl. 6 thereof, which expressly recognised its continuance in and over his State.
There was no substance in the argument that as a result of his proclamation issued on March 5, 1948, which replaced the emergency administration by a popular interim Government headed by Sheik Mohammad Abdullah and constituted a Council of Ministers who were to function as a cabinet, the Maharaja became a constitutional monarch.
The cabinet had still to function under the Constitution Act 14 of 1996 (1939) under the overriding powers of the Maharaja.
When the Maharaja on June 20, 1949, therefore, issued the proclamation authorising the Yuvaraj to exercise all his powers, although for a temporary period, it placed the Yuvaraj in the same position as his father till the proclamation was revoked.
The Maharaja was himself an absolute monarch and there could be no question as to his power of delegation.
In Re. ; , , referred to.
The proclamation issued by the Yuvaraj on November 25, 1949, did not vary the constitutional position as it stood after the execution of the Instrument of Accession by the Maharaja nor could it in any way affect the authority conferred on the Yuvaraj by his father.
The contention that the application of certain specified Articles of the Indian Constitution to the State by the Constitution (Application to Jammu and Kashmir) Order (C. O. 10) issued by the President on January 26, 1950, affected the sovereign powers of the Yuvaraj was not correct.
Neither the scheme of article 370 nor the explanation to cl.
(1) of that Article Contemplated that the Maharaja was to be a constitutional ruler.
The temporary provisions of that Article were 272 based on the assumption that the ultimate relationship between India and the State should be finally determined by the Constituent Assembly of the State itself.
So, that Article could not, either expressly or by implication, be intended to limit the plenary legislative powers of the Maharaja.
Till the Constituent Assembly of the State, therefore, made its decision, the Instrument of Accession must hold the field.
The initial formal application of article 385, which was sub sequently deleted from the list of Articles applied to the State, could not justify the conclusion that it had adversely affected the legislative powers of the Yuvaraj.
There was no substance in the contention that the decision of the Constituent Assembly not to pay compensation was invalid as the Assembly itself was not properly called or constituted.
There could be doubt that the Yuvaraj was perfectly competent to issue the proclamation dated April 20, 1951 in variation of the Maharaja 's, under which the Assembly was ultimately constituted, and so the Assembly was properly convened.
|
ivil Appeal No. 1659 of 1990.
From the Judgment and Order dated 31.12.
1987 of the Andhra Pradesh Administrative Tribunal, Hyderabad, in Repre sentation Petition No. 3339 of 1987.
K. Madhava Reddy, T.V.S.N. Chari, Ms. Sunita Rao and Ms. Manjula Gupta for the Appellants.
H.S. Guru Raja Rao, Vimal Dave and B. Rajeshwar Rao for the Respondent.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
Special leave granted.
The respondent in this appeal K. Ratnagiri was at the material 235 time Circle Inspector of Police attached to Sanjeeva Reddy Nagar Police Station, Hyderabad.
In that police station one U. Narasimha died in Police lock up.
Pending prosecution with regard to that offence, the Director General of Police made an order keeping the respondent under suspension.
The order reads: "Shri K. Ratnagiri, Circle Inspector of Police, Sanjiva Reddy Nagar P.S. Hyderabad is placed under suspension with immediate effect in public interest until further orders pending prosecution against him in the case of death of U. Narasimha in Police lock up".
The respondent appealed to the Andhra Pradesh Adminis trative Tribunal.
The Tribunal has set aside the suspension order holding that the respondent shall be deemed to be in service from the date of issue of suspension order.
The Tribunal, however, has reserved liberty to the Government to transfer him to any other Police Station.
It has been held that the order of suspension becomes invalid after the period of six months since the Government did not make a fresh order extending the period of suspension.
It has been further stated that the Director General has no power to keep the respondent under suspension pending investigation of the case against him.
Both these conditions are rested solely on the scope of Rule 13(1) of the A.P. Civil Service (CCA) Rules, 1963.
For immediate reference we may set out the Rule hereunder: 13(1) A member of service may be placed under suspension from service pending investigation or enquiry into grave 'charges, where such suspension is necessary in the public interest.
Provided that where a member of a service has been suspended by an authority other than the Government and the investiga tion has not been completed and the action proposed to be taken in regard to him has not been completed within a period of six months of the date of suspension, the fact shall be reported to the Government, for such orders as they may deem fit.
13.2 to 13.4 xxx xxx xxx 13(5) An order of suspension made or deemed to have been made under this rule may, at any time, be revoked by 236 the authority which made or is deemed to have been made the order or by any authority to which that authority is subor dinate." Rule 13(1) provides power to keep an officer under suspen sion from service pending investigation or enquiry into grave charges, where such suspension is necessary in the public interest.
Proviso thereunder requires the authority who made the order of suspension to report to the Government where the investigation into the charges and the action proposed to be taken against the officer has not been com pleted within the period of six months from the date of suspension.
Upon receipt of the report, the Government may make such orders as they deem fit having regard to the circumstances or development in the case.
Proviso thus imposes only an obligation on the authority to report to the Government, but it does not limit the period of suspension.
It does not state that the suspension order comes to an end by the end of six months.
It may be noted that the suspen sion order is not an interim suspension.
Nor the Rule 13(1) limits its operation only for six months.
Rule 13(5) pro vides that the order of suspension may, at any time, be revoked by the authority who made or is deemed to have been made the order or by any authority to which that authority is subordinate.
That apparently suggests that the order of suspension once made will continue to operate till it is revoked by an appropriate order.
Therefore, there appears to be no justification to contend that the order of suspension would not last beyond six months.
It has been passed by the competent authority who shall report to the Government if the action is not completed within six months.
The Govern ment may review the case and make further or other order but the order of suspension will continue to operate till it is rescinded by an appropriate authority.
Similar was the view expressed by this Court in Civil Appeal No. 1064 of 1990 in Government of A.P.v.
V. Sivaraman, disposed of on 12 January 1990 to which one of us was a party (K. Jagannatha Shetty).
There it was observed: "Where the rules provide for suspending a Civil servant and require thereof to report the matter to the Government giving out reasons for not completing the investigation or enquiry within six months, it would be for the Government to review the case but it does not mean that the suspension beyond six months becomes automatically invalid or non est.
The only duty enjoined by such a rule is that the officer 237 who made the order of suspension must make a report to the Government and it would be for the government to review the facts and circumstances of the case to make a proper order.
It is open to the Government to make an order revoking the order of suspension or further continuing the suspension.
The Order of suspension however, continues until it is revoked in accordance with the law.
" It was also observed: "That the order of suspension will continue till it is revoked, though it is necessary to review the case once in six months in the light of the instruction 18 contained in Appendix VI of the APCS (CCA) Rules, 1963 and the circular of the Chief Secretary dated February 13, 1989.
" The opposite view taken by the tribunal in the instant case therefore, cannot be sustained.
This brings us to the second conclusion reached by the Tribunal to invalidate the order of suspension.
Precisely, it is also rested on the statutory framework of Rule 13(I) coupled with the terms of the order by which the respondent was kept under suspension.
The Tribunal has observed that Rule 13(1) empowers the authority to make an order of sus pension pending investigation or enquiry into charges, but not pending prosecution with regard to the charges.
It seems to us that the Tribunal has taken a hypertech nical view of the matter.
The factual background of the case may now be shortly stated: On 10 July 1986, U. Narasimha died in the police custody of Sanjeeva Reddy Nagar Police Station where the respondent was then working as a Circle Inspector of Police.
Next day morning the infuriated mob attacked the Police Station and there was similar attack at the Bodabanda Outpost in whose limits Narasimha was resid ing.
On the same day, a First Information Report was issued registering the offence of murder but without mentioning the name of any accused.
The accused could not be named since there was then no authentic information as to how U. Nara simha died and who were responsible for his unnatural death.
In order to clear the mist surrounding the incident, on 19 July 1986 the State Government constituted a Commission of Inquiry under Section 3 of the Commission of Inquiry Act, 1952 (Central Act 60 of 1952).
Shri A.D.V. Reddy, retired Judge of the High Court of Andhra Pradesh was constituted as a Single Member 238 of the Commission of Inquiry.
The Commission was asked to find out the circumstances leading to the lock up death of U. Narasimha and to identify the person, if any, responsible for the incident.
The Commission was also required to point out lapses on the part of any authority or person or per sons, in connection with that incident.
On 29 November 1986 the Commission submitted its report indicating certain police officials including the respondent.
It was inter alia observed that the respondent and other police officials have mercilessly beaten and tortured U. Narasimha and that has resulted in his lock up death.
It has been further observed that the officials were also responsible for certain other offences like illegal detention of the deceased, disrobing of Smt.
Chandrakala, the wife of the deceased, house tres pass, misappropriation etc.
The Government after examining the report, has accepted it and decided to initiate prosecu tion against the officers.
The Director General of Police was asked to take immediate action in that regard.
There then the Director General of Police made the order keeping the respondent under suspension pending prosecution against him.
The Rule 13(1) empowers the authority to keep the respondent under suspension pending investigation or enquiry into the criminal charges where such suspension is necessary in the public interest.
When the first information report is issued, the investigation commences and indeed it has com menced when the respondent was kept under suspension.
The order of suspension cannot, therefore, be said to be beyond the scope of Rule 13(1) merely because it has used the word 'prosecution ' instead of investigation into the charges against the respondent.
A wrong wording in the order does not take away the power if it is otherwise available.
The tribunal seems to have ignored this well accepted principle.
In stating this conclusion, we do not of course express any opinion about the need to make a fresh order of suspen sion.
We however make it clear that the original order of suspension need not be given effect to since the respondent has already been reinstated into service and transferred to some other station.
The appeal is accordingly allowed setting aside the order of the Tribunal.
N.P.V. Appeal allowed.
| The first appellant made an order under Rule 13(1) of the A.P. Civil Service (CCA) Rules, 1963 keeping the re spondent, a Police Inspector, under suspension pending prosecution against him in the case of death of a person in lock up in the Police Station to which the respondent was attached.
The respondent challenged the order before the State Administrative Tribunal.
The Tribunal set aside the suspension order, holding that the order became invalid after six months since the Government had not made a fresh order extending the period of suspension, and that the first appellant had no power to suspend the respondent pending prosecution against him.
Hence the appeal, by Special Leave.
Allowing the appeal, this Court, HELD: 1.1 Rule 13(1) of the A.P. Civil Service (CCA) Rules, 1963 provides power tO keep an officer under suspen sion from service pending investigation or enquiry into grave charges, where such suspension is necessary in the public interest.
Proviso thereunder requires the authority who made the order of suspension to report to the Government where the investigation into the charges and the action proposed to be taken against the officer has not been com pleted within the period of six months from the date of suspension.
Upon receipt of the report, the Government may make such orders as they deem fit having regard to the circumstances or development in the case.
Proviso thus imposes only an obligation on the authority to report to the Government, but it does not limit the period of suspension.
It does not state that the suspension order comes to an end by the end of six months.
The suspension order is not an interim suspension.
Nor Rule 13(1) limits its operation only for six months.
The order of suspension once made will continue 234 till it is revoked by an appropriate order under Rule 13(5).
[236B D] Government of A.P.v.
Sivaraman, Civil Appeal No. 1064 of 1990, decided on January 12, 1990, referred to.
1.2 It is a well accepted principle that a wrong wording in the order does not take away the power if it is otherwise available.
[238E] Rule 13(1) empowers the authority to keep the respondent under suspension pending investigation or enquiry into the criminal charges.
When the First Information Report was issued registering the offence of murder, names of the accused could not be mentioned since there was no authentic information as to how the death occurred and who were responsible for it.
However, after the Commission of Inquiry submitted its report, indicting certain police officials including the respondent, the State Government decided to initiate prosecution against the officers and asked the first appellant to take immediate action in that regard.
Thus, the first appellant made the order keeping the re spondent under suspension pending prosecution against him.
Merely because the word 'prosecution ' has been used instead of 'investigation ', the order of suspension cannot be said to be beyond the scope of Rule 13(1).
The investigation commenced when the First Information Report was issued, and indeed it has commenced when the respondent was kept under suspension.
[237G H; 238B, C D]
|
Appeal No. 203 of 1964.
Appeal from the judgment and decree dated January 29, 1963 of the Rajasthan High Court in Civil Regular First Appeal No. 29 of 1956.
Sarjoo Prasad and T. Satyanarayana, for appellant.
R. Ganapapathy Iyer and B.R.G.K. Achar, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate against the judgment and decree of the Rajasthan High Court dated January 29, 1963.
The appellant firm Bansidhar Premsukhdas brought a suit which is the subject matter of this appeal against the State of Rajasthan on March 31, 1953 for the recovery of Rs. 86,646/3/ in the Court of District Judge, Bharatpur.
The case of the appellant was that the former State of Bharatpur with a view to increase the trade and commerce in the said State decided to establish a Mandi at Bharatpur where at the material time a T.B. Hospital was located, It decided to sell plots for certain fixed amounts and, therefore, issued a notification on May 18, 1946 offering the plots by public advertisement for sale on certain terms and conditions.
The notifification exhibit
4 was published in Bharatpur Rajpatra and one of the concessions proposed to be granted was embodied in cl. 3 of the notification which stated: "If any commodity is imported from outside into the Mandi and is sold for consumption within the State, or if any commodity received in the Mandi from within the State and is exported in both cases, a reduction of 25% in the customs duty prevailing at the time of the import and export of such commodities will be allowed.
This concession shall not be available in case of vegetable Ghee.
" The notification contained other terms and conditions relating to auction sale such as the prices for different kinds of plots available and the maximum number of plots which a person could purchase.
A committee for supervising the auction was also formed and the notification laid down the procedure for the sale of plots and certain other conditions such as deposit of one fourth sale money at the 83 time of auction etc.
The appellant purchased plots Nos. 8 and 9 for Rs. 4,600 at a public auction and two sale deeds (sanad nilam) were issued to the appellant on October 10, 1946.
The Government of Bharatpur and after its merger, the Government of United State of Matsya and thereafter the present Rajasthan State carried out the promise contained in cl. 3 of the Bharatpur notification and allowed reduction of 25 per cent in the customs duty, but on January 16, 1951 the Rajasthan Government issued notification No. F.4(18) SR/49 which reads as follows: "Now therefore Government of Rajasthan is hereby pleased to direct that with an immediate effect all free Mandies and Zones including the area comprising the former Kishangarh State and the Bhim District of the former Rajasthan State shall be abolished and that in consequence all the Customs concession hitherto enjoyed by or applicable to these Mandies or Zones shall cease to have force and duties of customs shall be levied and collected in such Mandies or Zones in accordance with the revised tariff, amended from time to time.
" The appellant and other traders thereupon made representation to the Rajasthan Government on January 29, 1951 and pending the disposal of the representation the Customs authorities agreed to keep the amount of 25 per cent by way of 'Amanat '.
The State of Rajasthan ultimately decided on May 25, 1951 that the reduction in the customs duty could not be conceded.
On March 31, 1953 the appellant filed the present suit in the Court of the District Judge of Bharatpur for the recovery of the excess amount of customs duty paid to the Rajasthan Government.
The main defence of the State Government was that item No. 3 of the Bharatpur notification was a matter of concession and could not be claimed as of right and the Rajasthan State as successor State was not bound by the contracts of the former State and the applicability of the concessions had also become impracticable on the formation of Rajasthan.
The District Judge of Bharatpur, by his judgment dated March 31, 1956, held that item No. 3 of Bharatpur notification was a term of sale between the parties and the Rajasthan State was bound by it and the succeeding States have recognised the concessions granted to the appellant and therefore the suit of the appellant should be decreed.
The State of Rajasthan took the matter in appeal to the Rajasthan Nigh Court which allowed the appeal and dismissed the suit holding that item No. 3 of the Bharatpur notification was not a part of the contract of sale, and even if it was held to be a part of the contract, the successor State of Rajasthan did not recognise it and was not, therefore, bound by it.
84 The first question involved in this appeal is whether cl. 3 of the Bharatpur notification exhibit 4, was a term of the contract of sale between the appellant and the State of Bharatpur.
It Was argued on behalf of the appellant that exhibit 4 which is the notification dated May 18, 1946 regarding the sale of plots by the Bharatpur State was an offer of purchase of plots on terms and conditions made in that notification.
It was contended that the offer was made to the public as a whole and after it was accepted by the appellant a valid contract came into existence.
The opposite view point was presented on behalf of the respondent.
It was submitted that the concession granted in cl. 3 did not relate to, nor did it form a part of the contract of sale of the plots of the Mandi.
It was pointed out that the concession of 25 per cent reduction in customs duty will not merely enure to the benefit of the purchaser of the plots but also enure to the benefit of the person trading in the shop.
The benefits were generally offered for trade and business in the Mandi and cannot be considered as an offer of benefit only to the prospective purchasers of the plots.
The commodities for which the concession was granted might be in the hands of purchasers and builders of plots, their tenants and licensees or other dealers.
It was therefore not possible to hold that the State Government offered the tax concessions as a reciprocal promise in connection with the contracts of sale with the appellant and the latter had no justification for treating the benefits offered as consideration in return for the purchase of the plots and the construction of shop buildings.
It is also pointed out by learned Counsel on behalf of the respondent that there are certain conditions in the Bharatpur notification exhibit 4, which can.
not, in the nature of things, be treated as terms of the sale.
Reference was made, in this connection, to cls.
5, 6, 7, 10 and 11.
In our opinion, there is much force in the argument advanced on behalf of the respondent but it is not necessary to express any concluded opinion on this aspect of the case.
We shall assume in favour of the appellant that cl. 3 of the Bharatpur notification, exhibit 4, was a term of the contract of sale of plots 8 and 9 of the Mandi.
Even upon that assumption the suit of the appellant must fail, for we shall presently show that there was no recognition of the contractual right by the succeeding State of Rajasthan, and in the absence of such recognition the contract between the former State of Bharatpur and the appellant cannot be legally enforced.
We shall proceed, therefore, to consider the next question, namely, whether the term of the contract was binding upon the successor State of Rajasthan on the assumption that cl. 3 of the Bharatpur notification, exhibit 4, was an integral term of the contract between the appellant and the Government of Bharatpur State.
It is not correct to say as a matter of law that the successor State automatically inherits the rights and obligations of the merged State.
There is no question of suborgation the successor State is not 85 subrogated ipso jure to the contracts with the merged State.
The true legal position is that the contract of the predecessor State terminates with the change of sovereignty unless the contract is ratified by the succeeding sovereign State.
It is now well established in law that the contractual liability of a former State is binding on a succeeding sovereign State only if it recognises that contractual liability.
The season is that the taking over of sovereign powers by a State in respect of territory which was not till then a part of it is an. act of State" and the municipal courts recognised by the new sovereign have the power and jurisdiction to investigate and ascertain only such rights as the new sovereign has chosen to recognise or acknowledge; and such recognition may be express or may be implied from circumstances.
In other words, accession of one State to another is an "act of State. and the subjects of the former State may claim protection of only such rights as the new sovereign recognises as enforceable by the subjects of the former State in his municipal courts.
In The Secretary of State in Council of India vs Kamachee Boye Saheba(1) the jurisdiction of the courts in India to adjudicate upon the validity of the seizure by the East India Company of the territory of Rajah of Tanjore as an escheat, on the ground that the dignity of the Raj was extinct for want of a male heir, and that the property of the late Rajah lapsed to the British Government, fell to be determined.
The Judicial Committee held that as the seizure was made by the British Government, acting as a sovereign power, through its delegate, the East India, Company, it was an act of State and the Municipal Court had no jurisdiction to inquire into the propriety of the action.
At page 529 of the Report Lord Kingsdown observed: "The transactions of independent States between each other are governed by other laws than those which Municipal Courts administer: Such Courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make.
" In another case Vajesingji Joravarsingji vs Secretary of State for India in Council(1) the Judicial Committee observed as follows: ". when a territory is acquired by a sovereign State for the first time that is an act of State, It matters not how the acquisition has been brought about.
It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognized ruler.
In all cases the result is the same.
Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has, through his officers, recognised.
Such rights as he had under the rule of precedes (1) Moore 's I.A. 476.
(2) 51 I. A. 357.
86 sors avail him nothing.
Nay more even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal courts.
The right to enforce remains only with the high contracting parties.
" In Secretary of State vs Sardar Rustom Khan and Others(1) a question arose whether the rights of a grantee of certain proprietary rights in lands from the then Khan of Kalat, ceased to be enforceable since the agreement between the Khan and the Agent to the Governor General in Baluchistan under which the Khan had granted to the British Government a perpetual lease of a part of the Kalat territory, at a quit rent, and had ceded in perpetuity with full and exclusive revenue civil and criminal jurisdiction and all other forms of administration.
In delivering the opinion of the Judicial Committee, Lord Atkin observed as follows: "In this case the Government of India had the right to recognise or not recognise the existing titles to land.
In the case of the lands in suit they decided not to recognize them, and it follows that the plaintiffs have no recourse against the Government in the Municipal Courts.
" The principle that cession of territory by one State to another is an act of State and the subjects of the former State may enforce only those rights which the new sovereign recognises has been accepted by this Court in M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Income tax(2).
The State of Saurashtra vs Jamadar Mohamat Abdulla and others(1).
Maharaja Shree Umaid Mills Ltd. vs Union of India (4), and State of Gujarat vs Vora Fiddali Badruddin Mithibarwala(5).
On behalf of the appellant it was contended that there was an implied recognition by the Rajasthan State of the contractual liability since the exemptions were continued upto January 13, 1951 and were revoked with effect from that date by the notification No. F.4(18)SR/49.
We are unable to accept this argument as correct.
Before the process of integration began, each Covenanting State was a separate geographical unit for customs purposes and had its own customs laws and barrier.
After the formation of the Matsya Union on March 18, 1948 there was a promulgation of the Matsya Customs Ordinance by the Raj Pramukh on September 21, 1948.
The United State of Rajasthan was constituted on May 15, 1949 when there was merger of Matsya Union in the United State of Rajasthan.
On August 9, 1949 the Raj Pramukh promulgated the Rajasthan (Regulation of Customs Duties) Ordinance (1) 68 I.A. 100.
(2) [1959] S.C.R. 729.
(3) (4) [1963] Supp. 2 S.C.R. 515.
(5) ; 87 No. 16 of 1949.
Section 3 of this Ordinance abolished duties on the transport of goods within the territory of Rajasthan.
Sectio n Section 3 reads as follows: "3.
No duty leviable on internal transport With effect from such date as may be notified by the Government in the Rajasthan Gazette, no duties of Customs shall be levied and collected in respect of any goods transported within Rajasthan, notwithstanding anything to the contrary in any law, or rule, instrument of usage having the force of law, in any part of Rajasthan; and any such law, rule instrument or usage shall be deemed to be repealed to that extent: Provided that the Government may, by notification in the Rajasthan Gazette (a) Impose a duty of customs on the transport of goods from or to any part of Rajasthan to or from such other part thereof at such rate or rates and with effect from such date as may be specified in the notification, or (b) direct that, in respect of the transport of goods of such description and from or to such part of Rajasthan as may be specified in the notification, a sum of money equal to the amount of the duty leviable on the export on such goods shall be deposited with the appropriate Customs Officer of the place from where the goods are intended to be transported.
" section 4 is the charging section with regard to import and export duties.
Section 4(1) states: "4.
Duties on export and import: (1) Until a revised tariff is introduced under sub section (2) Customs duties on the export or on the import of goods shall be levied and collected in accordance with the tariff for the time being in force in the place from or into which goods leviable with a duty of Customs have been exported or imported, as the case may be.
" sub section (2) of section 4 provides: "The Government may, by notification in the Rajasthan Gazette, issue a revised tariff specifying the goods or class of goods in respect of which, and the rate at which, duties of Customs shall be levied and collected with effect from such date as may be specified in the notification on the export or on the import of such goods or class of goods." eventually on August 15, 1949 a uniform revised tariff was made applicable to the whole of Rajasthan.
Section 6 provided that the existing law in force of the covenanting States shall regulate the GI 8 88 collection of such duties and other ancillary duties in relation thereto, unless altered, modified or repealed by a competent legislative authority of Rajasthan and thus saved existing law with regard to the procedure and ancillary matters.
It is manifest on examination of the provisions of this Ordinance that there was a repeal of all Customs laws of the Covenanting States in so far as they provided for the levy and collection of duties in the particular territorial limits of the Covenanting States and the Ordinance introduced a new law imposing duty on export and import into Rajasthan State as a whole.
Further, after the issue of a revised tariff the old tariffs under the various laws of the Covenanting States also stood repealed.
There is no express provision in the Ordinance saving the previous contractual rights with regard to customs duty.
In the absence of any such express provision it must be held that all existing contracts were repudiated and cancelled.
The enjoyment of the concession by the appellant after the formation of the Rajasthan State is clearly referable to the law under which customs concessions could be granted and recognised.
This is borne out by the notification dated January 16, 1951 which appeared in the Rajasthan Raj Patra, which itself refers to sections 10 and 33 of the Matsya Customs Ordinance No. 14 of 1948 by which customs concessions were revoked.
We are, therefore, of the opinion that the High Court has rightly taken the view, upon an analysis of the evidence adduced in the case, that there was no recognition of the contractual liability by the succeeding State of Rajasthan.
We shall however ,assume in faboure of the appellant that the State of Rajasthan recognised the contractual right of the appellant with regard to the exemption of tax.
Even upon that assumption the suit of the appellant must fail, for the contractual liability must be taken to have been superseded by the enactment of the Rajasthan Regulation 'of Customs Duties) Ordinance No. 16 of 1949 promulgated by the Raj Pramukh on August 9,1949.
Before we deal with this question it is desirable to indicate the constitutional developments which resulted in the inclusion of the former Bharatpur State into the Part B State of Rajasthan, which came into existence on January 26, 1950.
The former Bharatpur State remained a separate entity till March 18, 1948, though it had acceded to the Dominion of India after August 15, 1947 with respect to three subjects, namely, communications, defence and external affairs.
In 1948, however, the process of merger in Rajasthan began and the first merger that took place was of the former States of Alwar, Bharatpur, Dholpur and Karauli, which formed the Matsya Union as from March 18, 1948 by a Covenant entered on February 28, 1948.
After the formation of the Matsya Union the Raj Pramukh promulgated the Matsya Customs Ordinance 1948 on September 21, 1948.
Section 2 of that Ordinance repealed the levy of 89 customs duty in force in all the Covenanting States and applied the provisions of the new Ordinance to the whole of the United State of Matsya.
Section 10 of the Ordinance provided for the charge of customs duty on goods or class of goods to be notified in the State Gazette from time to time.
Section 33 of the Ordinance similarly granted power to the State Government to exempt any goods or class of goods imported or exported from the United State of Matsya from payment of customs duty leviable thereon.
Then came another union of certain other Rulers in Rajasthan in March 1948 by which these Rulers united under the Ruler of Udaipur to form what later came to be known as the Former State of Rajasthan.
In March 1949, the United State of Rajasthan was formed by Covenant entered into by fourteen Rulers of Rajasthan, including those who had formed the Former State of Rajasthan, and this State came into existence from April 7, 1949.
There was a merger of the Matsya Union in the State of Rajasthan on May 15, 1949 and thus the former Bharatpur State came to be included in the United State of Rajasthan through the Matsya Union.
As we have already stated, the Raj Pramukh promulgated the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 on August 9, 1949.
It is well established that Parliament or State Legislatures are competent to enact a law altering the terms and conditions of a previous contract or of a grant under which the liability of the Government of India or of the State Governments arises.
The legislative competence of Parliament or of the State Legislatures can only be circumscribed by express prohibition contained in the Constitution itself and unless and until there is any provision in the Constitution expressly prohibiting legislation on the subject either absolutely or conditionally, there is no fetter of imitation on the plenary powers which the Legislature is endowed with for legislating on the topics enumerated in the relevant Lists.
this view is borne out by the decision of the Judicial Committee in Thakur Jagannath Baksh Singh vs The United Provinces(1) in which a similar complaint was made by the taluqdars of Oudh against the United Provinces Tenancy Act (U.P. Act 17 of 1939).
It was held by the Judicial Committee that the Crown cannot deprive itself of its legislative authority by the mere fact that in the exercise of its prerogative it makes a grant of land within the territory over which such legislative authority exists, and no court can annul the enactment of a legislative body acting within the legitimate scope of its sovereign competence.
If therefore, it be found that the subject matter of a Crown grant is within the competence of a Provincial legislature nothing can prevent that legislature from legislating about it unless the Constitution Act itself expressly prohibits legislation on the subject either absolutely or conditionally.
accordingly, in the absence of any such express prohibition, the (1) [1946] F.C.R. III.] I 8(a) 90 United Provinces Tenancy Act, 1939, which in consolidating and amending the law relating to agricultural tenancies and other matters connected therewith in Agra and Oudh, dealt with matters within the exclusive legislative competence of the Provincial legislature under item 21 of List 11 of the 7th Sch.
to the Government of India Act, 1935, was intra vires the Provincial legislature notwithstanding that admittedly some of its provisions cut down the absolute rights claimed by the appellant taluqdar to be comprised in the grant of his estate as evidenced by the sanad granted by the Crown to his predecessor.
The same principle has been reiterated by this Court in Maharaj Umeg Singh and others vs The State of Bombay and others(1).
It was pointed out that in view of article 246 of the Constitution, no curtailment of legislative competence can be spelt out of the terms of clause 5 of the Letters of Guarantee given by the Dominion Government to the Rulers of "States" subsequent to the agreements of Merger, which guaranteed, inter alia, the continuance of Jagirs in the merged 'States '.
This principle also underlies the recent decision of this Court in Maharaja Shree Umaid Mills Ltd. vs Union of India(2) in which it was pointed out that there is nothing in article 295 of the Constitution which prohibits Parliament from enacting a law altering the terms.
and conditions of a contract or of a grant under which the liability of the Government of India arises.
It was further held that there was nothing in article 295 prohibiting Parliament from enacting a law as to excise duty or income tax in territories which became Part B States, and which were formerly Indian States, and such a prohibition cannot be read into article 295 by virtue of some contract that might have been made by the then Ruler of an Indian State with any person.
As we have already indicated, there is nothing in the provisions of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 which preserves the alleged contractual rights of the appel lant, and in the absence of any express language in the Ordinance preserving such alleged contractual rights, it must be held that the general, law enacted in the Ordinance supersedes the previous contract of the appellant with the State of Bharatpur.
Lastly, it was argued on behalf of the appellant that the notification dated January 16, 1951 revoking the tax concessions was in violation of article 306 of the Constitution which provides as follows: "Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the commencement of this Consti tution was levying any tax or duty on the import of goods into the State from other States or on the export of goods (1) [1963] Supp. 2 S.C.R. 515. 91 from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, continue to levy and collect such tax or duty subject to the terms of such agreement and for such period not exceeding ten years from the commencement of this Constitution as may be specified in the agreement.
The argument is based on the assumption that the appellant was enjoying concessions under section 40 of the Customs Circular No. 15 and continued to enjoy the concessions in the State of Matsya under section 34 of the Matsya Customs Ordinance No. 14 of 1948, and subsequently in the State of Rajasthan under section 6 of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949.
It is the admitted position that the agreement entered between the Government of India and the United State of Rajasthan on February 25, 1950 incorporated certain recommendations of the Federal Finance Enquiry Committee Report 1948 49.
The agreement having been executed and the condition under article 306 having been satisfied in this case, the continuance of the customs duty is in conformity with the provisions of this Article.
In any case, the claim of the appellant is not based on any provision of Bharatpur law but upon a contractual liability of Bharatpur State and to a case of this description the provisions of article 306 cannot be attracted.
For the reasons expressed, we hold that the judgment of the High Court is right and this appeal must be dismissed with costs.
Appeal dismissed.
| The respondent assessee had a gross agricultural income of more than Rs. 1 lakh in 1355 Fasli (July 1, 1947 to June 30, 1948).
In response to a notice issued by the Assistant Collector under section 15(3) of the U.P. Agricultural Income tax Act, 1948, the assessee filled a return of his income and the said officer made an assessment though under section 14(2) of the Act Jurisdiction to assess in cases when the gross income exceeded Rs. 1 lakh lay within the Collector.
The, Collector thereafter made a reassessment under section 25 read with section 16(4) within the period of limitation prescribed under the former section i.e. "within one year of the end of the year in which the income had escaped assessment".
In appeal by the respondent the Agricultural Income tax Commissioner set aside the orders of the Collector and also of the Assistant Collector and directed the Collector to make a fresh assessment after giving notice to the res pondent.
The Board of Revision held that the Commissioner had rightly decided that the orders in question were invalid but that the Commissioner was not empowered to set aside the order of the Assistant Collector which was not challenged before him.
However the Board suo motu set aside the order of the Assistant Collector and directed that fresh assess ment be made "according to law".
The High Court in reference under section 24(4) held that having regard to the limitation provided in section 25 the Board could not in 1952 direct the Collector to make a fresh assessment for the period in question.
The State of Uttar Pradesh appealed to this Court.
It was contended on behalf of the State that: (1) The Assistant Collector could make assessment even in cases when the gross income exceeded Rs. 1 lakh.
(2) The notice under section 15(3) issued by the Assistant Collector not having been set aside by the higher authorities, the Collector could, as directed by the Board, make an assessment without transgressing any restrictions in section 15(3) or section 25.
(3) without a fresh notice under section 15(3) the Collector had the power by virtue of the notice under section 15(1), to assess the income of the respondent on the return made pursuant to the notice issued by the Assistant Collector.
(4) Since notice under 9. 25 for reassessment of the escaped income had been issued by the Collector within the period prescribed by section 25(3) and the notice was otherwise valid, assessment proceedings directed by the Board could be founded by the Collector on that notice.
HELD : (i) Reading sub section
(1) & (2) together there can be no doubt that the Collector is the assessing authority within his revenue jurisdiction with unlimited jurisdiction and the Assistant Collector in charge of a sub division is the assessing authority within his revenue jurisdiction with power only in cases in which the gross agricultural income of the assessee 162 does not exceed Rs. 1 lakh.
The Assistant Collector is not entitled to make assessment in such a case relying on the generality of the provisions of section 14(1).
[167 F G] (ii) When the Assistant Collector arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh the proceedings initiated by him including the issue of the notice must, unless that conclusion is set aside by a superior authority, be treated as unauthorised, for the power to issue a notice under section 15(3) is only conferred upon the assessing authority and the assessing authority within the meaning of section 2(6) s a person authorised to assess agricultural income tax.
There is no provision in the Act or the Rules for transfer of proceedings from the Assistant Collector to the Collector when the Assistant Collector in dealing with a return finds that he has no jurisdiction.
The Collector therefore could not in the present case make reassessment on the basis of the return filed under section 15(3).
In fact having regard to the terms of the order passed by the Board it was clear that the notice under section 15(3) issued by the Assistant Collector had been quashed by the Board.
[168 B F] (iii) If the proceedings for assessment were commenced on a 'return made pursuant to an invalid notice, and the proceedings for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment the entire proceeding must be deemed to be vacated and relying upon the return made to the authority who had assessed the income another authority cannot proceed to assess the income of the assessee.
Mere issue of a notice under section 15(1) could not come to the aid of the Collector in commencing fresh assessment proceedings many years after the date on which that notice was issued on a return which was not made; to him.
[168 H 169 B] (iv) The notice under section 25 issued by the Collector must also be deemed to have been quashed by the Board.
The Collector had therefore, under the direction given by !he Board, to issue a fresh notice before a proceeding for assessment could be started and a fresh assessment could not be based on the earlier notice.
[169 E]
|
tion (Civil) No. 2135 of 1982.
(Under Article 32 of the Constitution of India): S.K. Bhattacharya for the Petitioner.
Mahabir Singh, K.B. Rohtagi, S.K. Dhingra, L.K. Gupta, S.K. Verma, B.D. Sharma, Mrs. section Dikshit and Ms. A. Subha shini (N.P.) for the Respondents.
The following Order of the Court was delivered A letter addressed to this Court complaining about prevalence of bonded labour system in Cutton, Anangpur and Lakkarpur areas of Faridabad District in Haryana State wherein the stone quarries workers are living in most inhu man conditions, was treated as a writ petition under Article 32 of the Constitution.
This Court appointed two Advocates as Commissioners to inquire into the working conditions of the stone quarry workers with particular reference to the cases mentioned in the writ petition.
This Court finding the necessity of an in depth investigation into social and legal aspects of the problem also appointed Dr.
S.B. Patvardhan and Mr. Krishan Mahajan to study the working conditions prevail ing in the, various quarries within the Faridabad district with particular reference to violation of provisions of the Bonded Labour System (Abolition) Act of 1976 and Inter State Migrant workmen (Regulation of Employment & Conditions of Service) Act.
The Commissioners furnished their report to the Court on 28th of June,1982.
Several questions were raised before the Court apart from merit of the dispute; the important ones being (i) whether an application under article 32 of the Constitution was maintainable, particularly when to allegation: of infringe ment of petitioner 's fundamental right was 529 made; (ii) whether a letter addressed to the Court could be treated as a writ petition and be proceeded with in the absence of support by affidavit or verification;.
and (iii).whether the Court had power to appoint Commissioners or an investigative body to inquire into allegations made in the petition and by affidavits and require reports to be made to the.
Court for facilitating exercise of its juris diction under article 32 of the Constitution.
The concept of public interest litigation had not then adequately 'developed and its contours sufficiently deline ated; the practice of accepting letters as a foundation for a writ petition had not also been clearly established; in writ petitions the practice of appointing Commissioners or investigating agencies had not been precedented; the tradi tional concept of defence of locus standi has not been wiped away notwithstanding the decision in S.P. Gupta vs Union of India, [1982] 2 SCR 365.
A 3 Judge Bench heard the matter at considerable length and each of them delivered a separate judgment.
Though the main judgment was delivered by Bhagwati, J. (as he then was) and Justice A.N. Sen concurred with it by a separate judg ment and Pathak, J. (as he then was) while concurring with Bhagwati, J. on some issues gave his own views.
The Court also took note of the position that the Presidential Ordi nance of 1975 for abolition of bonded labour and the subse quent Parliamentary legislation in 1975 were seeking to implement the mandate of article 23 of the Constitution but while statutory provision had been made, taking into account the fact that the pernicious practice of bonded labour had prevailed in this country for centuries; the then current social atmosphere had been tolerating this practice without any serious objection; the concentration of wealth in the hands of a few and the majority being poor it became conven ient for he owners of property and wealth to exploit the poor and in India asocial_ change opposed to traditional methods was difficult to implement, the Court did not treat the writ petition as disposed.
of by its judgment and the application survived for further monitoring.
In paragraph 39 of the judgment of Bhagwati, J. with whom on that aspect the other two learned Judges agreed, it was said: 530 "We accordingly allow this writ petition and issue the above directions to the Central Government and the State of Haryana and the various authorities mentioned in the preceding paragraphs of this judgment so that ' these poor unfortunate workmen who lead a miserable existence in small novels, exposed to the vagaries of weather, drinking foul water, breathing heavily dust laden polluted air and breaking and blasting stone all their life, may one day be able to realise that freedom is not only the monopoly of a few out belongs to them all and that they are also equally enti tled along with others to participate in the fruits of free, freedom and development.
These directions may be summarised as follows: .lm20 (1) The Government of Haryana will, without any delay and at any rate within six weeks from today, constitute Vigi lance Committee in each sub division of a district in compliance with the require ments ' of SeCtion 13 of the keeping in view the guidelines given by us in this judgment.
(2) The Government of Haryana will in struct the district magistrates to take up the work of identification of bonded labour as one of their top priority tasks and to map out areas of concentration of bonded labour which are mostly to be found in stone quarries and brick kilns and assign task forces for identification and release of bonded labour and periodi cally hold labour camps in these areas with a view to educating the labourers inter alia with the assistance of the National Labour Institute.
(3) The State Government as also the Vigilance Committees and the district magistrates will take the assistance of non political social action groups and voluntary agencies.
for the purpose of ensuring implementation of the provisions of the .
(4) The Government of Haryana will draw up within a period of three months from today a scheme or programe for rehabili tation of the freed bonded 531 labourers in the light of the guidelines set out by the Secretary to the Govern ment of India, Ministry of Labour in his letter dated September 2, 1982 and imple ment such scheme or programme to the extent found necessary.
(5) The Central Government and the Gov ernment of Haryana will take all neces sary_ steps for the purpose of ensuring that minimum wages are paid to the work men employed in the stone quarries and stone crushers in accordance with the principles laid down in this judgment and this direction shall be carried out within the shortest possible time so that within six weeks from today, the workmen start actually receiving in their hands a wage not less than the minimum wage.
(6) If payment of wages is made on truck basis, the Central Government will direct the appropriate officer of the Central Enforcement Machinery or any other appro priate authority or officer to determine the measurement of each truck as to how many cubic ft. of stone it can contain and print or inscribe such measurement on the truck so that appropriate and ade quate wage is received by the workmen for the work done by.
them and they are not cheated out of their legitimate wage.
(7) The Central Government will direct the Inspecting Officers of the Central Enforcement Machinery or any other appropriate Inspecting Officers to carry out surprise checks at least once in a week for the purpose of ensuring that the trucks are not loaded beyond their true measurement capacity and if it is found that the trucks are loaded in excess of the true measurement capacity, the In specting Officers carry ing out such checks will immediately bring this fact to the notice of the appropriate authori ties and necesSary action shall be initi ated against the defaulting mine owners and/or thekedars or jamadars.
(8) The Central Government and the Gov ernment of Haryana will ensure that payment of wages is made 532 directly to the workmen by the mine lessees and stone crusher owners or at any rate in the presence of a representa tive of the mine lessees or stone crusher owners and the Inspecting Officers of the Central Government as also of the Govern ment of Haryana shall carry out periodic checks in order to ensure that the pay ment of the stipulated wage is made to the workmen.
(9) The Central Board of Workers Educa tion will organise periodic camps near the sites of stone quarries and 'stone crushers in Faridabad District for the purpose of educating the workmen in the rights and benefits Conferred upon them by social welfare and labour laws and the progress made shall be reported to this Court by the Central Board of Workers ' Education at least once in three months.
(10) The Central Government and the Government of Haryana will immediately take steps for the purpose of ensuring that the stone crusher owners do not continue to foul the air and they.
adopt either of two devices, namely, keeping a drum of water above the stone crushing machine with arrangement for continuous spraying of water upon it or installation of dust sucking machine and a compliance report in regard to this direction shall be made to this Court on or before Febru ary 28, 1984.
(11) The Central Government and the Government of Haryana will immediately ensure that the mine lessees and stone crusher owners start supplying pure drinking water to the workmen on a scale of at least 2 litres for every workman by keeping suitable vessels in a shaded place at conveniently accessible points 'and such vessels shall be kept in clean and hygienic condition and shall be emptied, cleaned and refilled every day and the appropriate.
authorities of the Central Government and the Government of Haryana will supervise strictly the enforcement of this direction and initi ate necessary action if there is any default.
533 (12) The Central Government and the Government of Haryana will ensure that minimum wage is paid to the women and/or children who look after the vessels in which pure drinking water is kept for the workmen.
(13) The Central Government and the Government of Haryana will immediate ly direct the mine lessees and stone crusher owners to start obtaining drink ing water from any unpolluted source or sources of supply and to 'transport it by tankers to the work site with sufficient frequency so as to be able to keep the vessels filled up for supply of clean drinking water to the workmen and the Chief Administrator, Faridabad Complex will set up the points from where the mine lessees.
and stone crusher owners can, if necessary, obtain supply of potable water for being carried by tankers.
(14) The Central Government and the State GoVernment will ensure that conservancy facilities in ,the shape of latrines and urinals in accordance with the provisions contained in Section 20 of the Mines Act, 1950 and Rules 33 to 36 of the Mines Rules, 1955 are provided at the latest by February 15, 1984.
(15) The Central Government and the State Government will take steps to immediately ensure that appropriate and adequate medical and first aid facilities as required by section 21 of the and Rules 40 to 45 A of the Mines Rub s, 1955 are provided to the workmen not later than January 31, 1984.
(16) The Central Government and the Government of Haryana will ensure that every workman who is required to carry out blasting with explosives is not only trained under the Mines Vocational Train ing Rules, 1966 but also holds first aid qualification and carries a first aid outfit while on duty as required by Rule45 of the Mines Rules, 1955.
(17) The Central Government and the State Government will immediately take steps to ensure that 534 proper and adequate medical treatment is provided by the mine lessees and owners .of stone crushers to the workmen employed by them as also to the members of their families free of cost and such medical assistance shall be made avail able to them without any cost of trans portation or otherwise and the doctor 's fees as also the cost of medicines pre scribed by the doctors including hospi talisation charges, if any, shall also be reimbursed to them.
(18) The Central Government and the State Government will ensure that the provi sions of the , the Maternity Benefit (Mines and Circus) Rules, 1963 and the Mines Creche Rules, 1966 where applicable in any particular stone quarry or stone crusher are given effect to by 'the mine lessees and stone crusher owners.
As soon as any workman employed in a stone quarry or stone crusher receives injury or contracts disease in the course of his employment, the concerned mine lessee or stone crusher owner shall immediately report this fact to the Chief Inspector or Inspecting Officers of the Central Government and/or the State Government and such Inspecting Officers shall immediately provide legal assist ance to the workmen with a view to ena bling him to file a claim for compensa tion before the appropriate court or authority and they shall also ensure that such claim is pursued vigorously and the amount of compensation awarded to the workman is secured to him.
(20) The Inspecting Officers of the Central Government as also of the State Government will visit each stone quarry or stone crusher at least once in a fortnight and ascertain whether there is any workman who is injured or who is suf fering from any disease or illness, and if so, they will immediately take the necessary steps for the purpose of pro viding medical and legal assistance.
(21) If the Central Government and the Government of Haryana fail to ensure performance of any of the 535 obligations set out in clauses 11, 13, 14 and 15 by the mine lessees and stone crusher owners within the period speci fied in those respective clauses, such obligation or obligations to the extent to which they are not performed shall be carried out by the Central Government and the Government of Haryana.
The Court went on to further say: "We also appoint Shri Laxmi Dhar Misra, Joint Secretary in the Ministry of Labour, Govern ment of India as a Commissioner for the pur pose of carrying out the following assign ment: .lm20 (a) He will visit the stone quar ries and stone crushers in Faridabad District and ascertain by enquiring from the labourers in each stone quarry or stone crusher in the manner set out by us whether any of them are being forced to provide labour and are bonded labourers and he will prepare in respect of each stone quarry or stone crusher a state ment showing the names and particulars of those who, according to the enquiry made by him, are bonded labourers and he will also ascertain from them whether they want to continue to work in the stone quarry or stone crusher or they want to go away and if he finds that they want to go away, he will furnish particulars in regard to them to the District Magis trate, Faridabad and the District Magis trate will, on receipt of the particulars from Shri Laxmi Dhar Misra, make neces sary arrangements for releasing them and provide for their transportation back to their homes and for this purpose the State Government will make the requisite funds available to the District Magis trate.
(b) He will also enquire from the mine lessees and owners of stone crushers as also from the thekedars and jamadars whether there are any advances made by them to the labourers working in the stone quarries or stone crushers and if so, whether there is any documentary evidence in support of the same and he.
will also ascertain what, according to the mine lessees and owners of stone crushers or the jamadar or the 536 kedar, are the amounts of loans still remaining out.
standing against such labourers.
(c) He will also ascertain by carrying out sample check whether 'the workmen employed in any particular stone quarry or stone crusher are actually in receipt of wage not less than the minimum wage and whether the directions given in this order in regard to computation and pay ment of minimum wage arc being implement ed by the authorities.
(d) He will conduct an enquiry in each of the stone quarries and stone crushers in Faridabad District for the purpose of ascertaining whether there are any con tract labourers or inter State migrant workmen in any of these stone quarries or stone crushers and if he finds as a result of his enquiry that the Contract Labour Act, and/or the Inter State Mi grant Workmen Act is applicable, he will make a report to that effect to the Court.
(e) He will ascertain whether the direc tions given by us in this judgment re garding effective arrangement for supply of pure drinking water have been carried out by the mine lessees and stone crusher owners and pure drinking water has been made available to the workmen in accord ance with those directions.
(f) He will also ascertain whether the mine lessees and owners of stone crushers in each of the stone quarries and stone/crushers visited by him have complied with the directions given by us in this judgment regarding provision of conservancy facilities.
(g) He will also ascertain whether the directions given by us in this judgment in regard to provision of first aid facilities and proper and adequate medi cal treatment including hospitalisation to the workmen and the members of their families are being carried out by, the mine lessees and stone crusher owners and the necessary first aid facilities and proper and adequate medical services including hospitalisation are provided to the workmen and the members of their families.
537 (h) He will also enquire whether the various other directions given by us in this judgment have been and are being carried out by the mine lessees and stone crusher owners.
" This Court indicated its expectation in paragraph 40 of the judgment thus: "We have no doubt that if these direc tions given by us are honestly and sin cerely carried out, it will be possible to improve the life conditions of these workmen and ensure social justice to them so that they may be able to breathe the fresh air of social and economic freedom.
" The proceedings thereafter continued with a view to fulfilling the fond hope and expectation of the Court.
Mr. Laxmidhar Misra, In due course, submitted his report in two parts one dealing with the identification ' of the bonded labour and the second covering the inquiry into the implementation of the 21 directives.
The petitioner Morcha came before the Court with a petition for contempt action alleging that the directions were not being implemented.
That led to the appointment of Mr. Mahabir Jain of the Faculty of National Labour Institute to inquire into the measures and report on the degrees to which the 21 direc tives issued by the Court had implemented and to present to the Court a clear picture of the issues involved f.or ena bling it to make its own assessment and come to a conclusion as to whether the directions had been or were being imple mented and also as to whether action for contempt was appro priate or in the matter of monitoring the social problem, some other course was necessary to be adopted.
In February, 1989, Mr. Jain gave a very detailed report to the Court which is on record and to 'which reference has to be made in a later part of our order.
The Union Territory of Delhi housing the capital of the country is surrounded on three sides by the Haryana State and on the other lies the State of Uttar Pradesh.
The stone quarries of Faridabad have thrived for almost half a century now on account of building activity in the industrial belt of Haryana particularly Ballabgarh and Faridabad and in the Union Territory of Delhi.
The quarrying process involves substantial manual labour and the need of Continuous avail ability of labour at cheap rate has led to the growth of the system of bonded labour in that trade.
For a loan taken at an exorbitant rate of interest 538 the debtor virtually sells himself to the creditor and gets bonded usually for a period of life and renders service for the purpose of satisfying ' the debt.
The creditor anxious to exploit the situation ensures that the debt is never satis fied and often on the traditional basis of pious obligation the liability is inherited by the children of the original debtor.
The system thus provides a built in mechanism for continuation of exploitation of the under privileged section of the society by the privileged few living therein.
The bonded labourers are, paid nominal wages and often their family members are not permitted to take remunerative jobs elsewhere without permission of the master, Normally, such permission is not granted and the impoverished condi tion is allowed to continue to the advantage of the credi tor.
The Constitution fathers were aware of this prevailing inhuman practice and in article 23(1) provided: .lm`5 "Traffic in human beings and beggar and other similar forms of forced labour are prohibited and any contravention of this provision shall be an offence punishable in accordance with law.
" So powerful was the rich men 's lobby that it took 25 years after the enforcement of the Constitution to provide a definite law for the purpose and the Presidential Ordinance was the first positive measure in this direction.
That got replaced Act entitled .
We may point out that the directives in articles 39(c), 41 and 42 are also relevant in this regard.
It is perhaps not necessary to delve into the philosophy involved in the matter as the 3 Judge Bench has gone into it in the judgment of December 1983, and what remains for consideration at this stage is more or less a clear review of the enforcement of the directives and assessment of the outcome for achieving the statutory purpose and the constitutional goal and for the fulfilment of the hopes and expectations of this Court in that regard and if it is necessary to take further action and if so, what such action, should be.
This will require an analytical study of, the reports furnished by Mr. Laxmidhar Misra and Mr. Mahabir Jain.
Mr. Laxmidhar Misra in his letter to the Registry of this Court in January, 1984, ' indicated that the inquiry entrusted to him had two phaSes the first relating to the inquiry into the implementation of the Bonded Labour System.
(Abolition) Act, Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act and the Contract Labour (Regulation and Abolition) Act etc.
and the 539 Second related to ascertaining the extent of compli ance of the directions of this Court by the concerned au thorities.
On 4th February, 1984, this Court directed: "So far as ,the consideration of the report of Mr. Laxmidhar Misra is concerned, the same does not brook any delay involving as it does the release and rehabilitation of the bonded labourers and amelioration of the lives and working conditions of the large number of stone quarry workers, we would direct that the matter be expeditiously taken up." Mr. Laxmidhar Misra submitted his report on.
the second aspect too.
His report gave the ultimate indication that the enforcement of ' the Acts covered by the first part of his report had not been adequate.
In regard to the second part, namely, steps for implementation of the Court 's direc tives, he also came to hold that nothing very substantial had been done though some steps had been taken.
On 3.5.1988, this Court required Shri A.K. Srivasta va, Director General of Labour Welfare in the Ministry of Labour to inquire into the matter again and furnish a report on the degree to which the directions issued by the Court had received compliance.
Shri Srivastava was not in a posi tion to undertake this inquiry and ultimately it led to the appointment Of Mr. Mahabir Jain, as already indicated.
On 6th of March, 1989, Mr. Jain furnished his report.
He took into account the 21 directives of the Court.
As the report indicates,he adopted the method of interviews, observations, representations, holding of formal and informal meetings, reference to documents and other available literature as the basis for collection of information.
He spent considerable time in the jhuggi colonies where the bonded labourers dwell in different parts of the quarry area.
He noticed absence of sufficient drinking water facility, no provision for school ing of the children of the bonded labourers and want of appropriate medical facility.
Apart from these, he also found that the jhuggis were very small, unhygienic and did not constitute reasonable accommodation for human use.
He noticed that there was lack of organisation among the jhuggi dwellers which facilitated their exploitation by the stone quarry owners.
Even though camps were being organised at regular intervals.
for workers employed in the stone quar ries and stone crushers by the Regional Directorate of Workers Education Centre, Faridabad, there was no discerni ble ' impact whiCh would catch the eye of the visitor.
He recorded the statements of several people he met 540 including workers, their widows, dependants, relations, outsiders and public officials.
He noticed that adequate safety measures were not available in the mines and several accidents had taken place on that account.
With reference to the Workers ' Education Centre at Faridabad, Mr. Jain observed: "A critical analysis of the camp reports shows mat a few Acts like the , Minimum Wages Act, BOnded Labour System Act, .
Payment of Wages Act and Trade Union Act had been given much emphasis in almost all the camps.
In only one or two camps, topics like eradication of social evils, economic problems, a sense of coopera tion and the need for organisation of the workers had been discussed.
If one goes back to the camp reports of the Centre for Workers Education, Faridabad.
one finds that the basic objectives of the camps were to desensitise the workers about their legal rights and the need for workers organisation.
Compared to those objectives, the discussion of the topics relevant to organisation building had been given less emphasis.
Besides, less emphasis was also on audio/visual method of teaching.
However, topics discussed in different camps were more or less the same.
Therefore, topics which would create awareness among stone quarry workers need to be discussed in the camps.
In regard to the specific direction of the Court, Mr. Jain noticed that Vigilance Committees as required under Section 13 of the Act had been constituted in all districts and sub divisional headquarters of the State of Haryana and a good number of meetings of the Vigilance Committees had been held.
He, however, came to the conclusion on verifying the proceedings of the Vigilance Committee at Faridabad that he did not find any useful information regarding the work of the Vigilance Committee '.
Mr. Jain then referred to the report submitted by Shri Laxmidhar Misra to this Court where he had said that 26 per cent of the bonded labourers had been released and rehabili tated by the State Government; nearly 30.per cent of the identified bonded labourers were not willing to go back to their native places.
At the same time, 41 per cent of.
the bonded labourers had left the work site.
According to 541 Mr. Jain, these facts showed that only one bonded labourer out of every three identified was willing to go back to his or her native place.
Mr. Jain, however, found that most of the bonded labourers who had been released or rehabilitated came back to the mines a feature which clearly indicates that the rehabilitation process was defective and not use ful.
If the rehabilitated bonded labourer had a sense of confidence in the arrangement of rehabilitation, there would indeed be no occasion for him to run away from the rehabili tative process back to bondage.
Mr. Jain found that the task of identifying the bonded labourers had not been sincerely carried out.
It is true that in 1982 the Haryana Government had instructed all the District Magistrates to make rehabil itation schemes for released bonded labourers in accordance with the Government of India 's scheme and contemporaneously or near about that point of time some rehabilitation had been undertaken.
In the absence of constant goading, the exercise had become sporadic and even fell into disuse.
Mr. Jain found that there had been an increase in the number of bonded labourers and stone quarries were again thriving.
The minimum wage programme had not been effectively introduced.
A few prosecutions had been lodged but that was not adequate and had not generated the requisite consciousness.
Payment of wages had not been properly recorded and in the absence of documents cross verification became indeed difficult.
The Commissioner found that even though Mr. Laxmidhar Misra had indicated about deficiency of drinking water, schooling facility, medical treatment and the, like, no attention had been bestowed on improving these aspects and he noticed dearth of these wherever he went.
Portions from the conclu sions of the Jain report may now be extracted.
His report said: "It is a technologically backward industry thriving on continuous plentiful supply of cheap replaceable labour.
The impoverished rural hinterland sends forth an unending stream of uprooted, assetless, illiterate e people from the 'traditionally oppressed communities, mainly the Scheduled Castes and Tribes.
As workers in stone quarries and crushers, they must remain uprooted, asset less, illiterate and oppressed so that they may be easily replaced; so that the industry may continue to get its labour cheap.
" He further found: "It is an industry which in the mineral extraction part allows unchecked operation of self appointed, unregistered 542 middlemen, nicknamed 'contractors ' who perform a variety of functions." His yet further findings were that there was no account ability, the trade was ecologically hazardous, there was lack of planning and the working involved 'an in built system of criminality.
He, therefore, recommended that there should be central registration of all workers, conferment of the status of small producers by allocating permits directly to them, determining the minimum remuneration, facilitating modernisation, total exclusion ' of contractors and middlemen from the trade and protection and restoration of the natural environment.
This matter was heard for ' some time on the basis of these reports of Mr. Jain and we reserved judgment on 1oth of July, 1990.
, Swami Agnivesh at Whose instance this Court had registered the proceeding had undertaken to supply a list of unrehabilitated bonded labourers.
He took quite Some 'time to submit the statements and these reports indicated their number to be 3993.
When we were proceeding to dispose of the matter a communication was received by the Court dated 24.1.1991 from the 'Director General of Labour Welfare in the Ministry of Labour that the total number was 523 upto 30.11.1990.
The gap was so huge that we found it difficult to proceed tO Conclude the matter on the basis of the state ments given by Swami Agnivesh by ignoring the situation.
These aspects were brought to the notice of the parties and after hearing them, by an order of 2 1st FebrUary, 1991 this, Court directed: "With a view to meeting the situation, we direct that a Committee shall immediately be set up ' with Director General, Labour Welfare of the Union Government or a very senior officer from his establishment, the 'Chief Judicial Magistrate, Faridabad, Mrs. Raju Ramachandran, an advocate of the Supreme Court with social service background, an officer from the Haryana Government nor below the rank of Additional District Commissioner and Swami Agnivesh representing the petitioner.
Mr. Rohtagi or his nominee advocate 'appearing for the brick kiln owners would be permitted 'to associate in the activities of the Committee.
This Committee shall within six weeks from now check up the particulars pro vided in the list by the petitioner, identify the persons claimed to have been bonded 543 labour and collect all relevant material in respect of them; so as to assist this Court to make further directions in terms of the re quirement of the scheme to rehabilitate them.
In course of their movement, for the purpose of complying. 'with this order if fresh cases of bonded labour are noticed by them they would collect the particulars separately and report to the Court.
" The Committee obtained extension of time from this Court and ultimately has furnished its report on July 1, 1991.
This Committee adopted the questionnaire form to elicit information on all relevant aspects Which were 18 in number and have collated the material.
In a part of the report it has said: "The Committee members have personally identi fied every person whose name appears in the list prepared by the Committee.
They were approximately 1983 persons so identified but from each dera there were about 20% per sons who were not available for identification either out of fear of the contractor or be cause they had gone out that day for buying provisions or to the doctor.
Some persons could not be identified because the Committee missed finding them in their homes 'and also missed finding them in their places of work.
Some workers from the list given by the peti tioner had left and gone elsewhere and in their place some others had come.
There were some persons whose names had been missed in the list prepared by the Bandhua Mukti Mor cha.
The list of persons prepared by the Committee is all inclusive of the above iden tified categories.
" In this setting it would perhaps be appropriate to proceed on the footing that the total number of identified bonded labour is around 2000 and hot 3993 as stated by the petitioner.
It may be that some of the people whose name appear in the list furnished by Swami Agniyesh are no more in the area.
It may also be that people who had left their work even by then had been included in that list.
The picture placed by the Committee in regard to wages does not give one different from what had been recorded by this Court when the original case was disposed of in 1982.
It may be that the labourers have ' become more ' informed and educated about their rights.
They have, 544 however, no organised base.
are the weaker party and once they are in the trap of bondage the capacity to negoti ate is gone.
That is how, exploitation thrives notwithstand ing the intervention of this Court.
The facility of school ing and medical treatment, availability of water, provisions and scope for recreation are aspects which still require attention.
The Committee has reported: "Inspite of order dated 17th October, 1990 of the Chief Labour Commissioner under section 25(2)(v)(b) of ' the Contract Labour (Regula tion and Abolition) 'Central Rules, 1971 in respect of stone breaker who is a piece rated worker working in the stone mines in the Faridabad area, fixing the piece rated wage at the rate of Rs. 133 per 200 cft.
stone, there is no implementation thereof.
" At another place the Committee has said that though this Court in the main judgment had indicated that untrained workers should not be engaged in the blasting operation with explosives the practice seems to ' be 'still 'continuing and the law as also the direction of this Court were being violated by the contractors.
The 'Committee, therefore, has recommended that the principal employer should be made liable for implementation of the directions both of law and the court.
The contractors working under the Haryana Miner als Ltd. were mostly unregistered and unlicensed.
The Committee has noted that the entire area of opera tion has a dust cover in the atmosphere which is hazardous to the workmen 's health.
No attention has been bestowed by the inspecting authority or the labour law enforcers to secure improved conditions of working.
There has been divi sion of opinion as to whether it is the responsibility of the State Government Or the employer in regard to providing educational facility to the children of the quarry WorkerS/We have not been able to see any reason for the difference.
Quahies are located.
in a particular area away from habitation.
On account of necessity for ' workmen in the area people from different parts Of ,the country are made to live therein along with their families under very insanitary and inconvenient conditions.
Health care of.
workmen and members of their families and education of the children as also the adults in such exclusive locality should be of the employer.
To require a school to be built in such an area where there may not be adequate number of children for the purpose of schooling at the expense of the State exche 545 quer may not be appropriate.
That apart these institutions should be a part of the trade.
In the manner the employer has.to make provision for water and medical care, it should also have the responsibility of providing schooling for the children of the workmen.
Today emphasis is also being given on adult ' education.
If appropriate facility is provided the workmen beyond their working hours can also have scope for learning the three Rs and this could be through a process of adult education with State support under the relevant scheme.
The State of Haryana must come forward to play its role in a better way As already pointed out.these are quarries located nearabout the industrial belt of Haryana and not far away from Delhi.
Ecology.
is not only a focal problem but must be taken to be a problem of Delhi also.
Dust emanating from the working area in Haryana is bound to affect adverse ly the Delhi atmosphere.
In fact, if adequate importance is given to the angle of pollution the industry itself has to be regulated or may have to be stopped.
, The State of Haryana, we must say, has not taken our intervention in the proper spirit and has failed to exercise appropriate control though some eight years back ' this Court had in clear terms laid down the guidelines and had called.
upon the ' public authority to take charge of the situation and provide adequate safeguards.
The operation of stone quarries is more or less concen trated in particular areas.
That is a. feature which facili tates control.
If a local officer of appropriate status had been placed around the corner it would have helped in im proving the lot of the workmen.
If the pollution authority, had been made to visit the area at repeated intervals pollu tion.
control Could have been imposed.
If some authority entrusted with welfare had been made to inspect this area at regular intervals he could have ensured availability of facilities for schooling and hospital as also supply of drinking water to the workmen.
It, is a hot belt and for over 4 to 5 months water scarcity is there in this area.
The Workmen 's job is such that they are exposed to the summer heat.
It is the obligation of the employer, therefore, to provide a definite source of water:" The workmen are engaged almost on full time basis.
As report indicates bulk ,of the workmen are not prepared to return to their States.
What is,necessary; therefore, is provision of a permanent base for residence at or near the work site.
This would necessitate reason ' able housing; supply of water, a reasonable provision store at hand, 546 schooling facility, facility of a hospital, :recreational facilities and attention to the law and order problem.
Perhaps near the area a police station or an outpost could be located.
If the workers were insufficient in number, a doctor could be taken as a visitor.to the. area at frequent intervals and instead of a regular.
school one single teach er could be provided to look after the health of the people.
Court 's judgment to regulate such matters has inherent limitation.
These are not schemes which could be convenient ly monitored by a court far less can the apex court keep track of the matter.
Its Registry has congestion.
To get attention for a matter of this type from the Court is bound to take some time.
Human problems in their normal Way do not.
wait for a time schedule for attention.
In such circum stances, it should be the obligation of the State which on account of running stone quarries within its area must in various ways be getting benefits to look after these as pects.
As a welfare. ' State it is now the obligation of the State of Haryana to cater to these requirements of the area.
Haryana as we find has made substantial.
advances compared to many other States of the country and there is some amount of welcome consciousness in the administration of the State.
We hope and trust that if a direction is issued to the Chief Secretary of the State to regulate these aspects the repos ing of trust by this Court would not turn out to be mis placed.
In these circumstances we call upon the State of Har yana to attend to the needs referred to above of the workmen in a wellconsidered ' and systematic way.
Since those workmen who will be working there have to be protected from the vagaries of employment and the anxiety of the employer to draw work without adequate payments, the authorities of the State of Haryana must take care to protect the workmen from.the hands of the employer by ensuring compliance with the laws and if there be any vacuum.
in the laws, the State of Haryana should rise to play.the role of a welfare State and play it well.
In fact there could be a special cess raised against the quarry activities to be specifically utilised by way of return to the industry and there could be a special fund out of which all the amenities referred to above could be provided.
What is wanting is not power but the mind and alertness regarding one 's duty.
If our directions are worked out there would really be no bonded condition and the workmen would be paid their due share against employment and with the facilities ensured they can live well in the area.
547 At the point of enforcement of the directions as indi cated above if any one turns out to be bonded and is freed and is also prepared to return to his State, the scheme.
framed by the Government of India would be applicable to such person.
We are thankful to Mr. Laxmidhar Misra, Mr. Mahabir Jain and the members of the new Committee for their cooperation.
The society to maintain its own elevation requires willing and voluntary contribution from all those who inhabit it.
In a welfare State it is the society.
which has to develop its welfare means.
No society can have the welfare outlook unless geared up on the basis of amity, friendship, coopera tion, consideration and compassion.
If everyone living in India is willing to believe in the 'live and let live ' principle he would be prepared to devote the same attention to the people around him as he is willing to devote for himself.
This factor, if practised, would immediately bring about sufficient rejuvenation of the ailing society.
It., is this elevated society that everyone must look forward to.
We, therefore, dispose of this petition by directing that the State of Haryana shall now ensure that the people who have been identified numbering about 2000 are continued in work with the improved conditions of service and facili ties as referred to above and such of them who want to go back to their native areas be treated as released from bondage and appropriate action must be taken in accordance with Government of India 's scheme forthwith.
There shall be no order as to costs.
We had called upon the State of Haryana:to deposit Rs.20,000 to meet the expenses of the Committee appointed by us.
The Registry will look into that matter and on the basis of the statement furnished by the Committee put up a note within two weeks for giving direction regarding honorarium to be paid to the members of the Committee.
V.P.R. Petition allowed.
| A letter addressed to this Court complaining about prevalence of bonded labour system in the quarries of Fari dabad District in Haryana_ State was treated as a writ petition under Article 32 of the Constitution.
Two Advocates were appointed as Commissioners to inquire into the working conditions of the stone quarry workers.
Later, this Court, finding the necessity of an in depth investigation into social and legal aspects of the problem, also appointed two Commissioners Dr. 'S.B. Patvardhan and Mr. Krishan Mahajan to study the working conditions provail ing in the various quarries within the Faridabad district with particular reference to violation of provisions of the Bonded Labour System (Abolition) Act of 1976 and Inter State Migrant Workmen (Regulation of Employment & Conditions of Service) Act.
The Commissioner furnished their report on 28th of June, 1982.
The 3 Judge Bench heard the matter and In its Judgment (reported in ; , dealt with various aspects of the problem and taking into account the information collected by Advocate Commissioners and the report made by Dr. Patvardhan.
The Court did not treat the writ petition as disposed of by its judgment and the application survived for further monitoring.
This Court also appoInted Shri Laxmi Dhar Misra, JoInt Secretary 525 in the Ministry of Labour, Government of India as a Commis sioner to carry out the assignments stated in the judgment.
Mr. Laxmidhar Misra, in due course, submitted his report in two parts one dealing with the identification of the bonded labour and the second covering the inquiry into the implementation of the 21 directives.
The petitioner Morcha, filed a petition for contempt alleging that the directions were not being implemented.
Mr. Mahabir Jain of the Faculty of National Labour Institute was appointed to inquire into the measures and report on the degrees to which the 21 directives issued by the Court had been implemented and to present to the Court a clear picture of the issues involved for enabling it to make its own assessment and come to a conclusion as to whether the directions had been or were being implemented and also as to whether action for contempt was appropriate or in the matter of monitoring the social problem, some other course was necessary to he adopted, and in February, 1989, the report was submitted to the Court.
As the 3 Judge Bench had gone into the philosophy in volved in the matter in the Judgment, what remains for consideration at this stage was more or less a clear review of the enforcement of the directives and assessment of the outcome for achieving the statutory purpose and the consti tutional goal and for the fulfilment of the hopes and expec tations.
of this Court in that regard.
The matter was heard for some time on the basis of these reports of Mr. Jain and this Court reserved Judgment on 10th of July, 1990.
When the totter was about to he disposed a communication was received by the Court dated 24.L1991 from the Director General of Labour Welfare in the Ministry of Labour that the total number of unrehabilitated bonded laboures was 523 upto 30.11.1990, whereas the number to he 3993 according to the petitioner and on 21st February, 1991, this court directed a Committee to check up the particulars and to furnish a report, which was furnished on July 1, 1991, from which it was understood that the total number of identified bonded labour is around 2000 and not 3993.
The report indicated that the wages, the facility of schooling and medical treatment, availability of water, provisions and scope for recreation are aspects which still require attention.
No attention has been 526 bestowed by the inspecting authority.
of the labour law enforcers to secure improved conditions of working.
Allowing the petition this Court, HELD: 1.
For a loan taken at an exorbitant rate of interest the debtor virtually sells himself to the creditor and gets bonded usually for a period of life and renders service for the purpose of satisfying the debt.
The creditor anxious to exploit the situation ensures that the debt is never satisfied and often on the traditional basis of pious obligation the liability is inherited by the children of the original debtor.
The system thus provides a built in mecha nism for continuation of the under privileged section of the society by the privileged few living therein.
[537H 538B] 2.
The bonded labourers are paid nominal wages and often their family members are not permitted to take remunerative jobs elsewhere without permission of the master.
Normally, such permission is not granted and the impoverished condi tion is allowed to continue to the advantage of the credi tor, [538B C] 3.
Quarries ace located in a particular area away from habitation.
On account of*necessity for workmen in the area people from different parts of the country are made to live therein along with their families under very insanitary and inconvenient conditions.
Health care of workmen and members of their families and education of the children as also the adults in such exclusive locality should be of the employer.
To require a school to he built in such an area where there may not be adequate number of children for the purpose of schooling at the expense of the State exchequer may not he appropriate.
That apart these institutions should he a part of the trade.
In the manner the employer has to make provi sion for water and medical care, it should also have the responsibility of providing schooling for the children of the workmen.
Today emphasis is also being given on adult education.
If appropriate facility is provided the workmen beyond their.
working hours can also have scope for learning the three Rs and this could he through a process of adult education with State support under the relevant scheme.
[544G 545B] 4.
The State of Haryana must come, forward to play its role in a better way.
These are quarries located near about the industrial belt of Haryana and not far away from Delhi.
Dust emanating from the, working area in Haryana is bound to affect adversely ,the Delhi atmosp 527 here.
If adequate importance is given to the angle of pollu tion the industry itself has to he regula`ed or may have to be stopped.
[545B C] 5.
The State of Haryana has not taken Court 's interven tion in the proper spirit and has failed to exercise appro priate control though some eight years back this Court had in clear terms laid down the guidelines and had called upon the public authority to take charge of the situation and provide adequate safeguards.
[545D E] 6.
The workmen engaged on fur time basis, who are not prepared to return to, their States, are to he provided with a permanent base for residence at or near the work site. 'This would necessitate, reasonable housing, supply of water, a reasonable provision store at Land, schooling facility, of a hospital, recreational facilities and atten tion tO the law and order problem.
Perhaps near the area a police statiOn or an outpost could be located.
If the work ers were insufficient in number, a doctor could be taken as a visitor to the area at frequent intervals and instead of a regular school one single teacher could he provided to look after the health of the people.
[545G 546B] 7.
Court 's judgment to regulate such matters has inher ent limitation.
These are not schemes which could be conven iently monitored by a Court far less can the apex court keep track of the matter.
its Registry has congestion.
To get attention for a matter of this type from the Court is.
bound to take some time.
Human problems in their normal way do not wait for a time schedule for attention.
in such circumstances, it should be the obligation of the State which on account of running stone quarries within its area must in various ways be getting benefits to look after these.
aspects.
As a welfare State it is now the obligation of the State of Haryana to cater to these requirements of the area.
[546B D] 8.
In these circumstances the State of Haryana was called upon to attend to the needs of the workmen in a well considered and systematic way.
Since those workmen who will be working there have to be protected from the vagaries of employment and the anxiety of the employer to draw work without adequate payments, the authorities of the State of Haryana must take care to protect the workmen from the hands of the: employer by ensuring compliance with the laws if there he any vacuum in the laws, the State of Haryana should rise to play the role of a welfare State and.
play it Well.
In fact there could be a special cess raised against the quarry activities to*be specifically utilised by way of return to the industry and there could he a Special fund.out of which all the amenities could be provided.
What is want ing is 'not power but the mind and alertness regarding one 's duty.
[546E G] 528 9.
The State of Haryana shall now ensure that the people who have been identified numbering about.
2000 are continued in work with the improved conditions of service and facili ties and such of them who want to go back to their native areas be treated as released from bondage and appropriate action must be taken in accordance with Government of In dia 's scheme forthwith.
[547D E] Gupta vs Union of India, [1982] 2 SCR 365, referred to.
|
Appeal No. 1015 1968.
Appeal from the judgment and Order dated April 30, 1964 of the Madras High Court in T.C. No. 194 of 1961 (Reference No. 74 of 1961).
D.Narsaraju, R. H. Dhebar, R. N. Sachthey and B. D. Sharma, for the appellant.
R.Gopalkrishnan and R. Balasubramaniam, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Special Bench of the Madras High Court in which the sole question that has to be determined is whether Rule 24 of the Appellate Tribunal Rules, 1946, insofar as it enables the Tribunal to dismiss an appeal for default of appearance was ultra vires the provisions of section 33 of the Income tax Act, 1922, hereinafter called the "Act".
The facts which gave rise to the reference which was made to the High Court by the Appellate Tribunal lie within a narrow compass.
The assessee owned 1674 shares in Asher Textiles Ltd. and 9 out of 20 shares in Textile Corporation (Private) Ltd. at Tiruppur.
The latter company was the managing agents of the Asher Textiles Ltd. The assessee was a Joint Managing Director of the Textile Corporation (Private) Ltd. along with one P. D. Asher.
The assessee sold on December 21, 1954 his entire holding in two companies to Asher and some of his relations.
These sales resulted in a profit of Rs. 72,515/ and Rs. 3,14,100/ respectively.
The Income tax Officer assessed these amounts to tax for the assesment year 1956 57 under section 10(5A) of the Act as compensation earned for parting with the effective power of management.
The assessment was upheld by the Appellate Assistant Commis sioner.
The assessee appealed to the Appellate Tribunal.
After some adjournments the appeal was finally fixed for hearing on August 26, 1958.
On that date no one was present on behalf of the assessee nor was there any application for an adjournment.
On August 28, 1958 the Tribunal dismissed the appeal for default of appearance.
This the Tribunal purported to do under Rule 24 of the Appellate Tribunal Rules, 1946 as amended by notification dated January.26, 1948.
Five weeks after the disposal of the appeal the assessee filed a petition before the Appellate Tribunal praying for its restoration.
It was stated, inter alia, in that petition 11 Sup CI/69 3 820 that it was owing to some misapprehension on the part of the assessees auditors at Coimbatore that the date of the hearing of the appeal was not intimated to the counsel at Madras who was convalescing there after a surgical operation.
The Tribunal did not consider that there was sufficient cause for restoration and rejected the petition.
The: assessee applied for a reference under section 66(1) of the Act on two questions of law but that application was rejected by the Tribunal.
The assessee approached the High Court under section 66(2) of the Act and on April 5, 1960 the High Court directed the Tribunal to state the case on two questions.
The matter was first heard by a division bench but owing to the validity of Rule 24 having been canvassed a special bench consisting of the Chief Justice and two judges was constituted.
The special bench reframed the first question thus : "Whether rule 24 of the Appellate Tribunal Rules, 1946 in so far as it enables the tribunal to dismiss an appeal for default of appearance, is ultra vires.
" The second question was "Whether on the facts and in the circumstances of the case the two sums of Rs. 72,515 and Rs. 3,14,100 were assessable to tax under section 10(5A) of the Income tax Act ?" Rule 24 was framed under sub section
(8) of section 5A of the Act.
This provision confers power on the Appellate Tribunal to frame Rules regulating its own procedure.
Section 5A(8) reads : "Subject to the provisions of this Act, the appellate tribunal shall have power to regulate its own procedure and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its functions, including the places at which the Benches shall hold their sittings.
" The Appellate Tribunal first made certain Rules which were published by means of a notification dated Feburary 1, 1941.
Rule 36 provided that the Tribunal shall determine the appeal 'on merits notwithstanding the fact that the appellant did not choose to appear.
The Tribunal was also empowered to restore an appeal which had been disposed of without hearing the appellant.
The Rules made in 1941 were substituted by the Appellate Tribunal Rules, 1946 which were promulgated by means of Income tax Appellate Tribunal Notification, dated October 31, 1946.
Rule 24 was in the following terms Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appel 821 lant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for defau lt or may hear it ex parte.
" This Rule was amended by means of a notification dated January 26, 1948 and it took the following shape "Where on the day fixed for hearing or any other day to which the hearing may be adjourned,, the appellant does not appear when the appeal is called on for hearing, the tribunal may dismiss the appeal for default.
" The Rule contained no provision for restoring an appeal dismissed for default.
The Special Bench of the High Court noticed the previous history of Rule 24 as also the terms in which it came to be framed after the passing of the Income tax Act, 1961 which enables the Tribunal, in its discretion, either to dismiss the appeal for default or to hear it ex parte in case of non appearance of the parties and further enables the Tribunal to set aside the dismissal on sufficient cause being shown for non appearance.
After referring to various decided cases and examining the relevant provisions of the Act, the Special Bench summed up the position thus "To sum up the position, the Appellate Tribunal is the appointed machinery under the Act for finally deciding questions of fact in relation to, assessment of income tax,.
Its composition, consisting as it does of qualified persons in law and accountancy, makes it peculiarly qualified to deal with all questions raised in a case, whether there be assistance from the party or his counsel or not.
Section 33(4) obliges it to decide an appeal, after giving an opportunity to the parties to put forward their case ' The giving of the opportunity only emphasises the character of the quasi judicial function per formed by the Appellate Tribunal.
The fact that that opportunity is not availed of in 'a 'particular case, will not entitle the Tribunal not to decide the case.
There can be no decision of the case on its merits if the matter is to be disposed of for default of appearance of the parties.
Further, an adjudication on the merits of the case is essential to enable the High Court to perform its statutory duty and for the Supreme Court to hear an appeal filed under section 66 A Section 33 (4) itself indicates by the use of the word "thereon, that the decision should relate to the subject matter of the appeal.
Rule 24, therefore, to be consistent with section 3 3 (4) could only empower the Tribunal to dispose of the appeal on 822 its merits, whether there be an appearance of the party before it or not.
This was indeed the rule when it was first promulgated in the year 1941.
The rule in its present form, as amended in the year 1948, in so far as it enables the dismissal of an appeal before the Income tax Appellate Tribunal for default of appearance of the appellant, Wm, therefore, be ultra vires, as being in conflict 'with the provisions of Section 3 3 (4) of the Act.
" On behalf of the appellant it was urged that the powers of the Appellate Tribunal relating to an appeal are derived from section 3 3 (4) as also from section 5A(8) and the Rules made thereunder and when Rule 24 cannot be said to be ultra vires the latter provision it cannot be impugned as being repugnant to section 33(4).
There is nothing, either express or implied, in the language of section 33(4) from which it could be held that the order of the Tribunal in an appeal must always be made on the merits.
The decisions of the Allahabad, Madras and Punjab High Courts in Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P., (1) Ruvula Subba Rao & Ors.
vs Commissioner of Income tax, Madras (2) and Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab (3) have also been pressed in support of the appellants contention.
Now section 5A of the Act appears in Chapter 2A relating to the Appellate Tribunal.
Sub sections
(1) to (4) provide for the constitution of the Tribunal and the appointment of its President and Members.
Sub sections (5) to (7) provide for the manner in which the benches of the Tribunal have to function.
Sub section (8) is to this effect "Subject to the provisions of this Act the Appellate Tribunal shall have the power to regulate its own procedure and the procedure of benches of the Tribunal in all matters arising out of the discharge of its functions including the places at which the bench shall hold their sittings.
" The powers, functions and duties of the Appellate Tribunal are set out in sections 28, 33, 35, 37,48 and 66.
For Our purpose reference may be made only to sections 33 and 66.
Sub sections (1) and (2) of section 33 give a right to the assessee and the Commissioner to appeal to the Appellate Tribunal against the order passed by the Appellate Assistant Commissioner within sixty days of the cornmunication of his order.
Under sub. 'section (2A) the Tribunal can admit an appeal after the expiry of sixty days if it is, satisfied that there was sufficient cause for not presenting it within that period.
Sub section (3) lays down the formalities in the matter of the filing of an appeal.
Sub section
(4) is to the effect that the Appellate (1) (3) (2) 823 Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit and shall communicate any such orders to the assessee and "to the Commissioner.
Sub section
(5) deals with the changes lo be made in the assessment as a result of the orders of the Appellate Tribunal Sub section (6) makes the orders of the Tribunal on appeal final,, the only saving being with reference to the provisions of section 66.
Under that section the assessee or the Commissioner can require the Appellate Tribunal to refer to the High, Court any question.
of law arising out of the order of the Appellate Tribunal and if the Tribunal refuses to state the case on the ground that no question of law arises the assessee or the Commissioner can, within the prescribed period, apply to the High Court and the High Court can direct the Appellate Tribunal to state the case and make a reference.
It is unnecessary to refer to all the previsions of section 66 except to notice the power of the High Court to decide the question of law which decision has to be implemented by the Appellate Tribunal.
Now Rule 24 cannot be said to be ultra vires sub section
(8) of section 5A but what has to be essentially seen is whether it is repugnant to the provisions of section 3 3 (4).
The reasoning which prevailed with the Special Bench of the High Court, in the present case, was that under section 3 3 (4) the Tribunal is bound to dispose of the appeal on the merits, no matter whether the appellant is absent or not.
Reference in particular was made to the remedies, namely, the provisions contained in section 66 relating to reference on question of law and the further right of appeal to this Court under section 66A if the case is certified to be fit one for appeal.
The Special Bench found it difficult to accept that by exercising the power to dismiss an appeal for default of appearance under Rule 24, these remedies which were open to an aggrieved party could be defeated or ren dered infructuous.
The fact that there was no provision in Rule 24 or any other Rule for restoring an appeal once it was dismissed for default was also considered weighty in the matter.
The cases in which the validity of Rule 24 has been upheld may now be considered.
In Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P.(1) the discussion on the question of validity of the rule is somewhat meagre.
It was no doubt said that Rule 24 did not in any way come into conflict with section 33(4) but hardly any reasons were given in respect of that view.
It was recognoised ' that there was no specific rule empowering the Tribunal to restore an appeal dismissed for default of appearance but it was observed that the Tribunal would have inherent jurisdiction to set aside such an order if satisfied with regard to the existence of a sufficient cause.
According to Ravula Subba Rao & Ors.
vs Commissioner of Income tax, kadras(2) a very wide power was given to (1) (2) 824 the Appellate Tribunal by section 33(4) and it could pass any order which the circumstances of the one required.
it was immaterial whether the opportunity of being heard had be en availed of by the party or not.
This provision, it was held, did not make it obligatory for the Appellate Tribunal to dispose of the appeal on merits.
In this case again there, was hardly much discussion and the Allahabad decision was simply followed.
In Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab(1), the points raised were different and arose in a petition filed under articles 226 and 227 of the Constitution.
It does not appear that the validity of Rule 24 was canvassed.
The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it has to dispose of an appeal by making such orders as it thinks fit on the merits.
It follows from the language of section 33 (4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided, by the departmental authorities in the light of the submissions made by the appellant.
This can only be done by giving A decision on the merits on questions of fact and law and not by merely disposing.
of the appeal on the ground that the party concerned has failed to appear.
As observed in Hukumchand Mills Ltd. vs Commissioner of Income tax, Central Bombay (2) the word "thereon" in section 33(4) restricts the jurisdiction of the Tribunal to the subject matter of the appeal and the words "pass such orders as the Tribunal thinks fit" include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by section 31 of the Act.
The provisions contained in section 66 about making a reference on question of law to the High Court will be rendered nugatory if any such power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been Properly filed, for default without making any order thereon in accordance with section 33 (4).
The position becomes quite simple when it is remembered that the assessee or the Commissioner of Income tax, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of section 66.
So far as the questions of fact are concerned the decision of the Tribunal is final and refe rence can be sought to the High Court only on questions of law.
The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers.
The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under section 33(4).
It follows from all this that the Appellate Tribunal is bound to give approper decision on questions of fact as well as law which can only be done,if the appeal is disposed of on the merits (1) (2) 8 25 and not dismissed owing to the absence of the appellant.
It was laid down as far back as the year 953 by section R. Das, J. (as he then was) in Commissioner of Income tax, Madras vs Mtt.
section Ar.
Arunahalam Chettiar(1) that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by die Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The Special Bench, in the present case, while examining this aspect quite ' appositely referred to the observations of Venkatarama Aiyar, J. in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd. (2) indicating the necessity of the disposal of the appeal on the merits by,the Appellate Tribunal.
This is how the learned judge had put the matter in the form of interrogation "How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should be sought.
Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under section 33(4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot short circuit the same by dismissing it for default of appearance.
Now although Rule 24 provides for dismissal of an appeal for the failure of appellant to appear, the Rules at the material time did not contain any provision for restoration of the appeal.
Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal [vide Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P.(3) and Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab(4)].
There is a conflict of opinion among the High Courts whether there is any inherent power to restore fin appeal dismissed for default under the Civil Procedure.
(Mulla, Civil.
Procedure Code, Vol.
II, pp.
1583, 1584).
It is unnecessary to resolve that conflict in the present case.
It is true that the Tribunal 's powers in dealing with appeals are of the widest amplitude and have, in some cases, been held similar to and identical with the power of an appellate court under the Civil Procedure Code.
Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24.
It clearly comes into conflict with sub.
section
(4) of section 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is (1) (2) ; (3) (4) 826 the rule which must give way to the provisions of the Act.
We would accordingly affirm the decision of the Special Beach of the High Court and hold that the answer to the question which was referred was rightly given in the affirmative.
The appeal fails and it is dismissed with costs.
R.K.P.S. Appeal dismissed.
| The respondent 's appeal against an order of assessment was rejected by the Appellate Assistant Commissioner and he, thereafter appealed to the Appellate Tribunal.
The Tribunal, after having granted some adjournments, dismissed the appeal for default in appearance On a day fixed for the hearing, purporting to do so under rule 24 of the Appellate Tribunal Rules, 1946.
The High Court directed the Tribunal to refer two questions to itself one relating to the merits and the other to the effect whether rule 24 of the Appellate Tribunal Rules, 1946, in so far as it enables the Tribunal to dismiss an appeal in default in appearance, is ultra vires.
A special bench of the High Court took the view that under section 3 3 (4) the Tribunal was bound to dispose of the appeal on the merits, whether the appellant was present or not.
On appeal to this Court, HELD : It follows from the language of section 33(4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant.
This can only be done by giving a decision on the merits on questions of fact and law and not by merely disposing of the appeal on the ground that the party concerned had failed to appear.
[824 C D] The provisions contained in section 66 about making a 'reference on questions of law to the High Court would be rendered nugatory if a power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been properly filed, for default, without making an order thereon in accordance with section 33(4).
So far as the questions of fact are concerned the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law.
The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers.
The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed a proper order under section 33(4).
[824 E H] Rule 24 clearly comes into conflict with section 33(4) and in the event ,of repugnancy between the substantive provisions of the Act and a rule, it is the rule which must give way to the provisions of the Act.
[825 H] Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P. ; Ruvula Subba Rao & Ors.
vs Commissioner of Income tax Madras, ; Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab, ; Hukumchand Mills Ltd. vs Commissioner of Income tax, Central Bombay, ; Commissioner of Income 819 tax Madras vs Mtt.
section Ar.
Arunachalam Chettiar, and Commissioner of Income tax, Bombay vs Scindia Stearn Navigation Co. Ltd. ; , referred to.
|
ION: Criminal Appeal No. 31 of 1961.
Appeal by special leave from the judgment and order dated October 7, 1958 of the Andhra Pradesh High Court in Criminal Appeal No. 456 of 1957.
Ram Reddy for the appellants.
Ratna Rao and K R. Choudhri, for respondent No 1.
A. Ganganatham Chetty and T.M. Sen. for respondent No.2.
October 5.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
The two appellants who were granted special leave by this Court, appeal against the judgment of the High Court of Andhra Pradesh convicting them, on appeal against acquittal, of an offence under.
380 of the Indian Penal Code and sentencing them to six months ' rigorous imprisonment and a fine Rs. 500/ each, with further rigorous imprisonment for one month in default of payment of fine.
The prosecution case which had a chequered career in the High Court and the two Courts below, is as follows: In Dusi, which is a part of Bhaskararaopuram, there was a Press known as Srinivasa Printing Press at Srinivasa Ashram.
This Press existed for over 17 years.
Pappala Chinna Ramadasu (P.W.4) was admittedly a printer and for some years, the declared keeper of that Press under section 4 of the Press and Registration of Books Act, 1867.
The declarations were made in 1944 (Ex.P.4) and 1947 (Ex.
On November 21, 1955, 10 Pappala Chinna Ramadasu sold this press by a registered document (Ex.P. 1 ) to one Boddepalli Lakshminarayana for Rs 4,000/ , of which Rs.3,500/ were shown to have been paid in advance and the balance was received by Pappala Chinna Ramadasu on January 10, 1956, (Ex.P.2).
Two applications were then made on December 1, 1955, respectively by Chinna Ramadasu and Boddepalli Lakshminarayana before the Collector and District Magistrate for substituting the name of Boddepalli Lakshminarayana in place of that of Pappala Chinna Ramadasu in the declaration.
On December 6, 1955, by exhibit P.11 they were informed that they should apply under the Press and Registration of Books Act (25 of 1867).
Subsequently, on January 11, 1956, a declaration under section 4 of that Act was made by Boddepalli Lakshminarayana and was accepted (Ex.P.3).
The case of the prosecution further is that Boddepalli Lakshminarayana went to Kurnool on March 20, 1956, and in his absence, the two appellants with two others (who were prosecuted but acquitted) removed the Printing Press on the night of March 25, 1956 to Korlakota where the first appellant, Apparao, resides.
A report of the offence (Ex.
P 13), purporting to be written on March 27, 1956, was handed in at the police station house on the following day at 8 P.m.
The police took no action, and a complaint was, therefore, filed on April 4, 1956, by Boddepalli Laksminarayana.
The Judicial Second class Magistrate, Srikakulam, convicted the two appellants of an offence under 8.
380 of the Indian Penal Code, and acquitted the two others, with whom we are not concerned, and sentenced each of the appellants to imprisonment till the rising of the Court and a fine of Rs. 250/ , with simple imprisonment for one month in default.
On appeal, the Additional District and Sessions Judge, Srikakulam, set aside the conviction and acquitted them.
The complainant then obtained special leave of the High Court to file 11 appeal against this acquittal, and the High Court reversed the acquittal, as already indicated above.
In support of the prosecution case, the complainant examined four witnesses, including himself.
Pappala Chinna Ramadasu was examined as P.W.4 to prove that he had sold the Press to Boddepalli Lakshminarayana, and two other witnesses were examined to prove the removal of the Printing Press by the appellants.
The defence of the appellants was as follows: According to them, the Press originally belonged to one Govindachari, and on October 25, 1947 he transferred it to Kuna Appala Naidu by exhibit D 2.
In the registered sale deed then executed, Govindachari was joined formally by Pappala Chinna Ramadasu.
The sale was for Rs. 6,400/ and on the same day, a promissory note was executed by Kuna Appala Naidu in favour of Govindachari, which was attested by Pappala Chinna Ramadasu.
Subsequently, Appala Naidu made payments of certain amounts, and endorsements on tho promissory note showing these payments were signed by Pappala Chinna Ramadasu as a witness.
Kuna Appala Naidu was examined as D.W.1, and he stated that, the name of Pappala Chinna Ramadasu was formally included in the transfer deed, since the declaration stood in his name.
He also stated that the deed, exhibit D.2, was signed as witness by one Akkala Naidu, who died years before the present controversy started.
Kuna Appala Naidu later sold the Press to the second appellant and one Sri K. Sriramda, and the second appellant continued in possession as owner.
Pappala Chinna Ramadas continued as the printer, and his declaration as the keeper of the Press also continued.
In 1953, Pappala Chinna Ramadasu left the Press for good.
The Press was leased out by the second appellant to one Appanna, and this leave continued till 1956.
On March 19, 1956, an agreement for leave was executed in favour of the first appellant, and on March 26, 1956, a registered deed was duly 12 executed.
According to the appellants, the Press WAS removed during the day on March 27 and the lease amount was paid on the 28th.
According to them, the second appellant was the owner, in law and in fact, of the Press and the first appellant was the lessee and had removed the Press in the bona fide exercise of his right as lessee.
The appellants examined eight witnesses in support of their case.
The case of the prosecution hinged upon the evidence of Pappala Chinna Ramadasu, when confronted with exhibit D 2, he denied his signature, and stated evasively that he could not identify the signatures of Govindachari and Appala Naidu.
He admitted, however, that Appanna used to look after the Press after 1953, though he said that he used to visit the Press once in two or three months before he sold it to P.W.1, and that the correspondence used to be made in his name.
He also stated that he had purchased the Press from the Madras Type Foundry Co., for RH.
9,107/ but that the bills were lost, and he added that they were taken away along with the Press, when it was removed.
The case of the appellants rested upon the proof of the signature of Pappala Chinna Ramadasu on Es.
D 2 and additionally the proof of the signature of Akkala Naidu, beoause if Akkala Naidu signed the document in 1947 and died some four years before the present controversy started, there would be good reason to think that a document of this character could not be a fabricated one.
The appellants examined a handwriting expert, Sri B. R. Singh (D.W.8).
He stated categorically that Ex.
D 2 bore tho signature of Pappala Chimla Ramadasu.
The signature of Akkala Naidu was proved by his son, Sri Rangam.
He identified the signature of his father not only on that document but also on exhibit D 3, the promissory Dote.
He also stated that h father had died in 1951.
From this material, the Additional District and Sessions Judge, Srikakulam, found that Ex D 2 13 was not a forged document, as was suggested, but was amply proved as genuine by Pappala Chandrudu (D.W 4) and the combined evidence of Sri Rangam (D. W. 3) and Sri B. R. Singh (D. W. 8).
He therefore, held that Pappala Chinna Ramadasu had no right to sell the Pres in 1955 to Boddepalli Lakshminarayana and that his connection with the Press had effectively ceased from.
1953 even as a mere printer.
It is unnecessary to examine whether this finding or the finding given by the Judicial Second Class Magistrate, Srikakulam, who held otherwise, was the correct inference from the. facts.
The learned Judge of the High Court, who heard the appeal against the acquittal, said nothing about exhibit D 2.
According to him, the removal of the Press amounted to theft, even though the appellants removed it under a bona fide claim of right.
In this statement of the law, the learned Judge was, with respect, clearly in error.
This is what the learned Judge observed: "Further, to a charge of theft, the plea that the property was removed under a bona fide claim of right would not avail.
For example a person who bona fide believes that the fountain pen on his neighbour 's desk is his has no right in law to trespass into the neighbour 's house and snatch away the pen without the latter 's content.
" The first of the statements is certainly not the law.
It is settled law that where a bona fide claim of right exists, it can be a good defence to a prosecution for theft.
An act does not amount to theft, unless there be not only no legal right but no appearance or colour of a legal right.
in 2 East .
659, the law was stated a long time ago thus: "If there be in the prisoner any fair pretence of property of right, or if it be brought into doubt at all, the court will direct an acquittal." 14 And according to I Hale P.C. 509, the best evidence is that the goods were taken quite openly.
The law thus stated by East and Hale has not been altered in modern times.
There are numerous cases in which Courts in India have recognised a bone fide claim of right as a defence to the charge of theft.
See Ratanlal law of Crimes 19th Ed.
p. 933.
We are not concerned in this case with the declaration under the Press and Registration of Books Act.
A declared keeper of the Press is not necessarily the owner thereof so as to be able to confer title to the Press upon another.
The ownership of the Press is a matter of the general law and must follow that law.
Whether Pappala Chinna Ramadasu was not only the declared keeper of the Press but also its owner can only be effectively decided by the Civil Court.
For purposes of Criminal law, the evidence prima facie pointed to a transfer of the Press by Pappala Chinna Ramadasu and Govindachari to Kuna Appala Naidu.
The evidence prima facie also established that the appellants had taken possession of the Press under a bona fide claim of right, and that, in our opinion.
was sufficient to dispose of the present case.
The Additional District and Sessions Judge, Srikakulam, had rightly held that the matter was for the decision of the Civil Court, and that this was not a case of theft under the Indian Penal Code, and had rightly directed the acquittal of the appellants.
The learned Judge of the High Court considered the declaration by Pappala Chinna Ramadasu, which continued Unchanged, as sufficient to prove an offence of theft.
In our opinion, in tho circumstances and in the light of the finding given by the District and Sessions Judge with regard to exhibit D 2, it was necessary to go further to see what right Pappala Chinna Ramadasu had to the Press at all.
If this had been considered, the learned Judge would have seen that there was some doubt the right of Pappala Chinna Ramadasu 15 to transfer the Press in 1955 to Boddepalli Lakshminarayana, and further that the defence that the appellants took possession of the Press under a bona.
fide claim of right was a good defence entitling them to an acquittal.
In the result, this appeal must succeed.
The convictions of the appellants and the sentences passed on them are set aside, they are acquitted and their bail bonds shall stand discharged.
The fines, if realised, are ordered to be remitted.
Appeal allowed.
| Under the powers conferred by section 8(1) of the Foreign Exchange Regulation Act, 1947, the Central Government issued a notification on August 25, 1948, placing a ban on the importation of gold except with the permission of the Reserve Bank.
Section 23A of the Act, which was introduced by an amendment in 1952, provided that". the restrictions imposed by section 8(1). shall be deemed to have been imposed under section 19 of the , and all the provisions of the Act shall have effect accordingly. " Section 19 of the , enabled the Central Government, by notification, to prohibit or restrict the bringing goods of any specified description into 787 India and, by reason of other :provisions of that Act, goods imported in contravention of the notification issued under section 19 were liable to confiscation.
In 1955, the , was amended by the introduction of section 178A in that Act, which provided, inter alia that "where goods were seized, under that Act in the reasonable belief that they were smuggled goods, the burden of proving that they were not smuggled goods shall be on the person from whose possession the goods were seized.
" On June 26, 1956, N, an employee of the respondent, on alighting at the Central Station in Madras From Bombay was intercepted by a Police Head Constable and, on a search of his clothing, four blocks of gold weighing about a thousand tolas were found in his possession.
The officers of the customs department interrogated him and, finding that lie was unable to produce any record for the purchase of the gold, seized from him the blocks of gold.
N admitted that he brought the gold for the respondent and enquiries were made to verify the story narrated by him as to the source from which he obtained the gold.
Thereafter the Collector of Customs being prima facie of the view that the gold seized had been smuggled, issued notice to the respondent to show cause why the said gold should not be confiscated.
The respondent offered his explanation bat the Collector held that the respondent bad not discharged the onus of proving that the gold was not smuggled, an onus which had been cast on him by section 178A of the , and directed the confiscation of the gold under section 167(8) of that Act.
The respondent challenged the legality of the action taken by the Collector of Customs on the grounds, inter alia, (1) that section 178A of the Sea Customs Act, 1873, was consti tutionally invalid as it was an unreasonable restraint on the citizen 's rights to hold property or to do business guaranteed by article 19(1)(f) and (g) of the Constitution of India and was not saved by cls.
(5) and (6) respectively of article 19; (2) that section 178A of the Sea Customs Act which was enacted in 1955 could not be invoked in adjudicating a contravention of a notification under the Foreign Exchange Regulation Act inasmuch as section 23A of the latter Act when enacted in 1952 in effect incorporated into that Act all the relevant provisions of the Sea Customs Act as they stood in ' 1952 with the result that any subsequent amendments to the Sea Customs Act could not affect section 23A; and (3) that the rule as to the burden of proof under section 178A was not attracted to the present case because the Customs Officer who effected the seizure did not, at the moment of seizure, entertain a reasonable belief that the goods seized were smuggled.
The Collector of Customs besides maintaining the legality of the order of confiscation, contended that the question raised in the case as to the constitutional 788 validity of section 178A of the Sea Customs Act was concluded by the decision in Babulal Amthalal Mehta vs The Collector of Customs, Calcutta Held: (1) that Babulal Amthalal Mehta vs The Collector of Customs, Calcutta, [1957] section C. R. II 10, was a decision as to the validity of section 178A of the Customs Act, 1878, with reference to article 14 of the Constitution of India only and that the question whether the said section was obnoxious to the rights guaranteed by article 19(1)(f) and (g) was not considered by that judgment.
(2) that the object of section 178A was the prevention and eradication of smuggling, inter alia of gold which was widely prevalent, and in view of the fact that without a Law in that form and with that amplitude smuggling might not be possible of being effectively checked, the restrictions imposed by that section being in the interests of the general public could not be held to be violative of the rights guaranteed by article 19 (1) (f) and (g), though it might operate somewhat harshly on a small section of the public.
Accordingly, section 178A does not contravene article 19(1)(f) and (g).
State of Madras vs V. G. Row, ; , Manohar Lal vs State of Punjab, ; and Ram Dhan Dass vs State of Punjab; , , relied on.
Pukhraj Champalal Jain vs D. R. Kohli, (1959) 61 Bom.
T. R. 1230, approved.
M.G. Abrol vs Amichand, (1 960) , disapproved.
Nathella Sampathu Chetty vs Collector of Customs, Madras, A. 1.
R. , reversed.
(3) that a seizure to which section 178A was applicable was merely a preliminary to the proceedings before a quasi judicial authority under section 182 and that it was only when the latter authority was, satisfied that the seizure was made "in the reasonable belief that the goods seized were goods that had been smuggled" that the rule of evidence laid down by section 178A came into operation.
(4) that the wording of section 23A of the Foreign Exchange Regulation Act, 1947, showed that the reference in it to section 19 of the , was merely for rendering notifications under the named provisions of the Foreign Exchange Regulation Act to operate as notifications under the and that it could not have the effect of incorporating the relevant provisions of the latter Act in the Act of 1947, and that, consequently, when a notification issued under section 8(1) of the Foreign Exchange Regulation Act was deemed for ail purposes to be a notification issued under section 19 of the 789 , the contravention of the notification attracted to it each and every provision of the which was in force at the date of the notification.
The, Secretary of State for India in Council vs Hindustan Co operative Insurance Society Ltd., (1931) L. R,.
A. 259, held inapplicable.
(5) that, in the instant case, the circumstances present at the moment when the gold was taken by the Customs Officer at the Central Station did tend to raise a reasonable suspicion that the gold seized had been obtained illicitly and that this was sufficient to constitute in the words of the statute "a reasonable belief that the goods (gold) were smuggled."
|
Civil Appeal No. 2107 of 1987.
From the Judgment and Order dated 3.3.1986 of the Delhi High Court in Writ Petition No. 2503 of 1985.
R.K. Garg and D.K. Garg for the Appellant.
M.S. Rao and C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by RAY, J.
Special leave granted.
Heard arguments of learned counsel for the parties.
This appeal by special leave is against the judgment and order dated 3rd March, 1986 passed by the High Court at Delhi dismissing the writ petition No. 2503 of 1985.
The facts of the case in brief are that the appellant was appointed to the post of Craftsman (Jawan) on November 23, 1973.
We was sent to 3 E.M.E. Centre, Bhopal for training.
After completion of his two years ' training he was posted to 80 EME Battalion C/o 56.
A.P.O. on July 25, 1975.
The appellant in view of his good service was promoted to the post of Naik and subsequently he was confirmed in that post.
During his service as Jawan and as a Naik, the appellant served at various places in the country including the field area at Punj Sector in 956 Jammu & Kashmir.
The appellant was reverted from the post of Naik to the post of Jawan (Craftsman) by Lt. Col. G.S. Srivastava and he was, thereafter, directed to report to NEFA.
The appellant joined his post in NEFA.
However, the appellant was subsequently transferred and posted in Panagarh.
One Major N.K. Tiwari who was the Commanding Officer of the said regiment became very much displeased with the appellant as he did not comply with his directions to go to Kanpur to bring his personal goods from Kanpur to Panagarh.
The appellant was harassed and maltreated in various ways.
The appellant being unable to bear the torture caused to him approached Col. R.K. Mehta, Commanding Officer, EME Depot Battalion, Sikandrabad and surrendered to the mercy of the said Colonel.
The Colonel advised the appellant to go back to Panagarh and report to his Unit.
The appellant was sent with the certificate of surrender.
On his return, the appellant was not permitted to join his duty; but he was taken into the custody immediately and thereafter he was directed by Major Tiwari to be treated without leave for three days and should be court martialled for the same.
The appellant was charge sheeted for the purpose and he was convicted to 42 days imprisonment in military custody.
During the period of his remaining in military custody, he was given only a small sum of Rs.60 and as such his family had to suffer much harassment.
The appellant, however, on 12th September, 1984 left Panagarh with his wife and children for Kanpur without taking any leave.
It is stated that he became unwell and he was under the treatment of a doctor.
After coming round he reported to Panagarh and reported in his Unit with the fitness certificate.
The appellant was called by the Officer Commanding and he was served with a charge sheet on November 2, 1984 wherein it was ordered by Major P.S. Mahant that the appellant be tried by a Summary Court Martial.
It has been alleged that Major Mahant appointed his close associate Captain K.J. Singh to record summary of evidence.
The appellant was not given proper opportunity to defend himself.
In the proceedings the appellant was not allowed to raise any objections.
On 9th November, 1984, the order of dismissal from service of the appellant was made by Major P.S. Mahant, Commanding Officer, in the summary court martial.
The appellant challenged this order by a writ petition being Civil Writ Petition No. 2503 of 1985 on the ground that the Commanding Officer was not legally competent to preside a summary court martial.
It was also stated in the petition that the punishment of dismissal from service was disproportionate to the charge; he was denied a fair 957 opportunity to defend himself and was in fact not permitted to ask questions to the witnesses.
The appellant so prayed for issuance of an appropriate writ for quashing the impugned order of dismissal from service and also for a direction to the respondents to pay the entire arrears of salary and allowances which are legally due to him.
The writ petition was heard by a Division Bench of the High Court at Delhi and it was dismissed on March 3, 1986 holding inter alia that no objection was taken before the Summary Court Martial that the appellant was not allowed to be represented by his counsel.
It was also held that in the writ petition no objection was taken as to the competence of Major P.S. Mahant to act as a Judge in the Summary Court Martial nor objection was made to the effect that Captain K.J. Singh ordered him to keep his mouth shut.
It was also observed that besides Major P.S. Mahant who was presiding Summary Court Martial there were two other members.
The appellant, it was held, had earlier been convicted four times and entries were made in the red ink.
The appellant was absent from duty without any leave and he pleaded guilty before the court martial proceedings and as such there was no illegality in the order of dismissal made in the court martial proceedings.
It is against this judgment and order, the impugned appeal on special leave has been preferred before this Court.
An affidavit in counter sworn by one Capt.
D.K. Ghosh on behalf of the respondents has been filed.
In paragraph 4 of the said affidavit, it has been submitted that Rule 39(2) of the Army Rules deals with the disqualification of officers for General and District Courts Martial.
The said rule says that an officer is disqualified for serving on a general or district court martial if he is the Commanding Officer of the accused.
The appellant has assailed the court martial proceedings on the ground that the Commanding Officer served on the Court Martial and as such the court martial proceedings are in breach of Rule 39(2) of the Army Rules, 1954.
It has been further stated that the appellant was tried by a Summary Court Martial and not by a General or District Court Martial and Army Rule 39(2) does not apply to Summary Court Martial constituted under Section 116 of the .
It has been further stated that a Summary Court Martial may be held by a Commanding Officer of any Corps, Department or Detachment of the regular army, as stipulated by Section 116(c) of the .
It has been submitted that the appellant has been tried by a Summary Court Martial and he was sentenced to dismissal from 958 service on November 9, 1984.
It has also been stated that the proceedings have been attended throughout by two other persons in accordance with the provisions of Section 116(1) of the said Act.
It has been averred that in a case of Summary Court Martial as per Section 116 of the said Act, the Commanding Officer shall alone constitute the Court.
The proceedings of the Court shall be attended by two officers/JCOs or one of either.
It has been further stated that the appellant incurred the following red ink entries while serving with various units prior to the summary court martial: (i) 14 days R.I. in military custody under AA (Army Act) Sec.
39(a) on September 3, 1975 by 80 EME Bn.
(ii) 3 days R.I. in military custody under A.A. Sec.
39(a) on 22nd June, 1979 by 1 EME Centre.
(iii) Reduced to the rank under AA Sec. 63 on 24 January, 1983 by 174 Fd.
(iv) 28 days R.I. and 14 days detention in mil.
custody under AA Sec.
39(a) on 10th July, 1984 by 986 AD.
Regt WKSP.
The appellant was issued a show cause notice for discharge being unsuitable inefficient soldier on 30th August, 1984 to which he replied on 2nd September, 1984.
The appellant again became absent without leave on 13th September, 1984.
The appellant did not inform the Unit authority again of taking his family to Kanpur.
While leaving for Kanpur he locked his quarter securely to keep possession of the family accommodation.
The proceedings of the summary court martial were in accordance with the provisions of the and the order of dismissal from service of the appellant is a valid order.
A rejoinder was filed by the appellant wherein he reiterated that the order of dismissal passed by the Commanding Officer, Major P.S. Mahant was illegal and contrary to the provisions of natural justice.
The charge sheet was given to the appellant by the aforesaid Major alleging that the appellant remained absent from 13th September, 1984 to 30.10.1984 without leave from the Unit 's line and the said officer himself made an order that the appellant shall be tried by a summary court martial on that day.
The said officer constituted the court of summary court martial and himself presided over the same.
The order of dismissal was passed in violation of the rules of natural justice.
It has also been submitted that the conviction of the appellant 959 was in utter breach of Articles 14 and 21 of the Constitution of India and as such the said order was liable to be set aside.
The first submission on behalf of the appellant is that the constitution of the Summary Court Martial by the Commanding Officer Major P.S. Mahant is in contravention of Rule 39(2) of the Army Rules, 1954.
the relevant provisions of Rules 39 are in the following terms: "Rule 39 . . (2) An officer is disqualified for serving on a general or district court martial if he: (a) is an officer who convened the court; or (b) is the prosecutor or a witness for the prosecution; or (c) investigated the charges before trial, or took down the summary of evidence, or was a member of a court of inquiry respecting the matters on which the charges against the accused are founded, or was the squadron, battery, company, or other commander, who made preliminary inquiry into the case, or was a member of a previous court martial which tried the accused in respect of the same offence; or (d) is the commanding officer of the accused, or of the corps to which the accused belongs; or (e) has a personal interest in the case." Rule 39(2) provides that an officer who is the Commanding Officer of the accused or of the corps to which the accused belongs or who is an officer who convened the court or who is the prosecutor or a witness for the prosecution and who has a personal interest in the case, is not eligible for serving on a general or district Court Martial.
There are four kinds of court martials specified in Section 108 of the Army Act, 1959.
These are: (a) General Courts Martial; (b) District Courts Martial 960 (c) Summary General Courts Martial; (d) Summary Courts Martial Section 116 of the said Act says that a summary court martial may be held by the commanding officer of any corps or department or detachment of the regular Army, and he shall alone constitute the court.
It further provides that the proceedings shall be attended throughout by two other persons who shall be officers or junior commissioned officers or one of either, and who shall not as such, be sworn or affirmed.
In the instant case a summary court martial was held by the Commanding Officer, Major P.S. Mahant in accordance with the provisions of Section 116 of the Army Act.
The Commanding Officer of the Corps, Department of Detachment of the Regular Army to which the appellant belongs, is quite competent in accordance with the provisions of Section 116 of the said Act and as such the constitution of the summary court martial by the Commanding Officer of the Corps cannot be questioned as illegal or incompetent.
It is neither a general court martial nor a district court martial where the appellant 's case was tried and decided.
In case of general court martial or district court martial Rule 39(2) of the Army Rules, 1954 is applicable and the Commanding Officer is not competent to convene general or district court martial.
The summary court martial was held by the Commanding Officer of the corps, Major P.S. Mahant and there are two other officers including Capt.
K.J. Singh and another officer to attend the proceedings.
In such circumstances, the summary court martial having been convened by the Commanding Officer of the corps according to the provisions of the , the first submission made on behalf of the appellant fails.
Chapter 6 of the specifies the offences and also the punishments for such offences.
Section 39(a) specifies that to be absent without leave constitutes an offence and Section 71(e) of the said Act provides dismissal from service as one of the punishments for such an offence.
The appellant undoubtedly absented himself from duty without taking any leave from the lines as required under the .
The appellant was charge sheeted for the said offence and he was tried by a summary court martial convened by the Commanding Officer and after giving him due opportunity it was held that the appellant was previously punished also for the offence of absence from duty on four occasions and there was a red ink entry.
Considering all this in the summary court martial proceedings he was convicted and sentenced to the punishment of dismissal from service.
The submission 961 that the punishment is disproportionate to charge is wholly unsustainable.
The summary court martial constituted by Major P.S. Mahant after considering the evidences has found the appellant guilty of the alleged charge and awarded the said punishment in accordance with the provisions of the .
As such the said order of dismissal cannot be challenged as disproportionate to the charge or as one tainted with illegality.
It has been urged on behalf of the appellant that he raised an objection to Major P.S. Mahant to preside over the summary court martial.
It has also been urged that at the time of taking evidence of the witnesses, the appellant was asked to keep his mouth shut and as such the appellant could not cross examine the witnesses examined on behalf of the prosecution, thereby the principles of natural justice have been violated.
It appears that the appellant has not filed any objection before the summary court martial objecting to the presiding of the court martial proceedings by Major P.S. Mahant nor any such objection had been taken in the writ petition moved before the High Court.
It is for the first time in the appeal which the appellant filed before the Chief of the Army Staff (Competent Authority), Army Headquarters, New Delhi that he raised an objection to the presiding of Major P.S. Mahant as Judge of the court martial proceedings.
It has been rightly held by the High Court that this is an after thought and as such this submission cannot be permitted to be made by the appellant after the court martial proceedings were completed and the order of dismissal from service was made.
As regards the other objection that he was directed by Capt.
K.J. Singh to keep his mouth shut, it is also without any substance in as much as it appears from the summary of the evidences recorded that the appellant in fact cross examined the prosecution witnesses.
It is also evident from the judgment of the Delhi High Court that the appellant admitted his guilt of absenting from duty without taking any leave.
Considering all these facts and circumstances, the judgment and order passed by the High Court of Delhi appears to us as unassailable.
We, therefore, dismiss the appeal and affirm the judgment and order of the High Court.
There will be no order as to costs.
N.V.K. Appeal dismissed.
| % The Serial titled "Tamas", based on a book written by Sree Bhisham Sahni, was being screened on the T.V. Four of its episodes had already been shown when the petitioner moved this Court under Article 32 of the Constitution for a writ of prohibition and any other appropriate writ restraining its further screening and to enforce petitioner 's fundamental rights under Articles 21 and 25 and for declaring the screening or televising of "Tamas" as violative of section 5B of the .
Earlier, a writ had been admitted in the High Court of Bombay and a single learned Judge granted interim stay.
On appeal, the Division Bench, after seeing the complete serial, vacated the stay.
Special leave petition has been filed against that judgment.
Serial `Tamas ' takes us to a historical past unpleasant at times, but revealing and instructive.
In those years which `Tamas ' depicts, a human tragedy of great dimension took place in this sub continent though 40 years ago which has left a lasting damage to the Indian psyche.
`Tamas ' depicts the Hindu Muslim and Sikh Muslim tension before the partition of India and the killings and looting that took place.
According to the Division Bench of the High Court, the serial inter alia depicts how communal violence was generated by fundamentalists and extremists in both communities, how innocent persons were duped into serving the ulterior purpose of fundamentalists, and how extremist ele 1012 ments infused tension and hatred for their own ends.
The petitioner 's contentions are: (1) The exhibition of the serial is against public order and is likely to incite the people to indulge in the commission of offences and is therefore violative of section 5B(1) of the and destructive of principles embodied under Article 25; (2) Its presentation is likely to promote feelings of enmity, hatred or ill will among different religious groups and is prejudicial to communal harmony and national integration, and is therefore an offence under section 153A of the Indian Penal Code; (3) Events have been depicted and characters portrayed in a manner that would provoke and instigate people of all ages exposed to it, who will fail to grasp the message if any behind the serial; (4) Truth in its naked form may not always and in all circumstances be desirable to be told or exhibited, and (5) The Judges of the High Court have viewed the film from their own point of view but the average persons in the country are not as sober and experienced as the Judges of the High Court.
The respondents on the other hand, urge that all the appropriate authorities have considered the film suitable for unrestricted public exhibition and the only question is whether the film has been misjudged or wrongly judged and allowed to be exhibited or serialised on a wrong approach.
This film indubitably depicts violence.
That violence between the communities took place before the pre partition days is a fact and it is the truth.
Dismissing the petitions, this Court, ^ HELD: (1) The itself contains several provisions to ensure the fulfilment of the conditions laid down in section 5B, and also to ensure that any film which is likely to offend the religious susceptibilities of the people is not screened for public exhibition.
[1021G H] (2) On the aforesaid statute, as it presently stands, the procedure for grant of certificate of exhibition to a film is quite elaborate, and the unanimous approval by the examining committee must be given full weight and the Court would be slow to interfere with the conclusion of a body specially constituted for this purpose.
[1022C D] (3) The correct approach in judging the effect of exhibition of a film or of reading a book is to judge from the standards of ordinary reasonable man.
[1019C D] 1013 (4) The two learned Judges viewed the film from the point of view of "how the average person for whom the film is intended will view it.
" They have found that the message of the picture was good, and have come to the conclusion that the average person will learn from the mistakes of the past and realise the machination of the fundamentalists as the film itself shows how realisation ultimately dawns as to the futility of violence and hatred and how the inherent goodness in human nature triumphs.
In their view, those who forget history are condemned to repeat it.
It is out of tragic experience of the past that we can fashion our present in a rational and reasonable manner and view our future with wisdom and care.
Awareness in proper light is a first step towards the realisation.
[1022F H] (5) The finding of the Division Bench of the Bombay High Court is that the picture viewed in its entirely, is capable of creating a lasting impression of the message of peace and co existence, and that people are not likely to be obsessed, overwhelmed or carried away by the scenes of violence or fanaticism shown in the film.
This Court sees no reason to differ from the conclusion.
[1024D] (6) It is the lesson of history that naked truth in all times will not be beneficial but truth in its proper light indicating the evils and the consequences of those evils is instructive and that message is there in `Tamas '.
[1023D] (7) It is true that a writer or a preacher should cling to truth and right, if the very heavens fall.
This is a universally accepted basis.
Yet in practice all schools alike are forced to admit the necessity of a measure of accommodation in the very interests of truth itself.
[1023B] (8) Judged by all standards of a common man 's point of view of presenting history with a lesson in this film, these boundaries appear to have been kept in mind.
[1023C D] (9) The Court is unable to see any alleged violation of Articles 21 and 25 of the Constitution.
The position that the petitioner has a right to draw attention of this Court to ensure that the communal atmosphere is kept clean and unpolluted, is accepted.
He has done well to draw attention to this danger.
This Court has examined and found that there is no such danger and the respondents have not acted improperly or imprudently.
[1024E F] Bhagwati Charan Shukla vs Provincial Government, A.I.R. 1947 1014 Nagpur 1; K.A. Abbas vs The Union of India and Another, ; ; Ebrahim Sulaiman Sait vs M.C. Muhammad and Anr., ; and Rajkapoor vs Laxman, ; , referred to.
|
Appeal No. 582 of 1965.
Appeal by special leave from the judgment ' and order dated August 23, 1961 of the Madras High Court in Appeal No. 157 of1957.
C.R. Pattabhiraman and R. Thiagarajana, for the appellants.
Vedantachari, G. Kausalya and section Balakrishnan, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
This is an appeal by special leave.
It is directed against the decision of the High Court of Madras in A.S. No. 157 1957.
This case has a fairly long history but we shall set out in this Judgment only such facts as are necessary for the decision of the issues debated before us.
In the course of his arguments Mr. C.R. pattabhiraman, learned Counsel for the appellant, urged two grounds in support of this appeal.
They are: (1 ) the appellant being an 'occupancy tenant ' of the suit properties he cannot be evicted from the land 510 in view of the provisions of the Madras Estates Land Act (Madras Act I of 1908) as amended by the Madras Estates Land Third Amendment Act (Madras Act XVIII of 1936) and (2) that under any circumstance the appellant should be held as enjoying the lands in question by personal cultivation and there fore he cannot be evicted in view of the provisions of the Madras Cultivating Tenants Protection Act (Madras Act XXV of 1953).
The respondent is the owner of the suit properties.
It leased out two different portions of those properties to the appellant under two lease deeds dated 11 9 1945 and 27 7 1946 (Exhs.
A 7 & A 8) respectively for a period of three years.
Even before the lease period came to an end the respondent sued the appellant for the possession of the suit properties on various grounds.
The appellant pleaded that the cannot be evicted from the suit properties in view of the protection afforded to him by section 6 of the Madras Estates Land Act.
He claimed 'occupancy right ' in the suit properties on the basis of the provisions of that Act.
The trial court upheld his contention and dismissed the suit.
But in appeal the High Court held that as the case fell within the scope of section 8(5) of the Madras Estates Land Act, the appellant was not entitled to the benefit of section 6 of that Act.
It accordingly allowed the appeal and remanded the case to the trial court for the trial of the other issues.
During the pendency of the appeal in the High Court the Madras Cultivating Tenants Protection Act came into force.
On the basis of the provisions of that Act, the appellant claimed before the trial court after remand that he should be considered as a cultivating tenant under that Act and if so held, he cannot be evicted from the suit properties.
Both the trial court as well as the High Court rejected both the aforementioned contentions of the appellant.
As regards the occupancy right pleaded, they held that the matter is concluded by the earlier decision of the High Court.
The trial court held that the appellant cannot be considered as a cultivating tenant under the Madras Cultivating Tenants Protection Act as he is not proved to have cultivated the properties by his own physical labour as claimed by him.
That Court opined that mere supervision of the work of the hired labour cannot be considered as "Physical labour" of the appellant.
The High Court affirmed this conclusion observing: "But the evidence disclosed that the cultivation of the suit lands was carried on by the appellant solely with the aid of hired labour.
Neither the appellant nor any member of his family took part in the cultivation operations in respect of the suit lands.
We therefore agree with the learned District Judge in his view that the appellant does not satisfy the test of carrying on personal cultivation to qualify for becoming a cultivating tenant.
He could not therefore claim the benefits conferred by the various protection Acts in force.
" 511 We have to first decide whether the appellant can be permitted to raise the contention that he has 'occupancy right in the suit properties in view of the decision of the High court of Madras in A.S. No. 241 of 1949.
In other words whether that decision operates as res judicata as regards his claim to the occupancy fight.
We are unable to agree with Mr. Pattabhiraman that the High Court did not finally decide the appellant 's claim to occupancy right in the suit properties in A.S. No. 241 of 1949 and that it merely made some tentative observations in respect of the same leaving the matter for a fresh decision by the trial court.
The High Court has specifically gone into the appellant 's claim to occupancy right, examined the relevant provisions of the Madras Estates Land Act, took into consideration the decisions bearing on the point and thereafter came to a firm conclusion that the appellant 's claim is unsustainable.
The case was remanded to the trial court for the trial of the issues that have not been decided earlier.
Therefore we have now to see whether the plea of occupancy right can be gone into afresh.
There is hardly any doubt that the trial court could not have gone into that issue again.
It was bound by the Judgment of the High Court.
It is also clear that that decision was binding on the Bench which heard the appeal.
On this question judicial opinion 'appears to be unanimous and it is a reasonable view to take.
We are unable to agree with the contention of the respondent that the decision of the High Court of Madras in A.S. No. 241 of 1949 on its file precludes the appellant from reagitating in this Court the plea that he has occupancy right in the suit properties.
An identical question came up for decision in this Court in Satyadhyan Ghosal and Ors.
vs Sm.
Doorajin Debi and Ant.(1) wherein this Court ruled that such a decision can be challenged in an appeal to this Court against the final Judgment.
As it is open to the appellant to recanvass the correctness of the decision of the High Court regarding his claim for occupancy right, we shall now go into the merits of that claim.
The suit land was in an Inam village but it was not an 'estate ' within the meaning of the Madras Estate Land Act as it originally stood; but it became an 'estate ' by virtue of the amending Act XVIII of 1936.
The lands in dispute are not admittedly 'private lands '.
Prior to the amending Act came into force, the respondent had obtained a decree for possession against the tenants who were then in the suit lands.
It is also not in dispute that no tenant had obtained any occupancy fight in those lands prior to 1936.
Therefore all (1) ; 512 that we have to see is whether the appellant can 'be said to have acquired occupancy right in those lands in view of the leases in his favour.
For deciding this question we have to examine the scope of section 6(1) and section 8(5) of the Act as they now stand.
Section 6(1) reads thus: "Section 6(1) : Subject to the provisions of this Act every ryot now in possession or who shall hereafter be admitted by a landholder to possession of ryoti land situated in the estate of such land holder shall have a permanent right of occupancy in his holding.
Explanation (1 ).
For the purposes of this Sub section, the, expression 'every ryot in possession ' shall include every person who, having held land as a ryot, continues in possession of such land at the commencement of this Act.
Explanation (2).
In relation to any inam village which was not an estate before the commencement of the Madras Estate Land (Third Amendment) Act, 1936 but became an estate by virtue of that Act, or in relation to any land in an inam village which ceased to be part of an estate before the commencement of that Act, the expression 'now ' and 'commencement of that Act ' in this sub section and Explanation (1) shall be construed as meaning and thirtieth day of June 1934, and the expression 'hereafter ' in the sub section shall be construed as meaning the period after the thirtieth day of June,1934.
" Section 8 ( 5 ) reads as follows: "If before the first day of November 1933 the landholder has obtained in 'respect of any land in an estate within the meaning of Sub clause (d) of Clause (2) of Section 3 a final decree or order of a competent Civil Court establishing that the tenant has no occupancy right in such land, and no tenant has acquired any occupancy right in such land before the commencement of the Madras Estates Land (Third Amendment)Act, 1936, the .land holder shall, if.the land is not private land within the meaning of this Act, have the right, notwithstanding anything contained in this Act, for a period of twelve years from the commencement of the Madras.
Estates Land (Third Amendment) Act, 1936, of admitting any person to the possession of such land on such terms as, may be agreed upon between them: Provided that ' nothing contained ' in "this sub section shall be deemed during the said period of twelve years 513 or any part thereof to affect the validity of any agreement between the land holder and the tenant subsisting at the commencement of the Madras Estates Land (Third Amendment) Act, 1936.
" The parties are agreed that the facts of this case satisfy the requirements of section 8(5) of the Act.
That being so the respondent was entitled for a period of twelve years from the commencement of the Madras Estate Land (Third Amendment) Act, 1936 to admit any person to the possession of the suit lands on such terms as may be agreed upon between him and his lessee notwithstanding anything contained in the Act.
While section 6(1) is subject to the provisions of the Act, section 8(5) is not controlled by any other provision of the Act.
Therefore if the case falls both within section 6( 1 ) as well as section 8( 5 ) then the governing provision will be section 8 ( 5 ) and not section 6 ( 1 ).
Once it is held ' that the present case falls within section 8 (5 ) it necessary follows that it is taken out of the scope of section 6 (1 ), But what is argued on behalf of the appellant is that when section 8(5) says that the land holder shall"have . the right notwithstanding anything contained in the Act for a period of twelve years from the commencement of the Madras Estate Land (Third Amendment) Act, 1936 of admitting any person to the possession of such land on such terms as may be agreed upon between them" it merely means that for the said period of twelve years, the tenants on the land cannot claim the benefit of section 6( 1 ) of the Act but they get those rights immediately after the twelve years period is over.
It was urged on behalf of the appellant that the object of the Act is to confer occupancy right on the tenants in respect of all lands included the inam excepting the 'private lands ' of the inamdar; at the same time the legislature thought that in respect of lands coming within the scope of section 8 ( 5 ) a period of grace should be allowed to the inamdar so that he may adjust his affairs; once that period is over all lands other than 'private lands ' would be governed by the provisions of section 6(1).
Another facet of the same argument was that section 6(1) is the main provision; it has general application; that provision contains the policy and purpose of the law; section 8(5) is an exception; therefore section 6(1) should be construed liberally and section 8(5) should be strictly construed with a view to advance the purpose, of the law.
Further we were asked to take into aid the policy laid down, in the proviso to section 8(5) while ascertaining the legislative intention behind section 8(5).
This proviso applies to agreements entered into between landholders and their tenants prior to the 1936 amendment.
It 'was said that there was no, discernible reason for treating the agreements in force on October 31,, .1936 (the date of commencement of the amended Act).
differently from agreements entered into 'after that date and since the legislature has expressly stated that the former shall be in force only for a period of twelve years, it is not reasonable to hold that in the case Of leases subsequent to Oct. 514 31, 1936, it intended to lay down a different rule.
We do see some force in these contentions but in our opinion none of these considerations are sufficient to cut down the plain meaning of the words "that the landlord has a right of admitting any person to the possession of such land on such terms as may be agreed upon between them." "Such terms" must necessarily include the term relating to the period of the lease.
We have to gather the intention of the legislature from the language used in the statute.
The language of section 8(5) is plain and unambiguous.
Hence we cannot call into aid other rules of construction of statutes.
If it was the intention of the legislature that the terms of the agreements entered into between the land holders and their tenants during the period of the twelve years mentioned earlier should come to an end at the close of the period and thereafter the provisions of the Act other than those in section 8(5) should govern the relationship between them it should have said so.
From the language of section 8(5), it is not possible to hold that the contract itself is exhausted or stands superseded at the end of the twelve years period mentioned therein.
If the legislative intention is not effectuated by the language employed in section 8(5) then it is for the legislature to rectify its own mistake.
It must be remembered that this legislation is in operation only in some parts of the Madras State as it was prior to the formation of the Andhra State in 1954.
In other words it is a State legislation.
The Madras High Court has consistently taken the view right from 1955 that agreements entered into by virtue of section 8(5) under which tenants were admitted into possession of lands falling within the scope of that provision do not get exhausted or superseded merely by the expiry of twelve years period mentioned in that sub section.
On the other hand under section 8 ( 5 ) a land holder is given a right during the said period of twelve years to admit tenants to possession of such lands on such terms as may be agreed upon.
It was so held for the first time in this very case before it was remanded to the trial court for further trial.
That decision is reported in Navaneethaswaraswami.
Devasthanam, Sikki represented by its Executive Officer vs L.K. Ganapathi Thevar(1).
This view was affirmed by a Full Bench of that High Court in Sri Navaneethaswaraswami Devasthanam Sikki represented by its Executive Officer vs
P. Swaminatha Pillai(2).
The learned Counsel for the appellant invited our attention to three decisions of the Madras High Court and one of Andhra Pradesh High Court.
The first decision to which our attention was invited is Muminia Damudu and Ors.
vs Datla Papayyaraju Garu by Muktyar Putravu Ramalingaswami and Ors.(3).
That is a decision of Hotwill, J. sitting singly.
Therein it was head that when (1) (2) I.L.R. (3) A.I.R. (1944) Mad.
515 the legislature spoke in section 8(5) of the tenant acquiring occupancy right during the period between the passing of the final decree and the commencement of the Act, it was referring to acquisition of occupancy rights otherwise than under the Act; the legislature must have intended by section 8(5) to exempt from the general operation of section 6, all cases where the 1andholder had obtained a decree prior to 1st November, 1933, unless the tenant subsequent to the passing of the final decree had acquired occupancy right independently of the Act.
Consequently where the landlord obtained a final decree referred to in section 8(5) before 1st November, 1933, the tenant cannot be said to have acquired occupancy rights under section 6 merely because he was in 'possession on 30th June 1934 so as to render section 8(5) inapplicable.
We fail to see how this decision bears on the rule with which we are concerned in this appeal.
In Korda Atchanna vs Jayanti Seetharamaswami(1), Viswanatha Sastri, J. differed from the view taken by Hotwell,.
J. in the decision cited above.
This decision also does not bear on the question of law we are considering.
In Thota Seshayya and six ors.
vs Madabushi Vedanta Narasimhacharyulu(2), a Bench of the Madras High Court while considering the vires of section 8(5 ) observed: "We are satisfied that section 8(5) is giving some limited privileges for a limited period to the landholders who have obtained decrees before 1st November 1933, has acted on a classification based on some real and substantial distinction beating a reasonable and just relation to the object sought to be attained, and that the classification cannot be called arbitrary or without any substantial basis, and must be upheld as perfectly valid and not impugning in the least on article 14 or 15 of the Constitution of India.
We may add that tenants who have been given now occupancy rights under the third amendment where they had none before, cannot reasonably complain of the restrictions put on the acquisition of such new occupancy rights in a few cases where justice requires such restrictions as in section 8(5).
The tenants acquired the right only under those conditions and cannot very well complain about them.
" From these observations we are asked to spell out that the learned Judges had come to the conclusion that all contracts entered into between the landholders and their tenants during the twelve years ' period mentioned in section 8(5) came to an end at the end of that period.
In the first place this conclusion does not necessarily flow from the observations quoted above.
Even if such a conclusion, can be spelled out, the observations in question are mere obiter on the question for decision before us.
That was also the view taken by the Division Bench of the Madras High Court in Nava (1).
AIR. 1950 Mad.
I.L.R. Ll3Sup.
CI/68 2 516 neetheeswaraswami Devasthanam Sikkil vs L. K. Ganapathi Thevar(1) .
In Vadranam Ramchandrayya and ant. vs Madabhushi Ranganavakamma(2), a Division Bench of the Andhra pradesh High Court followed the decision of the Madras High Court in Thota Seshayya and ors.
vs Madabushi Vendanta Narasimbhacharyulu(3).
Therein again the Court was not called upon to consider the scope of section 8(5).
For the reasons already mentioned we are unable.to hold that .the appellant had acquired occupancy right in the suit properties.
This takes us to the question whether the appellant can be considered as a 'cultivating tenant ' within the meaning of the Madras Cultivating Tenants Act 1955.
If he can be considered a cultivating tenant then he cannot be evicted from the suit properties except in accordance with the provisions of that Act.
In the Cultivating Tenants Act as it originally stood the definition .of a cultivating tenant was as follows : "Cultivating tenant in relation to an), land means a person who carries on personal cultivation on such land, under a tenancy agreement, express or implied, and includes (i) any such person who continue in possession of the land after the determination of tenancy agreement.
" If this definition had remained unaltered then on the basis of the findings of the trial court and the High Court the appellant could have been held as a cultivating tenant, as cultivation today is a .complex process involving both mental as well as physical activity.
But by the time this case came to be instituted the definition of "cultivating tenant ' was amended by additing an explanation to the original definition.
That explanation reads: "A person is said to carry on personal cultivation on a land when he contributes his Own physical labour or that of the members of his family in the cultivation of that land." The true effect of the amended definition came up for consideration before a Division Bench of the Madras High Court in Mohamed Abubucker Lebbai and anr.
vs The Zamindar of Ettayapuram Estate, Koilapatti(4).
' Therein it was held that in order to fall within the definition of 'cultivating tenant ', a person should carry on personal cultivation which again requires that he should contribute physical labour.
The use of physical labour includes physical strain, the use of muscles and sinews.
Mere supervision of work, or maintaining of accounts or distributing the wages will not be such contribution of physical labour as to attract the definition.
This view was upheld by this Court in section N. Sunda (1) (1955)2 M.L.J. 112.
(2) (1957) 2 Andhra Weekly Reports, p. 114.
(3) I.L.R. (4) (1961) 1 M.L.J.P. 256.
517 laimuthi Chettiar vs Palaniyandayan(1) to which one of us was a party.
In view of the said decision it follows that on the facts found in tiffs case, the appellant cannot be considered as a cultivating tenant.
In the result, this appeal fails and the same is dismissed with costs.
R.K.P.S. Appeal dismissed.
(1) [1966] I S.C.R. 450.
| 4(2) of the Indian Independence (Legal Proceedings) Order, 1947, runs as under: " 4.
Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947. . . (2)Any appeal or application for revision in respect of any proceedings so pending in any such Court shall lie in the Court which would have appellate, or as the case may be, revisional jurisdiction over.
that Court if the proceedings were instituted in that Court after the appointed day. . .
An application by the decree holder for re restoration of properties by reason of the default made by the judgment debtor after a new decree had been passed under section 36 of the Bengal Money Lenders Act, 1940, was pending in the Court of the Subordinate Judge, Alipore, on 15th August, 1947, when the bulk of the properties, which were the subject matter of the new decree, went to East Pakistan as being situated there.
The application was saved by the provisions of para.
4(1) which provided for the continuance in the same Court of these proceedings as if the said Act (Indian Independence Act) had not been passed.
It was con tended that the appeal to the High Court filed by the decreebolder was not saved by para.
4(2) as it was filed after 15th August, 1947, as the words "if the proceedings were instituted in this Court" in the said para.
should mean "if the proceedings could have been instituted in that Court.
" Held, that the appeal from the Court of the Subordinate Judge was competent to the Calcutta.
High Court because the only construction that could be put upon this provision was that the Court having appellate or revisional jurisdiction over that Court would 151 have such jurisdiction as if the proceedings had been instituted in that Court after the 15th August, 1947.
An application by the decree holder was in substance an application for the execution of the new decree which had been passed under section 36 of the Bengal Money Lenders Act, 1940.
Orders passed on such applications for execution would be clearly appealable.
The reasoning of the High Court that such an application was an application in the suit for a special remedy given under a special law and that the rules of Civil Procedure Code applied and an appeal lay against such orders because they were deerees within the definition of section 2(2) of the Civil Procedure Code was not sustainable and could not be accepted.
Tirlok Nath vs Moti Ram and Others (A.I.R. 1950 East Punjab 149) referred to.
|
minal Appeal 185of 1967.
Appeal by special leave from the judgment and order dated May 18, 1967 of the Punjab and Haryana High Court in Cri minal Appeal No. 247 of 1967 and Murder Reference No. 23 of 1967.
A.S.R. Charl, B. A. Desai, section C. Agarwal, A. K. Gupta, Shiva Pujan Singh and Virendra Verma, for the appellant.
Hans Rai Khanna and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Bhargava, J.
Bhupendra Singh has come up to this Court in appeal by special leave against a judgment of the High Court of Punjab and Haryana confirming the sentence of death awarded to him by the Sessions Judge of Jullundur for an offence, under section 302 of the Indian Penal Code and dismissing his appeal against the conviction and sentence.
The conviction of the appellant was recorded for committing the murder of one Gurdarshan Singh who was living in the same.
village Birpind as the appellant in the house adjoining the appellant 's house.
The appellant 's father, Ajit Singh, also lived with the appellant, while, with Gurdarshan Singh, were living his sons, Gurdial Singh and Sarvjit Singh, and his daughter Gian Kaur.
According to the prosecution, on the 6th November, 1965, at about 7.45 p.m., the two brothers, Gurdial Singh and Sarvjit Singh, happened to be standing in front of their house talking to each other, when the appellant came out of his house and asked them what they were talking about.
Gurdial Singh replied that he and Sarvjit Singh were brothers and were talking between themselves and it was no business of the appellant to interfere.
The appellant, thereupon, abused the two brothers and also slapped Sarvjit Singh on the face.
Gurdial Singh asked the appellant why he had beaten his brother and used abusive language against the appellant.
The appellant got enraged, ran into his house abusing the two boys, and return 406 ed with a double barrel 12 bore gun.
When he came out of his house this time, he was accompanied by his father, Ajit Singh.
Gurdial Singh and Sarvjit Singh then ran into the 'deorhi ' of their house.
In the meantime, their father, Gurdarshan Singh, and their sister, Gian Kaur, returned to the house from their fields.
When Gurdarshan Singh saw the appellant carrying the gun, he enquired what the matter was.
Thereupon, Ajit Singh raised a 'lalkara ' asking his son, the appellant, to finish off Gurdarshan Singh.
The appellant then fired two shots in quick succession from his gun hitting Gurdarshan Singh on vital parts of his body.
Gurdarshan Singh fell down dead on the ground.
One Malkiat Singh, who lived in a house nearby, had arrived and saw this occurrence, so that the four persons, who witnessed the occurrence.
were Malkiat Singh, Gurdial Singh, Sarvjit Singh and Gian Kaur.
Gurdial Singh, leaving others to look after the dead body of his father, went with Lal Singh, Lambardar, to the Police Station which was situated at a distance of about three miles and lodge the First Information Report at about 9.30 p.m. on the same day.
The ,case was then investigated.
A post mortem examination on the corpse of Gurdarshan Singh was performed and articles like pellets, blood stained cardboard pieces lying near the scene of occurrence were taken into their possession by the Police.
Both the appellant and his father, Ajit Singh, were thereafter prosecuted for this murder.
The appellant was charged with being the principal offender in committing the murder, while his father, Ajit Singh, was prosecuted for having participated in the murder with the common intention that Gurdarshan Singh should be killed.
However, before the trial could take place in the Court of Sessions, Ajit Singh was murdered and, for that murder, Gurdial Singh was prosecuted.
In the case, at the first stage before the Court of the Committing Magistrate, both Ajit Singh and the appellant took the plea that neither of them was responsible for committing the murder of Gurdarshan Singh and contented themselves with denying the correctness of the prosecution case.
In the Court of Sessions, when the appellant was examined under section 342 of the Code of Criminal Procedure, he came forward with the plea that it was his father, Ajit Singh, who actually fired and killed Gurdarshan Singh.
He pleaded that he himself was not present in this village at all and was, in fact, that day staying at Phillaur.
He, thus, put forward the plea of alibi.
The Sessions Judge believed the evidence of the four prosecution witnesses mentioned above, and, after discussing the defence evidence given on behalf of the appellant in support of his pleas.
rejected that evidence.
He did not accept the defence evidence that Gurdarshan Singh was fired at by Ajit Singh and he also, held that the evidence given on behalf of the appellant to prove 407 his alibi could not be relied upon.
On these findings, the Sessions Judge convicted the appellant and sentenced him to death for committing the murder of Gurdarshan Singh.
When the case came up before the High Court, the High Court briefly examined the evidence of the prosecution witnesses and held that their evidence was reliable.
The High Court did not, however, go into the defence evidence, because the counsel appearing for the appellant, according to the High Court, frankly admitted that there was no substance in it.
On this view, the High Court dismissed the appeal of the appellant and confirmed his sentence of death.
In this appeal, the principal question that was canvassed before us on behalf of the appellant was that the High Court, in not examining the defence evidence for itself on the simple ground that counsel for the appellant admitted that there was no substance in it, committed an error and did not properly discharge its duty.
It appears that there is substance in the submission made on behalf of the appellant.
Ordinarily, in a criminal appeal against conviction, the appellate Court, under section 423 of the Code of Criminal Procedure, can dismiss the appeal, if the Court is of the opinion that there is no sufficient ground for interference, after examining all the grounds urged before it for challenging the correctness of the decision given by the trial Court.
It is not necessary for the appellate Court to examine the entire record for the purpose of arriving at an independent decision of its own whether the conviction of the appellant is fully justified.
The position is, however, different where the appeal is by an accused who is sentenced to death, so that the High Court dealing with the appeal has before it, simultaneously with the appeal, a reference for confirmation of the capital sentence under section 374 of the Code of Criminal Procedure.
On a reference for confirmation of sentence of death, the High Court is required to proceed in accordance with sections 375 and 376 of the Code of Criminal Procedure and the provisions of these sections make it clear that the duty of the High Court, in dealing with the reference, is not only to see whether the order passed by the Sessions Judge is correct, but to examine the case for itself and even direct a further enquiry or the taking of additional evidence if the Court considers it desirable in order to ascertain the guilt or the innocence of the convicted person It is true that, under the proviso to section 376, no order of confirmation is to be made until the period allowed for preferring the appeal has expired, or, if an appeal is presented within such period, until such appeal is disposed of, so that, if an appeal is filed by a condemned prisoner that appeal has to be disposed of before any order is made in the reference confirming the sentence of death.
In disposing of such an appeal, however, it is necessary that the High Court should keep in view its duty under section 375 of the Code of Criminal Procedure and, consequently, the Court must examine the appeal record for itself,.
408 arrive at a view Whether a further enquiry or taking of additional evidence is desirable or not, and then come to its own conclusion on the entire material on record whether conviction of the condemned prisoner is justified and the sentence of death should be confirmed.
In Jumman and Others vs The State of Punjab( '), this Court explained this position in the following words: ". . but there is a difference when a reference is made under section 374, Criminal Procedure Code, and when, disposing of an appeal under section 423, Criminal Procedure Code, and that is that the High Court has to satisfy itself as to whether a case beyond reasonable doubt has been made out against the accused persons for the infliction of the penalty of death.
In fact the proceedings before ' the High Court are a reappraisal and the reassessment of the entire facts and law in order that the High Court should be satisfied on the materials about the guilt or innocence of the accused persons.
Such being the case, it is the duty of the High Court to consider the proceedings in all their aspects and come to an independent conclusion on the materials, apart from the view expressed by the Sessions Judge.
In so doing, the High Court will be assisted by the opinion expressed by the Sessions Judge, but under the provisions of the law above mentioned it is for the High Court to come to an independent conclusion of its own.
" The same principle was recognised in Ram Shankar Singh Others, vs
State of West Bengal (2) :_ ".
The High Court had also to consider what order should be passed on the reference under section 374, and to decide on an appraisal of the evidence, whether the order of conviction for the offences for which the accused were convicted was justified and whether, having regard to the circumstances, the sentence of death was the appropriate sentence." In Masalti V. State of U.p.(3) this Court was dealing with an appeal under Article 136 of the Constitution and, in that appeal, on behalf of the persons who; were under sentence of death, a point was sought to be urged which was taken before the trial Court and was, rejected by it, but wits not repeated before the High Court.
This Court held: ". . it may, in a proper case, be permissible to the appellants to ask this Court to consider (1) A.I.R. 1957 S.C. 469.
(2) [1962] Supp.
I S.C.R. 49 at p. 59.
(3) ; at P. 144. 409 that point in an appeal under Article 136 of the Constitution; after aft in criminal proceedings of this character where sentences of death are imposed on the appellants, it may not be appropriate to refuse to consider relevant and material pleas of fact and law only on the ground that they were not urged before the High Court.
If it is shown that the pleas were actually urged before the High Court and had not been considered by it, then, of course the party is entitled as a matter of right to obtain a decision on those pleas from this Court.
But even otherwise no hard and fast rule can be laid down prohibiting such pleas being raised in appeals under article 136.
" In view of these principles indicated by us above, and in view of the fact that, in this case, the ' High Court did not properly examine the defence evidence on the ground that the counsel for the appellant in that Court admitted that there was no substance in it, we permitted learned counsel for the appellant in this appeal to take us through the entire evidence on the record given by the prosecution and the defence so as to enable us to form our own judgment about the correctness of the conviction and sentence of the appellant.
We, however, find that, after examining the entire evidence, we are unable to hold that any grounds are made out for interference with the conviction.
The prosecution case, as already mentioned by us above, is supported by the evidence of four eye witnesses, Gurdial Singh, Sarvjit Singh, Gian Kaur and Malkiat Singh.
Three of these witnesses, Gurdial Singh, Sarvjit Singh and Gian Kaur are the sons and daughter of the deceased Gurdarshan Singh, but this circumstance, in our opinion, does not detract from the value to be attached to their evidence, because, naturally enough, they are interested in seeing that the real murderer of their father is convicted of the offence and they cannot be expected to adopt a course by which some innocent person would be substituted for the person really guilty of the murder.
None of these witnesses had any such enmity with the appellant as could induce him to give false evidence and to substitute him as the murderer in place of the person really guilty.
In fact, their feelings. would be strongest against the real culprit and, consequently, their evidence cannot be discarded on the mere ground of their close interest in the deceased.
Malkiat Singh has been held both by the Sessions Judge and the High Court to be an independent witness and we find no reason to differ from the view taken by the two Courts.
On behalf of the appellant, it was sought to be.
urged that Malkiat Singh bore a grudge against Ajit Singh, because Ajit Singh had been instrumental in the adoption of a son by Malkiat Singh 's real uncle, Veer Singh, with the result that Malkiat Singh was 410 deprived of the succession to the property of his uncle.
Malkiat Singh denied that he had any grievance against Ajit Singh on such a ground.
In support of the plea put forward on behalf of the appellant, one defence witness, Niranjan Singh was examined who claimed to be the son of another real uncle of Malkiat Singh.
Niranjan Singh came to depose that his son, Sadhu Singh, had been adopted by Veer Singh and this adoption took place because Ajit Singh had asked Veer Singh to take Sadhu Singh in adoption.
Niranjan Singh had, however, to admit that, in the deed of adoption, the person adopted is described as Mukhtiar Singh and not Sadhu Singh.
To explain this discrepancy, Niranjan Singh came forward with the assertion that his son, Sadhu Singh, bore an alias Mukhtiar Singh.
If Sadhu Singh was the real and principal name of the boy adopted by Veer Singh, there is no reason why that name was not mentioned in the deed of adoption and why the person adopted was described only as Mukhtiar Singh.
There is further the circumstance that, even according to Niranjan Singh, Malkiat Singh, witness, did not try to challenge the adoption, even though the adoption had taken place in April 1965, seven months before this incident.
Malkiat Singh had stated that he had no grievance against Ajit Singh and was in fact not interested in challenging the adoption.
In these circumstances, we do not think that Malkiat Singh can be said to be an interested witness and must hold that his evidence has been rightly relied upon.
The time of the murder was not only proved by the evidence of these four witnesses, but is also borne out by the circumstance that the First Information Report was lodged at the Police station three miles away at about 9.30 p.m. without any undue delay.
On behalf of the appellant, it was urged that the First lnformation Report was in fact recorded much later and not at 9.30 p.m. the same day, on the basis that the copy of that report sent to the Ilaqa Magistrate was received by him at 10.30 a.m. on 8th November, 1965.
The argument was that, if the report had been lodged at 9.30 p.m. on 6th November 1965, the copy should have reached the Magistrate the same night or early on the 7th November and not as late as 8th November.
We are unable to accept this submission.
The evidence of Gurdial Singh was perfectly clear that he reached the police station and lodged the report that very night at 9.30 p.m. and there is no reason to disbelieve him.
It appears that in this case, the investigating officer, Sub Inspector Ram Saran Dass was, to some extent, negligent.
In the report lodged by Gurdial Singh, the facts given clearly made out an offence of murder, and yet the Sub Inspector chose to register the case wrongly as for an offence under section 304 read with section 34 of the Indian Penal Code.
It may be that, having wrongly put down the offence as under 304 I.P.C. 'instead of section 102, the Sub Inspector did not consider it necessary to 411 send the report to the Ilaqa Magistrate the same night and delayed sending it, so that it was received at 10 30 a.m. on 8th November, 1965 by the Magistrate.
It is also not clear from the evidence whether, apart from the copy of the First Information Report sent to the Ilaqa Magistrate, any special report was also sent to the Magistrate by the Sub Inspector.
In any case, we do not think that this late receipt of the copy of the First Information Report by the Magistrate can lead to the inference that Gurdial Singh is not right in saying that he had the report recorded the same night at 9.30 p.m.
The evidence of the doctor who performed the post mortem examination and of the ballistic expert clearly establish that Gurdarshan Singh had died as a result of gun shot injury received by him from a gun.
The gun which the appellant possessed under a licence issued to him was examined by the ballistic expert and his evidence proved that the shots, which killed the deceased, were fired from that very gun.
In these circumstances, the Sessions Judge and the High Court were right in recording the conviction of the appellant for the murder of Gurdarshan Singh on the basis of this prosecution evidence.
So far as the defence put forward on behalf of the appellant is concerned, the first point to be noticed is that the plea that the shots, which killed Gurdarshan Singh, were fired by Ajit Singh, was not taken by the appellant until his father, Ajit Singh, had already died.
It seems to be clear that this plea, which was put forward for the first time in the Court of Sessions, was an afterthought which could be taken safely by the appellant after Ajit Singh had died and he could not be convicted for the murder.
When the appellant was examined in the court of the Committing Magistrate while Ajit Singh was alive, he did, not make any such statement.
This is an important circumstance that militates against the plea put forward in defence.
The appellant relied upon the evidence of two witnesses in support of the plea that the shots which killed Gurdarshan Singh were fired by Ajit Singh and not by the appellant.
The first of these witnesses is Uggar Singh who stated that he was in his house situated opposite to the house of the appellant and, when he came out on hearing the noise, he saw Ajit Singh quarelling with Gurdarshan Singh deceased and exchanging abuses.
Thereafter, Ajit Singh fired the gun shots towards Gurdarshan Singh killing him instantaneously.
According to him, neither Malkiat Singh nor the sons of Gurdarshan Singh were present at that time.
Even Shrimati Giano, according to him, was not there.
The evidence of this witness cannot be relied upon for several reasons.
According to this witness, his statement was recorded by the Police at about 10 a.m. the next day, i.e., the 7th November, 1965; but L7Sup.
C.l.68 2 412 the investigating officer 's statement is clear that no person residing in the neighbourhood had been examined by him or had come forward to give any statement to him.
Uggar Singh, thus, made a wrong statement that he was examined by the Police the next day.
It also appears that he was prosecuted in a murder case in which he was acquitted and Ajit Singh had assisted him in that trial.
The answers given by him in the cross examination also show that, in fact, his house is not in front of the house of the appellant but is situated in the same line as the house of the appellant and the deceased and at some distance.
He tried to get over this difficulty by stating that he has another house which is opposite to the house of the appellant, but it appears that that house belongs to his cousin, Ujagar Singh, and that is how the house is described in the site plan also.
In all these circumstances, the evidence of Uggar Singh cannot be accepted.
The second witness is Niranjan Singh, whose evidence we have noticed Above, and he also partially supported this part of the defence case by saying that he came rushing to the spot after the incident and found Gurdarshan Singh lying dead, while Ajit Singh was standing outside his house with something which appeared to be a gun.
It is clear that this is art another attempt by Niranian Singh to help the appellant and on this point also reliance cannot be ,placed on his evidence.
There remains to be considered the evidence given on behalf of the appellant to establish his plea of alibi.
One defence witness Kirpal Singh was examined to prove that the accused was on deputation in the Seed Corporation at Phillaur and was attached to the Tehsildar, Phillaur and that he was not suspended until 11th November, 1965.
His evidence is of no help, because it is obvious that the appellant could be suspended only after he surrendered in connection with this charge which happened on 11th November 1965.
The fact that he was in service on 6th November, 1965, does not necessarily prove that he could not have been present at the place of occurrence.
The Witness, on whose evidence reliance is primarily placed is Bunta Ram, Patwari.
Bunta Ram stated that on 6th Novem ber, 1965 he had come to the office of the Corporation at Phillaur in order to collect his pay and he also brought some files from Nakodar in order to consign those files.
In that connection.
he remained in the office of the Corporation throughout the day.
He saw the appellant also working in the said office throughout the day.
According to him, at about 6.30 p.m., he and the appellant went to the house of Inderjit Singh, Patwari and spent the night at his house.
It, 'however, I appears that this witness is a direct subordinate of the appellant and that is the reason why he has come forward to support the appellant 's case.
In this connec 413 tion, Jagdish Rai Batta, Tehsildar in the Seed Corporation, was examined as a court witness by the Sessions Judge and his evidence shows that Bunta Ram was one of the Patwaris working as a subordinate of the appellant who was a kanoongo in the Corporation.
Bunta Ram had stated that on that day he had himself appeared before the Tehsildar in connection with the consignment of the tiles and the Tehsildar had given him some directions in that behalf.
Jagdish Rai Batta stated that on that day Bunta Ram, Patwari did not appear before him nor did he produce any files.
He went further and stated that he did not point out any defects to Bunta Ram Patwari either orally or in writing.
Thus, Bunta Ram is proved to be an untruthful witness by the evidence of Jagdish Rai Batta, Tehsildar.
Bunta Ram, in his cross examination, purported to state that the appellant was living in a part of the house of Inderjit Singh at Phillaur.
On the face of it, it cannot be correct because the appellant did not belong to Phillaur and was not even posted there in connection with his employment.
His headquarters, according to Jagdish Rai Batta, was Nakodar and not Phillaur.
The evidence of Jagdish Rai Batta only shows that he saw the appellant working in his office at Phillaur on that day until about 5 p.m. Phillaur is connected with Nako dar by a metalled road along with which there is a bus service, and village Birpind,where the murder took place, is only three miles from Nakodar.
It is quite clear that the appellant could easily reach Birpind well before 7.45 p.m. even if he worked at Phillaur till 5 p.m. on that day.
It is also significant that the murder was committed with the gun belonging to the appellant.
If the appellant himself had not been at Birpind and had been at Phillaur or Nakodar, the gun should have been with him.
at one of these places and not at Birpind.
The gun could not, therefore, have been available for use by Ajit Singh, his father in his absence.
Considering all these circumstances and the nature of the evidence, we are unable to accept that there is any force in the defence plea of alibi put forward by the appellant, so that the conviction based on the prosecution evidence must be upheld.
A plea was put in for reduction of sentence.
Ordinarily, this Court, in exercise of its powers under article 1 36 of the Constitution, does not interfere with a sentence awarded by a Sessions Judge and upheld by the High Court; but, in this case, there are some special features which we cannot ignore.
Even according to the prosecution, the murder of Gurdarshan Singh by the appellant was not pre meditated.
The act of firing at him appears to be that of a hot headed person who was incited to do so by his father.
The murder was, not in any way cruel or brutal.
In all these circumstances, we think that the ends of justice would be met if the lesser penalty prescribed by law is awarded to the appellant.
414 Consequently, while upholding the conviction, we allow the appeal to the extent that the sentence of death is set aside, and, instead, the appellant is sentenced to imprisonment for life.
R.K.P.S. Appeal allowed.
| The appellant lived with his father A in a house adjoining that of the deceased G who lived there with his two sons and a daughter.
An argument developed one evening between the appellant and one of the sons of G.
When G intervened, the appellant 's father A raised a 'lalkara ' asking the appellant to finish him off.
Thereupon the appellant shot and killed G. By this time G 's two sons, his daughter and one M who lived nearby had arrived and witnessed the occurrence.
At the trial the appellant 's defence was a pica of alibi but the Trial Court rejected the defence and convicted the appellant of G 's murder and sentenced him to death.
in appeal, the High Court did not go into the defence evidence because the counsel appearing for the appellant admitted that there was no substance in it.
The High Court accordingly dismissed the appeal and confirmed the sentence of death.
In appeal to this Court against the conviction and the sentence it was contended that the High Court in not examining the defence evidence for itself, committed an error and did not properly discharge its duties.
HELD : (i) Although ordinarily, in a criminal appeal against conviction, the appellate Court, under section 423 of the Code of Criminal Procedure, can dismiss the appeal if the Court is of the opinion that there is no sufficient ground for interference and it is not necessary for the appellate Court to examine the entire record for the purpose of arriving at an independent decision, the position is different where the appeal is by an accused who is sentenced to death, so that the High Court dealing with the appeal has before it, simultaneously with the appeal,a reference for .confirmation of the capital sentence under section 374 of the Code.
On a re ference for confirmation of sentence of death, the High Court is required to proceed in accordance with sections 375 and 376 of the Code of Criminal Procedure and the provisions of these sections make it clear that the duty of the High Court, in dealing with the reference, is not only to see whether the order passed by the Sessions Judge Is correct but to examine the case for itself and even direct a further enquiry or the taking of additional evidence if the Court considers it desirable in order to ascertain the guilt or the innocence of the convicted person.
[407 D G] Jumman and Others vs The State of Punjab, A.I.R. 1957, S.C. 469; Ram Shanker Singh & Ors.
vs State of West Bengal, [1962] Supp. 1 S.C.R. 49 at p. 59; applied.
(ii)(Upon an examination of the entire evidence by the Court) : No s had been made out for interference with, the appellants con[409 D E] 405 Maaslti vs State of U.P., ; at p. 144; referred to.
(iii) The sentence of death must be set aside and instead the appellant sentenced to imprisonment for life Although ordinarily this Court, in exercise of its power under Art 136, does not interfere with a sentence, in the present case there were some special features which had to be taken into account : even according to the prosecution, the murder of G by the appellant was not premeditated; the act of firing at him a to be that of a hot headed person who was incited to do so by his father; the murder was not in any way cruel or brutal.
In all these circumstances, the ends of justice would be met if the lesser penalty prescribed by law was awarded to the appellant.
[413 G H]
|
Civil Appeal No. 3187 of 1982 From the Judgment and Order dated 22.1.1974 of the Allahabad High Court in C.M.P. No. 1395 of 1968.
872 A.R. Gupta for the Appellant.
B. Datta, Rishi Kesh, Badri Prasad, Ajit Pudissary, Girish Chandra and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by DESAI, J.
Another unequal fight between a giant public sector undertaking: Oil and Natural Gas Commission (Corporation ' for short) and a Store Keeper which has been brought to this Court by the ultra legalist stand taken by the Corporation which lacks equanimity and smacks of victimisation.
The appellant was appointed as Assistant Store Keeper in April, 1962 and was posted at Dehradun.
Later on when the Corporation decided to recruit Store Keeper, the appellant was selected in open competition and was appointed on December 7, 1963 as such.
He was posted at Cambay, Gujrat and later on December 24, 1963 sent back to Dehradun.
The office order dated February 26, 1964 recites that the appellant has been appointed as Store Keeper till further orders and the post is sanctioned for the period February 7, 1964 to February 29, 1964.
In other words, a man selected in an open competition was offered the post which was to last for 22 days roughly.
He was also told that his appointment was purely temporary and that other terms of service were those as set out in the letter dated December 7, 1963, one of which was that the appellant will be on probation for a period of six months from the date of the appointment and the same may be extended at the discretion of the appointing authority and that the appointment may be terminated at any time by a months ' notice given by either side.
On January 13, 1965, the appellant was informed in writing by the Memorandum No. PF/K 44 /64 ENT that the appellant on successful completion of the probation period of six months, is continued in service on regular basis until further orders.
By office order dated April 6, 1947, the appellant who was described as Store keeper, Grade I Mech.
Branch was transferred to Cambay Nawagam project.
This transfer order was challenged by the appellant on diverse grounds in a suit filed by him.
He sought an interim in 873 junction restraining the respondents from implementing the order of transfer.
Interim injunction as prayed for was granted.
The Oil & Natural Gas Commission Employees Mazdoor Sabha (Union for short), Dehradun submitted a charter of demands on May 15, 1967 and it was followed by a notice threatening direct action by the members of the Union.
It appears that the appellant was an active worker of the Union.
The usual management response emerged be a secret letter dated September 1, 1967.
Shri R.P. Sharma, Chief Engineer under whom the appellant was at the relevant time working was told that the appellant is the main trouble maker and that he is being given free hand by his immediate superiors and that the Chief Engineer did not keep strict vigilance over the activities of the appellant.
The employees of the Corporation went on strike on September 12, 1967.
It was called off on September 24, 1967.
On September 28, 1967, the Union submitted a list of workmen to the Corporation requesting the Corporation to give them the status of protected workmen as required by Sec. 33 (4) of the .
Appellant 's name appears at section No. 2 in this letter.
On December 27, 1967 the Union complained of victimisation of the active union workers including the appellant On December 29, 1967 Office Order No. M (Engg) 1 (1)/67 was issued by which the services of the appellant were terminated with immediate effect in accordance with the terms and conditions of his service.
A cheque in the amount of Rs. 317 accompanied the order being one month 's pay in lieu of notice.
The appellant challenged in Writ Petition No. 1395/68 in the Allahabad High Court the legality and validity of the order terminating his services.
A Division Bench of the Allahabad High Court held that despite the order dated January 13, 1965 that on successful completion of the probation period, the appellant has been appointed on a regular basis as Store Keeper, he was none the less a temporary employee of the Corporation till the date on which his services were terminated.
The High Court further held that the Corporation is not an industrial establishment within the meaning of the expression in and therefore the Model Standing Orders enacted under the Act were not applicable to the undertaking of the Corporation.
However, the High Court examined an alternative contention that 874 assuming that the Industrial Establishment (Standing (Orders) Act, 1946 does apply to the undertaking of the Corporation, yet in view of the provisions contained in Sec.
13B of the Act, no provisions of the Act would apply to the undertaking of the Corporation.
The High Court repelled the contention of the appellant that the order of termination of service is violative of Oil and Natural Gas Commission (Conduct, Discipline and Appeal), Regulations, 1964 observing that as the service of the appellant was not dispensed with on the allegation of misconduct, but as it was an order of termination of service simpliciter in accordance with the Regulation 25, no other regulation is shown to have been contravened by the impugned order.
The High Court rejected the submission on behalf of the appellant that as the Corporation is a State or at any rate instrumentality of the State ' as contemplated by article 12 of the Constitution and therefore, the appellant is entitled to the protection of Art 14 and 16 observing that 'it is not the requirement of law that in order to dismiss one employee on the ground of unsuitability, the Government or the Corporation is required to dismiss all an observation which has left us guessing for its content and meaning.
The Division Bench finally concluded that as the service of the appellant were terminated not because of any personal bias of the officers of the Corporation but because of his unsatisfactory work, the allegation of mala fides cannot be upheld.
Accordingly, the writ petition was dismissed with no order as to costs.
Hence this appeal by special leave.
Mr. B. Datta, learned counsel who appeared for the respondents did not press before us the contention that the Corporation is not an instrumentality of the State.
In view of the numerous decisions of this Court and especially one in Sukhdev Singh & Ors.
vs Bhagatram Sardar Singh Raghuvanshi & Anr.(1), a Constitution Bench of this Court in terms held that 'the Oil and Natural Gas Commission is an instrumentality of the State and is comprehended in the expression other authority ' in article 12, and that any termination of service of the employee of the Corporation, if (1) [197513 S.C.R. 619.
875 successfully questioned would permit the court to make a declaration that the employee continues to be in service. ' Even if the employees of the Corporation, which is an instrumentality of the State, cannot the be said to be the members of a civil service of the Union or an All India service or hold any civil post under the Union, for the purpose of article 310 and 311 and therefore, not entitled to the protection of article 311, they would none theless be entitled to the protection of the fundamental rights enshrined in article 14 and 16 of the Constitution.
In other words, they would be entitled to the protection of equality in the matter of employment in public service and they cannot be dealt with in an arbitrary manner.
(See A.L. Kalra vs Project and Equipment Corporation of India Ltd.)(1).
The next question is whether the service of the appellant was terminated in accordance with law or regulation or in a thoroughly arbitrary manner ? Factual matrix set out hereinbefore will affirmatively show that on successful completion of his probation period, the appellant was appointed on the regular establishment as Store Keeper.
Thus effective from 13, 1965, the appellant was appointed on regular basis as Store Keeper.
There is nothing to show in the order that on completion of the probation period, he was appointed as a temporary Store Keeper.
The words used are: 'He is continued in service on a regular basis until further orders. ' The expression 'until further orders ' suggest an indefinite period.
It is difficult to construe it as clothing him with the status of a temporary employee.
It is even worst than being a probationer because the apprehended further order may follow the very next day.
Therefore, the expression until further order ' being thoroughly irrelevant has to be ignored.
It is even inconsistent with the appointment on regular basis as stated in that very order.
If the appellant was appointed on regular basis, his service cannot be terminated by one month 's notice.
If it is by way of punishment, as the High Court has found it to be so, it will be violative of the principles of natural justice in that no opportunity was given to the appellant to clear himself of the (1) 11984] 3 S.C.C. 317. 876 alleged misconduct which never found its expression on paper but which remained in the minds of those passing the order of termination of service.
If it is discharge simpliciter, it would be violative of article 16 because a number of Store Keepers junior to the appellant are shown to have been retained in service and the appellant cannot be picked arbitrarily.
He had the protection of article 16 which confers on him the fundamental right of equality and equal treatment in the matter of public employment.
Mr. Datta however, contended that the earlier order dated December 7, 1963 recites that the appointment could be terminated by either side by one month 's notice and that was the power invoked in terminating the service of the appellant.
The order dated December 7, 1963 was at the time when the appellant was appointed on probation.
On successful completion of probation, the appellant became a member of the regular establishment.
The contract of service, if any, has to be in tune with article 14 and 16 and such unilateral power of termination of service without giving reasons is so abhorent that it smacks of discrimination and therefore, violative of article 14.
The High Court brushed aside this aspect by merely observing that in order to dismiss one employee on the ground of unsuitability, the Government or the Corporation is not required to dismiss all '.
If it is suggested that you can dismiss anyone without a semblance of an enquiry or without whisper of the principles of natural justice, then such an approach overlooks the well established principle that where State action affects livelihood or attaches stigma, the punitive action can be taken after holding an enquiry according to the principles of natural justice.
In other words, an unbiased Judge, and an opportunity to controvert the allegation and to clear oneself are the minimum principles of natural justice which must inform such drastic power of dismissal affecting livelihood of an employee.
If the observation of the High Court was with reference to the contention of the order being violative of article 14 and 16, it overlooks the fact that the Corporation attempted to sustain its action on the ground that the services of the appellant were no more required which will certainly impel the court to enquire whether the post had been abolished or whether retaining the juniors, the inconvenient person was thrown out under the garb of being surplus.
Therefore, the approach of the High Court in this behalf is not appreciable.
877 Accepting the finding of the High Court that the appellant was removed from service on the ground of his unsatisfactory work, the same could not have been done without an enquiry in accordance with principles of natural justice.
At any rate the action appears to be thoroughly arbitrary.
If the facts are properly viewed this public sector corporation has disclosed the typical private employer 's unconcealed dislike and detestation of an active trade unionist.
From the facts stated in the earlier portion of the judgment, it appears that appellant was a protected workman.
Add to this the fact that the secret letter of Mr. L J. Johnson dated September 6, 1967 reveals the inner working of the mind of the top brass of the Corporation when Mr. Johnson states that Mr. Joshi (appellant) ;5 the main trouble maker in the corporation.
Earlier on March 29 1967, the Assistant Director wrote to the Director of Stores to transfer the appellant from Dehradun to Assam, the usual management response namely, to transfer the active trade union worker to weaken the trade union movement.
Even a charge of victimisation qua the appellant was made in writing.
The then Petroleum Minister Mr. Ashok Mehta wrote to Mr. Natwarlal Shah.
ONG Employees Mazdoor Sabha wherein he assured that the Corporation would not be interested in victimising anyone and yet soon after within three months, the services of the appellant were terminated.
And now reasons for the termination of service of the appellant may be examined.
The appellant is considered unsuitable for the job as found by the High Court.
How he became unsuitable is an aspect not even examined by the High Court.
On the contrary one has to refer to several communications eulogizing the services of the appellant which have been placed on record.
One Ganga Ram, Personnel Officer, ONGC, Tel Bhavan, Dehradun has certified on August 26, 1964 that Shri Joshi was found to be 'very sincere, conscientious dependable and hard working official and he is very much loyal to his duties as Store Keeper and he has done exceedingly well ' He also states that Mr. Joshi knows his job thoroughly well '.
On April 15,1965, the Controller of Stores and Purchase, the immediate superior of the appellant writes that 'Mr. Joshi knows his work very well and he is very conversant with the purchase work, accounting and maintenance of stores.
He is a very bright young man of blameless character and would do very well in any position of responsibility '.
This letter of appreciation was sent when the 878 officer was relinquishing his charge of the post of Controller of Stores and Purchase.
On January 16.1968, the Chief Engineer Shri R P. Sharma has issued a certificate in which it is stated that he found Mr. Joshi sincere, intelligent and hard working young man fully trust worthy and dependable for any confidence that may be reposed in him '.
This will clearly show that the charge of unsuitability was either cooked up or conjured up for a collateral purpose of doing away with the service of an active trade union worker who because of his activities became an eye sore.
Accordingly we are unable to agree with the view taken by the High Court that the termination of service was legal, valid or justified.
This appeal will accordingly succeed.
The question then is: what relief we must grant ? Ordinarily, where the order of termination of service is shown to be bad and illegal, the necessary declaration must follow that the employee continues to be in an uninterrupted service and he is entitled to full backwages.
We would have been perfectly justified in giving the declaration and making that order.
However, the appellant is out of service from December 29, 1967 till today.
A period of nearly 18 years have rolled by and he will have to go back to some chagarined master.
We therefore, enquired from the learned counsel appearing for the appellant whether substantial and adequate compensation would be more acceptable to him or reinstatement with backwages.
The appellant opted for the latter and Mr. B. Datta learned counsel for the commission conceded that the Corporation would willingly pay Rs. 2 lakhs as and by way of backwages and compensation in lieu of reinstatement.
This matter was adjourned to enable learned counsel for the appellant to work out the spread over of backwages.
Mr. A.K. Gupta, learned counsel for the appellant has submitted the calculations of backwages.
The figures therein set out are not disputed.
We accept the same and treat it as part of the judgment.
A copy of it shall always be annexed to the copy of this judgment.
Accordingly this appeal is allowed and the judgment of the High Court is quashed and set aside and the rule is made absolute in the writ petition.
The Oil and Natural Gas Commission is directed 879 to pay Rs. 2 lakhs to the appellant on the basis of the calculations herein submitted in lieu of backwages and compensation in lieu of reinstatement within a period of four weeks from today.
In view of the computation made in respect of backwages and compensation from year and year, we must make it abundantly clear whether the Commission would be entitled to deduct income tax while making the payment.
In this connection we would follow the decision of this Court in Shri Sant Raj & Anr.
vs O.P. Singla & Anr.(1) In tune with that decision we give the following decision.
Now that the amount is being paid in one lump sum, it is likely that the employer may take recourse to Sec.
192 of the Income Tax Act, 1961 which provides that when any person responsible for paying any income chargeable under the head 'Salaries ' shall, at the time of payment deduct income tax on the amount payable at the average rate of income tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year.
If therefore the employer proceeds to deduct the income tax as provided by Sec. 192, we would like to make it abundantly clear that each appellant would be entitled to the relief under Sec.
89 of the Income Tax Act which provides that where, by reason of any portion of assessee 's salary being paid in arrears or in advance or by reason of his having received in any one financial year salary for more than 12 months or a payment which under the provisions of clause (3) of Section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that it would otherwise have been assessed, the Income Tax Officer shall on an application made to him in this behalf grant such relief as may be prescribed.
The prescribed relief is set out in Rule 21A of the Income tax Rules.
The appellant is entitled to relief under Sec. 89 because compensation herein awarded includes salary which has been in arrear for 18 years as also the compensation in lieu of reinstatement and the relief should be given as provided by Sec. 89 of the Income tax Act (1) 880 read with Rule " IA of the Income Tax Rules.
The appellant indisputably is entitled to the same.
If any application is necessary to be made, the appellant may submit the same to the competent authority and the Commission shall assist the appellant for obtaining the relief.
The appeal is allowed as herein indicated, with no order as to costs.
N.V.K. Appeal allowed.
| S and B were sons of two brothers respectively.
S died in 1884 leaving a daughter M, surviving him.
On the death of S dispute arose between B and M. B claimed the entire estate by survivorship, alleging that S died in a state of jointness with him and that all the properties were joint family properties and M was entitled only to maintenance.
The dispute was referred to arbitration and an award was delivered.
Under it the suit properties were given to M and the rest of the estate then in dispute was given to B.
The operative part of the award stated inter alia that B, first party, and M, the second party, were held entitled to speci fied shares in the properties in dispute and each had become permanent owner (Malik Mustaqil) of his or her share.
A division was effected and ever since the date of the award in 1884 each branch continued in possession of the proper ties allotted to it and each had been dealing with them as absolute owner.
The defendants claimed that the plaintiffs were bound by the award and were in any event estopped from challenging it.
In 1941 B 's grandsons instituted a suit claiming the properties allotted to M claiming that on the death of S his daughter M succeeded to a limited estate and reversion opened out on her death in 1929 and the plain tiffs were entitled as next reversioners, as M 's son had predeceased her.
The defendants (Ms grandsons) alleged that the property possessed by M consisted partly of property which belonged to her and partly of property which belonged exclusively to her father to which she succeeded as daughter.
Held, that the award gave an absolute estate to M as the words "Malik Mustaqil" were strong.
clear and unambiguous and were not qualified by.
other words and circumstances appearing in the same document in the present case.
Held further.
that even if the award be assumed to be invalid the plaintiffs ' claim was barred by the plea of estoppel.
There was estoppel against B because by his conduct he induced M to believe that the decision of the arbitrator was fair and reasonable and both the parties would be bound by it and he induced her to act greatly to her detriment and to alter her position by accepting the award and never attempting to go behind it as long 479 as he lived; there was estoppel against B 's sons because it descended to them as they stepped into his shoes, and fur ther there was independent estoppel against B 's son K by his acts and conduct as evidenced in this case.
There was estoppel against plaintiffs who claimed through their father K.
|
Civil Appeals Nos. 1652 to 1657 of 1978 Appeals by Special leave from the Judgment and order dated the 31st August, 1978 of the Andhra Pradesh Administrative Tribunal in Representation Petitions Nos. 595 and 985 of 1977 and 340, 289, 466 and 533 of 1978.
WITH Civil Appeal Nos. 1658 and 1659 of 1978.
Appeals by Special leave from the Judgment and order dated the 8th September, 1978 of the Andhra Pradesh Administrative Tribunal in Representation Petitions Nos. 561 and 59 of 1978.
AND Civil Appeal No. 415 of 1979.
Appeal from the Judgment and order dated the 31st August, 1978 of the Andhra Pradesh Administrative Tribunal in Transferred Writ Petition No. 941 of 1976.
549 M.N. Phadke, M. R. K Chaudhary, B. Kanta Rao and Miss Nalini, for the Appellants in CA.
1652 59/78.
section N. Kacker and B. Parthasarthi, for the Appellants in CA 415.
T. section Krishnamoorthy Iyer, K Ramkumar and Mrs. J. Ramachandran, for RR.
3, 5, 8 and 9 in CAS.
1652 59/78.
P. Ram Reddy, and G. Narayana Rao for RR.
1 and 2 in CA.
1652 59 and 415 of 1979.
The Judgment of the Court was delivered by VARADARAJAN J.
These appeals by special leave are directed against the Judgments of the Andhra Pradesh Administrative Tribunal, Hyderabad in Representation Petitions 595 of 1977 and batch and transferred Writ Petition 941 of 1976.
C. As.
Nos. 1652 to 1659 of 1978 have been filed against the common judgment dated 31.8.1978 in Representation Petition 595 of 1977 and batch in which common issues arose for consideration while C.A. No. 415 of 1979 has been filed against the separate judgment, dated 31.8.1978 in Transferred Writ Petition 941 of 1976.
All these appeals by the petitioners before the Tribunal were heard together in this Court and will be disposed of by a common judgment.
The main judgment of the Tribunal in Representation Petition 595 of 1977 and batch is in Representation Petition 595 of 1977 in accordance with which the other Representation Petitions in the batch have been disposed of as stated elsewhere in this judgment.
Representation Petition 595 of 1977 was filed by seven petitioners of whom petitioners Nos 1 to 6 were working as Principals of Junior Colleges at various places while the seventh petitioner was working as a Junior Lecturer in Government College, Srikakulam in Andhra Pradesh and claimed to be ripe for promotion as Principal of Junior College on the basis of his original seniority among junior Lecturers.
We will refers to the parties in these appears as arrayed before the Tribunal for the sake of convenience.
The seven pettioners in Representation Petition 595 of 1977 who were working as Post Graduate Assistants or Headmasters in 550 the Zilla Parishad Higher Secondary Schools at different places were appointed as junior Lecturers in 1969 as they were all Post Graduates who had passed in the first or second class with 50% marks and above and were fully eligible for appointment as Junior Lecturers.
The petitioners ' contention is that under the Adhoc Rules governing Junior Lecturers they being Post Graduates who had passed in first or second class, should be placed in the seniority list above Post Graduate Assistants who hold only third class Post Graduate degrees.
The second respondent, joint Director of Higher Education, Andhra Pradesh, prepared a subject wise seniority list in 1974 as per the rules,, placing the seven petitioners in Representation Petition 595 of 1977 at Nos. 17, 15, 20, 21, 23, 40 and 41 respectively.
On the basis of that seniority Junior Lecturers upto the rank of 40 in that list were promoted as Principals of various junior Colleges.
The 1st respondent State of Andhra Pradesh, prepared a revised seniority list as per the directions of the Andhra Pradesh High Court in Writ Petition No. 4358 of 1974 and Writ Appeal No. 920 of 1975.
In that revised seniority list issued in 1976 the petitioners in Representation Petition 595 of 1977 have been placed at Nos. 380, 54, 390, 392, 406, 368 and 374 respectively.
The petitioners ' contention was that third class Post Graduate degree holders who were appointed for the first time in 1970 and 1975 as junior Lecturers were shown in the said revised seniority list as seniors to the petitioners though the petitioners had all been appointed as junior Lecturers in 1969 itself and were regularised as early as in November 1969 and under the Adhoc Rules framed by the Government, Post Graduate Assistants with first and second class Post Graduate degrees should be treated as one group and as senior to Post Graduate Assistants with third class Post Graduate degrees, who should be treated as another group.
The petitioners in Representation Petition 595 of 1977 prayed in these circumstances for quashing the revised seniority list issued by the first respondent State of Andhra Pradesh on 27.12.1976 so far as they are concerned and for restoration of their old seniority as per the earlier seniority list of 1974 or in the alternative for declaring that Rule 13 (1) of the Adhoc Rules, 1973 dealing with seniority of Junior Lecturers is violative of Articles 14 and 16 of the Constitution Rule 13 (ll and (2) of the Adhoc Rules framed by the Government under Article 309 of the Constitution read as follows: "Rule 13 (1) The seniority of a person appointed under clauses (i) and (ii) of sub rule (l) of Rule 3 shall be 551 determined with reference to the date of his actual appointment as a Post Graduate Assistant of the.
probable date on which he would have been appointed as Post Graduate Assistant but for his appointment or promotion to a higher post; (ii) The seniority of any person appointed under clause (iii) of sub rule (1) of Rule 3 shall be determined with reference to the date of commencement of his probation.
Provided that no such person shall be senior to any person appointed under clause (i) or (ii) of sub rule (1) of Rule 3; Provided further that no person appointed under sub clause (b), sub clause (c) or clause (iii) of sub rule (I) of Rule 3 shall be senior to a person appointed under sub clause (a) of that clause. " Rule 3 of the Adhoc Rules, 1973 reads as follows: 4 "Rule 3 of Appointment: (1) Appointment to this class shall be made as follows: (i) First by appointment of Post Graduate Assistants in Category I A of Class II and Selection Grade Assistants in Grade I of Category 2 of Class II in the Andhra Pradesh Educational Sub ordinate Service or Headmasters of High Schools and Post Graduate Assistants in Zila Parishads High Schools and such of the Municipal Schools as are converted into Junior Colleges; (ii) Secondly, if there are no suitable and qualified persons available for appointment under clause (i) then by appointment of Trained Graduates a possessing Post Graduate Diploma in Physical Sciences in the scale of pay admissible to Post Graduate Assistants immediately before the commencement of these rules; (iii) Thirdly, if there are no suitable and qualified persons available for appointment under sub clause (i) or sub clause (ii) 552 (a) by recruitment from among the Headmasters and Post Graduate Assistants in recognised Multipurpose or Higher Secondary Schools under private management or under the management of the Municipality which are not converted into Junior Colleges; or (b) By transfer from School Assistants in Grade II or Category 2 in Class II and Pandits (including Hindi Pandits), Munshis Grade I in Category I of Class III of the Andhra Pradesh Educational Subordinate Service or by recruitment by transfer from any other service; or (c) by direct recruitment.
(2) Preference shall be given for appointment under clause (i) or sub clause (a) of clause (iii) of sub rule (I)(a): (a) Firstly to persons with first or second class Post Graduate degree; (b) Secondly to persons with a third class Post Graduate degree with not less than five years of service as a Post Graduate Assistant or Selection Grade Assistant in the Andhra Pradesh Educational Subordinate Service or as a Headmaster of a Zila Parishad High School or a Post Graduate Assistant in a school under the management of a Zila Parishad or a Municipality; (c) Thirdly to persons with a third classs Post Graduate degree with less than five years ' service as a Post Graduate Assistant or Selection Grade Assistant in the Andhra Pradesh Educational Subordinate Service or as a Headmaster of a High School or Post Graduate Assistant in a School under the management of a Zila Parishad or a Munici pality. ." 553 The Andhra Pradesh Government decided in 1964 that the Secondary School Education should be of 10 years ' duration instead .
4 of 11 years and that it should be followed by a two years ' Intermediate Collegiate education in the place of the then existing Higher Secondary and Multi purpose system commencing from 1969 70.
Accordingly, the Government decided in G.O.Ms 1920, Education, dated 25.10.1968 that in the existing colleges two year Intermediate Course should be introduced in the place of one year P.U.C. The staff pattern and pay scales of staff in junior Colleges started for the two year Intermediate Course were laid down by the Government in G.O. Ms 2063, Education, dated 25.8.1969.
In G.O.Ms. 2186, Education, dated 17.9.1969 the Government issued the following instructions regarding the absorption of Post Graduate Teachers in Junior Colleges: "In regard to the appointment of Post Graduates as Junior Lecturers in Junior Colleges, priority will be given to those who are in the scales of pay of Rs. 180 350 and who are suitable and willing to be absorbed as per seniority as indicated below: (a) First or second class Post Graduates working as Post Graduate Assistants: (b) Third class Post Graduates with not less than 5 years of service, working as Post Graduate Assistants: (c) Third class Post Graduates with less than of 5 years of service, working as Post Graduate Assistants.
and (d) Lastly Trained Graduates possessing Post Graduate diploma in Physical Sciences, working in the Post Graduate Assistant 's scale.
It was stated in that G. O. that all the existing Post Graduates who will be absorbed as Junior Lecturers in Junior Colleges will be appointed temporarily as Junior Lecturers pending framing of adhoc rules in due course.
The Government ordered in G.o.
Ms. 1147, Education, dated 4.6.1970 that in the common seniority list first rank should be given only to those who have secured first and second 554 class Post Graduate degree with 50 per cent marks and above.
These G. Os.
were all executive instructions.
There is no dispute that the petitioners are holders of first or second class Post Graduate and that the private respondents 3 to 8 in Representation Petition 595 of 1977 who have been placed as their seniors in the impugned seniority list of 1976 are holders only third class Post Graduate degrees.
The petitioners relied heavily I J on the above rule 3 of the Adhoc Rules, according to which persons with first or second class Post Graduate degrees are to be given preference over Post Graduates holding third class degrees and contended that they should, therefore.
be given seniority over the third class Post Graduate degree holders in determining the inter se seniority in the cadre of Junior Lecturers in Junior Colleges as was done in the seniority list prepared in 1974.
The contention of the first respondent, State of Andhra Pradesh, was that the executive instructions given in Government orders regarding appointments of Junior Lecturers pending the framing of Adhoc Rules under Article 309 of the Constitution ceased to operative once those adhoc rules were framed and that under Adhoc Rule 13 the seniority of Post Graduate Assistants of former Higher Secondary Schools and Multipurpose Schools with first, second and third class Post Graduate degrees and Post Graduate diploma shall have to be determined with reference to the actual date of appointment as Post Graduate Assistants.
The Government denied that Rule 13 (l) is violative of Articles 14 and 16 of the Constitution and contended in the counter affidavit that the Education Department followed the judgment of the Andhra Pradesh High Court in W.P. No. 4358 of 1974 and Writ Appeal 920 of 1975 and cancelled the earlier seniority list of 1974 and framed the revised seniority list of 1976 according to Rule 13 (1) of the Adhoc Rules.
Thus the Government opposed the Representation Petitions.
The Tribunal has taken note in Paragraph 9 of its judgment of the fact that the petitioners arc first and second class Post Graduate degree holders while respondents 3 to 8 are only third class Post Graduate degree holders correctly, but it has wrongly observed that both the categories of Post Graduate Assistants have been appointed as Junior Lecturers under Rule 3 (1) (i) of the Adhoc Rules issued in G.O.Ms 939, Education, dated 19.9.1973.
It was not disputed 555 before us that the petitioners being first and second class Post Graduates with 50 per cent and more marks were appointed as Junior Lecturers in 1969 and that respondents 3 to 8 who are third class Post Graduates were appointed as Junior Lecturers only in 1970 and 1975.
Therefore, the petitioners and some of respondents 3 to 8 had been appointed in 1969 and 1970 before the Adhoc Rules were framed on 19.9.1973 and only some of the respondents 3 to 8 B were appointed in 1975 under Rule 3 (1) (i) of those Adhoc Rules.
The fact that the petitioners were appointed as Junior Lecturers earlier than the respondents was conceded by Mr. Shiv Shankar before the Tribunal as seem from paragraph 8 of the Tribunal 's judgment.
The Tribunal noted the following further facts: (1) That Government had decided in G.O.Ms. 2063, Education, dated 25.8.1969 that first and second class Post Graduates would be given a higher starting pay of Rs 260 in in the scale of Rs. 200 500 and that third class Post Graduates would be allowed only the pay drawn by them before they were appointed as Junior Lecturers in the above scale; (2) That the Government expressed the view in G.O.Ms. 1147, Education, dated 4.6.1970 that in the common seniority list first rank should be given only to those who have secured first or second class Post Graduate degrees with 50 per cent marks and above which is the qualification prescribed for direct recruitment of Junior Lecturers; and (3) That in Rule 3 (1) (i) of the Adhoc Rules framed on 19.9.1973 it is stipulated that at the time of appointment to the category of Junior Lecturers persons with first or second class Post Graduate degrees would have preference over persons with third class Post Graduate degrees.
But the Tribunal relied heavily on the fact that the Andhra Pradesh High Court had directed in Writ Appeals 920 and 938 of 1975 that the seniority list should be prepared in accordance with Rule 13 (1) of the Adhoc Rules, 1973 which have been given retrospective effect from 1.8.1969 and held that the impugned seniority list framed as per Rule 13(1) of the Adhoc Rules having precedence over the earlier executive instruction is valid and that as the petitioners and respondents 3 to 8 belonged to the same category of Post Graduate Assistants, there is no question of violation of Articles 14 and 16 of the Constitution as Adhoc Rule 13 (1) says that seniority of Post 566 Graduate Assistants appointed as Junior Lecturers shall be determined with reference to the dates of their actual appointment as Post Graduate Assistants or the probable dates on which they would have been appointed as Post Graduate Assistants but for their appointment or promotion to higher posts.
The Tribunal has observed that if the intention of the Government was otherwise they would have specifically provided accordingly.
In this view the Tribunal rejected the petitioners ' prayer for restoring the old seniority list prepared in 1974 which in its opinion is contrary to Rule 13 (1) of the Adhoc Rules.
Accordingly the Tribunal dismissed Representation Petition 595 of 1977 and in view of its judgment in that Petition either rejected or dismissed Representation Petitions 985 of 197? and 289, 340, 446 and 553 of 1978.
In Representation Petition 273 of 1978 the Tribunal observed that the plea of the petitioners that first and second class Post Graduate degree holders should be given preference over third class Post Graduate degree holders in the matter of seniority as Junior Lecturers is covered by its judgment in Representation Petition 595 of 1977 and that since the petitioners in Representation Petition 273 of 1978 have already acquired B. Ed. qualification, which is a prerequisite for regular appointment as Post Graduate Assistants, the question of those petitioners ' regularisation in the posts of Post Graduate Assistants should be examined in accordance with the rules and their service should be regularised in that category and thereafter their seniority as Junior Lecturers should be determined in accordance with Rule 13 (I) of the Adhoc Rules.
In Transferred Writ Petition 1246 of 1976 the Tribunal has stated in its judgment that in the judgment of the High Court in Writ Appeals 920 and 938 of 1975, the High Court has ordered that a fresh seniority list should be prepared in accordance with Rule 13 (1) of the Adhoc Rules, that the relief prayed for by the four petitioners in that Writ Petition has already been given and that Writ Petition is disposed of accordingly.
The Tribunal has ordered that Transferred Writ Petition 78 of 1976 also stands disposed of, presumably in the same manner as Transferred Writ Petition 1246 of 1976 was disposed of, without specifically indicating bow that Writ Petition is disposed of.
In Transferred W.P. 941 of 1976 out of which C.A. No. 415 of 1979 filed by 34 petitioners in that Petition has arisen, the reliefs prayed for were: (I) that a correct seniority list based on Rule 13 of the Adhoc Rules 1973 should be issued in respect of all the Junior Lecturers, (2) that Rule 6 of the adhoc Rules framed in G.O.Ms. 557 502, Education, dated 19.6.1974, under which first or second class Post Graduate degree has been prescribed as the qualification for promotion to the posts of Principal of Junior Colleges should be struck down as illegal and (3) that adhoc appointments of seven third class Post Graduate Junior Lecturers as Principals of Junior Colleges made in the proceedings dated 14.3.1974 by the second respondent Director of Public Instruction, Andhra Pradesh should be declared as illegal, Here also we shall refer to the parties as arrayed before the Tribunal for the sake of convenience as stated earlier.
The 34 petitioners in this petition were working as School Assistants in Higher Secondary schools in Andhra Pradesh.
They were subsequently appointed as Junior Lecturers in junior colleges in terms of Rule 3 of the Adhoc Rules which states that first preference for appointment as junior Lecturers in Junior Colleges should be given to Post Graduate Assistants in Category I A of Class II and Selection Grade Assistants in Grade I of Category 2 of Class II in the Andhra Pradesh Educational Subordinate Service or Headmasters or High Schools and Post Graduate Assistants in Zilla Parishad High Schools and such of the Municipal Schools as are converted into Junior Colleges.
The rule also provides that preference should be given to persons with first or second class Post Graduate degrees.
Rules 13 (1) of the Adhoc Rules provides that seniority is to be determined with reference to the date of their actual appointment as Post Graduate Assistants or the probable date on which they would have been appointed as Post Graduate Assistants but for their appointment or promotion to higher posts.
The petitioners contended that seniority of Junior Lecturers, which is being maintained subjectwise, should be integrated and there should be a combined seniority list and not subject wise list.
In the Adhoc Rules framed by the Government in G.O.Ms. 939, Education, dated 19.9.1973 there were no rules regarding promotion of Junior Lecturers to the posts of Principals of junior Colleges.
Pending the framing of Adhoc Rules in that regard the second respondent, Director of Public Instruction, issued proceedings in R.C. No. 775 Cl/2/74 dated 14.3.1973 promoting under Rule 10 (a) (i) of the State and Subordinate Service Rules, seven persons as Principals of Junior Colleges though they did not hold first or second class Post Graduate degrees.
Subsequently, Adhoc Rules were framed by the Government in G.O.Ms. 502, Education, dated 19.6.1974 under the proviso to Rule 309 of the Constitution with retrospective effect from 1.8.1969 558 regarding promotion to the posts of Principals of Junior Colleges.
Under these Rules Junior Lecturers holding a first or second class Post Graduate degrees who have put in a service of three years as Junior Lecturers in the Educational Subordinate Service are eligible or promotion as Principals of junior Colleges.
But Rule 8 of the Adhoc Rules, 1974 which is a saving clause, reads as follows "Notwithstanding anything contained in these Rules a person who held a post of a Principal of Junior College immediately before the issue of these Rules shall be continued as Principal and be given option either to continue in the Post of a Principal or to revert to his original Post".
The tribunal affirmed in its judgment in this Transferred Writ Petition its judgment in Representation Petition 595 of 1977 and observed that judgment would apply as regards the interpretation of Rule 13 in the matter of fixing inter se seniority among Post Graduate School Assistants appointed as Junior Lecturers under Rule 3 (l) (1) of the Adhoc Rules, 1973, and that seniority should be determined with reference to the date of appointment as Post Graduate School Assistants without reference to the nature of the Post Graduate degrees, whether they are first, second or third class degrees.
The Tribunal held that subject to that provision regarding fixing of over all seniority subject wise seniority can also be fixed and that for purposes of promotion to the posts of Principals the overall seniority in the category of junior Lecturers fixed in accordance with Rule 13 of the Adhoc Rules should be followed.
It was submitted before the Tribunal on behalf of the Government that considering the nature of the duties of Principals there is a reasonable classification between first and second class Post Graduate School Assistants and such Assistants holding only third class Post Graduate degrees, and there is no contravention of Articles 14 and 16 of the Constitution in prescribing first and second class Post Graduate degree for Junior Lecturers to be promoted as Principals of Junior Colleges and that clear distinction has been maintained between holders of first and second class Post Graduate degrees and those holding only third class Post Graduate degrees, and the former class of Post Graduate degree holders have been given advance increments on their appointment as junior Lecturers while the latter have been given only the pay they were drawing as 559 Post Graduate School Assistants when they were appointed as junior Lecturers.
It was also submitted before the Tribunal that academic qualification is germane in the educational field and that classification made on the basis of qualification for the post of Principal cannot be termed as discriminatory.
On a perusal of G.O.Ms. 939, Education, dated 19.9.1973 in which Adhoc Rules under the proviso to Article 309 of the Constitution have been framed by the Government the Tribunal found that weightage is to be given for first and second class Post Graduate degree holders over third class Post Graduate degree holders.
The Tribunal accepted the contention of the Government that in academic institutions excellence in academic attainments is a relevant considera tion and that any discrimination based on excellence in academic attainments has direct nexus with the object of achieving excellence in a teaching institution and that it does offend Articles 14 and 17 of the Constitution, more .
O when third class Post Graduate degree holders are not permanently debarred from improving their standard of qualifications for becoming eligible to the posts of Principals of Junior Colleges.
The Tribunal thus rejected the second prayer of the petitioners that the prescription of first and second class Post Graduate degree as qualification for eligibility for promotion to the posts of Principals of Junior Colleges contravenes Articles 14 and 16 of the Constitution.
The Tribunal found nothing objectionable in Rule 8 of the Adhoc Rules 1974 referred to above which protects the rights of third class Post Graduate degree holders who had been promoted under Rule 10 (a) (i) of the State and Subordinate Service Rules pending framing of Adhoc Rules which were actually framed subsequently on 19.6.1974.
On these findings the Tribunal dismissed Transferred Writ Petition No. 941 of 1976.
Pursuant to the policy decision taken by the Andhra Pradesh Government in 1964 that the secondary school duration should be 10 years instead of 11 years and it should be followed by a two years ' intermediate course in the place of then existing PUC instead of the then prevailing Higher Secondary and Multi purpose system, commencing from the academic years 1969 70 the Government decided in G.O.Ms. 1920, Education, dated 25.10.1968 that in the existing 560 colleges the two years ' intermediate course should be introduced instead of the one year PUC, and laid down in G.o.
Ms. 2063, Education, dated 25.8.1969 the staff pattern and pay scales of staff in junior Colleges started for the two years ' intermediate course.
In implementing this scheme Post Graduates Assistants in certain categories of schools were appointed as Junior Lecturers in Junior Colleges.
The petitioners in Representation Petition 595 of 1977 and batch, out of which Civil Appeals 1652 to 1659 of 1978 have arisen and Transferred Writ Petition 941 of 1976, out of which Civil Appeal 415 of 1979 has arisen and those in certain other Representation Petitions and Transferred Writ Petitions 785 and 1246 of 1976 were appointed as Junior Lecturers.
Prior to their appointment as Junior Lecturers they were all Post Graduate School Assistants or Headmasters in various schools.
The private respondents in Representation Petitions 595 of 1977 and batch and the petitioners in Transferred Writ Petition 941 of 1976 were seniors as Post Graduate School Assistants to the petitioners in Representation 595 of 1977 and batch and the private respondents in Transferred Writ Petition 941 of 1976.
The said senior Post Graduate Assistants are all third class Post Graduate degree holders whereas the said Junior Post Graduate School Assistants are all first or second class Post Graduate degree holders.
Based on their superior academic qualification those first and second class Post Graduate School Assistants were given priority and treated as seniors to the said third class Post graduate School Assistants in the seniority list prepared in 1974 after they were appointed as Junior Lecturers.
The petitioners in Representation Petitions 595 of 1977 and batch and the petitioners in Transferred Writ Petition 941 of 1976 were appoint ed in 1969, 1970 and 1975 as Junior Lecturers.
In Writ Appeals 1? 920 and 938 of 1975 the Andhra Pradesh High Court gave directions to prepare a common seniority list of junior Lecturers in accordance with Rule 13(1) of the Adhoc Rules framed by the Government in G.o.
Ms. 939, Education, dated 19.9.1973.
Pursuant to that direction a revised seniority list of Junior Lecturers was issued by the Govern ment on 27.12.1976.
In the seniority list of 1974 the petitioners in Representation Petition 595 of 1977 had been placed at Nos 17, 15 20, 21, 23, 40 and 41 respectively, and on the basis of that seniority junior Lecturers up to the rank of 40 in that list had been promoted as Principals of various junior Colleges and the seventh petitioner in Representation Petition 595 of 1977 who had been placed at No. 41 in that list was awaiting his promotion as Principal of junior College.
But in the revised seniority list of 1976 those petitioners have been 561 placed at Nos. 380, 54, 390, 392, 406, 368 and 374 respectively and the private respondents in that Representation Petition have all been 4 placed above them as their seniors.
The seniority of the petitioners in the other Representation Petitions in the batch was also disturbed to their disadvantage in the revised seniority list of 1976.
The Representation Petitions were therefore filed for quashing the revised seniority list issued by the first respondent State of Andhra Pradesh in 1976 so far as the petitioners are concerned and for restoration of their old seniority as per the earlier seniority list of 1974 or in the alternative for declaring that Rule 13(1) of the Adhoc Rules, 1973 dealing with seniority of junior Lecturers is violative of Articles 14 and 16 of the Constitution.
The only question arising for consideration in Representation Petition 595 of 1977 and batch out of which Civil Appeals 1652 to 1659 of 1978 have arisen is the question of seniority of the Petitioners in those petitions (appellants in Civil Appeals 1652 to 1659 of 1978).
Though in Transferred Writ Petition 941 of 1976 out of which Civil Appeal 415 of 1979 has arisen three reliefs were prayed for viz. (1) that an integrated seniority list based on Rule 13 of the Adhoc Rules, 1973 should be issued in respect of all Junior Lecturers; (2) that Rule 6 of the Adhoc Rules framed in G.O.Ms. 502, Education, dated 19.6.1974 by which first and second class post graduate degree has been prescribed for promotion of junior Lecturers as Principals of Junior Colleges should be struck down as being illegal and (3) that adhoc appointments of seven third class Post Graduate degree holders as Principals of Junior Colleges made in proceedings dated 14.3.1974 of the second respondent, Director of Public Instructions should be declared illegal, Mr. S.N. Kackar, Senior Advocate appearing for the appellants in Civil Appeal 415 of 1979 confined his arguments to the second prayer alone viz. the attack on Rule 6 of the Adhoc Rules framed G.O.Ms. 502, Education, dated 19.6.1974 which prescribes first or second class Post Graduate degree for promotion of Junior Lecturers as Principals of Junior Colleges, which has been dealt with by the Tribunal in paragraph 6 of its judgment in Transferred Writ Petition 941 of 1976.
We shall consider these two questions in this common judgment.
We shall also consider briefly the third prayer made in Transferred Writ Petition 941 of 1976 which has been negatived by the Tribunal.
We may state that the first prayer made in Transferred Writ Petition 941 of 1976 will be covered by our finding on the only point arising for consideration in Civil Appeals 165 to 1659 of 1978.
Mr. M.N. Phadke, Senior Advocate appearing for the appellants in Civil Appeals 1652 to 1659 of 1978 drew our attention to the 562 special provisions in various Government orders which are executive instructions issued before the Adhoc Rules were framed under the proviso to Article 309 of the Constitution on 19.9.1973 and to some special provisions made even in those adhoc rules showing preference and priority for Post Graduate School Assistants holding first and second class Post Graduate degrees over such Assistants holding only third class Post Graduate degrees in the matter of appointment as Junior Lecturers in Junior Colleges and of promotion of Junior Lecturers as Principals of Junior Colleges and submitted that fixing seniority of Junior Lecturers holding first and second class Post Graduate degrees, forming one group and of those holding third class Post Graduate degrees, forming another group, on the basis of the dates of their original appointment as Post Graduate School Assistants is arbitrary and therefore the impugned seniority list of 1976 should be quashed and the seniority of the petitioners in the representation Petitions (appellants in Civil Appeals 1652 to 1659 of 1978) fixed in the list of 1974 should be restored.
But Mr. T.S. Krishna Moorty Iyer Senior Advocate appearing for the contesting private respondents 3, 5, 8 and 9 in Civil Appeals 1652 to 1659 to 1978 argued that before their appointment as Junior Lecturers Post Graduate Assistants holding first, second and third class Post Graduate Degrees were doing the same work and drawing the same scale of pay.
He submitted that though in G.O.Ms. 2063, Education, dated 25.8.1969 it was stated that first or second class Post Graduates will be given a higher start of Rs. 260 in the pay scale of Rs. 200 15 320 20 500 and third class Post Graduates will be allowed only the pay drawn by them before their appointment as Junior Lecturers in the pay scale of Rs. 200 500 if their pay was more than the minimum of the new scale on their appointment as Junior Lecturers, nothing is mentioned in the Adhoc Rules, 1973 about salary, and this would show that under the Adhoc Rules no new service was created but only the previous service created by the executive instructions was continued and that in alt fairness and justice the private respondents in Civil Appeals 1652 to 1659 of 1978 who had been appointed as Post Graduate School Assistants prior to the appellants in those appeals should be regarded as their seniors as had been done in the impugned seniority list of 1976 prepared in accordance with the directions given by the Andhra Pradesh High Court in its judgment in Writ Appeals 920 and 938 of 1975.
Mr. P. Rama Reddy, Senior Advocate appearing for the official respondents in all the civil appeals supported the impugned judgment of the Tribunal saying that the first, second and third class Post Graduate Assistants before they 563 were appointed as Junior Lecturers belonged to the same class and were drawing the same pay and doing the same kind of work and that seniority after their appointment as Junior Lecturers should be fixed on the basis of the dates of their original appointment as Post Graduate School Assistants, as has been done in the impugned seniority list of 1976.
As stated above, in G.O.Ms. 2063, Education, dated 25.8.1969 Government ordered that first or second class Post Graduates will be given a higher start of Rs. 260 in the new Junior Lecturers ' pay scale of Rs. 200 15 320 20 500 and third class Post Graduates will be allowed only the pay drawn by them before their appointment as Junior Lecturers in the scale of Rs. 200 500 if their pay was more than the minimum of the new scale of Rs. 200 15 320 20 500.
In G.O.Ms. 2186, Education, dated 17.9.1969 Government decided that all the existing Post Graduate teachers who will be absorbed in Junior Colleges will be appointed temporarily as Junior Lecturers pending framing of adhoc rules in due course and that in regard to appointment of Post Graduates as Junior Lecturers in Junior Colleges priority will be given to those who are in the scale of pay of Rs. 180 350 and are suitable and willing to be absorbed as per seniority as indicated below: (a) First and second class Post Graduates working as Post Graduate Assistants: (b) Third class Post Graduates with not less then five years of service, working as Post Graduate Assistants; (c) Third class Post Graduates with less than five years of service, working as Post Graduate Assistants; (d) Lastly, trained graduates possessing Post Graduate Diploma in Physical Sciences, working in the Post Graduate Assistants ' scale.
In G.O.Ms. 1147, Education, dated 4.6.1970 Government reiterated the aforesaid decision taken in G.O.Ms. 2186, Education, dated 17.9.1969 regarding priority to be given to first and second class Post Graduates over third class Post Graduates, based on the recommendations of the Vice Chancellors ' Conference and stated 564 that they consider that in the common seniority list first rank should be given only to those who have secured first or second class with 50 marks and above and third class Post Graduates should be given rank with reference to their services viz. those with five years of service, working as Post Graduate Assistants, next to the first and second class Post Graduates, working as Post Graduates Assistants and thereafter those with less than five years of service, working as Post Graduate Assistants.
Government have observed in that G.O. that this manner of creating seniority is reasonable.
These orders are all no doubt in the nature of executive instructions.
The Adhoc Rules were framed under the proviso to Article 309 of the Constitution with retrospective effect from 1.8.1969 in G.O.Ms. 939, Education, dated 19.9.1973 for the temporary posts of Junior Lecturers in Government Degree and Junior Colleges in Andhra Pradesh.
Rule 3 (1) and (2) of those rules reads as follows "3.
Appointment: (1) Appointments to this class shall be made as follows: (i) firstly by appointment of Post Graduate Assistants in Category I A of Clause II and Selection Grade Assistants in Grade I of Category 2 of Class II of The Andhra Pradesh Educational Subordinate Service, or Head Masters of High Schools and Post Graduate Assistants in Zilla Parishad High Schools and such of the Municipal Schools as are converted into Junior Colleges.
(ii) Secondly, if there are no suitable and qualified persons available for appointment under clause (i), then, by appointment of trained Graduates possessing Post Graduate Diploma in Physical Sciences in the scale of pay admissible to Post Graduate Assistants immediately before the commencement of these rules.
(iii) Thirdly, if there are no suitable and qualified persons available for appointment under sub clause (i) or sub clause (ii): (a) By recruitment from among the Head Masters and Post Graduate Assistants in recognised 565 multi purpose or Higher Secondary Schools under private management or under the management of a Municipality which are not converted into Junior Colleges; or (b) By transfer from School Assistants in Grade II Category 2 in Class II and Pandits (including Hindi pandits), Munshis Grade I in Category I of Class III of the Andhra Pradesh Educational Subordinate Service or by recruitment by transfer from any other service; or (c) By direct recruitment.
(2) Preference shall be given for appointment under clause (1) or sub clause (a) of Clause (iii) of sub clause 1 (a) Firstly to persons with First or Second class P.G. Degree: (b) Secondly to persons with a third class Post Graduate Degree with not less than five years of service as Post Graduate Assistants or Selection Grade Assistants in the Andhra Pradesh Educational Subordinate Service or as a Head Master of a Zilla Parishad High School or as a Post Graduate Assistant in a School under the management of a Zilla Parishad or a Municipality; (c) Thirdly to person with a third class Post Graduate Degree with less than five years of service as a Post Graduate Assistant or a Selection Grade Assistant in the Andhra Pradesh Educational Subordinate Service or as a Head Master of a High School or Post Graduate Assistant in a school under the management of a Zilla Parishad or of Municipality. . . . . . . ".
It is not disputed before us that the petitioners in Representation.
Petition 595 of 1977 and batch (appellants in Civil Appeals 566 1652 to 1659 of 1978) fall under the above preferred clause (a) and that the contesting private respondents in those appeals and the appellants in Civil Appeal 415 of 1979 fall under the above clause (b) or clause (c) and they would have come up for consideration for appointment as Junior Lecturers only after those falling under the above second clause (a).
Thus, the preference given to first and second class Post Graduate Assistants in the matter of appointment as Junior Lecturers in G.O.Ms. 2186, Education dated 17.9.1969 has been maintained even in the Adhoc Rules, 1973.
As submitted by Mr. T.S. Krishna Moorthy Iyer there is nothing in the Adhoc Rules, 1973 regarding the salary of first and second class Post Graduate Assistants on the one hand and of third class Post Graduate School Assistants on the other on their appointment as Junior Lecturers.
Therefore, G.O.Ms. 2063, Education, dated 25.8.1969 by which first and second class Post Graduates are given a higher start of Rs. 260 in the new Junior Lecturers ' pay scale of Rs. 200 15 320 20 500 and third class Post Graduates are given only the pay drawn by them before their appointments as Junior Lecturers in the scale of Rs. 200 500 if their pay was more than the minimum of the new scale of Rs. 200 15 320 20 500 continues to govern the matter of pay.
This position is not disputed before us.
Thus, in the matter of pay also first and second class Post Graduate Assistants who are appointed as Junior Lecturers are placed in a better and preferential position than third class Post Graduate Assistants who are appointed as Junior Lecturers.
Some time after the Adhoc Rules were framed on 19.9.1973, Government framed Adhoc Rules under the proviso to Article 309 of the Constitution in G.O.Ms. 502, Education, dated 19.6.1974 for the temporary posts of Principals of Junior Colleges in Andhra Pradesh with retrospective effect from 1.8.1969.
According to those rules the posts of Principals of Junior Colleges form a separate class in the administrative section of the Andhra Pradesh Educational Service, and appointment to that class should be made; (a) by recruitment by transfer from Junior Lecturers in the Andhra Pradesh Educational Subordinate Service who have opted or are deemed to have opted to remain as Junior Lecturers, or (b) by recruitment by transfer of Schools Assistants in Grade I and Deputy Inspectors of Schools Grade I in Category 2 of clause II of the Andhra Pradesh Educational Subordinate Service.
Rule 6 of those Rules states that no person shall be eligible for appointment to this class unless he 567 holds a first or second class Post Graduate degree of M.A., M. Sc., M. Com., B.A. (Hons.), B. Sc.
(Hons.), or B. Com (Hons.) of a University in India established or incorporated by or under a Central Act or a Provincial Act or a State Act or institutions recongnised by the University Grants Commission.
This rule which is impugned in Civil Appeal 415 of 1979 prescribes a first or second class Post Graduate degree for promotion of Junior Lecturers to the posts of Principals of Junior Colleges.
Under this rule third class Post Graduate Junior Lecturers are not eligible for promotion as Principals of Junior Colleges.
Thus, even in the matter of promotion as Principals of Junior Colleges, first and second class Post Graduate Junior Lecturers have priority and preference over third class Post Graduate Junior Lecturers who are not eligible at all for promotion as Principals on account of the inferiority of their academic attainments so long as they remain only third class Post Graduates.
Now Rule 13 dealing with seniority of junior Lecturers reads as follows: 13.
Seniority: (1) The seniority of a person appointed under clause (i) and (ii) of Sub rule (1) of Rule 3 shall be determined with reference to the date of the actual l appointment as a Post Graduate Assistant or the probable date on which he would have been appointed as a Post Graduate Assistant but for his appointment or promotion to a higher post; (2) The seniority of any person appointed under clause (ii) of sub rule (1) of Rule 3 shall be determined with reference to the date of commencement of his probation; Provided that no such person shall be senior to any person appointed under clause (i) or (ii) of sub rule (1) of Rule 3.
Provided further that no person appointed under sub clause(b) or sub clause (c) of clause (iii) of sub rule(1) of Rule 3 shall be senior to a person appointed under sub clause (a) of that clause".
568 It was submitted before us that these two provisos to sub rule (2) of Rule 13 have been struck down by the Andhra Pradesh Administrative Tribunal.
The main question for consideration is whether in spite of the aforesaid provisions in the executive instructions and adhoc rules providing for preferential treatment and position to holders of first and second class Post Graduate Degrees in the matter of appointment as Junior Lecturers, their starting pay and subsequent promotion as Principals of Junior Colleges, particularly (1) G.O.Ms.
1147, Education, dated 4.6.1970 in which Government considered and decided that in the common seniority list first rank should be given only two those who have secured first or second class Post Graduate degree with 50 per cent marks and above and third class Post Graduate Degree holders with not less than five years of service, working as Post Graduate Assistants should be ranked next and third class Post Graduate Degree holders with less than five years of service, working as Post Graduate Assistants, should rank next, and (2) Rule 3(1) (i) and (2) of the Adhoc Rules, 1973 according to which in the appointment of Junior Lecturers preference has to be given firstly to persons with first or second class Post Graduate Degrees, secondly to persons with third class Post Graduate Degrees with not less than five years of service as Post Graduate Assistants and thirdly to persons with third class Post Graduate Degrees with less than five years of service as Post Graduate Assistants, Rule 13(1) of the Adhoc Rules confers seniority on third class Post Graduate Junior Lecturers over first and second class Post Graduate Junior Lecturers based on their earlier appointment as Post Graduate Assistants.
There is nothing on record to show that while framing Rule 13(1) of the Adhoc Rules Government intended to depart from the policy earlier enunciated in G.O.Ms. 1147, Education, dated 4.6.1970 as regards conferment of seniority on first and second class Post Graduate School Assistants appointed as Junior Lecturers and Rule 3(1) (i) and (2) of the Adhoc Rules, 1973 as regards preference of first and second class Post Graduate School Assistants over third class Post Graduate School Assistants.
On the other hand, the fact that in the seniority list prepared in 1975 so soon after the Adhoc Rules were framed on 19.9.1973 higher places were given to first and second class Post Graduate Junior lecturers over third class Post Graduate Junior Lecturers although the first and second class Junior lecturers were Juniors to the third class Post Graduate Junior 569 Lecturers when they were all Post Graduate School Assistants would indicate that the Government who framed the Adhoc Rules themselves interpreted Rule 13(1) in the manner in which the appellants in Civil Appeals 1652 to 1659 of 1978 invite us to do, giving full effect to the priority laid down in Rule 3(1) and (2) of the Adhoc Rules which follows the policy laid down in that regard in G.O.Ms. 1147, Education, dated 4.6.1970.
lt is true that we cannot base our decision on this question on that fact alone especially having regard to the stand now taken before us and the Tribunal by the Government as regards the interpretation of Rule 13(1) which perhaps they are obliged to take in view of the direction given by the Andhra Pradesh High Court in Writ Appeals 920 to 938 of 1975 which is binding on them to prepare a fesh seniority list as has been done by them subsequently in 1976 which is impugned in Civil Appeals 1652 to 1659 of 1978.
As stated earlier there is no material on record to show that the Government had any reason, policy or otherwise, when they framed the Adhoc Rules, 1973 to depart from what they had decided in G.O.Ms. 1147, Education, dated 4.6.1970 about how seniority should be accorded.
There is no reason to think that the Government intended by Rule 13(1) of the Adhoc Rules to take away from the first and second class Post Graduate Junior Lecturers the preference shown to them over third class Post Graduate Junior Lecturers in the executive instructions especially G.O.Ms. 1147, Education, dated 4.6.1970 and even in Rule 3(1) and (2) of the Adhoc Rules, 1973.
As contended by the appellants in Civil Appeals 1652 to 1659 of 1978 Rules 3(1) and (2) and 13(1) have to be read together.
Only then there will be harmony between those rules.
If Rule 13(1) is read without reference to Rule 3(1) and (2) the consequence will be disharmony and the first and the second class Post Graduate Junior Lecturers who were given preference over third class Post Graduate Junior Lecturers by the other provisions mentioned above, will be placed in a less advantageous and inferior position as compared with third class Post Graduate Junior Lecturers as regards seniority alone, which will not even help them in the matter of promotion as Principals of Junior Colleges in view of Rule 6 of Adhoc Rules, 1974 so long as they do not improve their academic attainment by obtaining a first or second class Post Graduate Degree.
Every rule in the Adhoc Rules must be given its full, natural and legal effect.
There is no doubt that Rule 13(1) is inartistically worded though when read Rule 3(1) and (2) it would be clear that the principal laid down in it has to be applied separately to each of the three categories of Junior Lecturers mentioned in Rule 3(1) and (2) viz. 1) first and 570 second class Post Graduates, (2) third class Post Graduates with not less than five years of service, working as Post Graduate School Assistants, and (3) third class Post Graduates with less than five years of service, working as Post Graduate School Assistants according to the order in which they have to be selected for appointment as Junior Lecturers.
Each of these three categories forms a distinct and separate category.
The first category consists of first and second class Post Graduate, and on their appointment as Junior Lecturers their inter se seniority has to be fixed under Rule 13(1) with reference to the dates of their original appointment as Post Graduate School Assistants.
When Post Graduates with not less than five years of service working as Post Graduate School Assistants are appointed as Junior Lecturers their inter se seniority has to be fixed likewise under Rule 13(1) on the basis of the dates of their original appointment as Post Graduates School Assistants.
Similarly, when Post Graduates with less than five years of service, working as Post Graduate School Assistants are appointed as Junior Lecturers their inter se seniority has to be fixed on the basis of the dates of their original appointment as Post Graduate School Assistants.
If Rule 13(1) is interpreted in this manner, no disharmony will result in the consequences of applying all the adhoc rules We think that only by construing Rule 13(1) in this manner the Government framed the seniority list of 1974 soon after framing the Adhoc Rules, 1973 by according seniority to the first and second class Post Graduate Junior Lecturers over the third class Post Graduate Junior Lecturers who were senior to them when all of them were working as Post Graduate School Assistants before they were appointed as Junior Lecturers, As stated earlier, before the Tribunal it was argued for the private respondents 3 to 8 in Representation Petition 595 of 1977 that the prayer for quashing Rule 13 (1) of the Adhoc Rules has to be negatived in view of the High Court 's judgments in Writ Petition 4358 of 1974 and Writ Appeals 920 and 938 of 1975 and that it is not the contention of the petitioners in that petition that the impugned revised seniority list of 1976 is contrary to the directions given in those judgments.
In the view we take regarding the interpretation of Rule 13 (1) there is no need for quashing that rule.
It is true that the petitioners in Representation Petition 595 of 1977 have not contended that the impugned seniority list of 1976 is not in accordance with the directions given in the High Court 's Judgments in those Writ Petition and Writ Appeals.
The petitioners in 571 Representation Petition 595 of 1977 have contended that those judgments relate to the 1969 batch and that they belong to 1960 batch and would not be affected by them.
Whatever this may mean, it must be noted that it has not been contended by the respondents in Civil Appeals 1652 to 1659 of 1978 that the appellants in those appeals were parties to those judgments and they constitute res judicata and are binding on them.
Therefore, there is no substance in this contention of the private respondents in Representation Petition 595 of 1977.
Next it was contended before the Tribunal by the private respondents in Representation Petition 595 of 1977 that they were appointed earlier as Post Graduate School Assistants than the petitioners in that petition and were qualified to be appointed as Junior Lecturers when the petitioners in that petition were appointed as such, but were not available for posting, and that under Rule 33 (c) of the Andhra Pradesh State and Subordinate Service Rules they are entitled to seniority.
That rule applies to persons who were transferred from one class or category of service to another class or category of the same service, and would not apply to the facts of the present case where Junior Lecturers have been appointed by selection amongst Post Graduate School Assistants in the manner indicated in Rule 3 (1) and (2) of the Adhoc Rules and there is no question of transfer of Post Graduate School Assistants as Junior Lecturers.
Therefore, there is no merit even in the second contention put forward on behalf of the private respondents in Representation Petition 595 of 1977.
There is no question of this Court striking down Rule 13 (1) of the Adhoc Rules on the ground that any other rub which in the opinion of the Court would have been better or more appropriate.
Therefore, the decision in Reserve Bank of India vs N.C. Paliwal(1) relied on for the private respondents 3 to 8 in Representation Petition 595 of 1977 before the Tribunal is not relevant.
It is only a question of interpreation of Rule 13 (1) read with Rule 3 (1) and (2) of the Adhoc Rules, 1973.
In these circumstances we hold that Rule 13(1) of the Adhoc Rules, 1973 has to be interpreted in the manner indicated above, and seniority has to be fixed accordingly and there is no need to 572 quash that rule and that the impugned seniority list of 1976 has to be quashed and the seniority list of 1974 has to be restored.
It would follow that the first prayer in Civil Appeal 415 of 1979 regarding fixing of seniority as prayed for by third class Post Graduate Junior Lecturers has to be rejected and it is accordingly rejected.
Coming now to the only point argued by Mr. section N. Kackar, Senior Advocate for the petitioners in Transferred Writ Petition 941 of 1976 (Civil Appeal 415 of 1979) that Rule 6 of the Adhoc Rules, 1974 prescribing a first or second class Post Graduate Degree for a Junior Lecturer 's promotion as Principal of a Junior College, thereby excluding third class Post Graduate Junior Lecturers from eligibility for promotion as Principals, we would like to state at the outset that the contention put forward before the Tribunal that the posts of Principals are administrative posts and no teaching experience is required is incorrect.
The Director of Public Instructions has stated in his Proceedings Rc.
No. 1068/IC 4/70 dated 16.1.1971 that Principals of Junior Colleges must take at least six periods of work per week if not more.
Therefore, Principals of Junior Colleges have to take up teaching work in addition to their administrative duties.
They are administrative heads of Junior Colleges where first, second and third class Post Graduates work as Junior Lecturers.
They have to exercise administrative control over first, second and third class Post Graduate Junior Lecturers.
I. is therefore very desirable that the Principals should be first or second class Post Graduates.
Post of Principals of Junior Colleges are gazetted while those of Junior Lecturers of those colleges are not gazetted.
According to G.O.Ms. 2068, Education, dated 25.8.1969 Principals of Junior Colleges will have the status of Senior Lecturers in Degree Colleges and their pay scale is Rs. 400 800 while the pay scale of Junior Lecturers is Rs. 200 15 320 20 500.
The object of achieving excellence in educational institutions like Junior Colleges is a laudable one, and excellence in academic attainments of heads of such institutions is a relevant fact.
Promotion of Junior lecturers as Principals is based only on merit judged by their academic distinction which cannot be said to be discriminatory.
The ratio of this Court 's decision in section M. Pandit vs State of Gujarat(1) referred to above cannot be applied to the facts of the present case.
Prescribing a first or second class Post Graduate Degree for the head of an educational 573 institution has a direct nexus with the object of excellence sought to be achieved, and it cannot be said to be discriminatory.
Therefore, we do not think that Rule 6 of the Adhoc Rules, 1974 is liable to be struck down as being discriminatory and illegal.
Pending the framing of Adhoc Rules for the temporary posts of Principals of Junior Colleges, the Director of Public Instructions issued proceedings in Rc 775 Cl/2/74 dated 14.3.1974 promoting under Rule 10(a) (i) of the State and Subordinate Service Rules seven third class Post Graduate Junior Lecturers as Principals of Junior Colleges.
The third prayer in Transferred Writ Petition 7146 of 1976 is that those appointments should be declared as illegal.
Under Rule 6(ii) of the Adhoc Rules, 1974 framed subsequently in G.O.Ms. 502, Education, dated 19.6.1974 three years ' service in the Andhra Pradesh Educational Subordinate Service is prescribed as a qualification for promotion of Junior Lecturers as Principals of Junior Colleges in addition to a first or second class Post Graduate Degree.
It is not known whether when those promotions of seven 4 third class Post Graduate Junior Lecturers as Principals were made first or second class Post Graduate Junior Lecturers were not available for promotion or why after the Adhoc Rules, 1974 were framed within about three months thereafter those third class Post Graduate Junior Lecturers were not reverted as Junior Lecturers.
Their promotions were irregular having regard to the fact that even for appointment as Junior Lecturers preference has to be given to first and second class Post Graduate School Assistants.
The irregularity has been sought to be overlooked by providing a saving clause by way of Rule 8 of the Adhoc Rules, 1974 where it is stated that notwithstanding anything contained in those rules a person who F held the post of Principal of a Junior College immediately before the issue of those rules and who was not appointed in accordance with those rules, shall be continued as Principal and he is given an option either to continue in the post of Principal or to revert to his original post.
We do not think that there could have been any valid necessity to continue those adhoc promotions made even after the Adhoc Rules, 1974 were framed within about three months of those promotions.
We think that there is no meaning in providing for the option in that rule as it is not likely that a person who has been promoted as Principal in the grade of Rs. 400 800 would voluntarily opt for reverting to his original post of Junior Lecturer in the grade of Rs. 200 15 320 20 500.
However, having regard to 574 the long lapse of time we do not think it desirable to declare those appointments as illegal.
In the result Civil Appeals 1652 to 1659 of 1978 are allowed as indicated above and Civil Appeal 415 of 1979 is dismissed.
The contesting respondents in Civil Appeals 1652 to 1659 of 1978 shall pay the costs of the appellants in those appeals.
Advocate 's fees one set.
The parties shall bear their respective costs in Civil Appeal 415 of 1979.
H.S.K. CA Nos.
1652 59 of 1978 allowed and CA No. 415 of 1979 dismissed.
| The petitioner in the Special Leave Petition was the holder of a Stage carriage permit on an inter State route He held several permits for operation of the said route and as the period prescribed for a few of them had expired, he applied for renewal under section 58 of the to the Regional Transport Authority which granted renewal.
In the meanwhile, the State Road Transport Corporation the 5th respondent made an application for grant of a stage carriage permit for operation on the said route.
This application was advertised and the matter was taken up for consideration.
During the pendency of this application the petitioner was granted temporary permits under section 62 which were renewed from time to time.
When the application of the petitioner for renewal of permits and the application of the State Road Transport Corporation for allotment of new permit were taken up for consideration, an objection was raised on behalf of the Corporation that as the route was an inter State route it was entitled to the permit in preference to the petitioner in view of section 47 (1 H).
On behalf of the petitioner it was contended that section 58 entitled the petitioner to renewal of permit in preference to the Corporation.
The Regional Transport Authority negatived the petitioner 's contention and allotted the permit to the Road Transport Corporation.
465 The petitioner in his writ petition to the High Court contended that section 47 (1 H) was constitutionally invalid and no preference could be granted in favour of the State Road Transport Corporation.
The Single Judge dismissed the writ petition and the Division Bench upheld the order.
In the Special Leave Petitions to this Court it was contended on behalf of the petitioners that the State Road Transport Corporation must either take recourse to the provisions contained in Chapter IV A of the Act, which makes special provisions relating to State Transport Undertaking or otherwise if it wants to compete without recourse to chapter IV A it must stand in competition with other applicants for allotment of stage carriage permits.
Any preference that the State Road Transport Corporation may enjoy in respect of an interstate route under sub section (1 H) is violative of Article 14 and the fundamental freedom to carry on trade under Article 19 (1) (g).
Section 58 entitled the petitioners to renewal of permit in preference to the application for grant of a new permit made by the State Transport Undertaking.
In the connected Special Leave Petitions, it was contended on behalf of the petitioner that Rule 155 A of the Tamilnadu Motor Vehicles Rules provides for a marking system under different heads to objectively assess who is the best suited for grant of the permit, and consequently an ad hoc assignment of marks and failure to weed out the application of the State Transport Corporation on the ground of disqualification for not providing night halt cleaners vitiated the decision of the Transport Authority.
Dismissing the Petitions.
^ HELD: 1.(i) Section 47 (1 H) would not deny equality before law and hence would not offend Article 14.
[474 E] (ii) The Regional Transport Authority under section 47 upon a judicious consideration of merits and demerits of every applicant must in a fair and reasonable manner decide who amongst the applicants would perform the duty and carry out the obligations under the permit.
However, sub section (1 H) carves out an exception, that where an application for stage carriage permit on an inter state route is made by a State Transport Undertaking it must be accorded preference.
But while granting preference, the Regional Transport Authority must satisfy itself that the Corporation would be able to operate on the inter state route without detriment to its responsibility for providing efficient and adequate road transport service.
[471 C D] Dosa Satyanarayanamurty etc.
vs The Andhra Pradesh State Road Transport Corporation [1961]1 S.C.R. 642 referred to.
(iii) While considering the application for stage carriage permit under section 47, the private operator has an equal chance to get a permit even on an inter State route if it shows that the Undertaking is either unable to provide efficient and economical service or that the private operator is better equipped to render the same.
Preference in this context would mean that other things 466 generally appearing to be qualitatively and quantitatively equal though not with mathematical accuracy, statutory provision will tilt the balance in favour of the Undertaking.
[474 D] (iv) Section 47 (1 H) provides that in the case of inter State route, the Undertaking will have preference in the matter of stage carriage permit.
The expression `preference ' amongst others, means prior right, advantage, precedence etc.
It signifies that other things being equal, one will have preference over the other.
[473 B] (v) When an application for the stage carriage permit is being processed as required by sec.
47, the application of the Undertaking for an inter State route shall be examined as an application of any other private operator.
Their merits and demerits must be ascertained keeping in view the requirements of clauses (a) to (f) of sec.
47 (1) and after comparing the merits and demerits of both the application of the Undertaking will have preference over others.
[473 C D] (vi) Qualitative and quantitative comparison on broad features of passenger transport facility such as fleet, facilities to travelling public and other relevant consideration may be undertaken and after balancing these factors other things being equal, the application of the Undertaking shall be given preference over other applicants.
There is no question of eliminating private operators merely because the Undertaking applies for a stage carriage permit under Chapter IV.
[473 E] (vii) In an application under Chapter IV, the Corporation has to enter the arena like any other applicant, face the competition and come up to the level of other Private operators intending to obtain stage carriage permits and then in respect of the route in question claim preference.
Competition is the essence of improved commercial Service.
[473 F] 2.
(i) There is no substance in the contention of the petitioner that sec.
47(1 H) is violative of article 19 (1) (g) in that it denies the fundamental freedom to carry on trade because the petitioner has not been denied his free dom to carry on trade.
The petitioner is entitled to make an application under Chapter IV for a stage carriage permit and must compete with other private operators as also the Undertaking.
[474 F] (ii) The Undertaking whose nett profits are required to be spent for the provision of amenities to the passengers using road transport services, welfare of labour employed by the Undertaking, for financing the expansion programmes of the Undertaking, and the balance to be made over to the State Government for the purpose of road development must receive in larger public interest preference for a permit compared to a private operator whose profits would go to argument his private income.
[475 A B] Lachhman Das vs State of Punjab & Ors.[1963] 2 S.C.R. 353; Mannalal & Anr.
vs Collector of Jhalawar and Ors. ; referred to.
467 3 (i) If an application for renewal of a permit was to be trated differently than the application for a permit made under section 45 and perocessed under section 47 and other connected provisions, it was absolutely unnecessary for the legislature to provide that an application for renewal of a permit shall be made and disposed of as if it were an application for a fresh permit.
[476 E] (ii) The expression "as if" occurring in Section 58 (2) in the phrase "as if it were an application for a permit . " would mean and imply that the application for renewal must be made in the same manner and to the same extent as an application for a fresh permit and must be processed as such.
This means that even where an existing permit holder applies for renewal, it has to be advertised and fresh applicants can apply for a permit.
[476F] (iii) Section 47 (1 H) would also came into play when an application is for renewal of a permit on an inter State route.
There is no conflict between Section 47 (1 H) and Section 58 (2).
[476 G] 4.
Once the assignment of 5 marks to the State Transport Undertaking, is held to be valid the Transport Authority was perfectly justified in refusing renewal of permits to the petitioners.
Regarding failure to explain absence of nighthalt cleaners, in the absence of concrete evidence, no inference can be drawn.
[478 G H] D.R. Venkatachalam & Ors.
vs Dy Transport Commissioner
|
Appeals Nos. 10 and 10 A of 1952.
Appeal from the Judgment and Order dated 11th January, 1950, of the High Court of Judicature at Madras in Cases Referred Nos. 80 of 1946 and 38 of 1948.
M. C. Setalvad, Attorney General for India, (G. N. Joshi and P. A. Mehta, with him) for the appellant.
section Krishnamachariar for the respondent.
465 1952.
December22.
The Judgment of the Court was delivered by DAS J.
These two consolidated appeals are directed against the Judgment and order made on January 11, 1950) by the High Court of Judicature at Madras in References No. 80 of 1946 and No. 38 of 1948 under section 66 of the Indian Income tax Act whereby the High Court relying on its earlier decision in Commissioner of Income tax, Madras vs B. Rm.
M. Sm.
Sevugan alias Manickavasagam Chettiar(1) held that the references were incompetent and accordingly refused to answer the questions raised therein.
The facts are shortly as follows.
The respondent who is a Nattukotai Chettiar had, his headquarters at Karaikudi in India and also carried on his money lending business at branches at Maubin, Kualalumpur and Singapore.
He also had income from properties at Maubin and Singapore.
For the assessment year 1941 42 the Income tax Officer calculated the assessee 's accrued foreign income as Rs. 29,403 at Maubin, Rs. 27,731 at Kualalumpur and Rs. 34,584 at Singapore, in all Rs. 91,718.
After deducting out of this amount Rs. 4,500 allowed under the 3rd proviso to section 4 (1) of the Act, the Income tax Officer computed the total assessable foreign income at Rs. 87,218.
Out of the total remittances of Rs. 84,352 the Income tax Officer allocated Rs. 7,900 to the accrued income of Maubin and Rs. 62,315 to those of Kualalumpur and Singapore and the balance of Rs. 14,137 to the taxed income of earlier years.
The Income tax Officer disallowed the claim of the assessee to deductions under several heads.
On the basis of the total foreign income of Rs. 67,218 and income from ' other sources the Incometax Officer calculated Rs. 23,266 8 0 to be due by the assessee on account of income tax, super tax and surcharges thereon and by his assessment order dated January 31, 1942, made this amount payable on or before February 25, 1942.
The assessee preferred an (1) [1948] 16 I.T.R. 59; ; A.I.R. 1948 Mad, 418 466 appeal to the Appellate Assistant Commsioner against the disallowance of the several items of his claim including the claim for replantation expenses amounting to$498incurred at Kualalumpur and a bad debt of $ 15,472 at Singapore.
The Appellate Assistant Commissioner by his order dated May 25, 1942, allowed some of the several objections but disallowed the items of replantation expenses and ba` debt and reduced the assessment to Rs. 22,548.
The assessee took further appeal before the appellate Tribunal against the disallowance of the several claims by the Appellate Assistant Commissioner including the two items mentioned above.
The Appellate Tribunal by its order dated August 20, 1943, held that the replantation expenses "will be allowed to the appellant as expenses.
" As regards the bad debt the Tribunal held that it was permissible and that "the deduction claimed will, therefore, be allowed.
" The result was that the appeal was partly allowed.
The matter came back before the Income tax Officer on September 26, 1945.
Deducting Rs. 778 on account of replantation expenses the Kualalumpur income was reduced to Rs. 26,953 and after deducting Rs. 24,175 on account of the bad debt the Singapore income came down to Rs. 10,409.
These two reduced amounts together with Rs. 29,403 being the income 'from Maubin made up the total accrued income of Rs. 66,765.
Out of this amount Rs. 4,500 was deducted on account of unremitted profits of Maubin under the 3rd proviso to section 4(1) of the Act, leaving a balance of Rs. 62,265.
Out of the remittances the Income tax Officer allocated Rs. 7,000 towards the accrued income of Rs. 29,403 from Maubin and Rs. 37,362 against the totarl accrued income of Kualalumpur and Singapore.
He also allocated Rs. 24,549 as remittances out of assessed profits of previous years, leaving a balance of Rs. 13,541.
This amount the Income tax Officer considered as remittances out of earlier years ' unassessed income and held it to be asses. able to tax.
After adding Rs. 13,541 to Rs. 62,265 being the net accrued income of the year 467 from Maubin, Kualalumpur and Singapore, the Income tax Officer arrived at the total foreign income of Rs. 75,806.
On the basis of this foreign income together with other income the Income tax Officer.
recalculated the amount of income tax, super tax and surcharges thereon at Rs. 22,802 6 0 and after giving credit for certain amounts, found Rs. 21,211 14 0 as the balance due which by his order dated September 26, 1945, was made payable in equal moiety on or before September 30, 1947, and March 31, 1948.
He, however, did not issue any notice of demand under section 29 of the Act.
Being aggrieved by the inclusion of Rs. 13,541 as the alleged unassessed foreign income of earlier years remitted to India during the year of account the assessee preferred an appeal before the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner was not satisfied that the assessee had any right of appeal under section 30 of the Act for there had been no assessment under section 23 and no notice of demand had been served on the assessee under section 29 of the Act.
Accordingly the Appellate Assistant Commissioner by his order dated November 19, 1945, declined to admit the appeal.
He, however, expressed the view that the assessee 's remedy might lie in a miscellaneous application to the Tribunal complaining that the Income tax Officer had either misconstrued or had not given effect to the order of the Appellate Tribunal.
The assessee then brought a miscellaneous application to the Appellate Tribunal.
The Appellate Tribunal held that the.
finding of the Income tax Officer that the sum of Rs. 13,541 was to be assessed as untaxed profits of earlier years remitted to India in the accounting year did not arise in the course of giving effect to the Appellate Tribunal 's order and by its order dated February 20, 1946, cancelled that finding and directed the Income tax Officer to revise the computation accordingly.
The last mentioned order having been served on the Commissioner of Income tax, Madras, on March 8, 468 1946, the latter on May 1, 1946, made an application before the Appellate Tribunal under section 66(1) of the Act and prayed that three questions formulated by him in his petition should be referred to the High court.
The contention was that the Appellate Tribunal had no jurisdiction in law to entertain, consider and pass the order which it did on the miscellaneous application seeing that it was neither an appeal under section 33 of the Income tax Act nor could it be regarded as a rectification under section 35 of any mistake committed by the Bench.
The Appellate Tribunal took the view that although no specific provision was made in the Act by which it could give effect to its order or explain any ambiguity in such an order by a later order in any miscellaneous application filed by any party, such power, nevertheless ', was inherent in" the Tribunal.
The Tribunal accordingly thought that a point of law did arise and on August 23, 1946, referred the following question to the High Court, namely: "Whether in the facts and circumstances of this case the order of the Bench dated 20th February, 1946, in the miscellaneous application is an appropriate order and is legally valid and passed within the jurisdiction and binding on the Income tax Officer.
" The Tribunal declined to refer the other questions formulated by the Commissioner.
This reference came to be numbered as Case Referred No. 80 of 1946.
It appears that pursuant to an order made by the High Court on March 30,1948, on the application of the Commissioner of Income tax under section 66 (2) of the Act the Tribunal referred the following question to the High Court: " If the answer to the question already referred to the High Court by the order of the Appellate Tribunal dated 23rd August, 1946, is in the affirmative,, whether, in the circumstances and on the facts of the case, the recomputation made by the Income tax Officer pursuant to the decision of the Appellate 469 Tribunal in R.A.A. No. 53 (Madras) of 1942 43 was valid and correct." The Appellate Tribunal made this further reference on July 19, 1948, which came to be numbered as Case Referred No. 38 of 1948.
The two referred cases came up for consideration before a Bench of the Madras High Court and it was held that the reference under section 66(1) was incompetent in view of the earlier decision of that Court mentioned above which they felt to be binding on them and accordingly the Bench declined to answer the questions.
The Commissioner of Incometax thereafter applied for and obtained leave to appeal to this Court from the decisions in both the references and obtained such leave on his undertaking to pay the costs of the assessee in any event.
The two appeals were thereafter consolidated and have come up before us for final disposal.
Section 66 A (2) gives to the aggrieved party a right of appeal to this Court from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to this Court.
Section 66, (5) provides that the High Court upon the hearing of any such case referred to it under section 66(1) and (2) shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded.
During the opening of the case by the learned Attorney General a question arose as to whether the simple refusal of the High Court to bear the case on the ground that the reference was incompetent was a decision and judgment such as is contemplated by section 66(5) of the Act from which alone a right of appeal to this Court is given.
While maintaining that the decision and judgment of the Madras High Court fell within the meaning of section 66(5) the learned Attorney General for greater safety asked that the appeal may be treated as one on special leave granted by this Court under article 136 of the Constitution.
The learned Advocate appearing for the 470 assessee respondent did not object to this prayer and accordingly we gave leave to the appellant under article 136 and treated this appeal as one filed pursuant to such leave.
In the circumstances it is not necessary for us to express any opinion on the appealability of the order of the High Court under section 66 A of the Act.
The learned Attorney General contends that the decision relied on by the High Court has no application to the facts of the present case.
In that case the Tribunal by its order dated July 11, 1944, allowed an appeal from the Appellate Assistant Commissioner and cancelled the assessment which it held to be illegal.
This order was served on the Commissioner shortly thereafter.
On October 5, 1944, an application was made to the Tribunal by the Income tax Officer under section 35 to correct a statement contained in the statement of facts in the order.
More than 60 days after the date of the service on him of the order of July 11, 1944, to wit on October 7, 1944, the Commissioner made an application under section 66 (1) of the Act requiring the Tribunal to refer to the High Court the question as to the correctness of its decision embodied in the order of July 11, 1944.
Both the applications were disposed of on the same day, namely, January 17, 1945, when the application for rectification was granted and a case was stated for the opinion of the Court as prayed.
Section 66 (1) requires the application to be made within 60 days of the date on which the applicant is served with notice of an order under sub section (4) of section 33.
It was held that the granting of an application for rectification under section 35 and correcting the error in the order was not an order under section 33 (4) and, therefore, was not one in respect of which section 66 (1) permitted a case to be stated.
It was further held that if the Appellate Tribunal improperly or incorrectly made a reference in violation of the provisions of the statute, the High Court was capable of entertaining an objection to the statement of the case and that, if it camp to the 471 conclusion that the case should not have been stated, the High Court was not compelled to express an opinion upon the question referred.
in the case before us there is no question that the present application was not made within time, but the contention is that section 66 (1) only contemplates an application for a reference of a question of law arising out of " such order" which clearly means an order made under section 33 (4), _and, therefore, if there is no valid order under that section no question of law can be said to arise out of "such order" and consequently the Appellate Tribunal can have on jurisdiction to make any reference to the High Court under section 66(1).
Section 66 (2) provides that if on any application being made under sub section (1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner may, within the time specified therein, apply to the High Court and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it.
The jurisdiction given to the High Court under this sub section is conditional on an application under sub section (1) being refused by the Appellate Tribunal.
This clearly presupposes that the application under sub section (1) was otherwise a valid application.
If, therefore, an application under sub section (1) was not well founded in that there was no order which could properly be said to be an order under sub section (4) of section 33 then the refusal of the Appellate Tribunal to state a case on such misconceived application on the ground that no question of law arises will not authorise the High Court, on an application under sub section (2) of section 66, to direct the Tribunal to state a case.
The jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The only question for our consideration, therefore, is whether in this case any question 472 of law arose out of an order which can properly be said to have been made by the Appellate Tribunal under sub section (4) of section 33, for if it did not, then the Appellate Tribunal would have no jurisdiction under sub section (1) of section 66 to refer a case, nor would the High Court have jurisdiction under sub section (2) of that section to direct the Tribunal to do so.
It was at one stage suggested by the learned AttorneyGeneral that we should in the first instance remit the matter to the High Court for their decision on this question but as the question is one of law depending on the construction of the relevant sections of the Act it will save time if it is decided by us here and now.
It is not disputed that we have the power, on the hearing of this appeal, to decide this question.
It will be recalled that when on 19th November, 1945, the Appellate Assistant Commissioner declined to admit the appeal, the assessee did not prefer any appeal but only made a miscellaneous application before the Appellate Tribunal.
There is no provision in the Act permitting such an application.
Indeed, in the statement of the case the Appellate Tribunal states that in entertaining that application and correcting theerror of the Income tax Officer it acted in exercise ofwhat it regarded as its inherent powers.
There being no appeal under section 33 (1) and the order having been made in exercise of its supposed inherent jurisdiction.
, the order cannot possibly be regarded as one under section 33 (4) and there being no order under section 33 (4) there could be no reference under section 66 (1) or (2) and the appellate Court properly refused to entertain it.
The learned Attorney General submits that this Court should not take such a narrow and technical view but should treat that miscellaneous application as really an appeal under section 33.
Turning now to section 33 we find that any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 28 or section 31 may appeal to the Appellate Tribunal within the time specified in 478 sub section (1) which time, however, may be extended by the Tribunal under sub section (2A).
Under sub section (4) the Appellate Tribunal is given power, after giving both parties to.
the appeal an opportunity to be heard, to pass such order thereon as it thinks fit.
It is thus clear that the Appellate Tribunal can make an order under section 33 (4) only on an appeal from an order passed by the Appellate Assistant Commissioner under section 28 or section 31.
If, therefore, there is no order which may properly be said to have been made by the Appellate Assistant Commissioner under section 28 or section 31 then there can be no appeal under section 33 (1) and consequently there can be no order under section 33 (4).
Section 28 is not relevant for our present purpose.
Section 30 provides for filing of appeals against assessments made under the Act.
Sub section (1) of that section prescribes the different decisions against which an appeal will lie.
Sub section (2) prescribes the time within which the appeal is to be filed.
Subsection (3) prescribes the form in which the appeal is to be made.
Then comes section 31 which gives power to the Appellate Assistant Commissioner to hear and dispose of such appeal.
Sub section (3) of section 31 empowers the Appellate Assistant Commissioner in disposing of an appeal under section 30 to make one or other order under one or other of the several clauses of that ' sub section.
It is, therefore, clear that in order that the Appellate Assistant Commissioner may exercise his jurisdiction and make an order under section 3 1, there must be an appeal as contemplated by section 30.
The learned AttorneyGeneral only relies on the opening part of sub section (1) of section 30 and contends that the appeal before the Appellate Assistant Commissioner was with respect to the amount of income assessed under section 23 or section 27.
It will be recalled that the Appellate Tribunal held that the two sums claimed by the assessee would be allowed to him and concluded by saying that the appeal was partly allowed.
The power of the Appellate Tribunal under section 33(4) 474 is indeed wide, for on an appeal properly before it, it can make such order as it thinks fit.
Therefore, it be order made by the Appellate Tribunal in this case on August 20, 1943, must be read and construed as a direction to the Income tax Officer to carry out the directions by allowing the two deductions in question.
When the matter again came before the Income tax Officer his function was only to carry out the order of the Appellate Tribunal.
He could not otherwise reopen the assessment already made by him under section 23.
Therefore, in carrying out the directions of the Tribunal and in doing what be aid on September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and that being the position no appeal lay from that order of the Income tax Officer under section 30 (1) of the Act, I The result of it was that there was no proper appeal before the Appellate Assistant Commissioner such as is contemplated by section 30 (1) and, therefore, the order made by the Appellate Assistant Commissioner cannot be regarded as an order made by him under section 31 (3), for an order under section 31 (3) can only be made in disposing of an appeal properly ' filed under section 30, and consequently no further appeal lay to the Appellate Tribunal under section, 33 (1) so as to enable the Appellate Tribunal to make an order under sub section (4) of that section.
In the premises, there being no order which may properly be said to have been made under section 33 (4), no question of law can be said to arise out of an order made under section 33 (4) and consequently there can be no valid reference under section 66, subsection (1) or sub section (2).
If, therefore, the reference was incompetent for want of jurisdiction both under section 66 (1) or section 66 (2) surely the High Court could decline to entertain it as it did.
Even if the order dated September 26, 1945, made by the Income tax Officer after the matter came back to him to give effect to the decisions of the Appellate Tribunal be regarded as an order made by him under 475 section 23 or section 27 and as such appealable under section 30 (1) then the order made by the Appellate Assistant Commissioner on November 19, 1946, declining to admit the appeal clearly amounted to a refusal on his part to exercise the jurisdiction vested in him by law.
An order thus founded on an error as to his jurisdiction way conceivably be corrected by appropriate proceedings but it cannot certainly be regarded as such an order as is contem plated by any of the sub sections of section 31.
Such an order not coming within the purview of section 28 or section 31, no, appeal lay therefrom to the Appellate Tribunal under section 33 (1) and if no such appeal properly came before the Appellate Tribunal it could not properly make an order under section 33 (4) and if there was no order under section 33 (4) there could be no reference under section 66, sub section (1) or sub section (2).
It follows, therefore, that the order of the Appellate Tribunal correcting the order of the Income tax Officer directing that the sum of Rs. 13,541 should not be included in the assessment cannot be regarded as an order passed by the Appellate Tribunal under section 33 (4) so as to attract the operation of section 66.
The learned Attorney General urged that having under section 66 (2) of the Act directed the Appellate Tribunal to state a case the High Court could not afterwards refuse to answer the question thus referred to it.
Whether the High Court was so precluded or not requires no decision on this occa sion, for even conceding but ;not deciding that the High Court was so precluded, this Court, at any rate, can surely entertain the question of the competency of the reference.
The result, therefore, is that we dismiss these appeals with costs.
Appeals dismissed.
| The evidence on record did not establish the custom which had been pleaded, namely that among the community of dasis 940 (dancing girls) in South India a dasi daughter succeeded to her mother in preference to the married daughters; and in the absence of such custom, succession to a dasi must be governed by the rule of propinquity of Hindu law as a rule of justice, equity and good conscience and dasi daughters and married daughters would succeed to their mother 's property in equal shares.
A rule that degraded relations are preferential heirs to undegraded ones cannot be evolved merely on logical grounds the existence of such a rule can only be justified on the basis of established custom.
Custom cannot be extended by analogy.
It must be establish ed inductively, not deductively, and it cannot be established by a priori methods.
It cannot be a matter of mere theory but must always be a matter of fact and one custom cannot be deduced from another.
Shanmugathammal vs Gomathi Ammal , distin guished.
Narasanna vs Gangu (I.L.R. , Subbaratna Madali vs Balakrishna Naidu (33 M.L.J. 207), Subbaraya Pillai vs Ramaswami Pillai (I.L.R. , Balasundaram V. Kamakshi Ammal , and Abdul Husein Khan vs Soma Dero (I.L.R. P.C.) referred to.
The rule of Hindu law by which a maiden is a preferential heir to her married sisters does not apply to daughters who are admittedly married to an idol and lead a life of prostitution.
Tara vs Krishna (I.L.R. referred to.
|
ition No. 84 of 1975.
Petition under article 32 of the Constitution of India.
A. k. Sell, D. N. Mukherjee, Narayan Gupta and C. section Chatterjee, for the petitioner.
Girish Chandra, for respondent No. 1.
D.P. Uniyal and O. P. Rana, for respondent nos.
The Judgment of the Court was delivered by FAZAL ALI, J.
By an order dated November 8, 1974 passed by the District Magistrate, Badaun, the petitioner was detained under section 3(1)(a)(iii) of the hereinafter referred to as 'the Act ' because the allegations made in the grounds of detention disclosed that he had committed acts prejudicial to the maintenance of supplies and services essential to the community.
The grounds of the order of detention were served on the petitioner by the District Magistrate, Badaun, on November 13, 1974.
The State Government approved the order of detention on 18 November 19, 1974 and made a report to the Government of India on November 22, 1974.
According to the respondents, the Government of U.P. had made a reference to the Advisory Board constituted under the Act on November 22, 1974 but as it had not received The representation from the petitioner, the same was forwarded later.
The representation, according to the respondents, was received on November 28, 1974 which was rejected on December 6, 1974.
The representation was sent to the Advisory Board on December 18" 1974 which gave 13 its report holding that the grounds were sufficient for detention of the petitioner and after receipt of the opinion of the Advisory Board on January 7, 1975 the order of detention was finally confirmed by the Government on January 17, 1975.
We might mention at the very outset that there was some controversy on two points before us.
In the first place the petitioner did not accept the stand of the Government that the reference to the Advisory Board was made on November 22, 1974 but relied on a counter affidavit filed by Mr. section K. D. Mathur, the then District Magistrate of Badaun, in this Court to support his plea that the reference to the Advisory Board was made on December 20, 1974 vide paragraph 2(vi) of the counter affidavit appearing at p. 118 the Paper Book.
It was therefore contended by the learned counsel for the petitioner that as the reference was made to the Advisory Board beyond the period mentioned in section 10 of the Act, there being a violation of the mandatory provision of the statute, the order of detention fell on this ground alone.
We gave an opportunity to the Government to produce before us materials to show the exact position and from the original file produced before us we find that the counter affidavit filed by Mr. section K. D. Mathur in this court to the effect that the reference was made to the Advisory Board on December 20, 1974 was factually incorrect and that the reference was really made on November 22, 1974 by the Government by virtue of letter No. 107/2/48/74.
The file also contains a letter of the Registrar dated January 7, 1975 forwarding the opinion of the Advisory Board wherein also it was mentioned that the reference was made on November 22, 1974.
In view of these cogent materials Mr. Sen learned counsel for the petitioner did not choose to press this point.
We cannot, however.
Leave this matter without expressing our strong disapprobation on the careless and irresponsible manner in which the counter affidavit has been filed by the respondents, particularly by Mr. section K. D. Mathur who happened to be the then District Magistrate, Badaun.
We hope the Government will be careful in future and see that such incorrect affidavit are not filed before this Court, which may create unnecessary confusion and controversy and make a simple issue so very much involved.
The petitioner was admittedly a partner of the firm called Bharat Oil Company which was dealing in the storage and sale of high speed diesel oil since 1965.
According to the petitioner the business was started at Badaun and Ujhani but later a branch was opened at Bareilly and the firm transferred its headquarters to Bareilly in 1971.
We are not, however, concerned with the business at 19 Bareilly in this case.
Under the , the petitioner could have carried on his business only after obtaining a licence from the prescribed authority.
The District Authorities could grant licence only to the extent of 22,000 liters but if the dealer wanted to store high diesel oil to the extent of more than 22,000 litres he had to get a licence from the Chief Controller of Explosives, Nagpur.
The petitioner 's further case is that as high speed diesel oil ran in short supply, the Indian oil Corporation and the District authorities impressed on the dealers the necessity of keeping light diesel oil which was available in sufficient quantities and was necessary for running, crushers and pumps in the rural areas.
The petitioner had undoubtedly secured a licence for storage of li ht diesel oil which was valid upto March 31, 1975 and had applied for renewal of the licence thereafter and had also complied with all the necessary formalities about no objection and the safety certificate to be given by the District Authorities.
But on the date in question the licence of the petitioner had not been renewed so far.
We might intention in this connection that the stand taken by the respondents is that although the petitioner had a licence to stole light diesel oil to the extent of 22,000 litres he did not possess any licence for storing it at Ujhani.
It appears that the godown of the petitioner was searched by the excise authorities on October 17, 1974 and November 5, 1974 and in inspection of the godown about 1.64 lakhs litres of light diesel oil was found stored it Ujhani.
The stock register was produced by the petitioner before the authorities which appeared to be in order and there is no allegation that there was any manipulation or interpolation in the stock register Thus the simple allegation against the petitioner is that he had stocked huge quantity of light diesel oil without waiting for the licence to be cleared by the Chief Controller of Explosives at Nagpur This forms the subject matter of the allegations mentioned in grounds (1)(a) & (b) of the grounds of detention served on the petitioner.
The sheet anchor of the argument of Mr. Sen learned counsel for the petitioner was that in so far as ground No (1) was concerned it was wholly irrelevant and totally unconnected with the nexus of the Act, because even if the grounds be taken at their face value they did not disrupt or disturb the essential supplies to the community.
Before dealing with this contention it may be necessary to quote in extenso the grounds mentioned in (1)(a) & (b) of the detention order: "(1) That you a partner in the firm named Bharat oil Company, Mohalla Ayodhya Nagar, Ujhani District Badaun, on Bareilly Mathura Road, authorised only to deal in High Speed Diesel and Motor Spirit were found hoarding Light Diesel oil, without having obtained a licence for the same from the Chief controller of Explosives, Nagpur as is evident from the following: (a) On 17 10 74 at about 4 P.M. the premises of your aforesaid firm was inspected by Sri section N. Pandey, District Excise officer, Badaun and it was found that in the underground tanks within the premises mentioned aforesaid 96,000 litres of Light 20 Diesel oil was stored, for which no licence could be produced on demand by the District Excise officer aforesaid and thereafter a complaint has also been lodged in the court of the Chief Judicial Magistrate, Badaun by the District Excise officer on 8 11 74 (b) On 5 11 74 the premises of your aforesaid firm Bharat oil Company, Ujhani, was again inspected at about 4.15 P.M. by Sri N. N. Verma S.D.M. Badaun accompanied by District Excise officer Badaun and Sri Fateh Singh, Dy.
S.P. Badaun and it was found that 68,000) litres of Light Diesel oil had during 7th October 1974 to the time of this inspection been added to the store kept by you of the said Light Diesel oil of 96,000 litres, in three underground tanks within the premises mentioned aforesaid and no licence could be produced on demand by the S.D.M. Badaun.
For this also, a complaint has been lodged by the S.D.M. Badaun in the Court of Judicial Magistrate II Badaun on 8 11 74.
" Analysing these grounds it would appear that there is no allegation by the detaining authority that by storing the huge quantity of light diesel oil the petitioner had in any way affected the distribution or sale of that commodity, nor is there any allegation to show that the petition had refused to sell light diesel oil to any body who required it.
The High Court which was moved in the first instance for a writ of habeas corpus, appears to have drawn an inference based purely on speculation that the petitioner had transferred huge quantities of light diesel oil from his depot at Badaun to his godown at Ujhani.
There is, however, no material on the basis of which the High Court could have drawn such an inference.
There is, however, no suggestion.
far less any allegation, in these grounds that the petitioner had tried to divert his stocks of light diesel oil from Badaun to Ujhani and thereby deprived the people of Badaun of their share of the light diesel oil.
In these circumstances, therefore, we arc satisfied that there is absolutely no correlation between the act of the petitioner and the disruption of distribution of the essential supplies to the community.
The learned counsel appearing for the respondents submitted that by storing such huge quantities of light diesel oil in Ujhani the petitioner has committed a clear violation of the mandatory provisions of the and the Rules made thereunder and must be presumed to have disrupted the essential supplies because light diesel oil had been declared by the order of the Government of U.P. to be an essential commodity.
We are, however, unable to agree with this argument.
Mr. Sen appearing for the petitioner does not dispute that the light diesel oil was an essential commodity, but his argument was that he has in no way tried to disrupt the essential supplies of this commodity and he merely committed a technical offence in storing the quantities of light diesel oil in anticipation of the licence which had been cleared by the District Authorities and which awaited the 21 sanction of the Chief Controller of Explosives, Nagpur and which would have in normal routine been granted.
It is also admitted in the ground itself that a complaint had been lodged in the Court of the Chief Judicial Magistrate against the petitioner for the storage.
We have already held in several cases that the commission of an offence at a private place or a violation of a provision of law by itself does not attract the Act unless by the act committed by the petitioner the essential supplies to the community are disrupted or even flow of the life of the community is disrupted.
Reading grounds (1)(a) & (b) we are unable to hold that they are in any way germane or relevant to the disruption of maintenance of essential supplies to the community.
In Manu Bhusan Roy Prodhan vs State of West Bengal and others(1) this Court observed as follows: "This kind of a solitary assault on one individual, which may well be equated with an ordinary murder which is not an uncommon occurrence, can hardly be said to disturb public peace or place public order in jeopardy, so as to bring the case within the purview of the Act.
It can only raise a law and order problem and no more; its impact on the society as a whole cannot be considered to be so extensive, widespread and forceful as to disturb the normal life of the community thereby rudely shaking the balanced tempo of the orderly life of the general public.
This ground is, therefore, not at all relevant for sustaining the order of detention for preventing the petitioner from acting in a manner prejudicial to the maintenance of public order.
The ratio of this case fully tallies with the facts of the present case where also grounds (1) (a) & (b) taken at their face value appear to be irrelevant and do not disclose any causal connection with the disruption of the essential supplies to the community.
We now take up the other ground, namely, ground No. (2), which is as follows: "(2) That you as partner of the firm M/s Bharat oil Company located at Badaun licensed at Badaun to deal with Light Diesel oil and required by rule 9(1) of the U.P. Essential Commodities (Price Display and Control of Supply and Distribution) order, 1971.
as amended by Second Amendment dated ' June 13, 1973 framed under Rule 114(2) of the Defence of India Rules, 1971 to issue every purchaser a correct receipt showing, inter alia, the name and address of the customer were found to have sold Light Diesel Oil repeatedly without complying with the said requirement and with the object make fictitious sale of the 22 Light Diesel Oil a scheduled commodity within the meaning of the said order, as is evident from the following: (i) Cash memo No. 62 dated 8 8 74 | | (ii) Cash memo no, 63 dated 14 8 74 | | (iii)Cash memo no 134 dated 7 10 74 | Name and address | of the customer (iv) Cash memo no, 135 dated 7 10 74| not given" | (v) Cash memo No. 145 dated 7 11 74| | (vi) Cash memo No. 146 dated 7 11 74| This ground no doubt discloses a clear overt act on the part of the petitioner from which an inference can be drawn that the petitioner had made a number of fictitious sales.
The details of the cash memos by which the sales had been made have also been given but the cash memos do not disclose the names and addresses of the customers, as required by the rules.
The petitioner has himself admitted in paragraph 13 of his petition filed in this Court that there had been a violation of the U.P. Sale of Motor Spirit Taxation Act and the Rules made thereunder but he sought to explain the omission on the ground that it was due to the mistake of the Munim and the quantities alleged to have been sold were actually purchased by the petitioner himself for the use of the pumps in his own agricultural farm.
This explanation does not appear to be convincing at all.
From the file produced before us by the respondents it appears that the total amount of sale of light diesel oil under these cash memos mentioned in the ground comes to 21 ,000 litres.
We find it impossible to believe that the petitioner would consume such huge quantity of light diesel oil for his personal agricultural farms particularly when the petitioner had given no details of the number of farms and other machines for which this oil was said to be used.
In these circumstances there can be no doubt that these were fictitious sales made by the petitioner with a view to hoard light diesel oil and by his conduct the persons who were in genuine need of light diesel oil were deprived of the same.
Ground No. (2), therefore is quite specific, but the difficulty is that in view of our finding that ground No. (1) is irrelevant it is not possible to determine as to what extent the subjective satisfaction of the detaining authority was influenced or affected by Ground No. (1) which has been found by us to be extraneous and irrelevant.
It has been held by us in several cases that where out of two grounds one ground is vague or irrelevant, then the entire order of detention falls to the ground.
In this view of the matter the order of detention suffers from this serious infirmity and must be quashed.
Secondly it was argued by the learned counsel for the petitioner that on the materials produced before us the subjective satisfaction of the detaining authority has also not been established.
To begin with it is not clear at all as to who passed the order of detention and who was satisfied regarding the sufficiency of the grounds.
In the second place the grounds appear to have been served by Mr. R. C. Arora the permanent District Magistrate of Badaun who has also signed the same which shows that he was the detaining 23 authority also.
On a consideration of these two points we are of the opinion that the contention of the learned counsel for the petitioner is well founded and must prevail.
Coming to the first point we find that Mr. section K. D. Mathur has clearly alleged in his counter affidavit that Mr. R. C. Arora the permanent District Magistrate of Badaun had proceeded on leave from October 21, 1974 to November 11, 1974 and during his absence the deponent section K. D. Mathur was acting as the District Magistrate of Badaun.
It is further stated in the affidavit that Mr. R. C. Arora rejoined his duty in November 12, 1974 and took charge of his office.
The order of detention, however, appears to have been passed while Mr. section K. D. Mathur was officiating as District Magistrate of Badaun and Mr. Mathur makes no secret of the fact that the order of detention was passed by him after being satisfied of the grounds of detention.
In the counter affidavit submitted by Mr. section K. D. Mathur before the High Court, which is Annexure at p. 66 of the Paper Book Mr. Mathur categorically stated that he himself had passed the detention order after recording his satisfaction.
In this connection paragraph 1 of the counter affidavit before the High Court is as follows: That the deponent was District Magistrate, Badaun on 8 11 1974, and he has passed the detention order against the petitioner after being fully satisfied that the petitioner was acting in a manner prejudicial to the maintenance of supplies and services essential to the community and as such he is well acquainted with the facts deposed to below.
" This allegation is reiterated and over emphasised in paragraph 23 of the same affidavit wherein Mr. Mathur makes a categorical averment which is as follows: ". the deponent submits that in his capacity as the District Magistrate he was fully competent to make the impugned order of detention.
The deponent further submits that on the basis of the evidence and the material placed be before him, to which he has referred above he was personally and fully satisfied as to the existence of sufficient basis to make the impugned order with a view to prevent the petitioner from indulging in activities prejudicial to the maintenance of essential services and supplies.
" In this very affidavit Mr. Mathur goes on to state that he had also farmed draft of the grounds on November 8, 1974 and that Shri R. C. Arora who took over on November 12, 1974 served these grounds on the petitioner which were drawn by the deponent Mr. section K. D. Mathur.
In this connection the averment runs as follows: "Sri R. C. Arora took over charge on November 12, 1974 and under his signature Sri Arora served these same grounds which the deponent had earlier drawn upon the petitioner.
" According to the clear and categorical averments made by Mr, section K. D. Mathur in his affidavit before the High Court the only role which was 24 assigned to Mr. R. C. Arora the permanent District Magistrate was A that he signed the grounds and served them on the detenu.
In other words, according to Mr. section K. D. Mathur, Mr. R. C. Arora was merely the serving officer and did not perform any other function in so far as the order of detention passed against the petitioner was concerned and yet this officer is imprudent enough to allege in paragraph 25 of the counter affidavit filed in this Court that the order of detention was passed not only by him but by the two detaining authorities, namely Mr. R. C. Arora and Mr. section K. D. Mathur.
In this connection Mr. Mathur averred as follows.
"That the order of detention was passed by the detaining authorities after they had fully satisfied themselves about the existence of the grounds.
" It would thus appear from this averment that the order of detention was not passed by one single person but by more than one person and taking the facts mentioned by the deponent it would appear that the order of detention appears to have been passed in two stages in he first instance by Mr. section K. D. Mathur who was full fledged District Magistrate on November 8, 1974 when the order of detention was passed, but who according to his own statement had first prepared a draft of the grounds.
The order of detention was then signed by Mr. R. C. Arora on November 13, 1974 and served on the detenu.
While Mr. section K. D. Mathur took the clearest possible stand before the High Court that he alone had made the order of detention and he alone was satisfied about the sufficiency of the grounds, but in his affidavit before this Court he seems to suggest that there were two detaining authorities both of whom were satisfied.
This shows the casual and cavalier manner in which the order of detention against the petitioner appears to have been passed in this case.
Even if the order had been made by Mr. section K. D. Mathur and signed, by him, there could have been no objection in Mr. R. C. Arora serving the grounds on the petitioner, because the law does not require that the person who actually signs the order or the grounds must also serve the same on the detenu.
But in this case it is not possible to determine as to who in fact made the order of detention.
F It is true that the Court cannot go behind the subjective satisfaction of the detaining authority, but such satisfaction does not confer a blanket power which may authorise the detaining authority to act in a ruthless or arbitrary fashion and the judicial decisions have undoubtedly carved out an area, though limited.
within which the subjective satisfaction of the detaining authority can be tested on the touchstone of objectivity.
It is obvious that the subjective satisfaction of the detaining authority is a sine qua non for the exercise of power of detention and it has got to be exercised properly and discreetly.
In Khudiram Das vs The State of West Bengal and others(1) this Court made the following observations: "The basic postulate on which the courts have proceeded is that the subjective satisfaction being a condition precedent for the exercise of the power conferred on the executive, the 25 court can always examine whether the requisite satisfaction is arrived at by the authority; if it is not, the condition precedent dent to the exercise of the power would not be fulfilled and the exercise of the power would be bad." In the instant case, in view of the contradictory stand taken by the detaining authorities, we are satisfied that the exercise of jurisdiction to detain the petitioner has not been made with due care and caution or in a proper and fair manner.
On this ground also the order of detention stands vitiated.
Section 3(1) of the Act runs.
thus: "3.
(1) The Central Government or the State Government may, (a) if satisfied with respect to any person (including a foreigner) that with a view to preventing him from acting in any manner prejudicial to (i) the defence of India, the relation of India with foreign powers, or the security of India, or (ii) the security of the State or the maintenance of public order, or (iii)the maintenance of supplies and services essential to the community, or (b) if satisfied with respect to any foreigner that with a view to regulating his continued presence in India or with a view to making arrangements for his expulsion from India; It is necessary so to do, make an order directing that such person be detained.
" This power can also be exercised by the officers mentioned in sub section
(2), and in the instant case we are concerned with the District Magistrate.
The words "make an order directing that such person be detained " clearly postulate three conditions (1) that the order must be made by the authority mentioned in section 3; (ii) the order must be duly signed by the said authority; and (iii) that only one authority and one authority alone can pass such order of detention.
The statute does not contemplate a sort of composite or a joint order passed by several authorities.
In the instant case the original order of detention passed by Mr. section K. D. Mathur bears his signature and even the grounds mentioned bear his signature.
In these circumstances we are unable to accept the affidavit of Mr. section K. D. Mathur that the grounds framed by him were merely draft grounds prepared by him which were signed by the permanent District Magistrate later.
It is obvious that unless the order made and the grounds prepared are signed by the authority concerned, the order is not made as contemplated by section 3 of the Act.
Further more, since the order is based on grounds to be served on the detenu, the order of detention could be passed only if the grounds are in existence and are prepared contemporaneously, otherwise the order 26 of detention becomes purely illusory.
In view, however, of the contradictory affidavits given by Mr. section K. D. Mathur, it is difficult to determine whether Mr. section K. D. Mathur or Mr. R. C. Arora passed the order of detention and as to who among them was satisfied regarding the grounds of detention.
This is also a very serious infirmity from which the order of detention suffers and as a result of which the order has to be set aside.
There appears to us to be a clear violation of the provisions of section 3 of the Act in this case.
Lastly we may mention that although the petitioner has pleaded he question of mala fides in the instant case, it is not necessary for us to decide the same in the view we take in this case, and that is why it was not seriously pressed by Mr. Asoke Sen ill the course of his arguments before us.
For the reasons given above, we allow the petition and quash the order of detention passed against the petitioner on November 8, 1974 and direct the petitioner to be released forthwith.
V.P.S. Petition allowed.
| Section 2 of the Prevention of Corruption Act, 1947, provides that, for the purposes of this Act, "Public servant" means a public servant as defined in section 21 of the Indian Penal Code.
Before the Criminal Law (Amendment) Act, 1958 (Act No. 11 of 1958) was passed adding clause 12 to this section, section 21 of the Penal Code consisted only of eleven clauses and an employee under the Corporation or a Government Company did No. fall within the purview of any of the clauses of section 21 of the Penal Code.
Clause 12 was further amended by the Anti Corruption Laws (Amendment) Act, 1964 (Act No. XL of 1964) enlarging the definition of "public servant".
The respondent who was an employee in the Heavy Electricals (India) Ltd. Bhopal, which is a Government Company, was convected by the Special Judge Indore, under section 420 I.P.C. and section 5(2) read with section 5(1)(d) of the Act and was sentenced to one year rigorous imprisonment on each count.
The appeal filed by the respondent before the High Court of Madhya Pradesh was allowed mainly on the ground that as the respondent was not a public servant as contemplated by the provisions of the Act, his trial under the Act was without jurisdiction.
The High Court took the view that as the Act had incorporated the definition of the Penal Code prior to its amendment, it became an integral and independent part of the Act and would remain unaffected by any repeal or change in the previous Act, namely, the Penal Code.
This appeal has been preferred on the basis of the certificate granted by the High Court.
Allowing the appeal, ^ HELD: (i) It is well settled that, after the provision of the previous Act is incorporated in the subsequent Act, the off spring, namely, the incorporated provisions, survives even if the previous Act is repealed, amended, declared a nullity or erased from the statute book.
But the Act being a social legislation its provisions must be construed liberally so as to advance the object of the Act.
Though the Act and the Penal Code are not statutes in pari materia there can be no doubt that the evidence Act and the Prevention of Corruption Act form part of one system, because the rules of Evidence Act, with minor exceptions, apply to trials of offences created under the Act.
The Act, no doubt, contains a penal flavour but it is in effect a piece of social legislation directed towards eradication of the evil of corruption amongst the services alone.
In other words, the public servants alone fall within the mischief of the Act and no one else.
[11E; 12A C] Clarke vs Bradlaugh, ,69, Ram Sarup vs Munshi and other ; , 868 869, In re Wood 's Estate, Ex parte Her Majesty 's Commissioners of Works and Buildings, [18861 , 615 616, Secretary of State for India in Council vs Hindustan Co operative Insurance Society Ltd. L.R. 58 I.A. 259.
266 267. referred to.
State of Madras vs Vaidyanath Aiyar, A.I.R. 1958 S.C. 61, relied on.
(ii) The object of the Act is to eradicate corruption from various levels either in Government services or in service under the Corporation or Government Companies.
The Penal Code no doubt creates offences like those mentioned in sections 161 and 165 of the Code but they were not found sufficient to cope with the present situation and the expending needs of the nation.
In these circumstances, 7 it was considered necessary to evolve a quick, expeditious and effective machinery to destroy the evil of corruption existing in any form.
If, therefore, the Penal Code with the same object enlarged the definition of section 21 by adding the twelfth clause by virtue, of the Criminal law (Amendment) Act, 1958 and the Anti corruption Laws (Amendment) Act, 1964, there is no reason why the extended meaning to the provision of section 2 of the Act ns borrowed from section 21 of the Penal Code be not given lo that section.
Otherwise the Act would become wholly unworkable.
[12D F] Secretary of State for India in Council vs Hindustan Co operative Insurance Society Ltd. L.R. 58 I.A. 259, 266 267.
section Gangoli vs The State of Uttar Pradesh, [1960] 1 section C. R. 290 and M. Narayanan Nambiar vs State of Kerala, [1963 Supp. 2 S.C.R. 724.
referred to.
(iii) Even if section 2 of the Act had not applied the provisions of the Penal Code and had not defined public servant, then the provisions of the Penal Code would have come into operation by implied reference because the Act was a supplemental Act to the Penal Code.
It was only by way of abundant caution that section 2 of the Act incorporated the definition of "public servant" as mentioned in section 21 of the Penal Code and in that sense alone the Act can be treated as being pari meteria with the Penal Code.
[15A B]
|
vil Appeals Nos. 474 and 475 of 62.
Appeal from the judgment and decree dated January 10.
1958, of the Bombay High Court in Appeal No. 375 of 1953.
J.C. Bhatt, B.R.Agarwala and H.K. Puri, for 'the appellants (in C.A. No. 474 of 1962) and respondent (in C.A. No. 475 of 1962).
Niren De, Additional Solicitor General, N.D. Karkhanis, B.R.G.K. Achar, for R.N. Sachthey, for Respondent (in C.A. No. 474 of 1962) and appellant (in C.A. Nos. 475 of 1962).
The judgment of SUBBA RAO, DAYAL and BACHAWAT JJ. was delivered by SUBBA RAO, J. The dissenting Opinion of MUDHOLKAR and RAMASWAMI JJ.
was delivered by RAMASWAMI J. Subba Rao, J. On October 4.
1949, M/s. Harshadrai Mohanlal & Co. a firm doing business at Thana, Bombay.
hereinafter called the firm, entrusted 4 boxes alleged to have contained menthol crystals to the then G.LP.
Railway for carriage from Thana to Okhla near Delhi under a railway receipt bearing No. 233/27.
On October 11, 1949, the firm consigned 2 more such boxes to Okhla from Thana under 2 railway receipts bearing Nos. 233/35 and 233/36.
All the said 6 boxes were marked with the name of the said firm and were consigned to "self".
The said firm endorsed the relevant railway receipts in favour of Morvi 'Mercantile Bank Ltd., hereinafter called the Bank, against an advance of Rs. 20,000 made by the Bank to the firm.
The said consignments did not reach Okhla.
The railway company offered to deliver certain parcels to the Bank, but the Bank refused to take delivery of the same on the ground that they were not the goods consigned by the firm.
As the railway failed to deliver the boxes, the Bank, as the endorsee of the said railway receipts for valuable consideration, filed Civil Suit No. 50 of 1950 in the Court of the Civil Judge, Senior Devision.
Thana, against the Union of India through the General Manager, Central Railway, Bombay, for the recovery of Rs. 35,500, being the value of the goods contained in the said consignments as damages.
The defendant in the written statement averred that on February 1. 1950, the railway company offered to deliver all the consignments to the Bank, but the latter wrongfully refused to take delivery of the same on the ground that the consignments were not identical to the ones consigned from Thana; it put the plaintiff to strict proof of the allegation that the consignments contained menthol crystals as alleged or that the aggregate value of the said consignments was Rs. 35,500.
or that the railway receipts were endorsed in favour of the plaintiff for valuable consideration.
The learned Civil Judge found as follows: (1) The boxes consigned by the firm contained menthol crystals and by the wrongful conduct of the employees of the railway administration the contents of the boxes were lost; (2) the said consignments were not offered 257 for delivery to the Bank, but what was offered were different consignments containing caustic soda; (3) the relevant railway receipts were endorsed by the firm in favour of the Bank for valuable consideration; and (4) the Bank, as endorsee of the railway recepts, was not entitled to sue the railway company on the railway receipts for loss of the consignments.
On those findings the suit filed by the Bank was dismissed with costs.
The Bank preferred ' an appeal to the High Court against the decision of the learned Civil Judge, being First Appeal No. 375 of 1953.
The appeal was heard by a Division Bench of the Bombay High Court, consisting of J.C. Shah and Gokhale, JJ.
The learned Judges agreed with the learned Civil Judge on the first 3 findings; but on the 4th finding they took a different view.
They held that the Bank, as endorsee of the said railway receipts, was entitled to sue for compensation for the loss suffered by it by reason of the loss of the consignments, but.
as pledgees of the goods, it suffered the loss only to the extent of the loss of its security.
On that view, the learned Judges gave a decree to the Bank for a sum of Rs. 20,000 advanced by it with interest and proportionate costs in both the Courts.
The plaintiff as well as the defendant preferred, by certificate, cross appeals to this Court.
Learned Additional Solicitor General raised before us the following points: (1) In law the endorsement of a railway receipt does not constitute a pledge; (2) an endorsement of a railway receipt for consideration constitutes at the most a pledge of the railway receipt and not the goods covered by it.
and, therefore, in the present case the Bank acquired only a right to receive the goods covered by the relevant receipts from the railway; and (3) if the endorsement of the railway receipts does not constitute in law a pledge of the goods, the Bank has no right to sue for compensation, as, though the proprietary right in the goods was transferred to it, the right to sue trader the contracts did not pass to it.
The decision on the first point depends upon the scope of the legal requirements to constitute a pledge under the Indian law.
That calls for a careful scrutiny of all the relevant provisions of the Indian Contract Act, the Indian and the .
for their combined consideration yields the answer to the problem raised.
Under the Contract Act, delivery of goods by one person to another under a contract as security for payment of a debt is a pledge.
Ordinarily delivery of tangible property is essential to a true pledge; but where the law recognizes that delivery of tangible symbol involves a transfer of possession of the property symbolized, such a symbolic possession takes the place of physical delivery.
The short but difficult question, therefore.
is whether the Indian law equates the railway receipts with the goods covered by them for the purpose of constituting delivery of goods within the meaning 258 of the Contract Act.
Before the amendment of section 178 of the Contract Act and the passing of the , the scope of railway receipts vis a vis the goods covered by them came up for consideration before the Judicial Committee in Ramdas Vithaldas Durbar vs
S.Amarchand & Co., C).
The head note of that case succinctly gives the following facts: Sellers of cotton consigned it to the buyer in Bombay, and forwarded to him receipts issued by the railway company which had undertaken the carriage.
The receipts provided that they should be given up at the destination by the consignee, and that if he did not himself attend to take delivery he must endorse on the receipt a request for delivery to whom he wished it to be made.
The evidence showed that similar receipts for cotton were used in the ordinary course of business in Bombay as proof of the possession and control of the goods therein referred to or as authorising the holder to receive or transfer the goods.
The consignee endorsed and delivered the receipts as security for advances made specifically upon them in good faith.
The sellers sought to stop the cotton in transit.
The Judicial Committee held that the railway receipts were instruments of title within the meaning of the , s.103, and that the sellers were therefore not entitled to stop the goods except upon payment or tender to the pledgees of the advances made by them.
This decision lays down 3 propositions, namely, (i) the railway receipts in question in that case were used in the ordinary course of business in Bombay as proof of possession and control of the goods therein referred to, or as authorising the holder to receive or transfer the goods; (ii) such railway receipts were documents of title and a valid pledge of the goods covered by the receipts could be made under the Contract Act before it was amended in 1930.
by endorsing and delivering the same as security for advances made.
to the owner of the goods.
It may be noticed at this stage that under the Contract Act before it was amended in 1930 there was no definition of the expression "documents of title", but there.
was one in the Indian Factors Act (XX of 1844) which.
with certain modifications, made the provisions of the English Factors Act.
1842, applicable to British India.
The last mentioned Acts defined the expression "documents of title to goods as including any bill of lading, dock warrant.
ware housekeeper certificate, whar finger 's certificate.
warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods.
or authorising or purporting to authorise, either by endorsement or by delivery the possessor of the document to transfer or receive goods thereby represented '.
Railway receipt was so nominee not included in the detinition.
But the Privy Council, on the basis of the evidence adduced in that case, brought the railway receipts under that part of the definition describing generally the documents of title to goods.
It may also be noticed that the Judicial Committee.
though (1) T. A. 164.
259 its attention was called to the provisions of sections 4 and 137 of the , preferred to decide that case decors the said provisions.
In the Explanation to section 137 of the , which was introduced by the Amending Act 2 of 1900, the definition of the expression "mercantitle document" is practically the same as that found in the Indian Factors Act noticed by the Judicial Committee in the decision cited supra, with the difference that it expressly includes therein railway receipt.
Under s.4 thereof the Chapter and the sections of the Act shall be taken as part of the .
In 1930 Parliament in enacting the Indian , presumably borrowed the definition of "documents of title to goods" from the Indian Factors Act and the English Factors Act noticed by the Judicial Committee, but expressly included in the definition the railway receipt.
This indicates the legislative intention to accept the mercantile usage found by the Judicial Committee in Ramdas Vithaldas Durbar vs section Amerchand & Co.(1).
The same definition was incorporated by reference in the Explanation to s.178 of the Contract Act as amended in the year 1930.
This definition is also in accord with the definition of "mercantile document of title to goods" in the Explanation to s.137 of the .
The Judicial Committee had another occasion to consider the question of pledge of railway receipt in Official Assignee of Madras vs Mercantile Bank of India.
Ltd.(2).
The facts in that case were as follows: The insolvents did a large business in groundnuts, which they purchased from the up country growers; the nuts were then dispatched by rail and arrived in Madras by one or other of the two railways, the Madras & Southern Maharatta Railway or the South Indian Railway.
Under an arrangement between the said Railways and the Madras Port Trust, the consignments of nuts when received were deposited in the go downs of the Madras Port Trust.
The general course of business was for the insolvents to obtain from the railway companies in respect of each consignment or wagon had a railway receipt.
The insolvents obtained loans from the respondent Bank after sending to the said Bank the railway receipts duly endorsed in blank and also after executing a promissory note for the amount a letter of hypothecation.
When the goods arrived at the port, delivery was taken from the Port Trust against the railway receipts.
At the time the insolvents were adjudicated the bags of ground nuts in question in that case were either in transit on the railway or in the transit sheds or godowns of the Port Trust.
On those facts.
the main question was whether the pledge of the railway receipt was a pledge of the goods represented by them or merely a pledge of the actual documents.
If there was a valid pledge before the insolvency, the Bank would be entitled to receive the amount realised by the sale of the goods; if not, the Official Assignee would be entitled to it.
The Judicial Committee, after considering (1) (1) (1934) L.R. 51 I.A. 416, 423.
260 its earlier decision in Ramdas Vithaldas Durbar 's case (1) and all the relevant provisions which we have noticed earlier, came to the conclusion that there was a valid pledge of the goods represented by the receipts.
It may be noticed that this decision also turned upon the relevant provisions of the Contract Act before its amendment in 1930, though at the time the decision was made the amendment came into force.
On the question whether a pledge of a document is a pledge of the goods as distinct from the document, the Judicial Committee observed: "Their Lordships likewise in the present case see no reason for giving a different meaning to the term (documents of title to goods) in s.178 from that given to the terms in sections 102 and 103; in addition a railway receipt is specifically included ' in the definition of mercantile document of title to goods by section 137 of the , which, in virtue of s.4 of the Act, is to be taken as part of the Contract Act as being a section relating to contracts.
A railway receipt is now included in the definition of documents of title to goods in section 2, sub section 4, of the Indian .
" On the construction of the expression "person" in section 178 of the Contract Act, it was argued that the said expression took in only a mercantile agent and that the law in India was the same as in England.
Rejecting that plea, the Judicial Committee remarked at p. 426 thus: "Their Lordships did not in that case see any improbability in the Indian Legislature having taken the lead in a legal reform.
It may well have seemed that it was impossible 'to justify a restriction on the owner 's power to pledge which was not imposed on the like powers of the mercantile agent.
The same observation may well be true m regard to the words now being considered.
The reasonableness of any such change in the law is well illustrated by the facts of the present case, where it was clearly intended to pledge the goods, not merely the railway receipts, and the respondents have paid in cash the advances they made on that footing.
In these circumstances, it would be indeed a hardship that they should lose their security.
" These pregnant observations show that there is no justification to the distinction that is being maintained in England between pledge of a bill of lading and the pledge of documents of title of the than a bill of lading.
The Judicial Committee in this decision clearly laid down, after noticing all the relevant provisions of the Contract Act, the and the that railway receipts were documents of title and the goods cover (1)(1916) L.R. 43 I.A. 164.
ed by the documents could be pledged by transferring the documents.
This decision is in accord with the view expressed by us on a fair reading of the said provisions.
Even so, it is contended that by the amendment of section 178 of the Contract Act in 1930, the Legislature has taken away the right of an owner of goods to pledge the same by the transfer of documents of title to the said goods.
Under the old section "a person" who was in possession of any goods etc. might make a valid pledge of such goods, whereas under the present section "a mercantile agent", subject to the conditions mentioned therein, is authorized to make a pledge of the goods by transferring the documents of title.
Therefore, the argument proceeds, a person other than a mercantile agent cannot make a valid pledge of goods by transferring the documents representing the said goods.
This argument appears to be plausible and even attractive; but, if accepted, it will lead to anomalous results.
It means an owner of goods cannot pledge the goods by transferring the documents of title, whereas his agent can do so.
As the Privy Council pointed out it is impossible to justify a restriction on the owner 's power to pledge when there is no such restriction imposed on the like powers of a mercantile agent.
A careful scrutiny of section 178 of the Contract Act and the other relevant provision thereof indicates that the section assumes the power of an owner to pledge goods by transferring documents of title thereto and extends the power even to a mercantile agent.
A pledge is delivery of goods as security for payment of a debt.
If a railway receipt is a document of title to the goods covered by it, transfer of the said document for consideration effects a constructive delivery of the goods.
On that assumption if we look at section 178 of the Contract Act, the legal position is apparent.
The material part section 178 of the Contract Act reads: "Where a mercantile agent is, with the consent of the owner.
in possession of goods or the documents of title to goods, any pledge made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the Pawnee acts in good faith and has not at the time of the pledge notice that the pawner has not authority to pledge.
" The section emphasizes that a mercantile agent shall be in possession of documents of title with the consent of the owner thereof; if he is in such possession and pledges the goods by transferring the documents of title to the said goods, by fiction, he is deemed to have expressly authorized by the owner of the goods to make the same.
The condition of consent and the fiction of authorization indicate that he is doing what the owner could have done.
So too.
262 section 30 of the Indian discloses the legislative mind.
The relevant part of the said ' section reads: "Where a person, having sold goods, continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same." This sub section shows that a person who sold the goods as well as a mercantile agent acting for him can make a valid pledge in the circumstances mentioned therein.
If an owner of goods or his mercantile agent after the owner has sold the goods, can make a valid pledge by transferring the documents of title to the goods, it would lead to an inconsistent position if we were to hold that an owner who has not sold the goods cannot pledge the goods by transferring the documents of title.
Sub section
(2) of section 30 of the Indian relevant to the present enquiry reads: "Where a person.
having bought or agreed to buy goods.
obtains, with the consent of the seller, possession of the goods or the documents of title to the goods.
the delivery or transfer by that person or by a mercantile agent acting for him.
of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist.
" This sub section clearly recognizes that a buyer or his mercantile agent can pledge goods by transferring the documents of title thereto: it protects a bona fide pledgee from the buyer against any claim by the original owner based on the lien or any other right still left in him.
If the owner the purchaser becomes the owner cannot pledge the goods at all by transfer of documents of title.
the protection given under sub section
(2) of section 30 of the to a bona fide purchaser is unnecessary.
The material part of section 53(1) of the reads: "Subject to the provisions of this Act, the unpaid seller 's right of lien or stoppage in transit is not affected by any sale or other disposition of the goods which the buyer may have made, unless the seller has assented thereto: Provided that where a document of title to goods has been issued or lawfully transferred to any person as buyer or owner of the goods, and that person transfers the document to a person who takes the document in good faith 263 and for consideration, then, if such last mentioned transfer was by way of sale, the unpaid seller 's right of lien or stoppage in transit is defeated, and, if such last mentioned transfer was by way of pledge or other disposition for value, the unpaid seller 's right of lien or stoppage in transit can only be exercised subject to the rights of the transferee.
" This sub section protects a bona fide pledgee from an owner against any rights still subs sting in his predecessor in interest.
This assumes that the owner can pledge the goods by transfer of the relevant documents of title.
The said sections embody statutory exceptions to the general rule that a person cannot confer on another a higher title than he possesses.
The argument that section 178 of the Contract Act, as amended in 1930.
restricts the scope of the earlier section and confines it only to a mercantile agent was noticed by the Judicial Committee in Official Assignee of Madras vs Mercantile Bank of India, Ltd. (1) and it observed therein: "The Indian Legislature may well have appreciated in 1872 the exigencies of business, even though in 1930 they recanted.
Or perhaps they did not appreciate fully the effect of the actual words of the section.
" These observations indicate that the Judicial Committee did not express any final opinion on the construction of the amended section 178 of the Contract Act as the question in the appeal before it related to the unamended section.
Further, it did not notice the other sections referred to earlier which throw a flood of light on the true meaning of the terms of section 178 of the Contract Act, as it now stands.
This conclusion also accords with the view expressed by Bachawat.
J. in Commissioner for the Port Trust of Calcutta vs General Trading Corporation Ltd.(2).
The Indian decisions cited at the Bar do not deal with the question whether a valid pledge of goods can be effected by transfer of documents of title, such as a railway receipt, representing the goods; they were mainly concerned with the question whether an endorsee of a railway receipt for consideration could maintain an action on the basis of the contract embodied in the said receipt: see the firm of Dolatram Dwarakdas vs The Bombay Baroda and Central India Railway Co. C); Shah Muji Deoii vs Union of India(4) Commissioner for the Port Trust of Calcutta vs General Trading Corporation Ltd. (2); and Union of India vs Taherali (2).
These raise a larger question on which there is a conflict of opinion.
In the view we have taken on the question of pledge, it is not necessary to express our opinion thereon in these appeals.
(1) , 423.
A.I.R. 1964 cal.
(3) (1914) I.L.R,.
38 .Rom.
(4) A.I.R. 1957 Nag.
(5) (1956) 58 Born.
L.R. 650.
264 The law on the subject, as we conceive it, may be stated thus: An owner of goods can make a valid pledge of them by transferring the railway receipt representing the said goods.
The general rule is expressed by the maxim nemo dat quod non habet, i.e., no one can convey a better title than what he had.
To this maxim, to facilitate mercantile transactions, the Indian law has grafted some exceptions, in favour bona fide pledgees by transfer of documents .of title from persons, whether owners of goods or their mercantile agents who do not possess the full bundle of rights of ownership at the time the pledges are made.
To confer a right to effect a valid pledge by transfer of documents of title relating to goods on owners of the goods with defects in title and mercantile agents and to deny it to the full owners thereof is to introduce an incongruity into the Act by construction.
On the other hand, the real intention of the Legislature will be carried out if the said right is conceded to the full owner of goods and extended by construction to owners with defects in title or their mercantile agents.
We are glad that, on a reasonable construction of the material provisions of the relevant Acts, we have been able to reach this conclusion To accept the contentions of the respondents to the contrary would be a retrograde step and would paralyse the entire mechanism of finance of our internal trade.
In this vast country where goods are carried by railway over long distances and remain in transit for long periods of time, the railway receipt is regarded as a symbol of the goods for all purposes for which a bill of lading is so regarded in England.
The next question is whether the plaintiff would be entitled to recover the full value of the consignments amounting to Rs. 35,500/ or, as the High Court held, only the amount of Rs. 20,000/ with interest, i.e., the amount secured under the pledges.
The answer to this question depends upon the construction of section 180 of the Contract Act, it reads: "If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made; and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury " Under this section, a pledge being a bailment of goods as security for payment of a debt, the pledgee will have the same remedies as the owner of the goods would have against a third person for deprivation of the said goods or injury to them.
If so, it follows that the Bank, being the pledgee, can maintain the present suit for the recovery of the full value of the consignments amounting to Rs. 35,500/ .
265 The last question is whether the Bank was the pledgee of the goods or was only the pledgee of the documents of title whereunder they could only keep the documents against payment by the consignee as contended on behalf of the Railway.
The firm borrowed a sum of Rs. 20,000/ from the Bank and executed a promissory note, exhibit 104, dated October 6, 1949, in its favour.
It also endorsed the railway receipts Nos.
233/27, 233/35 and 233/36 in favour of the Bank.
The Accountant of the Bank deposed that the railway receipts were endorsed in favour of the Bank, which had.advanced the said amount to the firm on the security of the said railway receipts.
The evidence of this witness was not challenged in the High Court.
The Bank.advanced alarge amount of money to the firm.
The three transactions, namely the advancing of loan the execution of the promissory note and the endorsement of the railway receipts, together form one transaction.
Their combined effect is that the Bank would be in control of the goods till the debt was discharged.
This is a well known practice followed by Banks.
The Judicial Committee both in Ramdas Vithaldas Durbar vs section Amerchand & Co.(1), and the Official Assignee of Madras vs The Mercantile Bank of India, Ltd.(2) heId that such a transaction was a pledge.
We, therefore, hold on the facts of this case that the firm by endorsing the railway receipts in favour of the Bank for consideration pledged the goods covered by the said receipts to the Bank.
In this view it is not necessary to express our opinion on the question whether if the transaction was not a pledge of the goods,the Bank would be entitled to sue on the basis of the contract entered into between the firm and the Railway.
No other question was raised.
In the result, Civil Appeal No. 474 of 1962 filed by the Bank is allowed; and Civil Appeal No. 475 of 1962 filed by the Railway is dimissed.
The plaintiff 's suit is decreed with costs throughout.
Ramaswami, J.
We regret we are unable to agree with the judgment pronounced by our learned brother Subba Rao J. On October 4, 1949, M/s. Harshadrai Mohanlal & Co., (hereinafter referred to as the firm) entrusted 4 boxes containing "menthol crystal" to the then G.I.P. Railway for carriage from Thana railway station to Okhla near Delhi.
On October 11, 1949, the firm consigned 2 more boxes also alleged to have contained "menthol crystal" to Okhla from Thana railway station.
The Railway Receipts issued were numbered 233/27, 233/35 and 233/36.
All the six boxes were consigned to "self".
It is alleged that the Rail way Receipts with regard to these six boxes were endorsed in favour of Morvi Mercantile Bank Ltd. (hereinafter referred to as the plaintiff bank) against an advance of Rs. 20,000 by the plaintiff bank on security of the Railway Receipts.
The G.I.P. Railway offered to deliver the boxes at Okhla rai1way station but the plaintiff bank declined to accept the same alleging that the boxes were not those (1) (1916) L.R. 43 I.A. 164.
(2) (1934) L.R. 61 I.A. 416, 423.
266 which were consigned from Thana station.
The plaintiff bank filed Civil, Suit No. 50 of 1950 in the Court of the Civil Judge, Senior Division, Thana, claiming a sum of Rs. 35,000 as damages for breach of contract.
The suit was contested by the defendants on the ground that identical boxes which were consigned by the firm at Thana were offered to the plaintiff bank who declined to accept the same and the Railway Administration had, not committed an breach of contract and, therefore, the Union of India was not liable to pay any damages.
The trial Judge held that the boxes Consigned by the firm contained "menthol crystals" and by the unlawful conduct of the employees of the railway administration the contents of the boxes were lost, but he took the view that the plaintiff bank.
as endorsee of the railway receipts, was not entitled to sue for compensation for loss of the consignments.
In taking that view the learned Civil Judge followed a decision of the Bombay High Court in Shamji Bhanji & Co. vs North western Railway Company(1).
The Civil Judge accordingly dismissed the suit by a judgment and decree dated January 15, 1953.
Against that decision the plaintiff bank preferred an appeal to the Bombay High Court which continued the findings of the Civil Judge that tile Railway failed ' to deliver the boxes at Okhla and the boxes contained "menthol crystals".
The High Court also held that the plaintiff bank assignees of the railway receipt was entitled to bring a suit for damages for breach of contract against the Union of India though the damages would be limited to the loss of its security.
In taking this view the Bombay High Court relied upon its previous decision in The Union of India vs Taherali Isaji(2).
The first question for determination in this case is whether there was a valid pledge of boxes of "menthol crystals" in favour of the plaintiff bank by endorsement on the railway receipts by the firm.
In English Law a pledge arises when goods are delivered by one person called the 'pledgor ' to another person called the 'pledgee" to be held as security for the payment of a debt or for discharge of some other obligation upon the express or implied understanding that the subject matter of the pledge is to be restored to the pledgor as soon as the debt or other obligation is discharged.
It is essential for the creation of a pledge that there should be a delivery of the goods comprised therein.
In other words, a pledge cannot be created except by delivery of the possession of the thing pledged, either actual or constructive.
It involved a bailment.
If 'the pledgor had actual goods in his physical possession, he could effect the pledge by actual delivery; but in other cases he could give possession by some symbolic act, such as handing over the key of the store in which they were.
however, the goods were in the actual physical possession of a third person, who held for the bailor so that in law his possession was that of the bailor, this pledge could ' be effected by a change of the character of the possession of the (1) A.I.R. 1947 Bomb.169.
(2)(1956)58 Bomb L.R. 650.
267 third party, that is by an order to him from the pledgor to hold for the pledgee, the change being perfected by the third party attorning to the pledgee, thus acknowledging that he thereupon held for ' the latter.
There was thus a change of possession and a constructive delivery; the goods in the hands of the third party came by this process constructively in the possession of the pledge.
But. where goods were represented by documents the transfer of the documents did not change the possession of the goods, save for ' one exception, unless the custodian (carrier, warehouseman or ' such) was notified of the transfer and agreed to hold in future as bailee for the piedgee.
The one exception was the case of bills of lading, the transfer of which by the law merchant operated as a transfer of the possession of, as well as the property in, the goods.
, This exception has been explained on the ground that the goodsbeing at sea the master could not be notified; the true explanation was perhaps that it was a rule of the law merchant, developed in order to facilitate mercantile transactions, whereas the process of pledging goods on land was regulated by the narrower rule of the common law.
The position in English Law, therefore, was that in the case of delivery of documents of title other than bills of lading, a pled of the documents is merely a page of the ipsa corpora of them, for the transfer of documents does not change the possession of the goods unless the custodian (carrier, warehouseman or such) was not filed of the transfer and agreed to hold in future as bailee for the pledgee.
In Inglis vs Robertson and Baxter(1).
It was held by the House of Lords that where goods are lodged in warehouses in Scotland a pledgee of the goods must, to make effective all real rights which depend on the constructive delivery of the goods, give notice of the pledge to the warehouse keeper.
The Factors Act 1889 enacts: "S.3.
A pledge of the documents of title to goods shall be deemed to be a pledge of the goods."; and section 1: 'For the purposes of this Act ' (sub section 5).
The expression 'pledge ' shall include any contract, pledging, or giving a lien or security on, goods, whether in consideration of an original advance or of any further or continuing advance or of any pecuniary liability '.
9 prescribes that the effect of delivery or transfer of the documents of title of the goods under any pledge &c., by a person who having bought the goods obtains with the consent of the seller possession of the goods or documents of title, shall have the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.
" Goods were stored by G, a domiciled Englishman, in a bonded warehouse in Glasgow, transferred into the name of G as owner; and the Warehouse keeper issued to G delivery orders showing that (1) ; 268 the goods were held to G 's order or assigns by endorsement 'hereon '.
G obtained a loan from I an English merchant, and delivered to him in England a letter of hypothecation stating that he deposited a part of the goods with him in security, with power of sale, and G endorsed and handed to I the delivery warrants.
I did not intimate or give notice of the right he had acquired to the warehouse keeper.
R. & B., claiming as personal creditors of G, .arrested the goods in the hands of the warehouse keeper and then raised an action against him in the Scottish Court claiming through the arrestment a preferable right thereto.
It was held by the House of Lords that section 3 of the Factors Act, 1889, was merely intended to define the full effect of the pledge of the documents of title made by a mercantile agent, and that it had no application to the case .of the pledge of the documents of title by one in the position of G, 'who was not a mercantile agent within the meaning of the Act; nor was G a pledgor within section 9 of the same Act.
At pages 625 to 627 Lord Watson states: I can see no reason to doubt that, by Scottish law as 'well as English, the endorsement and handing over of delivery orders in security of a loan, along with a letter professing to hypothecate the goods themselves, is sufficient in law, and according to mercantile practice, to constitute a pledge of the documents of title, whatever may be the value and effect of the right so constituted.
In my opinion, the right so created, whether in England or in Scotland, will give the pledgee a right to retain the ipso corpora of the documents of title until his advance is repaid.
The crucial question in this case is whether the right goes farther, and vests in the pledgee of the documents, not a jus ad rein merely, but a real interest in the goods to which these documents relates.
It was not disputed by the appellant 's counsel, and it is hardly necessary to repeat, that by the common law of Scotland the indorsation and hypothecation of delivery .orders, although it may give the pledgee a right to retain the documents, does not give him any real right in the goods which they represent.
He can only attain to that right by presenting the delivery orders to the custodier by whom they were granted, and obtaining delivery of the goods from him, or by making such intimation of his right to the custodier as will make it the legal duty of the latter to hold the goods for him.
His right, which in so far as it relates to the goods is in the nature of jus ad rem, will be defeated if, before he has either obtained delivery or given such intimation, the goods are validly attached in the hands of the custodier by a creditor of the person for whom the custodier holds them.
" 269 The principle is reiterated by the House of Lords in Dublin City Distillery Ltd. vs Doherty(1).
in which the plaintiff advanced moneys to a distillery company on the security of manufactured whisky of the company stored in a ware house.
Neither the company nor the excise officer could obtain access to the warehouse without the assistance of the other, and the whisky could only be delivered out on presentation to the excise officer of a special form of warrant supplied by the Crown.
On the occasion of each advance the company entered the name of the plaintiff in pencil in their stock book opposite the particulars of the whisky intended to be pledged and delivered to the plaintiff (1) an ordinary trade invoice and (2) a document called a warrant, which described the particulars of the whisky and stated that it was deliverable to the plaintiff or his assigns.
It was held by the House of Lords that the plaintiff was not entitled to a valid pledge on the whisky comprised in the warrants.
At pages 843 and 847 of the Report Lord Atkinson states the law on the point as follows: "As to the second question, it was not disputed that, according to the law of England, and indeed of Scotland.
a contract to pledge a specific chattel, even though money be advanced on the faith of it, is not in itself sufficient to pass any special property in the chattel to the pledgee.
Delivery is, in addition, absolutely necessary to complete the pledge; but of course it is enough if the delivery be constructive, or symbolical, as it is called, instead of actual.
The example of constructive delivery frequently given is the delivery of the key of the store or house in which the goods have been placed; but that is because, in the words of Lord Hardwicke, 'it is the way of coming at the possession, or to make use of the thing ', Ward vs Turner (1751) 2 Ves.
Sen. 431 at P. 443).
The giving by the owner of goods of a delivery order to the warehouse man does not, unless some positive act be done under it, operate as a constructive delivery of the goods to which it relates: Mc Ewan vs Smith ; And the delivery of a warrant such as those delivered to the respondent in the present case is, in the ordinary case, according to Parke B., no more than an acknowledgment by the warehouse man that the goods are deliverable to the person named therein or to any one he may appoint.
The warehouseman holds the goods as the agent of the owner until he has attorney in some way to this person, and agreed to hold the goods for him; then, and not till then, does the warehouseman.become a bailee for the latter; and then, and not till then, is there a constructive delivery of the goods.
The delivery and ' (1) 270 receipt of the warrant does not per se amount to a delivery and receipt of the goods: Farina vs Home ; ; Bentall vs Burn ((1824) ; In our opinion, the position in Indian Law is not different Section 172 of the Contract Act which defines a 'pledge ' affirms the English Common Law.
Section 172 states that "the bailment of goods as security for payment of a debt or performance of a promise" is called ' a "pledge".
The bailor is in this case called the "pawnor" and the bailee is called the "pawnee".
According to section |48 of the Contract Act "a bailment is the delivery of goods by one .person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.
The person delivering the goods is called the 'bailor '.
The person to whom they are delivered is called the 'bailee '.
Section 149 states that the delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf.
Reference should also be made to section 178 of the Contract Act, as it stood before the .
The original section 178 states: "A person who is in possession of any goods, or of any biII of lading, dock warrant, warehouse keeper 's certificate wharfinger 's certificate, or warrant or order for delivery, or any other document of title to goods, may make a valid pledge of such goods or documents: Provided that the pawnee acts in good faith and under circumstances which are not such as to raise a reasonable presumption that the pawnor is acting improper Provided also that such goods or documents have not been .obtained from the lawful owner, or from any person in lawful custody of them, by means of an offence or fraud.
" By the the section was repealed and the subject matter of that section is now spread over the present sections 178 and 178A of the Contract Act and section 30 of the Indian .
The new section 178 of the Contract Act states: "Where a mercantile agent is, with the consent of the owner, in possession of goods or the documents of title to goods, any pledge made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided* that the pawnee acts in good faith and has not at the time of the pledge notice that the pawnor has no authority to pledge.
Explanation in this section the expressions mercantile agent ' and 'documents of title shall have the meanings assigned to them in the Indian ." 271 Section 30 of the Indian provides as follows: "30(1) Where a person, having sold goods, continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same Where a person, having bought or agreed to buy goods, obtains, with the consent of the seller.
possession cf the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him.
of the .goods or documents of title under any sale, pledge of ' other disposition the thereof to any person receiving the same in good faith and without notice of any/ten or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist." Section 178A of the Contract Act states: "178A.
When the pawnor has obtained possession of the goods pledged by him trader a contract voidable under section 19 or section 19A, but the contract has not been rescinded at the time of the pledge, the pawnee acquires a good ' title to the goods.
provided he acts in good faith and without notice of the pawnor 's defect of title." After the passing of the the legal position with regard to the pledge of railway receipts is exactly the same in Indian law as it is in English law and consequently the owner of the goods cannot, pledge the goods represented by the railway receipts in the present case unless the railway authorities are notified of the transfer and they agree to hold the goods as bailee for the piedgee.
On behalf of the appellants Mr. Bhatt placed strong reliance upon the decision of the Judicial Committee in Official Assignee of Madras vs Mercantile Bank of India, Limited (1) in which it was held that a railway receipt, providing that delivery of the consigned goods is to be made upon the receipt being given up by the consignee or by a person whom he names by endorsement thereon, is a document of title within the meaning of the , (section 178 for which a new section was substituted.
by the amending Act IV of 1930), and a pledge of a railway receipt operated under the repealed section as a pledge of the goods.
But this decision is not of much assistance to the appellants, because it was concerned with the interpretation and legal effect of section 178 of the Contract Act as it stood before the Indian Contract (Amending) (1) (1934) 61 I.A. 416.
272 Act (Amending Act IV of 1930).
It was held by the Judicial Committee in that case that under the repealed section 178 the owner of the goods could obtain a loan on security of a pledge of the goods by the pledge of the documents of title.
But it is significant to note that section 178 has been amended by the Amending Act, 1930 and under the present section statutory power to pledge goods or documents of title is expressly confined to mercantile agents while acting in the customary course of the business.
There are two other instances in which a person other than the owner of the goods may make a valid pledge of the goods and these two instances are dealt with in section 178A of the Contract Act and section 30 of the Indian .
The result, therefore, under the amended law is that a valid pledge can no longer be made by every person "in possession" of goods.
It can only be made by a mercantile agent as provided in the new section 178 of the Contract Act or by a person who has obtained possession of the goods under a contract voidable under section 19 or section 19A of the Contract Act as provided in section 178A, or by a seller or by a buyer in possession of goods after sale as provided in section 30 of the Indian .
Learned Counsel for the appellants also referred to the decision of the Judicial Committee in Ramdas Vithaldas Durbar vs
section Amerchand & Co.(1) in which the Judicial Committee explained the legal effect of section 103 of the Contract Act, as it originally stood.
It was held by Lord Parker that the railway receipts are instruments of title within the meaning of the , section 103, and that the sellers were therefore not entitled to stop the good 's in transit except upon payment or tender to the pledgees of the advances made by them.
It is manifest that the decision cannot afford assistance to the appellants.
because, in the first place, it related to the construction of old section 103 of the Contract Act in regard to the right of stoppage of goods in transit, and, in the second place, there has been a significant change in the law in view of the legislative amendment of section 178 of the Contract Act by the .
In the present case, therefore, our concluded opinion is that there is no valid pledge of the consignments of menthol crystals represented by the railway receipts in favour of the plaintiff bank and the finding of the High Court on this point is erroneous in law We shall next deal with the question whether the plaintiff can sue on the contract of bailment even though there is no valid pledge of the goods in favour of the plaintiff.
It was contended on behalf of the appellants that the plaintiff bank was the endorse of railway receipts and, therefore, it was entitled to sue the defendants for compensation for the loss of the goods.
We are unable to accept this argument as correct.
At Common law a bill of lading was not negotiable like a bill of exchange so as to enable the endorsee to maharaja an action upon it in his own name, the effect of the (1914) 43 I.A. 164.
273 of the endorsement being only to transfer the property in the goods but not the contract itself.
It was observed by Alderson, B. in Thompson vs Dominy (1) as follows: "This is another instance of the confusion, as Lord Ellenborough in Waring vs Cox expresses it, which 'has arisen from similitude reasoning upon this subject Because, in Lickbarrow vs Mason, a bill of lading was held to be negotiable, it has been contended that instrument possesses all the properties of a bill of exchange; but it would lead to absurdity to carry the doctrine to that length.
The word 'negotiable ' was not used in the sense in which it is used as applicable to a bill of exchange, but as passing the property in the goods only.
" Delivery orders, warrants, written engagements to deliver goods and similar documents are in the same position as the bills of lading were before the Bills of Lading Act, 1855 (18 & 19 Vic. c. 111 ).
They are mere promises by the seller, being the issuer or transferor, to deliver, or authorise the buyer to receive possession.
It is only by reason of the enactment of the Bills of Lading Act, 1855 (18 & 19 Vic. c. 111) that the issue or transfer of a bill of lading operates as a delivery to the buyer of the goods shipped, and the consignee of the bill of lading is entitled to sue upon the contract contained in the same.
The same provisions are contained in the Bills of Lading Act (Act IX) of 1856 in India.
It is true that the railway receipt and all other documents enumerated in section 2, sub section
(4), , are assimilated to bills of lading for the purposes of the right of stoppage in transit under section 103, Contract Act and a pledge under section 178, Contract Act as explained by the Judicial Committee in Ramdas Vithaldas vs section Amerchand& Co.(2) and Official assignee of Madras vs Mercantile Bank of India(1).
But the effect of these decisions is not to assimilate the railway receipt to a biIl of lading for all purposes whatsoever.
The legal position of the railway receipt is the same as it was in English law and that position is not affected at all by the enactment of section 2, sub.
section (4) of ' the , or the enactment of provisions analogous to sections 103 and 178 of the Contract Act.
As stated in Halsbury 'section Laws of England, Hailsham Edition, Vol. 29, at p. 143, article 179: "Such documents, although they may purport to be, or may commonly be treated as, transferable, are not negotiable instruments, unless there be a trade usage to that effect.
Accordingly, subject to the provisions of the Factors Act 1889, the owner cannot claim delivery of the goods except from the seller who is the issuer or immediate transferor of the document.
" It is manifest that there are no rights created merely by reason of the endorsement of a Railway Receipt between the endorsee and (1) ; (2) (1916) LIt.
43 I.A. 164.
(3) (1934) L.R. 61 I.A. 416, 423.
274 the railway company which has issued the railway receipt to the .consignee, the only remedy of the endorsee being against the endorser.
This was the position in English law, except in the case of .bills of lading the transfer of which by the Law Merchant operated as a transfer of the possession of as well as the property in 'the goods as observed by Lord Wright in Official Assignee of Madras vs Mercantile Bank of India, Limited(1) at page 422.
The endorsee may bring an action as an assignee of the contract of carriage but then the assignment has to be proved as in every other case.
It is true that by reason of section 137 of the , the provisions relating to the transfer of an actionable claim do not apply to a railway receipt, and the assignment need not be according to any particular form, but a railway receipt is not like d negotiable instrument (See Mercantile Bank of India Ltd. vs Centarl Bank of India Ltd.(2).
It is also apparent that subject to the exceptions mentioned in sections 30 and 53 of the Indian .
1930, and s 178 of the Contract Act, 1872.
its possessor cannot give a better title to the goods than he has.
The negotiation of the railway receipt may pass the property in the goods.
but it does not transfer the contract contained in the receipt or the statutory contract under section 74 E of the Indian Railways Act.
Negotiability is a creature of statute or mercantile usage, not of judicial decisions apart from either.
So, in the absence of any usage of trade or any statutory provision to that effect, d railway receipt cannot be accorded the benefits which flow from negotiability under the Negotiable Instruments Act.
so as 10 entitle the endorsee as the holder for the time being of the document of title to sue the carrier the railway authorities in his own name.
If file claim of the plaintiff is as an ordinary assignee of the contract of carriage, then the plaintiff has to prove the assignment 'in his favour.
In the present case the plaintiff bank has furnished no such proof of assignment in its favour.
In view of cl.
(3) of the notice printed at the back of the railway receipt it is clear that an endorsement made on the face of the railway receipt by the consignee is meant to indicate the person to whom the consignee wishes delivery of the goods to be made if he himself does not attend to take delivery.
An endorsement made by the consignee on the face of the railway receipt requesting the railway company to deliver the goods to the endorsee merely conveys to the railway company that the person in whose favour the endorsement is made by the consignee is constituted by him a person to whom he wishes that delivery of the goods should be made on his behalf.
Clause (3) of the notice printed at the back of the railway receipt states: "That the railway receipt given by the railway company for the articles delivered for conveyance, must be given up at destination by the consignee to the railway company, otherwise the railway may refuse to deliver and that the signature of the consignee or his agent in the delivery (1) (1934) L.R. 61 I ,A. 416. (2) (1937) 65 I.A. 75.
275 book at destination shall be evidence of complete delivery.
If the consignee does not himself attend to take delivery he must endorse on the receipt a request for delivery to the person to whom he wishes it made, and if the receipt is not produced, the delivery of the goods may, at the discretion of the railway company, be withheld until the person entitled in its opinion to receive them has given an indemnity to the satisfaction of the railway company.
" In the present case the plaintiff has not proved by proper evidence an assignment of the Contract of Carriage.
In our opinion, the law on the point has been correctly stated by Bhagwati, J. in Shamji Bhanji & Co. vs North Western Rly.
Co.(1).
It follows, therefore, that the plaintiff has no right to bring the present suit against the Union of India.
Counsel for appellant has referred to the practice of merchants in treating a railway receipt as a symbol of goods and in making pledge of goods by pledge of railway receipts, but no such practice or custom has been alleged or proved on behalf of the plaintiff in the present case.
In the absence of such allegation or proof it is not open to the Court to take any judicial notice of any such practice.
Counsel for appellant also referred to possible inconvenience and hardship to merchants if such a practice is not judicially recognised, but the argument from inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure.
In Sutters vs Briggs(2).
Lord Birkenhead stated: "The consequences of this view of section 2 of the Gaming Act, 1835 will no doubt be extremely inconvenient to many persons.
But this is not a matter proper to influence the House unless in a doubtful case affording foothold for balanced speculation as to the probable intention of the legislature.
" In the present case the language of section 178 of the Contract Act is clear and explicit and if any hardship and ' inconvenience is felt it is for Parliament to take appropriate steps to amend the law and not for the courts to legislate under the guise of interpretation.
For the reasons expressed, we hold that Civil Appeal 474 of 1962 brought by the plaintiff bank should be dismissed and Civil Appeal 475 of 1962 brought by the Union of India through the General Manager, Central Railway should be allowed with costs and ' the suit of the plaintiff bank should be dismissed with costs throughout.
ORDER BY COURT In accordance with the majority Judgment.
Civil Appeal 474 of 1962 is allowed and Civil Appeal 475 of 1962 is dismissed,plaitiff 's suit is decreed with costs throughout.
(1) A.I.R. 1947 Bom. 169.
I.A.C. 1.
(2) [1922] I.A.C.1.
| By the enactment of Calcutta Tramways Act, 1951, the Government of West Bengal was substituted for the Corporation of Calcutta (Respondent) in various agreements entered into between the predecessors in interest of the appellant and the predecessors in interest of the respondent, subject to a reservation that any sum payable under the agreements shall be payable by the appellant to the respondent.
All the agreements contained an arbitration clause which provided for refering any disputes arising under the agreements to arbitration in the prescribed manner.
Disputes arose as regard the track rent payable by the appellant to the respondent and the dispute was referred to arbitration in accordance with the terms of the arbitration clause.
The appellant nominated its arbitrator without prejudice to its rights, and filed an application in the High Court, for the determination of the question whether there was a valid arbitration agreement between the appellant and respondent.
The High Court held that there was an agreement.
In appeal by special leave: HELD: Both the right to the sums payable to the respondent and the procedure of arbitration were saved under the Act.
The proviso to section 5 of the Act, in terms as well as by necessary implication brings the subject matter of the sums payable under the agreements both under the substantive and procedural aspects within the scope of the exception.
The substantive right to the payment of rent and the procedural one to have any dispute arising in respect of that right referred to arbitration embodied in the agreements are interconnected and are not severable.
To preserve the substantive right and to withhold the procedural right to enforce it is to save the right and deny the remedy.
[357 C D, F G]
|
Civil Appeals Nos.
*1312 of 1976, 519, 1146, 537 and 2639 of 1979.
773 and 2032 of 1980.
Appeals by *Certificate and Special leave Petitions from the Judgment and order dated the 8.10.74, 9.11.78, 22.12.78, and 5th March.
1980 of the Allahabad High Court in Civil Writ Petitions Nos.
3039/74, 89/76, 760/75, 759/75, 442/76, 2630/77 and 547/75.
P. R. Mridul, G. L Sanghi, Dr. Praveen Kumar, Praveen Kumar, and H. K Puri for the appearing Appellants.
section C. Manchanda, Sobha Dikshit, Pradeep Misra and Sudhir Kulshreshta for the appearing Respondents 668 The Judgment of the Court was delivered by THAKKAR, J.
The main controversy in this group of appeals centres around the question whether Electricity Duty on the consumption of electrical energy in Uttar Pradesh is payable by a person who has his own source of generation and also purchases electrical energy from a licensee, or the Board, or the State Government, or the Central Government.
The contention has been raised in the context of Section 3(1) and 4(1) of the U. P. Electricity (Duty) Act, 1852.
The view is canvassed on behalf of the consumers of electrical energy that while under Section 3(1) (c) read with Section 4(1) (c) of the Act Electricity Duty is indubitably leviable and payable on electrical energy consumed by a person from his own source of generation, such duty is not payable by him in case he consumes energy from his own source of generation and also purchases energy from a licensee, the Board, the State Government or the Central Government.
This question initially came up before a Division Bench of the Allahabad High Court in Sherwani Sugar Syndicate Pvt. Ltd. vs State of U.P. (C. M. W. P. No. 3039 of 1974).
The Division Bench by its judgment dated October 8, 1974 upheld the contention that in as much as the petitioner company had its own source of generation of energy and was also purchasing energy from another source indicated in Section 3 (1) (a) and 3 (1) (b), the petitioner company was not liable for payment of duty on the energy generated from its own source of supply.
The State of Uttar Pradesh has called into question the legality and validity of this decision by way of an appeal by certificate of fitness granted by the High Court (C. A. No. 1312 of 1977).
Meanwhile M/s. Deoria Sugar Mills Ltd. also approached the High Court of Allahabad by way of C.M.W.P. No. 9990 of 1975 on an identical plea.
The matter came up before another Division of the Allahabad High Court.
This Division Bench was of the opinion that the decision in Sherwani Syndicate case (supra) required reconsideration.
The matter was therefore referred to a Full Bench.
The Full Bench was of the opinion that the view taken earlier in Sherwani 's Case was not correct and dismissed the Writ Petition filed by M/s Deoria Sugar Mills, taking the view that a user of electricity was liable to pay electricity duty on the consumption of energy from his own source of supply regardless of whether or not he also purchased electricity from some other source indicated in Section 3 (1) (a) and (b).
In view of this decision of the Full Bench, petitions instituted by six other companies raising the identical question were dismissed by the High Court of Allahabad.
These companies 669 have approached this Court by way of six separate appeals by special leave granted by this Court.
Sections 3 (1) and Section 4(1) of the Act in so far as material read thus; "3.
Levy of Electricity Duty (I) Subject to tho provisions herein after contained, there shall be levied for and paid to the State Government on the energy: (a) Sold to a consumer by a licensee, the Board, the State Government or the Central Government, or (b) Consumed by a licensee or the Board in or upon premises used for commercial or residential purposes, or in or upon any other premises except in the construction, maintenance or operation of his or its works; or (c) Consumed by any other person from his own source of generation; a duty (hereinafter) referred to as 'electricity Duty ') x x x x x x x x x x 4.
Payment of electricity duty and interest thereupon: (1) The electricity duty shall be paid, in such manner and within such period as may be prescribed, to the State Government.
(a) Where the energy is supplied or consumed by a licensee, by the licensee: (b) Where the energy is supplied by the State Government or the Central Government or is supplied or consumed by the Board, by the appointed authority; and (c) Where the energy is consumed by any other person from his own source of generation by the person generating such energy.
" 670 The original writ Petitioners who canvass the view that electricity duty is not leviable or payable by a person consuming energy from his own source of generation under section 3 (1) (c) read with Section 4 (l) (c) of the Act lay great stress on the expression 'another person ' occuring in Section 3 (l) (c) and Section 4 (1) (c) of the Act.
It is contended that in view of the user of this expression only those consumers who wholly fall outside the orbit of Sections 3 (1) (a) or 3 (l) (b) are eligible to electricity duty under section 3(1) (c).
In case a consumer fails 'both ' under Sections 3 (1) (a) and 3 (1) (c) or sections 3 (1) (b) and 3 (1) (c) (it is so argued such a person would not be exigible to electricity duty.
The same argument is urged protanto in the context of clauses (a), (b) and (c) of Section 4(1).
In our opinion this submission is altogether untenable and has been rightly repelled by the Pull Bench of the Allahabad High Court in its well considered judgment.
On a plain reading of Section 3 (1) (c) it is evident that duty has been levied on the energy consumed by a person from his own source of generation without anything more.
There is no rider or qualification engrafted in Section 3 (1) (c) or Section 4 (1) (c?.
The fact that the user of electricity from his own source of generation purchases electricity from some other source as well, is an altogether irrelevant factor from the stand point of the liability imposed by the said provisions.
Be it realized that duty is levied on the consumption of energy.
The taxing event is the consumption of energy The source from which the electricity is acquired is altogether irrelevant.
A person having his own source of energy who also purchases energy from another source indicated in Section 3 (1) (a) will be covered by 3 (1) (a) to the extent he purchases electricity from such a source, and will be equally covered by Section 3 (1) (c), insofar as he consumes energy from his own source of generation.
He will be covered by both the provisions read conjointly.
The same reasoning applies in the context of clauses (a) (b) and (c) of Section 4 (1).
There is no rational basis for exonerating a person from payment of duty merely because he has his own source of generation and he also purchases electricity from some other source.
In fact it will be irrational to do so and it would give rise to an anachronism.
Why make him pay 'only if he generates his own energy and why exempt him altogether merely because he 'also ' purchases from some other source ? Duty is levied as a measure of taxation in order to raise additional revenue as is made abundantly clear by the prefactory note and the extract from the statement of objects and reasons published in U. P. Gazette Extraordinary dated September 1, 1952 which reads as under: 671 "The minimum programme of development which this State must carry out within the next three or four years for the attainment of the objective of a welfare State is set out in the Five Year Plan drawn up by the Planning Commission.
This plan provides for an expenditure of 13.58 crores of rupees on power development projects.
Such a huge expenditure cannot be met from our present resources.
It is, however essential for the welfare of the people that the expenditure should be incurred and that noting should be allowed to stand in the way of the progress of the plan.
Additional resources have therefore to be found, the bulk of which can be raised only by means of fresh taxation.
A tax on the consumption of electrical energy will impose a negligible burden on the consumer and is a fruitful source of additional revenue.
The bill has been so prepared as to ensure that the tax payable by a person will be related to the quantity of electricity consumed by him.
The bill is being introduced with the above object.
Vide Statement of Objects and Reasons published in U. P. Gazette.
Extra.
September 1, 1952.
" How would this object be promoted or served by adopting such an irrational course ? The taxing event being the consumption of energy, the source from which the electricity is acquired would become altogether irrelevant.
Section 3 (1) as also Section 4 (1) has to be read as a whole and has to be interpreted in a harmonious and meaningful manner.
To do otherwise would be to defeat the legislative intent which is abundantly clear, whilst at the same time exposing the provision to the charge of being irrational and arbitrary, by placing such an unwarranted construction thereon.
The Full Bench of the Allahabad High Court, was, therefore, perfectly justified in taking the view that duty was chargeable in respect of energy consumed by a person from his own source of generation regardless of the fact that he 'also ' purchased electricity from some other source indicated in Section 3 (1) (a) and Section 4 (1) (a).
The appeal preferred by the State, being Appeal No. 1312/77 will therefore have to be allowed and the appeals preferred by the consumers of electricity challenging the correctness of the decision rendered by the Full Bench must therefore be dismissed.
672 The next question agitated in five out of the seven appeals comprised in the group (it does not arise in C.A. 1312/77 and C.A. 1146/79) arises thus: The State of U.P. issued a notification dated March 17, 1973 whereby in exercise of powers under sub section (4) of Section 3 of the Act a person consuming energy from his own source of generation installed 'after ' January 2, 1973 was exempted from payment of electricity duty.
The appellants in the appeals before us are persons who have their own source of generation of electricity.
The generating machinery was however installed and commissioned by them 'before ' January 2, 1973.
It is their contention that exemption could not have been lawfully granted to a person installing his own source of generation 'after ' January 2, 1973 unless exemption was also granted to the persons consuming electricity from their own source of generation installed 'prior ' to January 2, 1973.
In other words the argument is that exemption must be granted to all persons having their own source of electricity regardless of the date on which the source of generation is installed, in order to be able to successfully face the challenge from the platform of Article 14 of the Constitution of India.
Exemption, (it is argued in effect), must be granted to all or to none irrespective of the date of installation of the equipment for generation of electricity to save the provision from the peril of being held as unconstitutional by reason of its being discriminatory and violative of Article 14 of the Constitution.
This argument has been rightly negatived by the High Court for the very good reason that the Notification ex facie made it abundantly clear that exemption was being granted "having regard to the need to promote industrial production generally and to the prevailing acute power shortage in the State.
" It is evident that in view of the felt need for augmenting the sources of supply of electrical energy an incentive needed to be provided by way of granting exemption to those who installed their own source of generation of energy.
As acute shortage of power was being experienced there was a need to encourage the consumers to acquire their own source of energy with a view to reduce or lessen the burden on the existing sources of electricity generation.
Obviously this purpose can be achieved only by granting the exemption prospectively to those consumers who install their own source of generation of energy pursuant to the concession being granted under the provision for exemption.
Those who already had their own source of generation of energy need no such encouragement in respect of the source of generation already installed.
If they wanted to further augment their own source of generation of energy they would also be entitled to 673 exemption in respect of the 'additional ' source of generation installed 'after ' the date specified in the notification.
The classification is, therefore, rational, purposeful, as also meaningful, and it is calculated to effectively serve the real purpose of granting exemption.
Article 14 cannot be invoked in a situation like this to successfully assail that part of the notification where by the date of installation has been made the precondition for qualifying for exemption.
State of Uttar Pradesh vs Jageshwar(1) on which reliance is placed cannot buttress the view canvassed by the writ petitioners having regard to the fact that exemption was granted with a view to encouraging consumers of electricity to become self sufficient hence forth and with the end in view to lessen the burden on the other source of generation prospectively.
As against this those who had already acquired their own source for generating electricity were in need of no retroactive encouragement by way of concession or exemption for doing what they had already done.
There would have been no augmentation of the existing resources by extending the exemption to them.
Under the circumstances we are of the opinion that the High Court was fully justified in repelling the plea urged by the writ petitioners in this behalf.
In the result the appeal preferred by the State of Uttar Pradesh (C.A. 1312 of 1977) is allowed, the judgement and order of the High Court are set aside, and the writ petition giving rise to the said appeal is dismissed with costs throughout.
The rest of the appeals are dismissed with costs.
All interim orders will stand vacated.
H.S.K Civil Appeal No. 1312/72 allowed and all other Appeals dismissed.
| The services of the appellant workman were terminated by the Management of the respondent.
On a report from the Conciliation Officer the Government referred the dispute to the Labour Court.
The Management contended that the workman had not raised any demand with the Management and that there was, therefore, no industrial dispute.
The Labour Court found as a fact that the Union had raised a valid demand with the Management and that the termination of services of the workman was illegal and mala fide.
The Management invoked the jurisdiction of the High Court under article 226.
A Single Judge of the High Court quashed the Award of the Labour Court on the finding that no demand had been raised and there was no industrial dispute which could be properly referred by the Government for adjudication.
The judgment of the Single Judge was affirmed by the Division Bench.
Allowing the appeal, ^ HELD: The High Court was not right in interfering with the Award of the Labour Court under article 226 on a mere technicality, [728 E] The jurisdiction under article 226 of the Constitution is truly wide but, for that very reason, it has to be exercised with great circumspection.
It is not for the High Court to constitute itself into an appellate court over Tribunals constituted under special legislations to resolve disputes of a kind qualitatively different from ordinary civil disputes and to readjudicate upon questions of fact decided by those Tribunals.
That the questions decided pertain to jurisdictional facts does not entitle the High Court to interfere with the findings on jurisdictional facts which the Tribunal is well competent to decide.
[727 D F] In the instant case there was a conciliation proceeding, the conciliation had failed and the Conciliation Officer had so reported to the Government.
The Government was justified in thinking that there was an industrial dispute and referring it to the Labour Court.
The High Court 's discussion on what was an industrial dispute and what was a jurisdictional fact was an entirely unnecessary exercise.
[727 G F; 728 A B] Sindhu Resettlement Corporation Ltd. vs The Industrial Tribunal of Gujarat, [1968]1 S.C.R. 515, explained and distinguished.
|
Civil Appeal No. 662 of 1981 Appeal by special leave from the judgment and order dated the 15th January, 1981 of the Bombay High Court in Letters Patent Appeal No. 611 of 1980.
Soli J. Sorabji G.L. Sanghi, P.H. Parekh, P.K. Shroff and Gautam Philips for the Appellant.
R.P. Khambata, B.R. Agarwala, K.P. Khambata, Ashok C. Mehta and Miss Halida Khatun for Respondent No. 1.
K.K. Venugopal, R. Vaidya, M.B. Rele, Rajiv K. Garg and N.D. Garg for Respondent No. 2.
The following judgments were delivered: FAZAL ALI, J.
This appeal by special leave is directed against an Order dated January 15, 1981 of the Division Bench of the Bombay High Court by which the appeal filed by the appellant against the Order of the Trial Judge was dismissed on the ground that the appeal was not maintainable as the Order impugned was 197 not a judgment within the meaning of clause 15 of the Letters Patent of the High Court.
After hearing counsel for the parties at great length we passed the following Order on April 22, 1981: "We have heard counsel for the parties at great length.
In our opinion, the appeal before the High Court was maintainable and the High Court should have entertained and decided it on merits.
We, therefore, allow this appeal, set aside the judgment dated January 15, 1981 of the Division Bench of the Bombay High Court and remand the case to the same and decide it on merits.
The High Court will dispose of the appeal as quickly as possible.
The interim order passed by this Court on February 16, 1981 will continue until the High Court disposes of the appeal.
Liberty to parties to approach the High Court for fixing an early date of hearing.
In the circumstances, there will be no order as to costs.
Reasoned judgment will follow.
" We now set out to give the reasons for the formal Order allowing the appeal which was passed by us on the aforesaid date.
As we are not at all concerned with the facts of the case it is not necessary to detail the same in this judgment.
Suffice it to say that the plaintiff appellant had filed a suit on the original side of the Bombay High Court for specific performance of a contract and prayed for an interim relief by appointing a receiver of the suit property and injuncting the defendant from disposing of the suit property during the pendency of the suit.
The single Judge after hearing the notice of motion dismissed the application for appointment of receiver as also for interim injunction.
Thereafter, the plaintiff appellant filed an appeal before the Bombay High Court which dismissed the appeal as being non maintainable on the ground that the Order impugned (order of the Single Judge) was not a judgment as contemplated by clause 15 of the letters patent of the High Court.
Hence, this appeal by special leave.
The substantial questions of law raised in this appeal by the Counsel for the parties are as to the scope, ambit and meaning of 198 the word 'judgment ' appearing in clause 15 of the Letters Patent of the Bombay High Court and corresponding clauses in the Letters Patent of other High Courts.
We might mention here that the significance of the word 'judgment ' assumes a special importance in those High Courts which have ordinary civil jurisdiction depending on valuation of the suit or the action.
These High Courts are Calcutta, Bombay, Madras as also Delhi and Jammu & Kashmir.
The other High Courts do not have any ordinary civil jurisdiction but their original jurisdiction is confined only to a few causes like probate and administration, admiralty and cases under .
It seems to us that the interpretation of the word 'judgment ' appearing in the Letters Patent of the High Court has been the subject matter of judicial interpretation by decisions rendered by various High Courts in India.
Unfortunately, however, the decisions are by no means consistent or unanimous.
On the other hand, there appears to be a serious divergence of judicial opinions and a constant conflict between the High Courts regarding the true scope, ambit and meaning of the word 'judgment ' appearing in the Letters Patent so much so that a colossal controversy has been raging in this country for more than a century.
Several tests have been laid down by leading judgments of the Calcutta, Madras and Rangoon High Courts.
Other High Courts have either followed one or the other of the leading judgments regarding the validity of the tests laid down by the three High Courts.
The Calcutta High Court appears to have followed the leading case of its court in The Justices of the Peace for Calcutta vs The Oriental Gas Company where Sir Richard Couch, C.J. had laid down a particular test on a rather strict and literal interpretation of the Letters Patent.
Later decisions of the Calcutta High Court have followed this decision of Sir Richard Couch, C.J. with some modifications and clarifications.
The Madras High Court has taken a very liberal view in its decision in T.V. Tuljaram Row vs M.K.R.V. Alagappa Chettiar.
The Bombay High Court seems to have consistently taken the view that no interlocutory order can ever be said to be a judgment within the meaning of the Letters Patent so as to be appealable from the order of a Single Judge exercising original civil jurisdiction (hereinafter referred to as 'Trial Judge ') to a larger Bench.
The Rangoon High Court speaking through Sir Page, C.J. in In Re Dayabhai Jiwandas & Ors vs A.M.M. Murugappa Chettiur has placed a very narrow interpretation on 199 the term 'judgment ' and has almost equated it with a decree passed by a civil court.
This Court also has incidentally gone into the interpretation of the word 'judgment ' and has made certain observations but seems to have decided the cases before it on the peculiar facts of each case without settling the conflict or the controversy resulting from the divergent views of the High Courts.
This Court, however, has expressed a solemn desire and a pious wish that the controversy and the conflict between the various decisions of the High Courts has to be settled once for all some time or the other.
In this connection, in Asrumati Debi vs Kumar Rupendra Deb Raikot & Ors.
this Court observed as follows: "In view of this wide divergence of judicial opinion, it may be necessary for this Court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word 'judgment ' as it occurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts.
We are, however, relieved from embarking on such enquiry in the present case as we are satisfied that in none of the views referred to above could an order of the character which we have before us, be regarded as a 'judgment ' within the meaning of clause 15 of the Letters Patent".
(Emphasis supplied) Similarly, in the case of State of Uttar Pradesh vs Dr. Vijay Anand Maharaj, this Court noticed the divergence of judicial opinions on the subject and observed as follows : "The scope of the expression "judgment" came under the judicial scrutiny of the various High Courts, there is a cleavage of opinion on that question. . . 200 The foregoing brief analysis of judgment shows that the definition given by the Madras High Court is wider than that given by the Calcutta and Nagpur High Courts.
It is not necessary in this case to attempt to reconcile the said decision or to give a definition of our own, for on the facts of the present case the order of Mehrotra, J., would be a judgment within the meaning of the narrower definition of that expression".
After, however, analysing the various judgments this Court did not think it necessary to give any definition of its own and refrained from giving a final decision on the question as to the scope and meaning of the word 'judgment ' appearing in the Letters Patent.
Mudholkar, J. in his concurring judgment expressly refrained from expressing any opinion on the subject.
Again in a later decision in Shankarlal Aggarwal & Ors.
vs Shankarlal Poddar & Ors.
the conflict in the various decisions of various High Courts was again noticed and this Court observed as follows: "There has been very wide divergence of opinion between the several High Court in India as to the content of the expression 'judgment ' occurring in Cl.
15 of the Letters Patent. . .
We consider that occasion has not arisen before us either since in view of the construction which we have adopted of section 202 of the Indian the scope of the expression 'judgment ' in the Letters Patent does not call for examination or final decision".
(Emphasis ours) There are other decisions of this Court also which have touched the fringes of the question but did not choose to give a final verdict on the vexed question and preferred to decide the cases on their own facts.
We shall briefly refer to these decisions at a later stage of this judgment.
With due deference to the desire of this Court to settle the controversy in question once for all, the very able, detailed and lengthy arguments advanced by counsel for the parties on various shades, features and aspects of the interpretation of the word 'judg 201 ment ' appearing in the Letters Patent, the serious legal controversy raging in this country for over a century between the various High Courts resulting in an irreconciliable element of judicial uncertainty in the interpretation of the law and further having regard to the huge backlog and accumulation of arrears in the High Courts, we are clearly of the opinion that the time has now come when the entire controversy on the subject should be set at rest and an authoritative pronouncement on the matter may be given by us so as to maintain complete consistency in deciding the matter by the High Courts whenever it arises.
Mr. Sorabjee, learned counsel for the appellants has submitted four important points of law dwelling on the various facts of the question at issue: (1) It was contended that the provisions of section 104 read with order 43 Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'Code of 1908 ') does not impose any bar on the trial held by the Trial Judge and thus by virtue of these provisions the order impugned (the order of the trial court refusing to appoint Receiver and to grant injunction) falls squarely under clauses (r) and (s) of order 43 Rule 1 of the Code of 1908 and is therefore appealable to a larger Bench.
In amplification of this contention it was submitted that the Trial Judge is governed by the procedure prescribed by the Code of 1908 in all matters and hence there is no reason why order 43 Rule 1 should not apply to any order passed by the Trial Judge under any of the clauses of order 43 Rule 1 read with section 104.
(2) Even if we assume that the Letters Patent was a special law which overrides the provisions of the Code of Civil Procedure, the power under section 104 read with order 43 Rule 1 is in no way inconsistent with cl. 15 of the Letters Patent.
Section 104 merely provides an additional remedy and confers a new jurisdiction on the High Court without at all interfering with or overriding the existing provisions of the Letters Patent.
202 (3) Even if order 43 Rule 1 did not apply in terms, the orders which have been mentioned as being appealable to a larger Bench could form valuable guidelines for the Court in arriving at the conclusion that such orders amount to judgments of the Single Judge as contemplated by the Letters Patent.
(4) Even if section 104 read with order 43 Rule 1 does not apply, an order refusing to appoint a receiver or to grant injunction has the trappings and attributes of finality as it affects valuable rights of the plaintiff in an ancillary proceeding though the suit is kept alive and would, therefore, amount to a judgment within the meaning of the Letters Patent.
The learned counsel for the respondents while countering the arguments of Mr. Sorabjee submitted the following propositions: (1) section 104 read with order 43 Rule 1 could not apply to the original trial by the Trial Judge which is governed by the Letters Patent alone.
(2) It was further argued that the forum for an appeal contemplated by section 104 is the same as that for appeals under sections 96 to 100 of the Code of 1908, that is to say, appeals from the courts in the mofussil (district courts) to the High Court and it has no application to internal appeals within the High Court.
In other words, the forum under which an appeal lies from one Judge of the High Court to a larger Bench is not a forum contemplated by section 104 at all but is created by the Letters Patent.
(3) If section 104 of the Code of 1908 is held to be applicable to proceedings before the Trial Judge of the High Court certain strange anomalies will arise, viz., where an appeal lies from a district court under order 43 Rule 1 before a Single Judge, a further appeal will have to lie before a larger Bench against the order of the Trial Judge although section 104 prevents a second appeal against miscellaneous orders under order 43 Rule 1 and permits only one appeal.
This will, therefore, lead to an inconsistent and anomalous position.
203 (4) The word 'judgment ' should be strictly construed as was done by Sir Richard Couch, C.J. in Oriental Gas Company 's case (supra) so as to include only those orders of the Trial Judge which are of a final nature and effectively decide the controversy of the issues in dispute.
We would first deal with the point relating to the applicability of section 104 read with order 43 Rule 1 of the Code of 1908 because it seems to us that the arguments of Mr. Sorabjee on this score are well founded and must prevail.
Moreover, some of the decisions of this Court, those of the Privy Council and other High Courts support the propositions adumbrated by Mr. Sorabjee.
In order, however, to appreciate the applicability of section 104 read with Order 43 Rule 1, it may be necessary to examine some important provisions of the Code of Civil Procedure as also the previous history which led to the enactment of section 104 by the Code of 1908.
It appears that prior to the Code of 1908 in the earlier Code of Civil Procedure there were two kinds of appeals to the High Court (1) appeals against judgments and decrees of the Trial Judge, and (2) appeals against orders, either interlocutory or quasi final, passed by the court during the pendency of the suit or proceedings.
In the Civil Procedure Code of 1877 the section corresponding to order 43 Rule 1 of the Code of 1908 was section 588 which provided for appealable orders under clauses (a) to (t).
Section 588 of the Code of 1877 provided that an appeal from any order specified in section 588 shall lie to the High Court or when an appeal from any other order is allowed by the Chapter it would lie to the Court to which an appeal would lie from the decree in the suit in respect of which such order was made or when such order is passed by a court other than the High Court, then to the High Court.
A perusal of sections 588 and 589 of the Code of 1877 would clearly show that the statute made no distinction between appeals to the High Courts from the district courts in the mofussils or internal appeals to the High Courts under the Letters Patent.
Section 591 clearly provided that except the orders mentioned in section 588 no further appeal could lie from any order passed by any court in exercise of its original or appellate jurisdiction.
Section 591 may be extracted thus: "591.
No other appeal from orders; but error therein may be set forth in memorandum of appeal against decree.
204 "Except as provided in this chapter, no appeal shall lie from any order passed by any Court in the exercise of its original or appellate jurisdiction but if any decree be appealed against, any error, defect or irregularity in any such order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal".
In other words, the position was that while the statute provided only for appeals against orders, all other appeals could only be against a decree passed by the court concerned.
The statute there fore, did not contemplate any other appeal except those mentioned in sections 588 and 591.
The Code of 1877 was later on replaced by the Code of 1882 but the provisions remained the same.
In view of the rather vague and uncertain nature of the provisions of sections 588 to 591 a serious controversy arose between the various High Courts regarding the interpretation of section 588.
The Bombay and Madras High Courts held that under cl. 15 of the Letters Patent of the said High Courts, an appeal could lie only from orders passed under section 588 and not even under the Letters Patent.
In Sonba 'i vs Ahmedbha 'i Habibha 'i a Full Bench of the Bombay High Court held that under cl. 15 of the Letters Patent an appeal to the High Court from an interlocutory order made by one of the Judges lies only in those cases in which an appeal was allowed under the Code of Civil Procedure, that is to say, under sections 588 and 591 of the Code of 1877.
The Madras High Court in Rajgopal & Ors (in Re: L.P.A. No. 8 of 1886 took the same view.
Then came the decision of the Privy Council in the case of Hurrish Chunder Chowdry vs Kali Sundari Debia which while considering section 588 made the following observations: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals is from one of the Judges of the Court to the full Court." (Emphasis ours) 205 This judgment gave rise to a serious conflict of opinions in the High A Courts in India.
The High Courts of Calcutta, Bombay and Madras held that in view of the decision of the Privy Council in the aforesaid case, even though an order may not have been appealable under section 588 it could be appealable provided it was a judgment within the meaning of cl. 15 of the Letters Patent of the respective High Courts.
Toolsee Money Dassee vs Sudevi Dassee,, Secretary of State vs Jehangir; Chappan vs Modin Kutti, However, the Allahabad High Court in Banno Bibi vs Mehdi Husain held that if an order was not appealable under sections 588 and 591 of the Code of 1877 it could not be appealed against even under the Letters Patent of the High Court.
This view was affirmed by a later decision of the same High Court in Muhammad Naim ul Lah Khan vs Ihsan ul Lah Khan.
With due respect we would like to point out that the pointed and terse observations of the Privy Council did not leave any room for any doubt or speculation in the matter.
While construing section 588, the Judicial Committee in Hurrish Chunder Chowdry 's case (supra) had made it clear that appeals would lie under section 588 to the High Court and the section did not contain any restriction to the effect that appeal against the orders of the Trial Judge mentioned in section 588 would not lie to a larger Bench of the High Court.
In other words, the Privy Council intended to lay down clearly that section 588 did not affect nor was it inconsistent with the provisions of the Letters Patent and hence those orders of the Trial Judge which fell beyond section 588 could be appealable to a larger Bench under the Letters Patent if those orders amounted to judgment within the meaning of cl. 15 of the Letters Patent.
Therefore, the views taken by the Calcutta, Bombay and Madras High Courts, referred to above, were undoubtedly correct.
At any rate, since a fresh controversy had arisen, the legislature stepped in to settle the controversy by enacting the new section 104 in the Code of 1908.
Section 104 made it clear that appeals against orders mentioned in order 43 Rule 1 were not in any way inconsistent with the Letters Patent and merely provided an additional remedy by allowing appeals against miscellaneous Orders passed by the Trial Judge to a larger Bench.
In other words, the legislature gave full statutory effect to the views of the Calcutta, 206 Bombay and Madras High Courts.
Even after the introduction of section 104, the conflict between the various High Courts still continued as to whether or not section 104 would apply to internal appeals in the High Court.
That is the question which we shall now discuss.
To begin with, it is not disputed that a Trial Judge has to follow the entire procedure laid down by the Code of 1908 starting from the presentation of the plaint right up to the delivery of the judgment.
The only difference in the assumption of jurisdiction by the High Court is that a suit of a particular valuation has to be instituted in the High Court rather than in the District court.
Secondly, it is indisputable that any final judgment that the Trial Judge passes deciding the suit one way or the other amounts to a decree and under the provisions of the Letters Patent an appeal lies to a larger Bench which normally is a Division Bench as provided for under the Rules made by various High Courts.
Thirdly, the Letters Patent itself does not define the term 'judgment ' and has advisedly not used the word 'decree ' in respect of any judgment that may be given by the Trial Judge.
Section 5 of the Code of 1908 may be extracted thus: "5.
Application of the Code to Revenue Courts: (1) Where any Revenue Courts are governed by the provisions of this Code in those matters of procedure upon which any special enactment applicable to them is silent the State Government may, by notification in the Official Gazette, declare that any portions of those pro visions which are not expressly made applicable by this Code shall not apply to those Courts, or shall only apply to them with such modifications as the State Government may prescribe.
(2) "Revenue Court" in Sub section (1) means a court having jurisdiction under any local law to entertain suits of other proceedings relating to the rent, revenue or profits of land used for agricultural purposes, but does not include a Civil Court having original jurisdiction under this Code to try such suits or proceedings as being suits or proceedings of a civil nature " The importance of this section is that wherever the provisions of the Code of Civil Procedure are sought to be excluded by any special enactment which may be silent on the point, the State 207 Government can by notification apply the provisions of the Code to Revenue courts.
A bare perusal of this section would clearly reveal that excepting Revenue courts all other Civil courts would normally be governed by the provisions of the Code of Civil Procedure in the matter of procedure.
Section 4(1) of the Code of 1908 which is a saving provision clearly provides that in the absence of any specific provision to the contrary the provisions of the Code does not limit or affect any special or local law.
Thus, the test contained in section 4 is not applicable in the instant case because even if the Letters Patent of the High Court be deemed to be a special law as contemplated by section 4, the provisions of section 104 do not seek to limit or affect the provisions of the Letters Patent.
This now takes us to section 104 of the Code of 1908, the relevant portion of which may be extracted thus: "104.(1) An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders: (a) to (f) annulled; (ff) an order under section 35 A (g) an order under section 95; (h) an order under any of the provisions of this Code imposing a fine or directing the arrest or detention in the civil prison of any person except where such arrest or detention is in execution of a decree; (1) any order made under rules from which an appeal is expressly allowed by rules: (2) No appeal shall lie from any order passed in appeal under this section.
" Thus by the force of section 104 all appeals as indicated in the various clauses of order 43 Rule 1 viz. (a) to (w) would lie to the appellate court.
Section 105 clearly provides that no appeal shall lie from any order of a Court made in the exercise of its original or appellate 208 jurisdiction except according to the procedure laid down by the Code.
The relevant part of section 105 (1) may be extracted thus: "105.
(1) Save as otherwise expressly provided no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.
" Finally, order, 49 Rule 3 expressly exempts matters contained in clauses (1) to (6) of Rule 3 from the operation of the extraordinary original civil jurisdiction of the chartered High Courts, that is to say, the jurisdiction conferred on the High Court by the Letters Patent.
The relevant portion of this provision may be extracted thus: "O. 49.
(3) The following rules shall not apply to any Chartered High Court in the exercise of its ordinary or extraordinary original civil jurisdiction, namely: (1) rule 10 and rule 11, clauses (b) & (c), of order VII; (2) rule 3 of order X; (3) rule 2 of order XVI; (4) rules 5, 6, 8, 9, 10, 11, 13, 14, 15, and 16 (so far as relates to the manner of taking evidence) of Order XVIII; (5) rules 1 to 8 of order XX; and (6) rule 7 of order XXXIII (so far as relates to the making of a memorandum); and rule 35 of order XLI shall not apply to any such High Court in the exercise of its appellate jurisdiction" It may be pertinent to note that although a number of rules have been exempted from the operation of the Code, order 43 Rule 209 1 and the clauses thereunder have not been mentioned in any of these clauses.
Thus, a combined reading of the various provisions of the Code of Civil Procedure referred to above lead to the irresistible conclusion that section 104 read with order 43 Rule 1 clearly applies to the proceedings before the Trial Judge of the High Court.
Unfortunately, this fact does not appear to have been noticed by any of the decisions rendered by various High Courts.
We might further point out that section 117 of the Code of 1908 expressly applies the provisions of the Code to High Courts also.
Section 117 may be extracted thus: "117.
Save as provided in this Part or in Part X or in rules, the provisions of this Code shall apply to such High Courts".
We find ourselves in complete agreement with the arguments of Mr. Sorabjee that in the instant case section 104 read with Order 43 Rule 1 does not in any way abridge, interfere with or curb the powers conferred on the Trial Judge by cl. 15 of the Letters Patent.
What section 104 read with order 43 Rule 1 does is merely to give an additional remedy by way of an appeal from the orders of the Trial Judge to a larger Bench.
Indeed, if this is the position then the contention of the respondent that section 104 will not apply to internal appeals in the High Courts cannot be countenanced.
In fact, the question of application of the Code of Civil Procedure to internal appeals in the High Court does not arise at all because the Code of Civil Procedure merely provides for a forum and if order 43 Rule 1 applies to a Trial Judge then the forum created by the Code would certainly include a forum within the High Court to which appeals against the judgment of a Trial Judge would lie.
It is obvious that when the Code contemplates appeals against orders passed under various clauses of order 43 Rule 1 by a Trial Judge, such an appeal can lie to a larger Bench of the High Court and not to any court subordinate to the High Court.
Hence, the argument that order 43 Rule 1 cannot apply to internal appeals in the High Court does not appeal to us although the argument has found favour with some of the High Courts.
We might also reiterate that prior to the Code of 1908, in the Code of 1877 an identical provision like order 43 Rule 1 also existed in the shape of section 588 which was absolutely in the same terms 210 as order 43 Rule 1 and its various clauses.
Of course, section 104 was conspicuously absent from the Codes of 1877 or 1882.
As indicated earlier, the question of the application of section 588 (now Order 43 Rule 1) was considered as early as 1882 in Hurrish Chunder Chowdary 's case (supra) where the Privy Council in very categorical terms observed thus: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the full Court.
" We have already shown that a perusal of these observations leaves no room for doubt that the Privy Council clearly held that section 588 undoubtedly applied to appeal from one of the Judges of the High Court to the Full Court, which really now means the Division Bench constituted under the Rules.
In spite of the clear exposition of the law on the subject by the Privy Council it is rather unfortunate that some High Courts have either misinterpreted these observations or explained them away or used them for holding that s.588 does not apply to High Courts.
We shall deal with those judgments and point out that the view taken by the High Courts concerned is not at all borne out by the ratio decidendi of the Privy Council.
So far as the applicability of section 588 to proceedings in the High Courts is concerned, in a later decision the Privy Council reiterated its view in unmistakable terms.
In Mt. Sabitri Thakurain vs Savi & Anr., their Lordships observed as follows: "Section 15 of the Letters Patent is such a law and what it expressly provides, namely an appeal to the High Court 's appellate jurisdiction from a decree of the High Court in its original ordinary jurisdiction, is thereby saved.
Thus regulations duly made by orders and Rules under the Code of Civil Procedure, 1908 are applicable to the jurisdiction exercisable under the Letters Patent, except that they do not restrict the express Letters Patent appeal".
Though not directly, some observations made by this Court also support the consistent view taken by the Privy Council that order 43 Rule 1 applies to the original proceedings before the Trial 211 Judge.
In Union of India vs Mohindra Supply Co., this Court made the following observations: "The intention of the legislature in enacting sub section (1) of section 104 is clear: the right to appeal conferred by any other law for the time being in force is expressly preserved.
This intention is emphasised by section 4 which provides that in the absence of any specific provision to the contrary nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force.
The right to appeal against judgments (which did not amount to decrees) under the Letters Patent, was therefore not affected by section 104 (1) of the Code of Civil Procedure, 1908".
Thus, this Court has clearly held that the right to appeal against judgments under the Letters Patent was not affected by section 104 (1) of the Code of 1908 and the decision therefore fully supports the argument of Mr. Sorabjee that there is no inconsistency between the Letters Patent jurisdiction and section 104 read with order 43 Rule 1 of the Code of 1908.
Similarly, in Shankarlal Aggarwal 's case (supra) this Court while construing the provisions of section 202 of the Indian observed as follows: "There was no doubt either that most of the orders or decisions in winding up would not be comprehended within the class of appealable orders specified in section 104 or O. 43 r.1.
If therefore the contention of the respondent were accepted it would mean that in the case of orders passed by the District Courts appeals would lie only against what would be decrees under the Code as well as appealable orders under section 104 and o. 43 r.1.
and very few of the orders passed in the Courts of the winding up would fall within these categories.
On the other hand, the expression "judgment" used in cl. 15 is wider.
The learned Judge therefore rejected a construction which would have meant that the same orders passed by District Courts and by a Single Judge of a High Court would be subject to different rules as to appealability".
There is yet another aspect of the matter which shows that section 104 merely provides an additional or supplemental remedy by way 212 of appeal and, therefore, widens rather than limits the original jurisdiction of the High Court.
For instance, in this very case with which this Court was dealing, an order passed under section 202 of the was appealable to a larger Bench and yet it was argued that the order being of an interlocutory nature would not be a judgment and therefore no appeal would lie to the Division Bench.
This contention was negatived by the Supreme Court and it was held that against the order passed by a Trial Judge under the , an appeal would lie to the Division Bench.
On a parity of reasoning, therefore, section 104 read with order 43 Rule 1 expressly authorises and creates a forum for appeal against orders falling under various clauses of order 43 Rule 1, to a larger Bench of the High Court without at all disturbing, interfering with or overriding the Letters Patent jurisdiction.
There are a number of other Acts also which confer additional powers of appeal to a larger Bench within the High Court against the order of a Trial Judge.
Take, for instance, a case under the Arbitration Act.
Suppose in a suit the matter is referred to arbitration and after the award is filed by the Arbitrator certain objections are taken, under section 39 of the Arbitration Act an appeal would lie to a Larger Bench from the order of a Single Judge disposing of the objections taken by the parties against the award.
Section 39 runs thus: "39.
Appealable orders. (1) An Appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decree of the Court passing the orders; An Order (i) superseding an arbitration; (ii) on an award stated in the form of a special case; (iii)Modifying or correcting an award; (iv) filing or refusing to file an arbitration agreement; (v) staying or refusing to stay legal proceedings where there is an arbitration agreement; (vi)setting aside or refusing to set aside an award: Provided that the provisions of this section shall not apply to any order passed by a small Cause Court.
213 (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court".
It cannot be contended by any show of force that the Order passed by the Trial Judge being an interlocutory order, no appeal would lie to the Division Bench or that the provisions of the Arbitration Act giving a right of appeal to a litigant from the order of a Trial Judge to the Division Bench in any way fetter or override the provisions of the Letters Patent.
There are, however, a number of decisions of the various High Courts which have held that the provisions of order 43 Rule 1 clearly apply to a Trial Judge.
As early as 1872, the Bombay High Court in Sonba 'i 's case (supra) held that in regard to appeals against orders of the Trial Judge the practice of the Bombay High Court has been that in all matters the provisions of the Code concerned would be applicable.
In this connection, Sargent, Acting C.J., speaking for the court observed as follows: "the word "judgment" may be taken to include any preliminary or interlocutory judgment, decree, order, or sentence within the meaning of clause 40, and effect may be given to section 37 by limiting the orders open to appeal to those orders which are expressly declared appealable in the various sections of the Civil Procedure Code, or in other words by incorporating the provisions of the Civil Procedure Code relating to appeals with Sec.
IS of the Letters Patent, and holding the word 'judgment ' to mean all judgments and orders which are appealable under the provisions of the Civil Procedure Code".
This case was followed by a Division Bench of the Madras High Court which clearly held that an order passed under section 592 was controlled by section 588.
We have already pointed out that in the Code prior to 1882, order 43 Rule 1 appeared in the shape of section 588 and even under order 43 Rule 1 an order rejecting an appeal in forma pauperis is not appealable and does not appear in any of the clauses of order 43 Rule 1.
The Madras High Court in Rajgopal 's case (supra), relying on the decision of the Bombay High Court, observed thus: 214 "An order passed under section 592 of the Code of Civil Procedure rejecting an appeal in forma pauperis is not appealable under section 588, which provides that no appeal shall lie from orders not specified in that section.
It has already been decided in Achaya vs Ratnavelu (ILR that section 15 of the Letters Patent is controlled by a similar section in the Civil Procedure Code, which provided that an order shall be final, and that enactments to such effect are not beyond the legislative powers of the Governor General in Council".
Thus, even in the earlier times the High Court had veered round to the view that section 588 would be applicable to the High Courts also even in respect of internal appeals in, the High Court.
Similarly, in Ruldu Singh vs Sanwal Singh, Shadi Lal, C.J. Speaking for the court observed thus; Now, section 588 of the old Code, which has now been replaced by section 104 and Order XLIII, rule of the new Code, enacted that an appeal lay from the orders specified in that section and from no other orders"; and it was consequently decided by a Full Bench of that Court in Muhammad Naim ul Lah Khan vs Ihsan Ullah Khan All. 226 that clause 10 of the Letters Patent was controlled in its operation by section 588, and that no appeal lay under the Letters Patent from an order made under the Code if it was not one of the orders enumerated in that section.
Section 104 of the new Code, however, expressly saves the right of appeal otherwise provided by 'any law for the time being in force '.
It seems to us that the object of the Legislature in enacting sub section (2) was to make it clear that there was no second appeal under the Code from the orders specified in Sub section (1) of section 104, and that sub section (2) was not intended to override the express provisions of the letters patent." The Lahore High Court relied on the decision of the Privy Council in Hurrish Chunder Chowdrys case (supra).
The High Court further held that section 104 does not in any way take away the 215 right of appeal conferred by the Letters but Patent of the High Court merely bars a second appeal from orders passed under O.43 R. 1 to Division Bench.
A contrary view was taken by the Allahabad High Court in Ram Sarup vs Kaniz Ummehani where the following observations were made: "It may, however, be conceded that this saving clause does not occur in sub section (2) of section 104.
But under the corresponding section 588 of the old Code, where the words were "orders passed in appeal under this section shall be final", their Lordships of the Privy Council in Hurrish Chunder Chowdhry vs Kalisunduti Debi Cal. 482 observed that section 588, which had the effect of restricting certain appeals, did not apply to a case where the appeal is from one of the Judges of the High Court to the Full Court to the full Court.
In any case section 104 (2) does not contain any express provision which would suggest that the provisions of the Letters Patent have been abrogated.
We accordingly hold that under clause 10 of the Letters Patent an appeal lies from the order of a single Judge passed in appeal." With due deference to the Hon 'ble Judges we are of the opinion that the decision of the Allahabad High Court on this point is based on a serious misconception of the legal position.
It is true that section 104 was introduced by the Code of 1908 and the aforesaid section, as we have already indicated, clearly saved the Letters Patent jurisdiction of the High Court.
From this, however, it does not necessarily follow that the restriction that there is no further appeal from the order of a Trial Judge to a larger Bench would be maintainable or permissible.
In the first place, once section 104 applies and there is nothing in the Letters Patent to restrict the application of section 104 to the effect that even if one appeal lies to the Single Judge, no further appeal will lie to the Division Bench.
Secondly, a perusal of clause 15 of the Letters Patent of the Presidency High Courts and identical clauses in other High Courts, discloses that there is nothing to show that the Letters Patent ever contemplated that even after one appeal lay from the subordinate court to the Single Judge, a second appeal would again lie to a Division Bench of the Court.
All that the Letters Patent provides for is that where the Trial Judge passes an order, an appeal against the judgment of the said Trial Judge would 216 lie to a Division Bench.
Furthermore, there is an express provision in the Letters Patent where only in one case a further or a second appeal could lie to a Division Bench from an appellate order of the Trial Judge and that is in cases of appeals decided by a Single Judge under section 100 of the Code of Civil Procedure.
Such a further appeal would lie to a Division Bench only with the leave of the court and not otherwise.
The relevant portion of cl. 15 of the Letters Patent may be extracted thus: "And we do further ordain that an appeal shall lie to the said High Court of Judicature at Madras, Bombay, Fort William in Bengal from the judgment.
Of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act, and that notwithstanding anything hereinbefore provided, an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act, made (on or after the first day of February, 1929) in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court where the Judge who passed the judgment declares that the case is a fit one for appeal.
" A perusal of the Letters Patent would clearly reveal two essential incidents (1) that an appeal shall lie against any order passed by the Trial Judge to a larger Bench of the same High Court, and (2) that where the Trial Judge decides an appeal against a judgment or decree passed by the district courts in the mofussil, a further appeal shall lie only where the judge concerned declares it to be a fit one for appeal to a Division Bench.
Thus, the special law, viz., the Letters Patent, contemplates only these two kinds of appeals and no other.
There is, therefore, no warrant for accepting the argument of the respondent that if order 43 Rule 1 applies, then a further appeal would also lie against the appellate order of the Trial Judge to a Division Bench.
As this is neither contemplated nor borne out by the provisions of the Letters Pantent extracted above, the contention of the respondent on this score must be overruled.
A further second appeal Lying to a Division Bench from an appellate order of the Trial Judge passed under order 43 Rule 1 is wholly foreign to the scope and spirit of the Letters Patent.
Un 217 fortunately however, the Allahabad High Court in Ram Sarup 's case (supra) refused to follow a Division Bench decision in Piari Lal vs Madan Lal and also tried to explain away the Full Bench decision in Ram Sarup 's case (supra) where it was clearly pointed out that in such cases no further appeal would lie to the Division Bench under the Letters Patent.
The distinction drawn by the Allahabad High Court regarding the application of section 104 is a distinction without any difference.
Sir John Edge, C.J., in Muhammad Naim ul lah Khan 's case (supra) dealing with this aspect of the matter observed thus: "It appears to me that the Code of Civil Procedure (Act No. XIV of 1882), as did Act No. X of 1877, contemplates a High Court in two aspects.
It contemplates a High Court doing the ordinary work of a Court of original and appellate jurisdiction; having the necessary powers of review and revision in certain cases and certain other powers such as are generally found vested in the Courts of the importance of High Courts. whatever those powers may be, it is quite clear to my mind that the power conferred on a High Court under Chapter XLV of the Code of Civil Procedure are special powers and entirely distinct from the ordinary powers required by the High Court in the carrying on of its ordinary judicial business." and Mahmood, J. Observed thus: "To hold then that where this statute of ours, namely, our present Code of Civil Procedure, declares a decree or order non appealable, such decree or order can be made the subject of consideration by the whole of this Court under the Letters Patent, is to hold that wherever no appeal lies to this Court the ceremony of presenting it to this Court to a Single Judge of this Court who would undoubtedly reject the appeal, makes it the subject of consideration by a Bench of the Court.
" The other Judges agreed with the view taken by the Chief Justice and Mahmood, J. In Piari Lal 's case (supra) which was decided after section 104 was introduced in the Code of 1908, the following observations were made: 218 "A preliminary objection has been taken to the hearing of the appeal based on the Full Bench decision in the case of Muhammad Naimullah Khan vs Ihsan ullah Khan All. 226.
Section 104 of the Code of Civil Procedure provides for the cases in which an appeal shall lie against an "order '.
Clause (ii) provides that "No appeal shall lie from any order passed in appeal under this section".
The contention of the respondent in the preliminary objection is that no second appeal lies and reliance is placed upon the authority quoted to show that even a Letters Patent appeal is not permissible.
We are of course bound by the Full Bench ruling of this Court.
It is contended, however, that the words in section 588 of the Code of Civil Procedure, which was in force when the decision in the Full Bench case was given, differed from the words of the present Code.
The only difference is that in the old Code the words were "The order passed in appeals under this section shall be final", whereas in the present Code the words are "No appeal shall lie".
We cannot see how the change in the words can in any way help the appellant.
Possibly the reason for the change is that under the words in the old Code it might have been argued that even a "revision" or a "review of judgment" would not lie against an order passed by an appellate court.
We think the preliminary objection must prevail and we accordingly dismiss the appeal with costs." Thus, in these two cases it was clearly held that where a Trial Judge had passed an order in an appeal against an order passed by the district judge under order 43 Rule 1, a further appeal under the Letters Patent was not maintainable.
This view is fully supported by the express language in which clause 15 of the Letters Patent has been couched, as referred to above.
Thus the latter decision of the Allahabad High Court in Ram Sarup 's case (supra) was clearly wrong in holding that an appeal under the Letters Patent would lie even against an appellate order of the Trial Judge passed under O.43, R. 1 even though it was prohibited by section 104 (2) of the Code.
Similarly, in Chappan 's case (supra) the Court on an interpretation of section 588 (which now corresponds to the present Order 43 Rule 1 clearly held that an appeal would lie to the High Court 219 against the orders contemplated in various clauses of section 588 of the Code of 1877.
The Court held thus: "The result of this judgment (so far as it applies to the question before us) appears to me to come to this, that if the order made by a single Judge only amounts to an order such as is intended by chapter XLII of the Code, it is not appealable unless it is within section 588." The Madras case heavily relied on the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra).
In Lea Badin vs Upendra Mohan Roy Chaudhury & Ors.
while criticising the judgment of Sir Richard Couch, C.J. in The Justice of the Peace for Calcutta (supra) the Court as an alternative argument clearly held that order 43 Rule 1 would apply pro tanto to the Trial Judge and on this ground also the order would be appealable to a Division Bench.
In this connection, the celebrated jurist Sir Manmatha Nath Mookerjee, J. Observed as follows: "But there is another and a far simpler ground on which it must be held that an appeal is competent.
The order in the present case is one for which a right of appeal is provided in cl.
(s) of r. 1 of or 43 of the Code.
Under the present Code (Act V of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court " Another important decision regarding the applicability of order 43 Rule 1 to an order passed by the Trial Judge was rendered by a Full Bench in Mathura Sundari Dassi vs Haran Chandra Shaha & Ors.
where Sanderson, C.J. Observed thus: "By the terms of section 117, the Code is made applicable to the High Court, and O. 43, R. 1 gives a right of appeal in the very case under discussion.
But it is said that this Code and the rules made under it do not apply to an appeal from a learned Judge of the High Court.
I cannot follow that argument.
It is part of the defendant 's case that O.9 R. 8 applies.
That order is in effect a part of the Civil Procedure Code.
It seems to me strange that the plaintiff 220 should be subjected to O. 9, R. 8 and be liable to have his suit dismissed for want of appearance, yet when he has had his suit dismissed under one of the rules of the Code and wants to call in aid another of the rules which when his application for reinstatement has been refused gives him a right of appeal against that refusal, he is met with the argument that he cannot call in aid that rule because there is no appeal from the learned Judge of the High Court under the Civil Procedure Code.
I think this is not a true view or a reasonable construction to put upon the Code and the rules made under it.
In my judgment, the Code and the rules do apply and the plaintiff has a right of appeal." and Woodroffo 'J ' made similar observations: "Whether or not as a question of jurisdiction an appeal lies under clause 15 of the Letters Patent in a case in which an appeal is allowed under the Code, I think it may be said that there are prima facie grounds for holding that an appeal should be held to lie under the Letters Patent where it is allowed under the Code; for the fact that the Legislature has in the Code allowed an appeal in a particular case, a affords to my mind prima facie grounds for supposing that case is of a class which this Court considers appealable under its Letters Patent.
Looking at the nature of the order appealed from, I think I should hold that it is appealable as a 'judgement ' under the Letters Patent." and Mookerjee, J. Observed thus: "The term "Rule" which finds a place in section 117 is defined in clause 18 of section 2 of the Code to mean "a rule contained it the First Schedule or made under section 122 or section 125.
" our attention has not been drawn to any such rule which makes O. 43, R, 1, clause (c) inapplicable.
On the other hand, O. 49, R. 3 which excludes the operation of other rules, lends support to the contention of the appellant that O. 43, R. 1 clause (c) is applicable to the present appeal.
"section 104 of the Code of 1908 is materially different from section 588 of the Code of 1882.
It provides that lie from 221 the orders mentioned in the first clause of that section and, save as otherwise expressly provided in the body of the Code or by any law for the time being in force from no other orders.
" The effect of section 104 is thus, not to take away a right of appeal given by clause 15 of the Letters Patent, but to create a right of appeal in cases even where clause 15 of the Letters Patent is not applicable.
I hold accordingly that this appeal is competent under Clause (c), R. 1, O. 43 of the Civil Procedure Code.
I am further of opinion that the appeal is competent also under Clause 15 of the Letters Patent." (Emphasis ours) We find ourselves in complete agreement with the view taken and the reasons given by the three eminent Judges in the aforesaid case which furnishes a complete answer to the arguments of the respondents that order 43, Rule I will have no application to internal appeals in the High Court under the provisions of the Letters Patent.
A similar view was taken in Lea Badin 's case (supra) where the following observations regarding the applicability of order 43 Rule I in respect of an order passed by a Trial Judge were made: "As an order refusing an application for the appointment of a receiver based on provision in the indenture of hypothecation, that on a breach of any one of the covenants contained therein the plaintiff 's assignor would be entitled to have a receiver appointed, the order has determined a right which is one of the matters in the controversy itself, and so it satisfies the definition of Couch, C.J., as well.
The order appealed from in this case is, in our opinion, a judgment ' within the meaning of Cl.
IS, Letters Patent.
We may add that there are decisions of this Court in which orders discharging or refusing to discharge a receiver appointed in a suit, after the suit had come to an end or had become infectious, have been held to be ' judgments ' and so appealable.
But there is another and a far simpler ground on which it must be held that an appeal is competent.
The order in the present case is one for which a right of appeal is provided in cl.
(s), R. 1, 222 O. 43 of the Code.
Under the present Code (Act S of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court, such a contention was elaborately dealt with and repelled in the case of Malhura Sundari Dassi vs Haran Chandra Shaha & Ors.
(AIR (Emphasis ours) In Toolsee Money Dassee & Ors.
vs Sudevi Dassee & ors.
(supra) Maclean, C.J. while relying on the decision of the Judicial Committee in Hurrish Chunder Chowdry 's case made the following pithy observations: "To my mind the first of these points has been authoritatively decided against the view of the present respondents by the Judicial Committee of the Privy Council in the case of Hurrish Chunder Chowdhry vs Kali Sunderi Debi (10 I. A. 4).
I need not travel into the facts of that case, but there their Lordships said at page 494 of the report in the Indian Law Reports: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this where the appeal is from one of the Judges of the Court to the Full Court.
" It is clear from the report that the point was elaborately argued, and the clear expression of their Lordships ' opinion must be read in connection with that argument." and Prinsep, J. who agreed with the Chief Justice, made the following identical observations: "We have it, therefore, that if beyond clause 15 of the Letters Patent, 1865, section 588 of the Code of Civil Procedure gives the right of appeal against any order of the description specified therein, there is no Court of Appeal constituted to hear it, if such order not being a judgment had been made by the Judge on the original Side of the High Court. .
I understand this to mean that section 588 does not affect any matter coming within clause 15 of the Letters 223 Patent, and if I may venture to say so, the reasons which led to the expression of that opinion and which have not been given in the judgment reported may be those stated by me for arriving at the same conclusion.
I have no doubt that we are bound to follow to the fullest extent the opinion expressed by their Lordships of the Privy Council that section 588 of the Code does not apply to the case now before us, and that this matter has thus become settled law".
And Ammer Ali, J. while dissenting from the applicability of section 588 held that the order appealable under section 588 was a judgment within the meaning of the Letters Patent.
Two decisions of the Rangoon High Court also have consistently taken the view that the provisions of section 104 read with order 43 Rule I apply to the Trial Judge.
In P. Abdul Gaffor vs The Official Assignee (1) the following observations were made: For an order made in exercise of the ordinary original civil jurisdiction to be appealable, it must come either under order XLIII, Rule 1 or be a judgment within the meaning of Section 13 of the Letters Patent, so that for the purpose of this application the appellant must establish that it is a judgment within the meaning of section 13".
(Emphasis ours) The question of the applicability of order 43 Rule I to an appeal from the Trial Judge under the Letters Patent was raised and decided by the Jammu & Kashmir High Court in Abdul Samad & Ors.
vs The State of J & K (2) a decision to which one of us (Fazal Ali, C.J. as he then was) was a party.
After an exhaustive review of various decisions on the subject, the High Court observed as follows: G The legal position that emerges, therefore, is that orders of the character specified in Section 104 and order 43, Rule I, Civil P.C. excepting clause (JJ) thereof, would 224 be construed as judgments and an appeal against any one of such orders would lie to the.
Division Bench of the High Court notwithstanding the fact that it is passed by one of the judges of the High Court sitting on the original side".
It may be mentioned that like the Presidency High Courts, the High Court of Jammu & Kashmir had also been invested with ordinary civil original jurisdiction.
The question of the applicability of order 43 Rule 1 to an appeal against an order of a Trial Judge to the Division Bench was directly in point and fully considered by a Division Bench of the Calcutta High Court and a Full Bench of the Rangoon High Court.
In Kumar Gangadhar Bagla vs Kanti Chunder Mukerjee & Anr.
while dwelling on this aspect of the matter it was observed as follows: "Mr. Bose did not seek to argue, that the formal order of the 7th of June, 1935, was one of the appealable orders provided for in the Code of Civil Procedure.
On the contrary, he went so far as to aver with considerable vehemence that neither sec. 104 nor order XLIII, r. l of the Civil Procedure Code has any application to the High Court.
I would point out that it is clear from sec.
117 of Code of Civil Procedure and still clearer from Or.
XLIX, r. 3, C.P.C., that both sec.
104 and Or.
XLIII, r. 1, do apply to the High Court".
(Emphasis ours) It is manifest from the observations made above that in view of the clear and explicit provisions of section 117 and order 49 Rule 3 which while exempting other provisions from the jurisdiction of the High Court did not exempt the various clauses of order 43 Rule 1.
An identical view seems to have been taken by Sir Page, C.J. in a Full Bench decision of the Rangoon High Court in In re: Dayabhai Jiwandas & Ors.
(supra) where the Chief Justice pithily observed as follows : "In many statutes in India, of course, a Right of appeal from an order passed pursuant to the statute is expressly provided, and in such cases an appeal will lie on the terms and conditions therein prescribed.
I will not pause to enumerate or discuss these enactments, although 225 many such statutes were cited at the Bar.
But, except A where otherwise a right of appeal adhoc is given under some statute or enactment having the force of a statute, the right of appeal from orders that do not amount to "judgment" is regulated by the provisions of the Code of Civil Procedure; (see section 104 and order 43, Rule 1)".
Thus, there appears to be a general consensus of judicial opinions on the question of the applicability of order 43 Rule 1 to Letters Patent appeals.
This now brings us to the second limb of the argument of Mr. Sorabjee that even assuming that order 43 Rule I does not apply to the High Court so far as the Trial Judge of the said court is concerned, there can be no doubt that the orders indicated in various clauses of order 43 Rule 1 possess the attributes and incidents of a final order which conclusively decides a particular issue so far as the Trial Court is concerned.
Thus, there can be no difficulty, even without applying order 43 Rule 1 to hold by a process of analogical reasoning that the appeals and orders mentioned in the various sub clauses would amount to a judgment within the meaning of cl. 15 of the Letters Patent because they contain the traits, trappings and qualities and characteristics of a final order.
In other words, the argument advanced was that we could still apply the provisions of order 43 Rule 1 by the process of analogy.
We fully agree with this argument because it is manifest that the word 'judgment ' has hot been defined in the Letters Patent but whatever tests may be applied, the order passed by the Trial Judge appealed against must have the traits and trappings of finality and there can be no doubt that the appealable orders indicated in various clauses of order 43 Rule I are matters of moment deciding valuable rights of the parties and in the nature of final orders so as to fall `within the definition of 'judgment '.
This Court in Radhey Shyam vs Shyam Behari Singh (1) clearly held that an application under order 21 rule 90 to set aside the auction sale is a judgment as the proceeding raises a controversy between the parties regarding their valuable rights.
In this connection, this Court observed thus : "In our view an order in a proceeding under o. XXI, r. 90 is a "judgment" inasmuch as a proceeding raises 226 a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction sale".
On a parity of reasoning, an order refusing to appoint a receiver or grant an injunction and similar orders mentioned in various clauses of order 43, Rule 1 fall within the tests laid down by this Court in the aforesaid case.
We are aware that there are some decisions which have taken a contrary view by holding that section 104 read with order 43 Rule I does not apply to a Trial Judge under the Letters Patent.
These decisions do not appear to have considered the various shades and aspects and the setting of the provisions of sections 104 and 117 and order 49 Rule 3 but seem to have proceeded on the basis that the Letters Patent being a special law or a special jurisdiction, the same over rides section 104 which in terms does not apply where a special law makes certain special provisions.
We now proceed to discuss these cases briefly.
In Pandy Walad Dagadu Mahar & Anr.
vs Jammadas Chotumal Marwadi (1) the identical point which is at issue in the instant appeal was not involved and the finding given by the High Court was merely incidental.
The Division Bench seems to have relied on a judgment of Sir Basil Scott and Hayward, JJ.
where the question was only incidentally dealt with.
Martin, J.
In Pandy 's case observed thus : "Shortly stated, therefore, this Full Bench decision amounts to this,.
that appeals under the Letters Patent are governed by the Letters Patent, and appeals under Code are governed by the Code.
Further, the Code only deals with appeals from certain Courts and it does not deal with appeals within the High Court from the decision of one Judge of the Court to another.
That is in my opinion, the true view of the relative position of the Letters Patent and the Code".
With due respect, a close analysis of this decision would reveal that the Judges followed a fallacious process of reasoning, According to their opinion, the appeals under the Code of Civil 227 Procedure and those under the Letters Patent were, so to say two separate compartments having different spheres of their own.
With due deference, we might point out that such a view is based on a total misinterpretation and misconstruction of the true nature and object of the Code of Civil Procedure and the Letters Patent.
In fact, as we have pointed out earlier, there is no inconsistency, whatsoever between the Letters Patent and section 104 read with order 43 Rule l; The first premise of the Court that internal appeals in the High Court were governed by the Letters Patent alone and not by the Code appears to be legally fallacious.
We have already pointed out that a large number of decisions, including the Privy Council, have clearly taken the view that although the Letters Patent is a special law certain provisions of the Code of Civil Procedure in the matter of procedure do apply to appeals against the decision of a Trial Judge to a larger Bench or to quote the Bombay Judges to 'internal appeals '.
Secondly, the Court completely overlooked the legal effect of section 117 and order 49 Rule 3 which completely demolishes the presumptuous process of logic adopted by the court.
Thirdly, the Court appears to have overlooked that far from excluding the Code there could be other special Acts which could and did confer additional jurisdiction even in internal appeals to the High Court, viz., from an order passed by a Trial Judge to a larger Bench, for instance, section 39 of the Arbitration Act or section 202 of the Indian and other similar local or special Acts.
If these special Acts could without affecting the jurisdiction of the Letters Patent or overriding the same provided a supplementary or additional jurisdiction, there was no reason why the Code of Civil Procedure also could not do the same particularly when the Trial Judge had to adopt the procedure contained in the Code, starting from the presentation of the plaint to the delivery of judgment.
Fourthly, the Division Bench does not seem to have considered the fact that what the Letters Patent did was merely to confer original civil jurisdiction on the High Court to be exercised by a Single Judge, who would undoubtedly be a Trial Judge, but of an elevated status so that only such suits could be filed in the Court of the said Judge as are of a very high valuation which may differ from High Court to High Court.
This was done in order that in heavy suits involving substantial questions of fact and law, the hearing of the suit by a senior Court of the status of a High Court Judge would repose, endeanr and generate greater confidence in the people.
Thus if, interlocutory orders passed by District courts in the mofussil could be appealable to the High Court, there was no reason why inter 228 locutory orders passed by a Trial Judge could not be appealable to a larger Bench irrespective of the question whether or not they were judgments within the meaning of cl. 15 of the Letters Patent.
This appears to us to be the cardinal philosophy of the Code in applying the provisions of order 43 Rule I, to the original suit tried by the Single Judge (Trial Judge).
Furthermore, the concept of internal appeals in the High Court seems to be a legal fiction without any factual existence imported by some of the High Courts in order to get rid of some of the provisions of the Code of Civil Procedure which is totally opposed not only to the aim and object of the Code but also to the very spirit of the Letters Patent.
In a later judgment of the Bombay High Court in Vaman Ravji Kulkarni vs Nagesh Vishnu Joshi & Ors.,(1) the following observations were made: "I am, with respect, of opinion that the view taken by the full Bench of the Madras and Calcutta High Courts in the cases referred to above is correct, and that the question must be regarded as having been finally settled by the decision of the Privy Council in 10 I. A. 4.
(Hurrish Chunder Chowdry vs Kali Sundari Debi) section 104.
Civil P.C., which refers only to appeals to the High Court from Courts subordinate to it, cannot apply to appeals filed under Cl.
15 of the Letters Patent from a single Judge OF the High Court to a bench.
(Wadia, J.) . .
There can be no doubt that the provisions of the Letters Patent have conferred special powers regarding appeals within the High Court.
Those powers are not specifically taken away by section 104, Civil P.C. and are not, therefore, affected by it .
Special enactments are not repealed by later general Acts unless there be some express reference to the previous legislation or a necessary inconsistency in the two Acts standing together, which prevents the maxim from being applied.
Sub section (2) of section 104, Civil P.C., does not refer to the Letters Patent and say that in spite of Cl. 15 of the Letters Patent no appeal lies from any order passed in an appeal under Sub section
Sub section
(2) is in no way 229 inconsistent with cl. 15 of the Letters Patent and the two can stand together, the former applying to appeals under the Code, and the latter to special appeals within the High Court.
I am satisfied that section 104, Civil P.C .
does not control cl. 15 of the Letters Patent, and in spite of the absence of a saving clause in sub section
(2) of section 104 does not affect or cut down the right of appeal conferred by the Letters Patent." (Lokur, J.) As regards the first part of the observations of Wadia, J, we are constrained to observe that the learned Judge has not correctly construed the true ratio of the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra) where, as indicated, the Privy Council has in express terms held that section 588 (which now corresponds to order 43 Rule 1) clearly applies to appeals against orders of a Trial Judge to a larger Bench of the High Court.
Similarly, the observations made by Lokur, J. run against the plain interpretation of section 104 by assuming that there is a conflict between section 104 read with order 43 Rule I and the Letters Patent when in fact, as pointed out, there is no such conflict at all all that section 104 does is to give an additional jurisdiction apart from the Letters Patent which is in no way unconstitutional with the Letters Patent.
We may like to observe here that there is no non obstante clause in the provisions of the Letters Patent to indicate that the provisions of the Code of Civil Procedure, particularly section 104 would not apply either expressly or by necessary intendment.
In this view of the matter, therefore, we are clearly of the opinion that the Bombay decisions are wrongly decided and must, therefore, be overruled.
In Vishnu Pratap and Ors.
vs Smt.
Revati Devi and Ors.(l) the Court held that no appeal against an order passed by a Trial Judge under section 202 of the would lie to a Division Bench in view of the Letters Patent.
This argument was negatived and overruled in Shankarlal Aggarwal 's case (supra) as already discussed above.
As regards the applicability of order 43, the following observations were made in Vishnu Pratap 's case: "It is true that orders 40 & 43 both apply to the High Court but the question here is whether o. 43 makes provision for an appeal from one court to another or it is intended to cover cases of an appeal from one Judge to a bench of 230 the same Court.
While section 96 deals with original decree, section 104 Civil P.C. deals with orders, not being decrees, and the orders that are appealable are set out under o. 43, C.P.C. The question of an appeal from one Court to another Court is no doubt governed by the provisions of the Code of Civil Procedure but the provision for appeal from one Judge of a Court to a bench of the same Court is not provided for by the Code and must be governed by the Letters Patent.
If section 104 read with O. 43 makes all these orders appealable then what would be the Court to which appeals would lie from an order passed by a Division Bench and not by a single Judge.
We are not satisfied that section 104 or O. 43 ever intended to deal with appeals from a Judge or Judges of one Court to a larger number of Judges in the same Court.
It is no doubt true, as has been held by their Lordships of the Judicial Committee.
in 'Mt. Sabitri Thakurain vs Savi ' (AIR that section 104 as well as o. 43 apply to High Courts but it does not mean that they give any right to an appeal from an order by a Judge or Judges of that Court to a larger number of Judges of the same Court independently of the Letters Patent of the Court.
As we have said if o. 43 or section 104, Civil P.C., were made applicable per se, without reference to the Letters Patent, then even an order passed by a bench would come under those provisions, but before an appeal can be filed there will have to be a Court constituted for hearing an appeal and the only provision for hearing an appeal, from the judgment of a single Judge, by a bench of two or more Judges of the same Court is contained in the Letters Patent of the Chartered High Courts.
An order, to come under the Letters Patent must be a judgment, and, if an order is not a judgment, then cl. 10 of the Letters Patent would not apply and there is no provision for constituting a bench of more than one Judge to hear such an appeal.
We, therefore, fail to understand how O. 43 R. 1, or section 104, Civil P.C. without any reference to cl. 10 of the Letters Patent, can help the appellants. ' In this case also, the line of reasoning adopted by the court is the same as that of the Bombay High Court referred to above.
231 One of the reasons given is that while order 43 makes provision for A appeal from one court to another, it is not intended to apply to an appeal from one Judge of the High Court to a bench of the same Court.
No reasons have been given by the Judges for holding why this is not so particularly in the face of the clear provisions of section 117 and order 49 Rule 3, as discussed above.
Thus, the first part of R the reasoning of the High Court is totally irrelevant and wholly unintelligible.
The point at issue is if section 104 read with order 43, Rule I applies to an order passed by District Courts in the mofussil, why could it not apply to the one passed by the Trial Judge when the Letters Patent does not in any way bar such an appeal.
Another ground taken by the Court is that if order 43 Rule I is made applicable to the High Court then a strange anomaly will arise in that where an appeal lies to the Division Bench, how could a further appeal lie to some other bench of the court.
This argument also is based on a misconception of order 43 Rule 1.
It is manifest that if order 43 Rule I were to apply to orders passed by the Trial Judge, the order would be one passed by only one Judge of the High Court and, therefore, in the context of the original jurisdiction exercised by a Single Judge of the High Court, the appellate jurisdiction would lie with the Division Bench as contemplated by the Letters Patent and the Rules framed by the High Court.
We are unable to see any anomaly or inconsistency in this position.
Thirdly, the court seems to have relied on a decision of the Privy Council in Mt. Sabitri Thakurain vs Savi (AIR and has interpreted the ratio of this case to mean that section 104 would not apply to High Courts which is exactly what the Privy Council does not say.
With due respect, therefore, the learned Judges have not correctly appreciated the decision of the Privy Council which has nowhere indicated that order 43 Rule I would not apply to internal appeals in the High Court.
On the other hand their Lordships of the Privy Council had held to the contrary as discussed above.
For these reasons, therefore, we are of the opinion that this case has also not been correctly decided and we disapprove the reasons given and the decision taken in this case.
We might also notice a full Bench decision of the Nagpur High Court in Madhukar Trimbaklal vs Shri Sati Godawari Upasani Maharaj 232 of Sakori & Ors.
(1) where Niyogi, J. Observed as follows : "Clause 10, Letters Patent defines the appellate jurisdiction of the High Court vis a vis the judgment passed by a single Judge of that Court.
It should be observed that the Civil Procedure Code does not make any provision in this behalf.
The right of appeal from a decree of a single Judge to the High Court is not governed by section 96 or section 100 or section 104, Civil P.C., but by cl. 10, Letters Patent.
This right of appeal depends on the special provision made in the Charter.
section 4, Civil P.C., provides that the Code does not affect any special jurisdiction or power conferred, or any special form of procedure prescribed by or under any other law for the time being in force.
Since the special jurisdiction or power is conferred on the High Court by cl. 10, Letters Patent the provisions in the Civil Procedure Code regarding appeals cannot come into operation in regard to an appeal from a single Judge of the High Court to the High Court".
With due respect, we are unable to agree with the opinion expressed by Niyogi, J. who has made a bald statement that the Code of Civil Procedure does not make any provision in regard to an appeal from an order passed by a Trial Judge to a Division Bench and that the right of appeal from a decree of a Civil Judge to a High Court is not governed by section 100 or section 104 but by cl. 10 of the Letters Patent of the Nagpur High Court.
Here again, the learned Judge seems to have committed an error apparent on the face of the record.
An examination of the language of sections 96 to 100 would clearly show that the scope of these sections is quite different from that of section 104.
Sections 96 to 100 expressly deal with the forum of appeal provided by the Code against decrees or orders amounting to decrees passed by the District Court in the mofussil.
Section 104 is couched in very general terms and cannot be limited to appeals against orders passed by the courts contemplated in sections 96 to 100.
Moreover, section 104 does not deal with appeal against a decree at all but provides a forum for appeal against orders under order 43 Rule I which are mainly orders of a final or quasi final nature passed during the pendency of a suit.
Section 104, therefore, has a much wider application, as discussed above, and neither overrides the Letters Patent nor is it inconsistent with the same.
For these reasons, therefore, we are unable to accept the line of reasoning adopted by the aforesaid High Court in holding 233 that section 104 does not apply to internal appeals in the High Court and A we accordingly overrule this decision.
A some what identical view was taken by a later decision of the Nagpur High Court in Ratanlal Jankidas Agarwal vs Gajadhar & Ors.
(l) Where the following observations were made "Firstly, O. 43 has not been made applicable to appeals from appellate decrees by o. 43, R. 1, though the rules of o. 41 have been made applicable to them.
So section 104 bars an appeal from the order.
Moreover, the Civil Procedure Code makes no provision for an appeal within the High Court, that is to say, from a single Judge of the High Court.
Power is given to a Division Bench of the High Court to hear appeals from decisions of a single ' ' Judge of the High Court only under cl. 10 of the Letters Patent".
For the reasons which we have already given above, we hold that the learned Judges have fallen into the same error which was committed by the earlier Nagpur case.
The first reasoning given by Mangalmurti, J. that order 43 is not applicable to appeals from appellate decrees is wholly irrelevant because the question is whether under order 43 Rule 1, an appeal could lie from a Trial Judge to a Division Bench of the High Court.
Secondly, the learned Judge says that section 104 bars a second appeal from the order and that the Code of Civil Procedure makes no provision for appeal within the High Court.
Here again, the learned Judge is wrong because we have already pointed out that as far back as Hurrish Chunder Chowdry 's case (supra) it was clearly held by the Judicial Committee that section 588 was applicable even to internal appeals in the High Court.
On a parity of reasoning, therefore, on the basis of which we have overruled the decisions of the other High Courts, taking a similar view we find ourselves unable to agree with the view taken by Mangalmurti and Bose, JJ.
in the aforesaid case and hold that this case is not correctly decided.
A later decision of the Allahabad High Court also seems to have taken the same view.
In Standard Glass Beads Factory & Anr.
vs Shri Dhar & Ors.
(2) the following observations were made : "Such an order if made by a subordinate court is appealable under or.
43 R. 1, C.P.C.; it is, as we have seen an order from which in England an appeal lies, without 234 leave, to the Court of Appeal.
If the narrower view of the meaning of the word 'judgment ' be correct such an order when made by a Judge of a High Court in India exercising original jurisdiction would not be appealable".
Here also with due deference to the Judges constituting the Full Bench, we are of opinion that they committed an error in drawing inspiration from the procedure prevailing in England in the court of appeal.
In the first place the hierarchy of the Courts in India under the Civil Procedure Code is essentially different from that in the United Kingdom.
Secondly, there is no provision existing in the English law corresponding to Order 43 Rule 1 of an appeal from a Trial Judge to a Division Bench under various circumstances.
Lastly, this case does not seem to have considered a large number of decisions referred to by us, clearly holding that section 104 read with order 43 Rule I applies to appeals under the Letters Patent in the High Court.
For these reasons, therefore, we hold that this case also was not correctly decided and must be overruled.
Another case taking a contrary view is again a case of the Bombay High Court which also makes a rather interesting reading.
In J.K Chemicals Ltd. vs Kreba and Co. (1) Desai, J. speaking for the court observed on this part of the case thus: "The reply to the said argument is that the provisions of section 104 and O. 43, R. I provide for an appeal only from the subordinate Court to the higher Court and not from one part of the Court to the other.
It has been held that the provisions relating to appeals contained in the Civil Procedure Code deal with appeals from subordinate Courts to higher Courts and do not deal with appeals from the decisions and decrees of the High Court in the exercise of its ordinary or extra ordinary civil jurisdiction except so far as the appeal to the Supreme Court is concerned.
The subject of an appeal from the decision of a single Judge of the High Court to a Division Bench of the same High Court is dealt with only under the Letters Patent and such right is not governed by the provisions of the Civil Procedure Code relating to appeals.
This view has been taken consistently by the High Courts in India and also by the Privy Council (see Hurrish Chunder vs Kali Sunderi Debi (1883) ILR at p. 494)".
235 The first part of the observations follows the reasonings of the A two decisions of the Bombay High Court, discussed above, and are therefore open to the same criticism which we have levelled against the previous decisions.
Secondly, the court seems to think that all the High Courts in India have consistently taken the view that order 43 Rule 1 does not apply to internal appeals in the High Courts.
This is doubtless factually incorrect because we have referred to a large number of decisions which have taken a contrary view.
The High Court was, therefore, not quite correct in observing that the High Courts in India had taken a consistent view in regard to this matter.
Thirdly, the High Court seems to have relied heavily on the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra) and on Chappan 's case (supra) in holding that order 43 did not apply to internal appeals in the High Courts which were governed by the Letters Patent alone.
Here also, with due respect, the High Court has gravely erred.
We have pointed out while dealing with Hurrish Chunder Chowdry 's case (supra) that the Privy Council had clearly laid down that section 588 applied to the High Court and this position has been understood in this very sense by several judgments discussed above.
The High Court, therefore, has not correctly appreciated the real ratio of the Privy Council case, referred to above.
As regards Chappan 's case (supra), the conclusion of the High Court is not borne out by the ratio of the Full Bench in the said case.
It would appear that the Full Bench in the aforesaid case was concerned with two questions: (1) Whether in view of section 622 of the old Code (which corresponds to section 115 of the Code of 1908) an order passed by a trial Judge could be revised by a larger Bench, and (2) Whether the right of appeal given by cl. 15 of the Letters Patent against an order passed by a trial Judge was controlled and limited by sections 588 and 591 of the Code of 1877 (which now corresponds to order 43 Rule 1).
In the instant case we are not concerned with the revisional power but only with what old section 588 was.
Far from deciding that section 588 was not controlled by the Letters Patent, the learned Judge decided to the contrary.
To begin with, Benson, J. formulated 236 the questions referred to the Full Bench thus : (1) Whether the jurisdiction exercised by the High Court under section 622, Civil Procedure Code, is included in the expression "appellate jurisdiction" as used in section 13 of the High Court Act (24 and 25 Vict.
104 and in section 36 of the Letters Patent of 1866, and (2) Whether the right of appeal given by section 15 of the Letters Patent against an order passed by a single Judge of the High Court is controlled and limited by sections 588 and 591, Civil Procedure Code? I am of opinion that both of these questions must be answered in the affirmative".
and Shephard, Acting C.J. Observed as follows: "Accordingly I think it must be assumed that the judgment of a single Judge acting under section 622 of the Code is open to appeal, unless the right of appeal has been taken away by section 588 of that Code.
On that question I entirely agree with Mr. Justice Subramania Ayyar.
The question is, in my opinion, concluded by authority which it is beyond our province to criticise".
and Boddam, J. expressed the following opinion : "The result of this judgment (so far as it applies to the question before us) appears to me to come to this, that if the order made by a single Judge only amounts to an order such as is intended by chapter XLIII of the Code, it is not appealable unless it is within section 588".
and Moore, J. Observed as follows : "It is clear, however, that this could not have been done, for the provisions of sections 588 and 591 do, in certain cases, most certainly apply to the High Court.
For example, section 588, clause 1, provides that if a District Munsif passes an order under section 20 of the Code, an appeal lies to the District Judge, but that there is no second appeal to the High Court, while if a District Judge passes 237 such an order an appeal can be preferred to the High Court.
Whatever view be taken of section IS of the Letters Patent it would have been impossible to include section 588 among those sections that do not apply to the High Court".
Thus, the ratio decidendi of the decision clearly goes to indicate that the Full Bench of the Madras High Court had held in no uncertain terms that section 588 applied to the High Court and orders mentioned therein passed by a Trial Judge would be appealable to a larger Bench.
This, therefore, knocks the bottom out of the decision of the Bombay High Court when Chappan 's case (supra) in no way supported the view taken by them.
For the reasons given above, we hold that J.K Chemicals 's case (supra) was also wrongly decided and can no longer be treated as good law.
It is rather unfortunate that despite clear, explicit, pointed and pragmatic observations of the Privy Council in Hurrish Chunder Chowdry 's case (supra) and further clarification by the legislature by introducing section 104 of the Code of 1908, some of the High Courts n seem to have stuck to the antiquated view that the provisions of order 43 Rule I do not apply to internal appeals within the High Courts.
Thus after considering the arguments of counsel for the parties on the first two limbs of the questions, our conclusions are : (1) That there is no inconsistency between section 104 read with order 43 Rule I and the appeals under the Letters Patent and there is nothing to show that the Letters Patent in any way excludes or overrides the application of section 104 read with order 43 Rule I or to show that these provisions would not apply to internal appeals within the High Court.
(2) That even if it be assumed that order 43 Rule I does not apply to Letters Patent appeals, the principles governing these provisions would apply by process of analogy.
(3) That having regard to the nature of the orders contemplated in the various clauses of order 43 Rule 1, there can be no doubt that these orders purport to decide valuable rights of the parties in ancillary proceedings even though the suit is kept alive and 238 that these orders do possess the attributes or character of finality so as to be judgments within the meaning of cl. 15 of the Letters Patent and hence.
appealable to a larger Bench.
(4) The concept of the Letters Patent governing only the internal appeals in the High Courts and the Code of Civil Procedure having no application to such appeals is based on a serious misconception of the legal position.
This now brings us to the second important point which is involved in this appeal.
Despite our finding that section 104 read with order 43 Rule I applies to Letters Patent appeals and all orders passed by a Trial Judge under clauses (a) to (w) would be appealable to the Division Bench, there would still be a large number of orders passed by a Trial Judge which may not be covered by order 43 Rule l.
The next question that arises is under what circumstances orders passed by a Trial Judge not covered by order 43 Rule 1 would be appealable to a Division Bench.
In such cases, the import, definition and the meaning of the word 'judgment ' appearing in cl.
15 assumes a real significance and a new complexion because the term 'judgment ' appearing in the Letters Patent does not exclude orders not falling under the various clauses of order 43 Rule 1.
Thus the serious question to be decided in this case and which is indeed a highly vexed and controversial one is as to what is the real concept and purport of the word 'judgment ' used in cl.
IS of the Letters Patent.
The meaning of the word 'judgment ' has been the subject matter of conflicting decisions of the various High Courts raging for almost a century and in spite of such length of time, unfortunately, no unanimity has so far been reached.
As held by us earlier it is high time that we should now settle this controversy once for all as far as possible.
We now proceed to deal with the main controversy as to what is the true scope, meaning and purport of the word 'judgment ' used in cl. 15 of the Letters Patent.
Numerous authorities on both sides were cited before us in the course of the very able arguments advanced by counsels for the parties and it appears that there are three leading judgments which have spelt out certain tests to determine as to when an order passed by a Trial Judge can be said to be a 'judgment ' within the meaning of.
cl IS of the Letters Patent.
A very narrow view on this point was taken by a Division Bench 239 Of the Calcutta High Court in the case of The Justice of the Peace for Calcutta (supra) where Sir Couch, C.J. On an interpretation of cl. 15 of the Letters Patent observed thus: "We think that "judgment" in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability.
It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.
" An analysis of the observations of the Chief Justice would reveal that the following tests were laid down by him in order to decide whether or not an order passed by the Trial Judge would be a judgment: (1) a decision which affects the merits of the question between the parties; (2) by determining some right or liability; (3) the order determining the right or liability may be final, preliminary or interlocutory, but the determination must be final or one which decides even a part of the controversy finally leaving other matters to be decided later.
Thus, examining the tests laid down by Sir Richard Couch, C.J,, it seems to us that the view taken by the learned Chief Justice appears to place a very strict and narrow interpretation on the word 'judgment ' under which orders deciding matters of moment or valuable right of the parties without finally deciding the suit may not amount to a judgment and hence, not appealable.
In giving this interpretation the learned Chief Justice was guided by two considerations: (I) that a liberal interpretation may allow vexed litigants to carry any discretionary order of the Trial Court in appeal, and (2) that it would confer more extensive right to appeal against the Judge sitting on the original side than the right of appeal given to a Trial Judge sitting in the mofussil.
We are doubtless impressed with the argument of the Chief Justice and fully appreciate the force of the reasons given by him but we feel that despite those considerations the law must be interpreted as it stands and a court is not 240 justified in interpreting a legal term which amounts to a complete distortion of the word 'judgment ' so as to deny appeals even against unjust orders to litigants having genuine grievances so as to make them scapegoats in the garb of protecting vexatious appeals.
In such cases, a just balance must he struck so as to advance the object of the statute and give the desired relief to the litigants, if possible.
Although it is true that this decision is practically the locus classicus so far as the Calcutta High court is concerned and has been consistently followed by later decisions at the same time it cannot be denied that in a number of cases the conscience of the Judges was so shocked that they tried to whittle down or soften the rigours of this decision so much so that in one case the observations of the Chief Justice were not only not followed but were described as antiquated and in other cases the Judges strongly expressed them selves that the High court should give up its fondness to stick to the principles laid down by the learned Chief Justice.
It is not necessary for us to burden this judgment with later decisions of the Calcutta High court in trying to comment on the correctness of the principles laid down by sir Couch, c J. but a few instances may be quite revealing.
In Chandi Charan Saha vs Jnanendra Nath Bhattacharjee and Ors.
,(l) Sir Asutosh Mookerjee in his leading judgment modified the strict rule of interpretation of 'judgment ' laid down by sir Couch, C.J. and pointed out that the words 'merits of the question between the parties by determining a right of liability ' were not to be confined or restricted to the controversy in a suit itself but could take within its fold any right involved in any application which puts an end to the suit or the proceeding.
sir Mookerjee, J. has widened the scope of the observations of sir Couch, c.
J and adopted some of the observations of Sir White, C.J. in Tuljaram Row 's case (supra) and in this connection observed thus: "It is plain that the expression 'some right or liability is not restricted to the right in controversy in the suit itself on the other hand, if we adopt the wider definition formulated by White C.J. in the case of Tuljaram Row vs Alagappa Chettiar (ILR , the decision is unquestionably a judgment within the meaning of the Letters Patent.
The test is, not what the form of the adjudication is, but what is its effect in the suit or proceeding in which 241 it is made.
If its effect, whatever its form may be and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, the adjudication is a judgment: Mathura vs Haran Cal. 857).
" In Lea Badin 's case (supra), the following observations were made: "To remove the incongruity which appears in the decision of this Court and to lay down some definite rule by which orders might be tested when it has to be determined whether or not they are 'judgments ' within the meaning of the clause, this Court will some day have to abandon its fond adherence to the antiquated definition of Couch, C.J., and boldly acknowledge its allegiance to the tests laid down by White, C.J." (Emphasis supplied) After making these observations the Court further reiterated the position in the following words.
"In more decisions than one of this Court this definition of 'Judgment ' given by Couch, C.J. has been described as classical, and yet in a long course of decisions this Court has repeatedly expressed the view that the definition is absolutely exhaustive.
Treating this definition as not of an inflexible character and yet not expressly purporting to extend it, the Court has in numerous cases emphasised the necessity of scrutinizing the nature of the decision in each particular case in order to find out whether the decision amounts to a 'judgment ' within the meaning of the Clause.
In Shorab Merwanji Modi and Anr.
vs Mansata Film Distributors and Anr., the following observations were made: "On a strict construction of the Calcutta test, the Tight or liability must mean some right or liability which is 242 a subject matter of controversy in the suit or proceeding but in its application to individual cases, that strict construction has not been adhered to and was indeed often departed from by Couch, J., himself who was the author of the test.
Orders concerning the jurisdiction of the Court to entertain a suit, as distinguished from matters of the actual dispute between the parties, were held by him to come within the category of judgments." In Mooammed Felumeah vs section Mondal & Ors.
the Court pithily observed as follows: "Now, so far as this Court is concerned, there is a considerable body of judicial opinion, which, while holding that Sir Richard Couch 's above definition is classical and of pre eminent practical importance and usefulness, has consistently refused to regard it as, in any sense.
exhaustive or inflexible.
Indeed, in essence and truth, it has been accepted merely as the starting point on a broad open field, stretched in front of it in all its vastness and immense magnitude, and Judges have always endeavoured to extend it and expand the different aspects of the term and to give it a wide and extended meaning, though, of course, within certain limits.
" The other leading case which puts even a narrower interpretation and in our opinion, a clearly wrong one, on the word 'judgment ' is the Full Bench decision of the Rangoon High Court In Re Dayabhai Jiwandas 's case (supra) where the following observations were made: "I am of opinion that in the Letters Patent of the High Courts the word judgment ' means and is a decree in a suit by which the rights of the parties at issue in the suit are determined." With due respect to the learned Chief Justice and the Judges who agreed with him, we are unable to accept the interpretation of the word judgment ' given by the Chief Justice which runs counter to the very spirit and object of the word 'judgment ' appearing in cl. 15 of the Letters Patent.
The learned Chief Justice seems to 243 have fallen into the error of equating the word 'judgment ' with 'decree ' as used in the Code of Civil Procedure when, as pointed out above, the words 'judgment ' and 'decree ' used in the Code cannot form a safe basis to determine the definition of the word 'judgment ' in the Letters Patent particularly when the Letters has deliberately dropped the word 'decree from judgment. ' We are, therefore, unable to hold that the view taken by the Chief Justice, Sir Page, is correct and accordingly overrule the same.
The next leading case which lays down the test of a 'judgment ' and which seems to have found favour with most of the High Courts in India is the test laid down by Sir Arnold White, C.J. in Tuljaram Row 's case (supra) where the learned Chief Justice pointedly spelt out various tests and observed thus: "The test seems to me to be not what is the form of the adjudication but what is its effect in the suit or proceeding in which it is made.
If its effect, whatever its form may be, and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, I think the adjudication is a judgment within the meaning of the clause.
An adjudication on an application which is nothing more than a step towards obtaining a final adjudication in the suit is not, in my opinion, a judgment within the meaning of the Letters Patent.
" I think, too, an order on an independent proceeding which is ancillary to the suit (not instituted as a step towards judgment, but with a view to rendering the judgment effective if obtained) e.g., an order on an application for an interim injunction, or for the appointment of a receiver is a 'judgment ' within the meaning of the clause.
" Analysing the observations of the learned Chief Justice it would appear that he has laid down the following tests in order to assess the import and definition of the word 'judgment ' as used in cl.
IS of the Letters Patent : (1) It is not the form of adjudication which is to be seen but its actual effect on the suit or proceeding; 244 (2) If, irrespective of the form of the suit or proceeding, the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment; (3) Similarly, the effect of the order, if not complied with, is to terminate the proceedings, the said order would amount to a judgment; (4) Any order in an independent proceeding which is ancillary to the suit (not being a step towards judgment) but is designed to render the judgment effective can also be termed as judgment within the meaning of the Letters Patent.
So far as this test is concerned, the learned Chief Justice had in mind orders passed by the Trial Judge granting or refusing ad interim injunction or appointing or refusing to appoint a receiver.
(5) An order may be a judgment even if it does not affect the merits of the suit or proceedings or does not determine any rights in question raised in the suit or proceedings.
(6) An adjudication based on a refusal to exercise discretion the effect of which is to dispose of the suit, so far as that particular adjudication is concerned, would certainly amount to a judgment within the meaning of the Letters Patent.
Similarly, Krishnaswami Ayyar, J., who agreed with tile Chief Justice in the above case, pointed out that even an interlocutory judgment which determines some preliminary or subordinate point or plea or settles some step without adjudicating the ultimate right of the parties may amount to a judgment.
With due respect we think that if the observations of Krishnaswamy Ayyar, J. are carried to its logical limit every interlocutory order would have to be held to be appealable.
So far as the tests laid down by White, C.J., and as analysed by us, are concerned we are inclined to agree generally with these tests though we feel that some of the tests laid down are far too 245 wide and may not be quite correct.
While the view taken by Sir Richard Couch, C.J. in The Justice of the Peace for Calcutta (supra) is much too strict, the one taken by Sir White, C.J. is much too wide.
The correct test seems to lie somewhere in between the tests laid down by the aforesaid jurists.
We might point out that the tests laid down by the Calcutta High Court have been consistently followed by the Bombay High Court and also by a large majority of the later decisions of the Calcutta High Court in Lea Badin vs Upendra Roy Chaudhury, Kumar Gangadhar vs Kanti Chunder Mukherjee, Shorab Merwanji Modi vs Mansata Film Distributors, Mohammed Felumeah vs section Mondal.(supra) Some of the decisions have sounded a discordant note and have gone to the extent of characterising the view of Sir Couch, C.J, as being antiquated and have strongly expressed the view that the Calcutta High Court should give up its fondness for the strict test laid down by Sir Couch in The Justice of the Peace for Calcutta 's case.
On the other hand, the tests laid down by Sir White, C.J. in Tuljaram Row 's case have been followed by the Lahore High Court in Ruldu Singh vs Sanwal Singh and by some other High Courts in Standard Glass Beads Factory Shri Dhar & Ors.
and later decisions of the Madras High Court as also by Andhra Pradesh High Court in Kuppa Viswappathi vs Kuppa Venkata Krishua Sastry.
A Full Bench of the Allahabad High Court, however, in Mt. Shahzadi Begam vs Alak Nath dissented from the view taken by the Madras High Court and held that the tests laid down by that High Court in the aforesaid case were rather too wide.
In this connection, Sulaiman, C.J., speaking for the Court observed as follows : "We would like to point out that the test laid down by the learned Chief Justice of the Madras High Court is put in too wide a language and cannot be accepted as laying down the correct criterion".
Similarly, in a later Full Bench decision of the Nagpur High Court in Manohar Damodar Bhoot vs Baliram Ganpat Bhoot, Hidayatullah.
J. (as he then was) who wrote the leading judgment, very pithily described the essential requisites and the exact meaning 246 of the word 'judgment ' as used in the Letters Patent and observed thus: "A judgment means a decision in an action whether final, preliminary or interlocutory which decides either wholly or partially, but conclusively in so far as the Court is concerned, the controversy which is the subject of the action.
It does not include a decision which is on a matter of procedure, nor one which is ancillary to the action even though it may either imperil the ultimate decision or tend to make it effective.
The decision need not be immediately executable 'per se ' but if left untouched must result inevitably without anything further, save the determination of consequential details, in a decree or decretal orders, that is to say, an executive document directing something to be done or not to be done in relation to the facts of the controversy.
The decision may itself order that thing to be done or not to be done or it may leave that over till after the ascertainment of some details but it must not be interlocutory having for its purpose the ascertainment of some matters or details prior to the determination of the whole or any part of the controversy".
The pointed observations of the Hon 'ble Judge try to synthesize the conflicting views taken by the Calcutta and the Madras High Courts and, in our opinion, they represent the true scope and import of the word 'judgment ' as used in the Letters Patent.
The learned Judge while making these observations has made an exhaustive analysis of a large number of cases.
Having dealt with the main cases of the various High Courts reflecting different and variant views, we do not think it necessary to multiply authorities on this subject which have been fully debated in the decisions we have referred to.
We shall now proceed to refer to the decisions of this Court with respect to the incidental observations made by them regarding the scope and meaning of the word 'judgment ' before giving our own view of the matter.
Before, however, dealing with the cases of this Court we might indicate that in view of the decisions taken by us regarding the applicability of section 104 read with order 43 Rule 1 even to internal appeals in the High Court, the controversy regarding the meaning of the word 'judgment ' has been largely narrowed down and sufficiently abridged because the orders mentioned in clauses (a) to (w) of order 43 Rule 1 having 247 been held to be appealable, there would be only a few cases left in A which the question as to whether or not the orders passed by the Trial Judge are judgments would arise.
After discussing the decisions of this Court, we shall give a list of illustrative cases which may justly be described as 'judgment ' within the meaning of the Letters Patent so as to cover almost the entire field though a few cases still may have to be determined according to the principles laid down.
The first decision of this Court which is relevant is Asrumati Debi 's case (supra).
In this case the only question involved was whether an order transferring a suit under cl. 13 of the Letters Patent satisfied the tests of a judgment as mentioned in cl. 15 of the Letters Patent.
This Court referring to the Calcutta and Madras decisions refrained from giving any particular decision except that they held that the mere order of transfer under cl. 13 of the Letters Patent could not be said to be a judgment and was therefore not appealable.
This Court pointed out that the order neither affected the merits of the controversy not did it terminate or dispose of the suit.
In this connection, the Court observed as follows: "The judgment must be the final pronouncement which puts an end to the proceeding so far as the court dealing with it is concerned.
It certainly involves the determination of some right or liability, though it may not be necessary that there must be a decision on the merits. .
We have indicated that the essential features of a 'judgment ' are according to both the, Calcutta and the Madras High Courts and all that we need say is that, in our opinion, an order under clause 13 of the Letters Patent does not satisfy the tests of a 'judgment ' as formulated by either of these High Courts".
Apart from this what is more important is that the Court clearly observed that as an order granting leave under cl. 12 of the Letters Patent constitutes the very foundation of the suit, hence if by an order such leave is rescinded the suit automatically comes to an end and there can be no doubt that such an order would be a judgment.
In this connection, this Court observed as follows: "Leave granted under clause 12 of the Letters Patent constitutes the very foundation of the suit which is 248 instituted on its basis.
If such leave is rescinded, the suit automatically comes to an end and there is no doubt that such an order would be a judgment".
Thus, from this case an important test that can be spelt out is that where an order which is the foundation of the jurisdiction of the Court or one which goes to the root of the action, is passed against a particular party, it doubtless amounts to a judgment.
As we have already pointed out apart from these observations this Court refused to embark on an enquiry as to in what cases an order passed by a Trial Judge would be a 'judgment ' for purposes of appeal before a larger Bench.
Again in Union of India vs Mohindra Supply Co. (supra) this Court clearly held that in enacting section 104 the intention of the Legislature was to preserve the Letters Patent jurisdiction of the High Court and provided for a right to appeal from the Trial Judge to the Division Bench without affecting the provisions of the Code of 1908.
In this connection, the Court observed as follows : "Under the Code, as amended, the view has consistently been taken that interlocutory judgments (i.e., decisions though not amounting to decrees which affect the merits of the questions between the parties by determining some right or liability) passed by single Judges of Chartered High Courts were appealable under the Letters Patent".
We might mention here that the observations of this Court completely demolish the arguments of some of the High Courts that section 104 does not apply to internals in the High Court because this Court while referring to the Code made specific reference to section 104 in the previous paragraph.
Apart from this, there is no observation by this Court regarding essential requisites of a Judgment.
In State of U.P. vs Dr. Vijay Anand Maharaj (supra) the order impugned passed by the Single Judge was an order dismissing an application filed by the applicant to review the order of the Trial Judge.
The question for determination was whether the order was a judgment so as to be appealable to the Division Bench.
This Court referred to the observations of Hidayatullah, J. extracted in Manohar V. Baliram (supra) and though they did not expressly approve this decision they indirectly seem to have been impressed by the reasons given by Hidayatullah, J. Nothing further was said by this Court because it held that on the facts of that case the 249 order of the Trial Judge dismissing the application for review was A appealable.
We might mention here that under clause (w) of order 43 Rule 1 an order granting an application for review is appealable.
On a parity of reasoning, therefore, an order dismissing an application for review would also be appealable under the Letters Patent being a judgment though it is not made appealable under order 43 Rule 1.
In Shankarlal Aggarwal 's case (supra) while indicating the divergence of judicial opinion on the subject this Court held that an order under section 202 of the Indian was a judgment within the meaning of Letters Patent and therefore appealable.
We might mention here that the which confers additional original jurisdiction on the Trial Judge expressly makes an order passed by the Trial Judge under section 202 appealable and, therefore, it is manifest that any order passed under section 202 would have to be appealable under the and therefore it was rightly construed as a judgment.
In Radhey Shyam vs Shyam Behari (supra) the question was whether in an application under order 21 rule 90 to set aside an auction sale an order passed by the Court would be a judgment affecting valuable rights.
This Court held that an order in such proceedings affected valuable rights and was therefore appealable.
In this connection, the Court observed as follows: "In our view an order in a proceeding under O. XXI, r. 90 is a "judgment" in as much as such a proceeding raises a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction sale.
" Thus, the only point which emerges from this decision is that whenever a Trial Judge decides a controversy which affected valuable rights of one of the parties, it must be treated to be a judgment within the meaning of the Letters Patent.
250 The last case of this Court to which our attention has been drawn is Shanti Kumar R. Canji vs The Home Insurance Co. Of New York where the court was considering the effect of an order passed by the Trial Judge allowing amendment of the plaint and the question at issue was whether such an order would be a judgment within the meaning of the Letters Patent.
The following observations were made by this Court in the aforesaid case.
"We are in agreement with the view expressed by the High Court at Calcutta in the M.B. Sirkar 's case (AIR 1956 Cal. 630) as to when an order on an application for amendment can become a judgment within the meaning of clause 15 of the Letters Patent.
If an amendment merely allows the plaintiff to state a new cause of action or to ask a new relief or to include a new ground of relief all that happens is that it is possible for the plaintiff to raise further contentions in the suit, but it is not decided whether the contentions are right.
Such an amendment does nothing more than regulate the procedure applicable to the suit.
It does not decide any question which touches the merits of the controversy between the parties.
Where, on the other hand, an amendment takes away from the defendant the defence of immunity from any liability by reason of limitation, it is a judgment within the meaning of clause 15 of the Letters Patent.
The reason why it becomes a judgment is that it is a decision affecting the merits of the question between the parties by determining the right or liability based on limitation.
It is the final decision as far as the trial court is concerned.
In finding out whether the order is a judgment within the meaning of clause 15 of the Letters Patent it has to be found out that the order affects the merits of the action between the parties by determining some right or liability.
The right or liability is to be found out by the court.
The nature of the order will have to be examined in order to ascertain whether there has been a determination of any right or liability".
(Emphasis ours) 251 Thus, having noticed the ratio of some of the cases of this Court referred to above, regarding the tests to determine the import and meaning of the word 'judgment ' we now proceed to deal with the specific question after interpreting cl.15 of the Letters Patent of the Bombay High Court and the corresponding clauses of Letters Patent of other High Courts.
We shall endeavour to interpret the connotation and the import of the word 'judgment ' particularly in the light of pertinent and pointed observations made by this Court on earlier occasions as discussed above.
The relevant portion of cl. 15 of the Letters Patent may be extracted thus : "We do further ordain that an appeal shall lie to the said High Court of Judicature at Madras, Bombay, Fort William in Bengal from the judgment. . of one Judge of the said High Court. " Clause 15 makes no attempt to define what a judgment is.
As Letters Patent is a special law which carves out its own sphere, it would not be possible for us to project the definition of the word 'judgment ' appearing in section 2 (9) of the Code of 1908, which defines 'judgment ' into the Letters Patent: "judgment ' means the statement given by the Judge of the grounds of a decree or order".
In Mt. Shahzadi Begam vs Alak Nath and Ors., Sulaiman, C.J., very rightly pointed out that as the Letters Patent were drafted long before even the Code of 1882 was passed, the word 'judgment ' used in the Letters Patent cannot be relatable to or confined to the definition of 'judgment ' as contained in the Code of Civil Procedure which came into existence long after the Letters Patent were given.
In this connection, the Chief Justice observed as follows : "It has been held in numerous cases that as the Letters Patent were drafted long before even the earlier Code of 1882 was passed, the word 'judgment ' used therein does not 252 mean the judgment as defined in the existing Code of Civil Procedure.
At the same time the word 'judgment ' does not include every possible order, final, preliminary or interlocutory passed by a Judge of the High Court".
We find ourselves in complete agreement with the observations made by the Allahabad High Court on this aspect of the matter.
The definition of the word 'judgment ' in sub section
(9) of section 2 of the Code of 1908 is linked with the definition of 'decree ' which is defined in sub section
(2) of section 2 thus: "decree" means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final.
It shall be deemed to include the rejection of a plaint and the determination of any question within section 47 or section 144, but shall not include (a) any adjudication from which an appeal lies as an appeal from an order, or (b) any order of dismissal for default.
Explanation: A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of.
It is final when such adjudication completely disposes of the suit.
It may be partly preliminary and partly final".
Thus, under the Code of Civil Procedure, a judgment consists of the reasons and grounds for a decree passed by a court.
As a judgment constitutes the reasons for the decree it follows as a matter of course that the judgment must be a formal adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy.
The concept of a judgment as defined by the Code of Civil Procedure seems to be rather narrow and the limitations engrafted by sub section
(2) of section 2 253 cannot be physically imported into the definition of the word 'judgment ' as used in cl. 15 of the Letters Patent because the Letters Patent has advisedly not used the terms 'order ' or 'decree ' anywhere.
The intention, therefore, of the givers of the Letters Patent was that the word 'judgment ' should receive a much wider and more liberal interpretation than the word 'judgment ' used in the Code of Civil Procedure.
At the same time, it cannot be said that any order passed by a Trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent.
It seems to us that the word 'judgment ' has undoubtedly a concept of finality in a broader and not a narrower sense.
In other words, a judgment can be of three kinds :.
(1) A Final Judgment a judgment which decides all the questions or issues in controversy so far as the Trial Judge is concerned and leaves nothing else to be decided.
This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full.
Such an order passed by the Trial Judge indisputably and unquestionably is a judgment within the meaning of the Letters Patent and even amounts to a decree so that an appeal would lie from such a judgment to a Division Bench (2) A preliminary judgment This kind of a judgment may take two forms (a) where the Trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable.
Here also, as the suit is finally decided one way or the other, the order passed by the Trial Judge would be a judgment finally deciding the cause so far as the Trial Judge is concerned and therefore appealable to the larger Bench.
(b) Another shape which a preliminary judgment may take is that where the Trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit, e.g., bar of jurisdiction, res Judicata, a manifest defect in the suit, absence of notice under section 80 and the like, and these objections are decided by the Trial Judge 254 against the defendant, the suit is not terminated but continues and has to be tried on merits but the order of the Trial Judge rejecting the objections doubtless adversely affects a valuable right of the defendant who, if his objections are valid, is entitled to get the suit dismissed on preliminary grounds.
Thus, such an R order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to larger Bench.
(3) Intermediary or Interlocutory judgment Most of the interlocutory orders which contain the quality of finality are clearly specified in clauses (a) to (w) of order 43 Rule 1 and have already been held by us to be judgments within the meaning of the Letters Patent and, therefore, appealable.
There may also be interlocutory orders which are not covered by o. 43 R.1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.
Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote.
For instance, where the Trial Judge in a suit under order 37 of the Code of Civil Procedure refuses the defendant leave to defend the suit, the order directly affects the defendant because he loses a valuable right to defend the suit and his remedy is confined only to contest the plaintiff 's case on his own evidence without being given a chance to rebut that evidence.
As such an order vitally affects a valuable right of the defendant it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to a larger Bench.
Take the converse case in a similar suit where the trial Judge allows the defendant to defend the suit in which case although the plaintiff is adversely affected but the damage or prejudice caused to him is not direct or immediate but of a minimal nature and rather too remote because the plaintiff still possesses his full right to show that the defence is 255 false and succeed in the suit.
Thus, such an Order passed by the Trial Judge would not amount to a judgment within the meaning of cl. 15 of the Letters Patent but will be purely an interlocutory order.
Similarly, suppose the Trial Judge passes an Order setting aside an exparte decree against the defendant, which is not appealable under any of the clauses of O. 43 R.1 though an order rejecting an application to set aside the decree passed exparte falls within O. 43 R.l cl.
(d) and is appealable, the serious question that arises is whether or not the order first mentioned is a judgment within the meaning of Letters Patent.
The fact, however, remains that the order setting aside the ex parte decree puts the defendant to a great advantage and works serious injustice to the plaintiff because as a consequence of the order, the plaintiff has now to contest the suit and is deprived of the fruits of the decree passed in his favour.
In these circumstances, therefore, the order passed by the Trial Judge setting aside the ex parte decree vitally affects the valuable rights of the plaintiff and hence amounts to an interlocutory judgment and is therefore, appealable to a larger Bench.
In the course of the trial, the Trial Judge may pass a number of orders whereby some of the various steps to be taken by the parties in prosecution of the suit may be of a routine nature while other orders may cause some inconvenience to one party or the other, e.g., an order refusing an adjournment, an order refusing to summon an additional witness or documents, an order refusing to condone delay in filing documents, after the first date of hearing an order of costs to one of the parties for its default or an order exercising discretion in respect of a procedural matter against one party or the other.
Such orders are purely interlocutory and cannot constitute judgments because it will always be open to the aggrieved party to make a grievance of the order passed against the party concerned in the appeal against the final judgment passed by the Trial Judge.
Thus, in other words every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights 256 of the parties and which work serious injustice to the party concerned.
Similarly, orders passed by the Trial Judge deciding question of admissibility or relevancy of a document also cannot be treated as judgments because the grievance on this score can be corrected by the appellate court in appeal against the final judgment.
We might give another instance of an interlocutory order which amounts to an exercise of discretion and which may yet amount to a judgment within the meaning of the Letters Patent.
Suppose the Trial Judge allows the plaintiff to amend his plaint or include a cause of action or a relief as a result of which a vested right of limitation accrued to the defendant is taken away and rendered nugatory.
It is manifest that in such cases, although the order passed by the trial Judge is purely discretionary and interlocutory it causes gross injustice to the defendant who is deprived of a valuable right of defence to the suit.
Such an order, therefore, though interlocutory in nature contains the attributes and characteristics of finality and must be treated as a judgment within the meaning of the Letters Patent.
This is what was held by this Court in Shanti Kumar 's case (supra), as discussed above.
Let us take another instance of a similar order which may not amount to a judgment.
Suppose the Trial Judge allows the plaintiff to amend the plaint by adding a particular relief or taking an additional ground which may be inconsistent with the pleas taken by him but is not barred by limitation and does not work serious injustice to the defendant wh o would have ample opportunity to disprove the amended plea taken by plaintiff at the trial.
In such cases, the order of the Trial Judge would only be a simple interlocutory order without containing any quality of finality and would therefore not be a judgment within the meaning of cl. 15 of the Letters Patent The various instances given by us would constitute sufficient guidelines to determine whether or not an order passed by the Trial Judge is a judgment within the meaning of the Letters Patent.
We must however hasten to add that instances given by us are illustrative and not exhaustive.
We have already referred to the various tests laid down by the Calcutta, Rangoon and Madras High Courts.
So far as the Rangoon High Court is concerned we have already pointed out that the strict test that an order passed by the Trial Judge would be a judgment only if it amounts to a decree 257 under the Code of Civil Procedure, is legally erroneous and opposed to the very tenor and spirit of the language of the Letters Patent.
We, therefore, do not approve of the test laid down by the Rangoon High Court and that decision therefore has to be confined only to the facts of that particular case because that being a case of transfer, it is manifest that no question of any finality was involved in the order of transfer.
We would like to adopt and approve of generally the tests laid down by Sir White, C.J. in Tuljaram Row 's case (supra) (which seems to have been followed by most of the High Courts) minus the broader and the wider attributes adumbrated by Sir White, C.J. Or more explicitly by Krishnaswamy Ayyar, J. as has been referred to above.
Apart from the tests laid down by Sir White, C.J., the following considerations must prevail with the court: (1) That the Trial Judge being a senior court with vast experience of various branches of law occupying a very high status should be trusted to pass discretionary or interlocutory orders with due regard to the well settled principles of civil justice.
Thus, any discretion exercised or routine orders passed by the Trial Judge in the course of the suit which may cause some inconvenience or, to some extent, prejudice one party or the other cannot be treated as a judgment otherwise the appellate court (Division Bench) will be flooded with appeals from all kinds of orders passed by the Trial Judge.
The courts must give sufficient allowance to the Trial Judge and raise a presumption that any discretionary order which he passes must be presumed to be correct unless it is ex facie legally erroneous or causes grave and substantial injustice.
(2) That the interlocutory order in order to be a judgment must contain the traits and trappings of finality either when the order decides the questions in controversy in an ancillary proceeding or in the suit itself or in a part of the proceedings.
(3) The tests laid down by Sir White, C.J. as also by Sir Couch, C.J. as modified by later decisions of the Calcutta High Court itself which have been dealt with by us elaborately should be borne in mind.
258 Thus, these are some of the principles which might guide a Division Bench in deciding whether an order passed by the Trial Judge amounts to a judgment within the meaning of the Letters Patent.
We might, however, at the risk of repetition give illustrations of interlocutory orders which may be treated as judgments: (1) An order granting leave to amend the plaint by introducing a new cause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant (2) An order rejecting the plaint.
(3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure.
(4) An order rescinding leave of the Trial Judge granted by him under clause 12 of the Letters Patent.
(5) An order deciding a preliminary objection to the maintainability of the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive.
(6) An order rejecting an application for a judgment on admission under order 12 Rule 6.
(7) An order refusing to add necessary parties in a suit under section 92 of the Code of Civil Procedure.
(8) An order varying or amending a decree.
(9) An order refusing leave to sue in forma pauperis.
(10) An order granting review.
(11) An order allowing withdrawal of the suit with liberty to file a fresh one.
(12) An order holding that the defendants are not agriculturists within the meaning of the special law.
(13) An order staying or refusing to stay a suit under section 10 of the Code of Civil Procedure.
259 (14) An order granting or refusing to stay execution of the decree.
(15) An order deciding payment of court fees against the plaintiff.
Here, it may be noted that whereas an order deciding the nature of the court fees to be paid by the plaintiff would be a judgment but this order affects only the plaintiff or the Government and not the defendant.
Thus, only the plaintiff or the Government as the case may be will have the right to file an appeal in the Division Bench and not the defendant because the question of payment of court fees is a matter between the Government and the plaintiff and the defendant has no locus in this regard.
We have by way of sample laid down various illustrative examples of an order which may amount to judgment but it is not possible to give such an exhaustive list as may cover all possible cases.
Law with its dynamism, pragmatism and vastness is such a large ocean that it is well nigh impossible for us to envisage or provide for every possible contingency or situation so as to evolve a device or frame an exhaustive formula or strategy to confine and incarcerate the same in a straitjacket.
We, however, hope and trust that by and large the controversy raging for about a century on the connotation of the term 'judgment ' would have now been settled and a few cases which may have been left out, would undoubtedly be decided by the court concerned in the light of the tests.
Observations and principles enunciated by us.
In the instant case, as the order of the Trial Judge was one refusing appointment of a receiver and grant of an ad interim injunction, it is undoubtedly a judgment within the meaning of the Letters Patent both because in view of our judgment, order 43 Rule 1 applies to internal appeals in the High Court and apart from it such an order even on merits contains the quality of finality and would therefore be a judgment within the meaning of cl. 15 of the Letters Patent.
The consistent view taken by the Bombay High Court in the various cases noted above or other cases which may not have been noticed by us regarding the strict interpretation of cl. 15 of the Letters Patent are hereby overruled and the Bombay High Court is directed to decide the question in future in the light of our decision.
We, therefore, hold that the order passed by the Trial Judge in the instant case being a judgment within the meaning of cl. 15 of the 260 Letters Patent, the appeal before the Division Bench was maintainable and the Division Bench of the High Court was in error in dismissing the appeal without deciding it on merits.
We have already directed the High Court to decide the appeal on merits by our formal order dated April 22, 1981.
Before closing this judgment we may indicate that we have refrained from expressing any opinion on the nature of any order passed by a Trial Judge in any proceeding under article 226 of the Constitution which are not governed by the Letters Patent but by rules framed under the Code of Civil Procedure under which in some High Courts writ petitions are heard by a Division Bench.
In other High Court writ petitions are heard by a Single Judge and a right of appeal is given from the order of the Single Judge to the Division Bench after preliminary hearing, In the circumstances we make no order as to costs.
AMARENDRA NATH SEN, J.
The only question which falls for determination in this appeal by special leave is whether an order passed by a Single Judge on the original side of the Bombay High Court refusing to grant an injunction or to appoint a receiver in an interlocutory application made in the suit, is appealable or not ? In other words, the maintainability of an appeal filed before a Division Bench of the Bombay High Court against an order of a learned single Judge of the High Court dismissing an interlocutory application for injunction and for appointment of a receiver by way of interim relief pending final disposal of the suit in the original side of the High Court, forms the subject matter of the present appeal.
The question is of some importance, as there appears to be no uniformity of the view amongst the various High Courts on the competence and the maintainability of such an appeal.
The appellant has filed in the original side of the Bombay High Court a suit for specific performance of an agreement dated 12th January, 1979.
In the said suit the appellant, as plaintiff in the suit, took out a notice of motion seeking the following reliefs: (a) that pending the hearing and final disposal of the suit, the respondent i.e. the defendant in the suit, be restrained by an order and injunction from in any 261 manner dealing with or disposing of or alienating or A encumbering the right, title and interest in respect of the said lands and the said land or any part thereof or parting possession of the said land or any part thereof; (b) that pending the hearing and final disposal of the suit, the Court receiver High Court Bombay or some other fit and proper person be appointed receiver of the said lands which forms the subject matter of the agreement, with all powers under 0.40, rule I of the Code of Civil Procedure; (c) ad interims in terms of prayers (a) (b); and (d) for such further and other reliefs as the nature and circumstances of the case may require.
A learned single Judge dealing with the said application of the appellant on the original side of the Bombay High Court dismissed the said application.
Against the order of the learned single Judge, the appellant preferred an appeal to the High Court of Bombay.
A preliminarily objection has been raised before the appellate Court as to the maintainability of the appeal on the ground that no appeal lay from the order of the learned Single Judge on the original side of the High Court, as the order could not be considered to be a 'judgment ' within the meaning of cl.
IS of the Letters Patent and the appeal was incompetent and not maintainable.
The appellate Court for reasons recorded in the Judgment upheld the said preliminary objection, holding that the order under appeal was not a judgment and no appeal would lie from the said order and the appeal, therefore was incompetent and not maintainable.
Against the order of the Division Bench of the Bombay High Court, the appellant has preferred this appeal by special leave granted by this Court.
After the hearing of the appeal was concluded, this Court in view of the urgency of the matter passed an order allowing the appeal and remanding the matter to the Bombay High Court for decision of the appeal on merits and this Court observed at the time of the passing of the order that this Court would state reasons later on.
The full text of the order has been set out in the judgment of my learned brother Fazal Ali.
J. 262 I have had the benefit of reading the judgment of my learned brother Fazal Ali, J. in advance.
I concur generally with the views expressed by my learned brother.
1, however, propose to state my own reasons for the order earlier passed by us.
The learned counsel appearing on behalf of the respective parties invited us only to decide the question of appealability of the order under appeal without going into the merits of the case.
The learned counsel for the parties have submitted before us that there is a conflict of decisions on the question of appealability of an order of this kind and maintainability of an appeal from such an order and this Court should resolve the conflict and decide the question of appealability of such an order and necessarily the maintainability of the appeal to a Division Bench of the High Court.
It has been further submitted before us that in the event of this Court holding that an appeal lay from the order in question and an appeal to the the Division Bench from the order was competent and maintainable, this Court should remand the appeal to the High Court for decision on merits and should not in this appeal go into the merits of the case.
The learned counsel for the parties, in view of the aforesaid submissions made, did not advance any arguments on the merits of the case before us.
The only question with which we are concerned in this appeal, as I have already indicated, therefore, is whether the order of the learned Single Judge refusing to grant an injunction or to appoint a receiver on the interlocutory application of the appellant, is appeal able or not; or, whether the appeal against the order of the learned Single Judge to the Division Bench of the High Court is competent and maintainable or not.
Mr. Sorabjee, learned counsel appearing on behalf of the appellant, has raised two principal contentions.
The first contention urged by Mr. Sorabjee is that in view of the provisions contained in section 104 of the Code of Civil Procedure read with order 43 thereof, the order is appealable under the Code and an appeal from the order becomes clearly maintainable.
The other contention raised by Mr. Sorabjee is that the order should in any event be considered to be a judgment within the meaning of clause IS of the Letters Patent, bearing in mind the provisions contained in section 104 of the Code of Civil Procedure and also order 43 thereof.
In support of his first contention, Mr. Sorabjee has argued that an appeal is a creature of statute and in the absence of any 263 statutory provisions making any other appealable no appeal will A normally lie against any order passed by a single Judge.
Mr. Sorabjee contends that cl.
I S of the Letter Patent makes such provision for an appeal being filed against any order passed by a learned Single Judge on the original side of the High Court.
It is the contention of Mr. Sorabjee that as Cl. 15 of the Letters Patent makes provision for preferring an appeal against an order passed by a learned Single Judge on the original side, provided the conditions laid down in the said clause are satisfied, Code of Civil Procedure and various other Statutes also make provision regarding appeal from orders passed by a learned Single Judge.
Mr. Sorabjee has submitted that the Code of Civil Procedure confers substantive rights of preferring appeals against particular orders specified in the Code.
In this connection Mr. Sorabjee has drawn our attention to section 104 and also order 43 of the Code of Civil Procedure.
Mr. Sorabjee argues that the Code of Civil Procedure confers a right of appeal on a litigant in respect of the orders which have been made statutorily appealable by the provisions contained in section 104 and order 43 of the Code of Civil Procedure.
It is the argument of Mr. Sorabjee that the Code of Civil Procedure makes inter alia general provisions with regard to appeals and also specifically confers on the litigant a right in respect of various orders, just as various other statutes make special or specific provisions with regard to the right of appeal in respect of any order under the particular statute.
Mr. Sorabjee has submitted that section 104 of the Civil Procedure Code and order 43 thereof clearly apply to the original side of a High Court.
In support of these submissions, Mr. Sorabjee has drawn our attention to the various provisions of the Code and particularly to Ss. 4, 98 104, 116 to 120, and section 122 and to order 43 rule 1 thereof.
Mr. Sorabjee in this connection has also relied on the following decisions : 1.
Mathura Sundari Dass vs Haran Chandra Shall(1) 2.
Lea Badin vs Upendra Mohan Roy Choudhary (2) 3.
Union of India vs Mohindra Supply Co. (3) 4.
Kumar Gangadhar Bagla vs Kanti Chander Mukherji (4) 5.
Sonbai vs Ahmedbhai Habibhai (5) 264 Mr. Sorabjee has criticised the view expressed by the Bombay High Court that section 104 of the Code of Civil Procedure and order 43 thereof do not apply to an order passed by a learned Single Judge on the original side of the High Court and an order passed by a learned Single Judge on the original side can only become appealable if the order can be said to be a 'judgment ' within the meaning of cl. 15 of the Letters Patent.
Mr. Sorabjee comments that cl.
IS of the Letters Patent does not, in any way, seek to control or curb the provisions contained in section 104 and order 43 of the Code of Civil Procedure.
He submits that a plain reading of the various sections of the Code of Civil Procedure make it clear that the pro visions contained in section 104 and order 43 of the Code are applicable to the original side of the High Court.
It is his submission that the provisions of the Code and the provisions contained in cl. 15 of the Letters Patent are not at all in conflict, as, clause IS of the Letters Patent may make such orders which may not be appealable under the Code, still appealable as judgment under cl. 15 of the Letters.
Patent.
In other words, it is the submission of Mr. Sorabjee that cl.
IS of the Letters Patent and the provisions of the Code are indeed supplementary to each other.
Mr. Sorabjee has fairly submitted that before the Division Bench of the Bombay High Court this argument that the order is appealable under the provisions of the Code and the appeal is, there t fore, competent was not advanced.
It is his submission that this argument was not advanced before the Division Bench of the Bombay High Court, as the view of the Bombay High Court has been that the provisions of section 104 and of order 43 of the Code of Civil Procedure do not apply to the original side of the Bombay High Court.
Mr. Sorabjee has argued that though in this appeal this aspect was not argued before the Division Bench of the Bombay High Court, he is entitled to urge this point before this Court as this point is a pure point of law.
Mr. Sorabjee has next contended that in any event the order under appeal should be considered to be a judgment within the meaning of cl. 15 of the Letters Patent.
He argues that the word 'judgment ' in clause 15 of the Letters Patent should be construed liberally so as to include within its fold any order which has been made appealable by virtue of the provisions contained in the Code or in any other statute.
He submits that such an interpretation will be in conformity with the principles of justice and will truly reflect intention of the Legislature and will avoid any kind of conflict 265 between the provisions contained in cl. 15 of the Letters Patent and A the provisions contained in the Code of Civil Procedure and in any other statute.
It is his submission that the word 'judgment ' in cl. 15 of the Letters Patent may include various other orders which may not otherwise be appealable under the provisions of the Code or any other Statute but may still become appealable as 'judgment ' by virtue of the provisions contained in the Letters Patent.
In other words, it is the contention of Mr. Sorabjee that the expression 'judgment ' in cl. 15 of the Letters Patent should be so construed as to include necessarily all orders which are appealable under any statute and also in appropriate cases various other orders which are not expressly made appealable by any statute.
He contends that the provisions of the Code contained section 104 and order 43 or in any other statute with regard to the appealability of any order do not have the effect of curtailing or affecting the special jurisdiction and power of the Court of entertaining an appeal from any other order, if the Court is satisfied that the order is in effect a judgment within the meaning of cl. 15 of the Letters Patent.
Mr. Sorabjee has submitted that as to the true meaning, effect and import of the word 'judgment ' in cl. 15 of the Letters Patent, there is a divergence of judicial opinion, and the word `judgment ' has come up for consideration before various Courts in many cases.
In this connection, Mr. Sorabjee has referred to the following decisions : 1.
The Justice of the Peace for Calcutta vs The Orientatal Gas Co. Ltd. (1) 2.
T.V. Tulzaram Row vs M.K.R.V. Allagappachettiar (2) 3.
Ruldu Singh vs Sanwal Singh (3) 4.
Shah Hari Dial & Sons vs Sohnamal Beliram (4) 5.
In Re: Dayabhai Jiwandas and Ors.
vs A.M.M. Muru gappa Chettiar (5) 6.
Abdul Samad & Ors.
vs State of J. & K. (6) 266 7.
Standard Glass Beads Factory vs Shri Dhar & Ors.(1) 8.
Sri Raja Vallanki Venkata Chinnayamma Rao Bahadur Zimidarni Garu vs Sri Raja Kotagiri Subemma Rao Bahadur Zimidarni Garu (2) 9.
Chitaranjan Mandal vs Shankar Prosad Sahani (3) 10.
Manohar Damadar Bhoot vs Baliram Ganpat Bhoot (4) 11.
Masanta Film Distributors Calcutta vs Sorab Marwanji Modi (5) 12.
J.K. Chemicals Ltd. vs Kreba and Co.(6) 13.
Kedar Nath Mitter vs Denobandhu Shaha(7) 14.
Shorab Merwanji Modi and Anr.
vs Mansata Film Distributors and Anr.(8) 15.
M.B. Sarkar and Sons vs Powell and Co.(9) 16.
Asrumati Devi vs Kumar Rupendra Deb Rai and Ors.(10) 17.
State of U.P. vs Dr. Vijay Anand Maharaj(11) 18.
National Bell Co. vs Metal Goods Co. (P) Ltd.(12) 19.
Shanti Kumar R. Canji vs The Home Insurance Co. Of New York(13) Mr. Sorabjee has submitted that this Court should lay down the guidelines or enumerate the principles to remove the confusion and resolve the conflict in the sphere of judicial determination as 267 to what constitutes 'judgment ' within the meaning of cl 15 of the Letters Patent.
Mr. Kapadia and Mr. Venugopal, learned counsel for the Respondents, have submitted that the provisions of the Code of Civil Procedure contained in section 104 and order 43 thereof are not applicable to the original side of the Bombay High Court which is a Chartered High Court in view of the provisions contained in cl. 15 of the Letters Patent.
They have argued that special jurisdiction has been conferred in the matter of preferring an appeal against an order of a Single Judge on the original side of a Chartered High Court by cl. 15 of the Letters Patent and this special jurisdiction of the High Court cannot in any way be affected by the provisions of the Code.
In support of this contention reference has been made to Ss. 3 and 4 of the Code of Civil Procedure and particular reliance has been placed on section 4.
They have also strongly relied on the decision of the Bombay High Court in the case of Vaman Raoji Kulkarni vs Nagesh Vishnu Joshi(1) and also on the decision of the same High Court in the case of J.K. Chemicals Ltd. vs Kreba and Co. (supra).
They have submitted that these judgments for cogent reasons recorded therein represent correct law and the view expressed by the Bombay High Court to the effect that section 104 and order 43 of the Code of Civil Procedure do not apply to the original side of the Bombay High Court, has been consistently followed by the Bombay High Court and should be upheld by this Court.
They have also relied on the following observations of the Judicial Committee in the case of Hurrish Chunder Chowdhry vs Kali Sundari Debia(2) at p. 17: "It only remains to observe that their Lordships do not think that sec.
588 of Act X. Of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the full Court.
" They have argued that if the provisions of the Code are not held to be applicable to the original side of the Bombay High Court, then the appeal from the order of the learned Single Judge can only be maintained if the order becomes a 'judgment ' within the meaning 268 of cl. 15 of the Letters Patent.
They have contended that an order on an interlocutory application refusing to grant an injunction or appoint a receiver cannot be considered to be a 'judgment within the meaning of cl. 1 S of the Letters Patent, as such an order virtually does not decide anything and does not in any way affect the merits of the suit.
They have also relied on the decisions which were cited by Mr. Sorabjee and they have placed particular reliance on the decision of the Bombay High Court in the case of J.K. Chemicals Ltd. vs Kreba and Co. (supra).
Mr. Kapadia and Mr. Venugopal have both pointed out to us that the question of appealability of the order under the provisions of the Code was not argued before the High Court in the instant case and was sought to be argued for the first time in this Court.
Both of them, however, have fairly stated that the question is one of law and one of of considerable importance and the Court should decide the same.
I propose to deal with the question of applicability of the provisions contained in section 104 and order 43 of the Code of Civil Procedure to the original side of the Bombay High Court in the first instance.
Before I deal with the contentions urged by the counsel for the respective parties, it will be convenient to consider the relevant provisions of the Code.
section I of the Code makes it clear that the Act is applicable to whole of India excepting the places mentioned in the said section and the Act, therefore, applies to Maharashtra.
section 3 of the Code provides that for the purpose of this Code, the District Court is subordinate to the High Court, and every Civil Court of a grade inferior to that of a District Court and every Court of Small Causes is subordinate to the High Court and District Court.
section 4 of the Code reads: "(1) In the absence of any specific provision to the contrary, nothing in this Code shall be deemed to limit or otherwise affect any special or local law now in force or any special jurisdiction or power conferred, or any special form of procedure prescribed, by or under any other law for the time being in force.
(2) In particular and without prejudice to the generality of the proposition contained in sub section (1), nothing in this Code shall be deemed to limit or otherwise 269 affect any remedy which a landholder or landlord may have under any law for the time being in force for the recovery of lent of agricultural land form the produce of such land.
" section 5 of the Code deals with the applicability of the provisions of the Code to Revenue Courts.
section 100 of the Code deals with appeals from Appellate Decree and section 100 A which has been introduced into the Code w.e.f.
1.2.1977 by the Amending Act, 104 of 1976 provides that notwithstanding anything contained in Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, where any appeal from an appellate decree or order is heard and decided by a single Judge of a High Court, no further appeal shall lie from the judgment, decision or order of such Single Judge in such appeal or from any decree passed in such appeal.
The material provisions of section 104 are: "section 104 (1); An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders : x x x x x x x x (ff) an order under section 35A; (fa) an order under section 91 or section 92 refusing leave to institute a suit of the nature referred to in section 91 or section 92 as 'the case may be; (g) an order under S 95; (h) an order under any of the provisions of this Code imposing a fine or directing the arrest or detention in the Civil prison of any person except where such arrest or detention is in execution of a decree; (i) any order made under rules from which an appeal is expressly allowed by rules; Provided that no appeal shall lie against any order specified 270 in clause (i) save on the ground that no order, or an order for the payment of a less amount, ought to have been made.
(2) No appeal shall lie from any order passed in appeal under this section.
" Sections 105 and 106 may also be quoted: "(1) Save as otherwise expressly provided no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal; (2) Notwithstanding anything contained in sub section (1), where any party aggrieved by an order of remand from which an appeal lies does not appeal the reform, he shall thereafter be precluded from disputing its correctness.
section 106: Where an appeal from any order is allowed it shall lie to the Court to which an appeal would lie from the decree in the suit in which such order was made, or where such order is made by a court (not being a High Court) in the exercise of appellate jurisdiction, then to the High Court. ' ' Special provisions relating to the High Courts, not being the court of a Judicial Commissioner, are made in para IX of the Code which consists of five sections namely Ss.
116 to 120 and the said sections are as follows: "section 116: This Part applies only to High Courts not being the Court of a Judicial Commissioner.
section 117: Save as provided in this Part or in part X or in rules, the provisions of this Court shall apply to such High Courts.
section 118: Where any such High Court considers it necessary that a decree passed in the exercise of its original civil jurisdiction should be executed before the amount of 271 the costs incurred in the suit can be ascertained by taxation, the Court may order that the decree shall be executed forthwith, except as to so much thereof as relates to the costs: and, as to so much thereof as relates to the costs, that the decree may be executed as soon as the amount of the costs shall be ascertained by taxation.
section 119: Nothing in this Code shall be deemed to authorise any person on behalf of another to address the Court in the exercise of its original civil jurisdiction, or to examine witnesses, except where the Court shall have in the exercise of the power conferred by its charter authorised him so to do, or to interfere with the power of the High Court to make rules concerning advocates, vakils and attorneyes.
section 120: The following provisions shall not apply to the High Court in the exercise of its original civil jurisdiction, namely, secs.
16, 17 and 20.
section 122 empowers the High Courts, not being the Court of a Judicial Commissioner to make rules regulating their own procedure and the procedure of the Civil Courts subjects to their superintendence.
section 129 further provides: "Notwithstanding anything in this Code, any High Court not being the Court of a Judicial Commissioner may make such rules not inconsistent with the Letters Patent or order or other law establishing of it to regulate its own procedure in the exercise of its original civil jurisdiction as it shall think fit, and nothing herein contained shall affect the validity of any such rules in force at the commencement of this Code.
The material provisions contain in O. XLIII of the Code of Civil Procedure may be set out: "An appeal shall lie from the following orders under the provisions of section 104, namely: x x x x x x x x 272 (q) an order under rule 2, rule 3 or rule 6 of order XXXVIII: (r) an order under rule 1, rule 2, rule 2A, rule 4 or rule 10 of O. XXXIX; (s) an order under rule 1, or rule 4 of order XL.
x x x x 2.
The rules of O. XLI shall apply, so far as may be, to appeals from orders." On a proper analysis of the relevant provisions of the Code there cannot be, in my opinion, any manner of doubt that section 104 and order 43 of the Code of Civil Procedure apply, to the original side of the Bombay High Court.
It is not in dispute and it cannot be disputed that the Code of Civil Procedure applies to the High Court.
section 1 of the Code which provides for territorial extent of the operation of the Code makes this position abundantly clear.
The argument is that section 104 and order 43 of the Code do not have any application to the original side of the High Court, although various other provisions of the Code may apply to the High Court including its original side.
This argument, as we have earlier noticed, is made mainly on the basis of the provisions contained Ss. 3 and 4 of the Code.
section 3 of the Code deals with subordination of Courts.
It is no doubt true that a learned Single Judge dealing with any matter on the original side discharges his duties as a Judge of the High Court, and he can, therefore, be in no way subordinate to the High Court.
When a division Bench of a High Court hears an appeal from any decree, order or judgment of any Single Judge of the High Court in its original side there can be no question of any subordination of the Judge, presiding over a Bench on the original side of the High Court to the High Court.
An appeal admittedly lies to a division Bench of the High Court from any order passed by a learned single Judge on the original side under cl. 15 of the Letters Patent, if the order is a 'Judgment ' within the meaning of the said clause.
An appeal also admittedly lies from a decree passed by a Single Judge on the original side of the High Court to a division Bench of the High Court.
A division Bench, properly constituted, is perfectly competent to hear an appeal from any such order which may constitute a judgment within the meaning of cl. 15 and from any decree by a Single Judge on the original side of the 273 High Court.
In the same way, in case of any other order in respect of which right to prefer any appeal has been conferred by a statute, a division Bench of the High Court will be competent to hear such an appeal.
S.3 of the Code, in my opinion, has really no bearing on the question and creates no bar to the competence and maintainability of an appeal from an order passed by a Judge on the original side, if the order is otherwise appealable.
section 4 of the Code has been enacted to preserve any special or local law in force.
An analysis of the material part of this section clearly indicates that in the absence of any specific provision to the contrary, no provision in the Code shall be deemed to limit or otherwise affect any special or local law in force or special jurisdiction or power conferred or any special form of procedure prescribed by or under any Jaw for the time being in force.
The argument that section 104 and order 43 of the Code affect the special jurisdiction or power conferred on the High Court under cl. 15 of the Letters Patent is, to my mind, untenable.
15 of the Letters Patent was enacted to provide for an appeal from the Courts of original jurisdiction to the High Court in its appellate jurisdiction and the said clause undoubtedly confers power for the hearing of an appeal from a judgment of any judge on the original side of the High Court.
Though cl. 15 makes special provisions in relation to appeal from a judgment of a learned single Judge on the original side, yet it cannot be said that the side clause intended to lay down that in no other case an appeal will lie from an order passed by any learned Judge on the original side, even if any specific provision is made in any other statute making any other order appealable.
An appeal, it has to be remembered, is a creature of a statute and litigant generally does not have a right of appeal against any decision of a competent Court unless a right of appeal has been specifically conferred on the litigant by law.
Cl. 15 of the Letters Patent confers on the litigant a right to prefer an appeal against any judgment.
Any order which is considered to be a 'judgment ' will be appealable by virtue of the provisions contained in cl. 15 of the Letters Patent.
In the same way other statutes may confer on the litigant the right to prefer an appeal against an order; and by virtue of the provisions of the statute such an order shall become appealable.
If any other statute confers on the litigant any right to prefer an appeal in respect of any other order, it cannot be said that such a provision creating a right of appeal in any way affects the provisions contained in cl. 15 of the Letters Patent.
The special power and jurisdiction of the High court under cl. 15 to entertain an appeal from any judgment is in no way affected and is fully retained; 274 and in addition to the said power, a High Court may be competent to entertain other appeals by virtue of specific statutory provisions.
section 4 of the Code cannot, therefore, be said to be in conflict with the provisions contained in cl. 15 of the Letters Patent and section 4 of the Code does not limit or otherwise affect the power and jurisdiction of the High Court under cl. 15 of the Letters Patent.
On the other hand, the Code contains specific provisions which go to indicate in which case or to which Court the provisions of the Code, may or may not be applicable.
section S of the Code makes specific provisions regarding the nature and manner of applicability of the Code to Revenue Courts and the Revenue Court has also been defined in the said section.
On the other hand, in Ss. 116 to 120 it is convincingly indicated that section 104 and order 43 of the Code of Civil Procedure apply to the original side of a High Court.
Ss. 116 to 120 are contained in part IX of the Code which makes special provisions relating to High Courts (not being the Court of Judicial Commissioner).
section 117 specifically provides that the provisions of the Code shall apply to High Court save as provided in part IX or in part X. section 120 contained in part IX lays down that the provisions contained in Ss. 16, 17 and 20 of the Code shall not apply to the High Court in the exercise of its original civil jurisdiction.
Part X which deals with rules and manner of framing thereof does not have any material bearing on the question of applicability of section 104 and order 43 of the Code to the original side of the High Court.
The effect of the special provisions contained in part IX relating to High Courts, therefore, clearly appears to be that the provisions of the Code have as provided in Part IX or Part X or in rules, apply to the original side of the High Court and Ss. 16,17 and 20 of the Code do not apply to the High Court in the exercise of its original civil jurisdiction.
section 104 of the Code is contained in part VII which deals with appeals.
Part VII of the Code dealing with appeals consists of the sections commencing from Ss. 96 to 112.
This part VII dealing with appeals makes provisions for an appeal from original decrees, appeals, appellate decrees, appeals from orders, general provisions relating to appeals and also appeals to the Supreme Court.
section 104 of the Code provides for appeals from orders and clearly stipulates that an appeal shall lie from the orders mentioned therein and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from no other order.
Order 43 which is attracted by section 104 of the Code clearly provides that an appeal shall lie from the orders mentioned in rule 1 of o. 43 under the provisions of section 104 and the orders referred to therein particularly in (q), (r) and (s) clearly 275 indicate that the order in question is an appealable order.
As I have earlier observed that an appeal is a creature of a statute and the right to appeal is only enjoyed, if law confers any right.
The Code of Civil Procedure clearly makes the order in question an appealable one.
The legislature has thought it fit to confer a right on the litigant to prefer an appeal in respect of the orders mentioned in section 104 of the Code read with order 43 thereof.
A Court will be slow to deprive a litigant of the statutory right merely on the ground that the order in question has been passed by a learned Judge on the original side of the High Court.
It may further be pointed out that section 104 which makes the order under appeal and also various other orders referred to therein appealable under the Code, recognises that apart from the order made appealable under the Code there may be other orders appealable by any law for the time being in force and further provides that no appeal will lie from any orders other than the orders expressly provided in the body of the Code or by any other law in force.
The right of appeal against a judgment of a learned single Judge on the original side under cl. 15 of the Letters Patent is a right conferred by any other law in force.
It may be pertinent to point out in this connection that by incorporating section 100A in the Code (by the Amending Act 104 of 1976, section 38), the Legislature has thought it fit to interfere with the right of appeal in certain cases, even if such right had been conferred by Letters Patent or any other law.
This right of appeal under cl. 15 of the Letters Patent is in no way curtailed or affected by section 104 of the Code of Civil Procedure and section 104 seeks to confer the right of preferring an appeal in respect of the various orders mentioned therein.
In other words, by virtue of the provisions contained in section 104(1), a litigant enjoys the right of preferring an appeal in respect of various orders mentioned therein, even though such orders may or may not be appealable under cl. 15 of the Letters Patent as a judgment and the right of appeal under cl.
15 of the Letters Patent remains clearly unimpaired.
In this connection the following observations of this Court in the case of Union of India vs Mohindra Supply Co. (supra) at p. 511 may be usefully quoted: "The intention of the legislature in enacting the sub s.(1) of section 104 is clear: the right to appeal conferred by any other law for the time being in force is expressly preserved This intention is emphasised by section 4 which provides that in the absence of any specific provision to the contrary 276 nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force.
The right to appeal against judgments (which did not amount to decrees under the Letters Patent, was therefore not affected by section 104(1) of the Code of Civil Procedure, 1908".
It will be apt in this connection to bear in mind the view expressed by the Privy Council in the case of Mt. Savitri Thakurain vs Savi and Anr.,(1) the Judicial Committee held at p. 82 83 as follows: "The orders and rules under the Code are by Section 121 given the same affect as if they had been enacted in the Code, and therefore order 41, Rule 10, is one of the pro visions of the Code.
It applies to appeals in the High Court, including the present appeal, unless any particular section of the Act can be found to exclude it.
Section 104(1) is the section relied on for this purpose It prescribes what orders shall be appealable and enumerates them, and among the orders enumerated there is not included such an order as that made by Choudhary, J. Out of the operation of Section 104 there are, however, expressly excepted matters, which are otherwise expressly provided for in the body of the Code.
In order to appreciate the full effect of section 104 it should be compared with the corresponding section of the Act of 1882, Section 588.
The earlier section enacted that appeals should lie in certain cases, which it enumerated, 'and from no other such orders. ' This raised this question nearly whether an appeal, expressly given by Section 15 of the Letters Patent and not expressly referred to in Section 588 of the Code of 1882, could be taken away by the general words of the section 581 and in the wording of section 104 of the Act of 1908 is significant for it runs, 'and same as otherwise expressly provided. by any law for the time being in force, from the other orders '.
Section 15 of the Letters Patent is such a law, and what it expressly provides namely, an appeal to the High Court 's appellate jurisdiction from a decree of the High 277 Court in its original ordinary jurisdiction, is thereby saved.
Thus regulations duly made by orders and Rules under the Code of Civil Procedure, 1908 are applicable to the jurisdiction exercisable under the Letters Patent, except that they do not restrict the express Letters Patent appeal.
" The effect of sub section (1) section 104, therefore, is clearly not to affect any existing special or local law or any special jurisdiction or power conferred and to preserve any existing right of appeal whether under any statute or the Letters Patent and to create a further right of preferring an appeal in respect of the orders enumerated therein.
C In the case of Mathura Sundari Dassi vs Haran Chandra Shaha and Ors.
(supra), Sanderson, C.J. Observed at p. 362 as follows: "I would be very loth to hold that this order is not a 'judgment ' within the meaning of cl. 15 of the Letters Patent, but it is not necessary in my judgment to give a definite opinion upon it because I think, on the second point, the Code does give a right of appeal.
By clause 14 of the Letters Patent it is provided as follows: 'And we do further ordain and declare that all the provisions of these our Letters Patent are subject to the legislative powers of the Governor General in Council, exercised at meetings for the purpose of making law and regulations '.
By the terms of section 117 the code is made applicable to the High Court, and o. 43.
R. 1, gives a right of appeal in the very case under discussion.
But it is said that this Code and the rules made under it do not apply to an appeal from a learned Judge of the High Court.
I cannot follow that argument.
It is part of the defendant 's case that O.9, R. 8 applies.
That order is in effect a part of the Civil Procedure Code.
It seems to me strange that the plaintiff should be subjected to O.9, R. 8, and be liable to have his suit dismissed for want of appearance, yet when he has had his suit dismissed under one of the rules of the Code and wants to call in aid another of the rules which when his application for reinstatement has been refused gives him a right of appeal against that refusal, he is met with the argument that he cannot call in aid that rule because there is no appeal from the learned Judge of the High Court under the Civil Procedure Code.
I think this 278 is not a true view or a reasonable construction to put upon the Code and the Rules made under it.
In my judgment, the Code and the rules do apply and the plaintiff has a right of appeal.
" Sri Aushotosh Mookherji in his judgment in the same case at pp.
364 365 held as follows: "The question, consequently, arises whether O,43, r. 1, clause (c), is applicable to an order under o. IX, r. 9, made by a Judge on the original side of this Court.
On behalf of the appellant, reliance has been placed upon section 117 of the Code which lays down that 'save as provided in this part or in part X or in rules, the High Court established under the Indian High Courts Act, 1961. ' The only provision in Part IX, which may have any possible hearing is that contained in section 120 which obviously does not touch the present question.
The provision in Part X, which deal with the matter, is contained in section 129: this also does not militate against the contention of the appellant.
The term 'rule ', which finds a place in section 117, is defined in clause 18 of section 2 of the Code to mean 'a rule contained in the first Schedule or made under section 122 or section 125 '.
Our attention has not been drawn to any such rule which makes o. 43, R. 1, Clause (e), inapplicable.
On the other hand O.49, R. 3, which excludes the operation of other rules, lends support to the contention of the appellant that o. 43, r. 1, cl.
(c) is applicable to the present appeal.
But it has been argued on behalf of the respondents, on the authority of the decision of the Judicial Committee in Hurriah Chandra Choudhary vs Kali Sudari Dasi that the Civil Procedure Code, in so far as it provides for appeals, does not apply to an appeal preferred from a decision of one Judge of a High Court to the Full Court.
The true effect of the decision of the Judicial Committee was considered by this Court in Toolses Money Dassesv.
Sudevi Dasses (1890) 25 Cal. 361) but it is not necessary for my present purpose to determine its hearing in all its implications, because in my opinion, the law has been substantially altered since that decision was pronounced.
section 104 279 Of the Code of 1908 is materially different from section 588 of Code of 1882.
It provides that an appeal shall lie from the orders mentioned in the first clause of that section, and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from no other orders '.
The effect of section 104 is thus, not to take away a right of appeal given by clause IS of the Letters Patent, but to create a right of appeal in cases even where clause 15 of the Letters Patent is not applicable.
I may here observe perethically that in the case of Tooles Money Dasses vs Sudevi Dasses.
Princep J. felt pressed by the argument that if an appeal was deemed to have been allowed by the Code of Civil Procedure, there was no provision for the Constitution of a Court to which such an award might be preferred.
section 106 of the Code, however, lays down that "where an appeal from any order is allowed, it shall lie to the Court to which an appeal would lie from the decree in the suit in which such order was made. ' Consequently, where a right of appeal has been so given, it would be the duty of this Court to constitute a Court of Appeal under section 13 of the Indian High Courts Act.
1 hold accordingly that this appeal is competent under cl.
tc), R. 1, o. 43 of the Civil Procedure Code.
" In the case of Lea Badin vs Upendra Mohan Roy Chaudhry (supra), a Division Bench of the Calcutta High Court held at p. 37 as follows: "But there is another and far simpler ground on which it must he held that an appeal is competent.
The order in the present case is one for which a right of appeal ii provided in cl.
R. 1, o. 43 of the Code.
Under the pre sent Code (Act 5 of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court; such a contention was elaborately dealt with and repelled in the case of On a plain reading of the various provisions of the Code and on a proper construction thereof I have no hesitation in holding that section 104 of the Code of Civil Procedure applies to the original side of the High Court and the order in question is clearly appealable by virtue of the provisions contained in section 104(1) read with order 280 43 thereof.
The authorities to which I have referred also lend support to the view that I have taken.
A contrary view expressed by any High Court must necessarily be considered to be wrong and incorrect.
The leading decision of the Bombay High Court in the case of Baman Rao Kulkarini vs Naresh Vishnu Joshi (supra) proceeds on an incorrect appreciation and interpretation of the provisions of the Code.
As I have earlier discussed, there is no question of section 104 of the Code of Civil Procedure purporting to control of cl. 15 of the Letters Patent.
It may, on the other hand, be said that section 104 of the Code seeks to supplement cl. 15 of the Letters Patent by conferring a right of appeal in the case of various orders mentioned in sub section (1) of section 104, which brings in its purview section 43 of the Code.
The further approach of the Bombay High Court in that case as to subordination of a judge of the High Court sitting singly on the original side, is fallacious and untenable.
An appeal under cl. 15 of the Letters Patent from a judge sitting singly on the original side of the High Court becomes competent to a division Bench and a learned judge against whose judgment the appeal is preferred does not become subordinate to the High Court.
There is in fact no question of subordination at all.
The observations of the Judicial Committee in the case of Hurish Chandra Choudhary vs Kali Sudari Dasi (supra) at p. 17 relied on by the learned counsel for the Respondents are of no material assistance to them.
I have already quoted the said observations of the Judicial Committee.
The said observations made in relation to the provisions of section 588 of the Act 10 of 1877 only go to lay down that the said section which has the affect of restricting certain appeals does not have the affect of restricting the right of appeal under cl. 15 of the Letters Patent and does not apply to a case where an appeal is one under cl. 15 of the Letters Patent.
It may further be noted that the law has since the said decision been substantially altered and section 104 of the Code of Civil Procedure of 1908 is materially different from section 588 of the Code of 1882.
This decision of the Judicial Committee has already come up for consideration by a division Bench of the Calcutta High Court in the Mathura Sudari Dassi vs Haran Chandra Shaha (supra).
I, therefore, accept the first contention of Mr. Sorabjee that the order in question is appealable under section 104 (1) of the Code read with order 43 thereof and the said provisions of the Code apply to the original side of the Bombay High Court and the appeal preferred 281 from the order of the learned single judge to the Division Bench of A the Bombay High Court was competent and maintainable.
In view of my accepting the first contention of Mr. Sorabjee it does not really become necessary for me to consider the other contention raised by him, namely, that the order in question is also appealable as a 'judgment ' under cl. 15 of the Letters Patent.
As elaborate arguments have been advanced on this aspect and various decisions have been cited, my learned brother Fazal Ali, J. has in his judgment also considered this aspect and has dealt with various cases, in deference to the submissions made from the bar that this Court should lay down guidelines as to what will constitute a 'judgment ' within the meaning of cl.
l S of the Letters Patent.
An order which is appealable under the Code or under any other statute becomes appealable as the statute confers a right on the litigant to prefer an appeal against such an order.
Such an order may or may not be appealable as 'judgment ' under cl. 15 of the Letters Patent.
An order which may be appealable under cl.
IS of the Letters Patent as a 'judgment ' becomes appealable as Letters Patent confers on the litigant a right of appeal against such an order as 'judgment '.
An order appealable under the Letters Patent may or may not be appealable under the Code.
A right of appeal is a creature of Statute.
A litigant does not have an inherent right to prefer an appeal against an order unless such a right is conferred on the litigant by law.
Certain orders become appealable under the Code, as the Code makes such orders appealable.
Other Statutes may confer a right of appeal in respect of any order under the Statute.
The Letters Patent by cl. 15 also confers a right to prefer an appeal against a 'judgment '.
An order which satisfies the requirements of 'judgment ' within the meaning of cl.
15 becomes appealable under the Letters Patent.
What kind of an order will constitute a 'judgment ' within the meaning of cl. 15 of the Letters Patent and will become appealable as such much necessarily depend on the facts and circumstances of each case and on the nature and character of the order passed.
The question whether a particular order constitutes a judgment within the meaning of cl. 15 of the Letters Patent to be appealable under the provisions thereof has come up for consideration before the various Courts in a number of decision.
Very many decisions have been cited in the present case and they have been considered by my learned brother, Fazal Ali, J. in his judgment.
The question indeed, is not free from difficulties and divergent views have been expressed by different Courts and by various learned 282 Judges.
This Court had also the occasion to consider as to what may constitute a judgment within the meaning of cl. 15 of the Letters Patent in certain cases.
In the case of Shanti Kumar R. Canji vs The Home Insurance Co. Of New York (Supra) this Court referring to the earlier decision of this Court in the case of Asrumati Debi vs Kumar Rupendra Deb Rajkot & ors (supra), observed at p. 550 "This Court in Asrumati Debi 's case said that a judgment within the meaning of cl. 15 of the Letters Patent would have to satisfy two tests.
First, the judgment must be the final pronouncement which puts an end to the proceedings as far as the Court dealing with it is concerned.
Second, the judgment must involve the determination of some right or liability though it may not be necessary that there must be a decision on merits".
This Court further observed at p. 555 "The view of the High Courts of Calcutta and Madras with regard to the meaning of 'judgment ' are with respect preferred to the meaning of 'judgment ' given by the Rangoon and Nagpur High Court.
" This Court also held at p. 556 "In finding out whether the order is a 'judgment ' within the meaning of cl.
IS of the Letters Patent it has to be found out that the order affects the merits of the action between the parties by determining some right or liability.
The right or liability has to be found out by a Court.
The nature of the order will have to be examined in order to ascertain whether there has been a determination of any right or liability.
" In my opinion, an exhaustive or a comprehensive definition of 'judgment ' as contemplated in ch IS of the Letters Patent cannot be properly given and it will be wise to remember that in the Letters Patent itself, there is no definition of the word 'judgment '.
The expression has necessarily to be construed and interpreted in each particular case.
It is, however, safe to say that if any order has the effect of finally determining any controversy forming the subject matter of the suit itself or any part thereof or the same affects the question of Court 's jurisdiction or the question of limitation, such an order will normally constitute 'judgment ' within the meaning of cl.
IS of the Letters Patent.
I must not, however, be understood to say that any other kind of order may not become judgment within the meaning of cl.
IS of the Letters Patent to be appealable under the provisions thereof.
As already stated, it is not necessary to decide in the present case whether the order in question would be appealable under cl.
IS of the Letters Patent as judgment; and I, therefore, refrain from expressing any opinion on this question.
| In a suit for specific performance of an agreement to sell filed on the original side of the Bombay High Court the plaintiff (appellant) prayed for certain interim reliefs.
A single Judge of the High Court dismissed the application.
A Division Bench of the High Court, on appeal by the plaintiff, held that the appeal was not maintainable on the ground that the impugned order of the single Judge was not a 'judgment ' within the meaning of clause 15 of the Letters Patent of the High Court.
In appeal to this Court it was contended on behalf of the appellant that since the trial Judge is governed by the procedure prescribed by the Code of Civil Procedure, by virtue of the provisions of section 104 read with Order 43 Rule (1) the impugned order is appealable to a larger Bench; (2) assuming that the Letters Patent was a special law, section 104 read with Order 43 is in no way inconsistent with clause 15 of the Letters Patent; (3) even if section 104 read with Order 43 Rule 1 does not apply an order refusing to appoint a receiver or to grant injunction has the attributes of finality and, therefore, amounts to a judgment ' within the meaning of Letters Patent.
Allowing the appeal ^ HELD: (per Fazal Ali and A. Varadarajan, JJ.) (Amarendra Nath Sen, J. concurring.) Since the Order of the trial Judge was one refusing appointment of a receiver and grant of ad interim injunction, it is a 'judgment ' within the meaning of the Letters Patent both because order 43 rule 1 applies to internal appeals in the High Court, and such an order even on merits contains the quality of finality and would be a judgment within the meaning of clause 15 of Letters Patent.
Hence an appeal is maintainable to the Division Bench.
The Division Bench was in error in dismissing the appeal without deciding it on merits.
[259 F G] 188 There is no inconsistency between section 104 read with Order 43 Rule 1, C.P.C. and appeals under Letters Patent.
There is nothing to show that Letters Patent in any way excludes or overrides the application of section 104 read with Order 43 Rule 1 or that these provisions do not apply to internal appeals within the High Court.
[237 E F] Code of Civil Procedure 1877, by sections 588 and 589, did not make any distinction between appeals to the High Court from the District Court and internal appeals to the High Court under Letters Patent.
Notwithstanding the clear enunciation of law by the Privy Council that section 588 did not affect nor was it inconsistent with the provisions of Letters Patent and that, therefore, orders of a trial Judge which fall beyond section 588 could be appealable to a larger bench under the Letters Patent if its orders amounted to a 'judgment ' within the meaning of clause 15 of the Letters Patent, there was a serious controversy among the High Courts on this question.
Section 104 of the C.P.C., 1908 made it clear that appeals against orders mentioned in Order 43 Rule 1 were not in any way inconsistent with the Letters Patent but merely provide additional remedy by allowing appeals against miscellaneous orders passed by the trial Judge to a larger bench.
[205 E G] In dealing with a suit the trial Judge has to follow the procedure prescribed by the Code.
It is indisputable that any final judgment passed by the trial Judge amounts to a decree and under the provisions of the Letters Patent an appeal lies to a larger bench.
Letters Patent itself does not define the term 'judgment ' and has advisedly not used the word 'decree ' in respect of a judgment given by the trial Judge.
[206 B D] Section 5 of the Code empowers the State Government to apply the provisions of the Code where any enactment is silent as to its applicability.
Section 5 makes clear that, excepting the Revenue Courts, all other Civil Courts would normally be governed by the provisions of the Code in the matter of procedure.[206H,207A] Section 4 of the Code which provides that in the absence of any specific provision to the contrary the provisions of the Code do not limit or affect any special or local law, is not applicable in the instant case because even if the Letters Patent is deemed to be a special law within the meaning of this section the provisions of section 104 do not seek to limit or affect the provisions of the Letters Patent.
[207 B C] By force of section 104 all appeals, as indicated in the various clauses of Order 43 Rule 1, would lie to the appellate court.
In short a combined reading of the various provisions of the Code leads to the conclusion that section 104 read with Order 43 Rule 1 clearly applies to proceedings before a trial Judge of the High Court.
[207 H; 209 B] In the instant case, therefore, section 104 read with Order 43 Rule 1 does not in any way abridge or interfere with or curb the powers conferred on the trial Judge by clause 15 of Letters Patent.
They only give an additional remedy by way of appeal from the orders of the trial Judge to a larger bench.
That being so there is no force in the respondent 's argument that these provisions do not apply to internal appeals in the High Court.
[209 D E] 189 Hurrish Chunder Chowdry vs Kali Sundari Debia, 10 I.A. 4, Mt. Sabitri Thakurain vs Savi & Anr.
A.I.R. 1921 P.C. 80, Union of India vs Mohindra Supply Co., ; and Shankarlal Aggarwal & Ors.
vs Shankarlal Poddar & Ors. , referred to.
A number of enactments, as for example, section 202 of the and section 39 of the Arbitration Act widen, rather than limit, the original jurisdiction of the High Court by conferring additional or supplementary remedy by way of appeal to a Division Bench from the judgment of a single Judge.
On a parity of reasoning, therefore, section 104 read with Order 43 Rule 1 expressly authorises and creates a forum for appeal against orders falling under the various clauses of Order 43 Rule 1 to a larger bench of the High Court without disturbing, interfering with or over riding the Letters Patent jurisdiction.
[211 B C] Dayabhai Jiwandas & Ors.
vs A.M.M. Murugappa Chettiar, I.L.R. 13 Rangoon 457, Sonbai vs Ahmedbhai Habibhai [1872] 9 Bom.
HC Reports.
398, Rajagopal & Ors.
(in Re. LPA 8 of Mad. 447, Ruldu Singh vs Sanwal Singh Lahore 188, Lea Badin vs Upendra Mohan Roy Chaudhary & Ors. , Mathura Sundari Dassi vs Haran Chandra Shaha & Ors.
A.I.R. 1916 Cal.
361 Abdul Samad & Ors.
vs The State of J & K. A.I.R. 1969 J&K 52, and Kumar Gangadhar Bagla vs Kanti Chunder Mukerjee & Anr., , approved.
Ram Sarup vs Kaniz Ummehani, ILR 1937 All.
386 over ruled.
Assuming that Order 43 Rule 1 does not apply to Letters Patent appeals the principles governing these provisions would apply by process of analogy.
The provisions of Order 43 Rule 1 possess the traits, trappings and qualities and characteristics of a final order.
Although the word 'judgment ' has not been defined in the Letters Patent but whatever test may be applied the order passed by the trial Judge appealed against must have the traits and trappings of finality.
The appealable orders indicated in the various clauses of Order 43 Rule 1 are matters of moment deciding valuable rights of the parties and are in the nature of final orders so as to fall within the definition of 'judgment '.
[237G; 225 E F] Radhey Shyam vs Shyam Behari Singh ; referred to.
Pandy Walad Dagadu Mahar & Anr.
vs Jamnadas Chotumal Marwadi, ; Vaman Ravi Kulkarni vs Nagesh Vishnu Joshi & Ors, A.I.R. 1940 Bom. 216; Vishnu Pratap & Ors.
vs Smt.
Revati Devi & Ors.
A.I.R. 1953 All.
647; Madhukar Trimbaklal vs Shri Sati Godawari Upasani Maharaj of Sakori & Ors. ; Ratanlal Jankidas Agarwal vs Gajadhar & Ors.; A.I.R. 1949 Nagpur 188; Beads Factory & Anr.
vs Shri Dhar & Ors.
A.I.R. 1960 All. 692; J. K. Chemicals Ltd. vs Kreba & Co.; A.I.R. 1967 Bom.
56, overruled.
Having regard to the nature of the orders contemplated in the various clauses of Order 43 Rule 1 which purport to decide valuable rights of the parties in the ancillary proceedings even though the suit is kept alive these orders possess the attributes or characteristics of finality so as to be judgments within the meaning of clause 15 of the Letters Patent.
They are therefore, appealable to a larger 190 bench.
The concept of the Letters Patent governing only the internal appeals in the High Courts and the Code of Civil Procedure having no application to such appeals is based on a serious misconception of the legal position.
[237H 238A B] The question to be decided in this case which is a vexed and controversial one is as to what is the real concept and purport of the word 'judgment ' used in the Letters Patent.
The meaning of the word 'judgment ' has been the subject matter of conflicting decisions of the various High Courts raging for almost a century and over which despite the length of time no unanimity had been reached and it is high time that this controversy should be settled once and for all as far as possible.
[238 E F] Out of the numerous authorities cited three leading judgments have spelt out certain tests for determining as to when an order passed by a trial Judge can be said to be a 'judgment ' within the meaning of clause 15 of the Letters Patent and we are inclined to agree generally with the tests laid down in these cases though some of the tests laid down are far too wide and may not be correct.
[238 G H] While the view taken in the Justices of the Peace for Calcutta vs The Oriental Gas Company (VIII Bengal L.R. 433) is much too strict, the one taken in T. V. Tuljaram Row vs M.K.R.V. Alagappa Chettiar (ILR 35 Madras 1) is much too wide.
The correct test seems to lie somewhere in between the tests laid down in these cases.
Similarly the full Bench decision in Manohar Damodar Bhoot vs Baliram Ganpat Bhoot (AIR 1952 Nagpur 357) pithily described the essential requisites and the exact meaning of the word 'judgment ' as used in the Letters Patent.
The pointed observations made in this case try to synthesize the conflicting views taken by the Calcutta and Madras High Courts.
They represent the true scope and import of the word 'judgment ' as used in the Letters Patent.
[The Court reviewed the entire case law on the subject laying down various tests to determine what a judgment is.] The test for determining as to when an order passed by a trial Judge can be said to be a 'judgment ' within the meaning of the Letters Patent are: (1) Where an order, which is the foundation of the jurisdiction of the Court or one which goes to the root of the action, is passed against a particular party, it amounts to a judgment.
[248 B C] Asrumati Debi vs Kumar Rupendra Deb Raikot ; (2) An order dismissing an application for review would be appealable under the Letters Patent being a judgment, though it is not made appealable under Order 43 rule 1.
[249 B] State of Uttar Pradesh vs Dr. Vijay Anand Maharaj ; (3) The which confers original jurisdiction on the trial Judge expressly makes an order passed by the trial Judge under section 202 appealable and, therefore, any order passed under that section would be appealable under the and is, therefore, a judgment.
[249 C D] 191 Shankarlal Aggarwal vs Shankerlal Poddar (4) Whenever a trial Judge decides a controversy which effects valuable rights of one of the parties it is a judgment within the meaning of the Letters Patent.
[249 H] Radhey Shyam vs Shyam Behari Singh ; (5) Where an order passed by the trial Judge allowing amendment of the plaint, takes away from the defendant the defence of immunity from any liability by reason of limitation, it is a judgment within the meaning of clause 15 of the Letters Patent.
[250 A B] Shanti Kumar R. Canji vs The Home Insurance Co. of New York ; (6) Clause 15 of the Letters Patent does not define the term 'judgment '.
The Letters Patent is a special law which carves out its own sphere and it would not be possible to project the definition of the word 'judgment ' as defined in the Code of Civil Procedure.
Letters Patent were drafted long before the Code of Civil Procedure of 1882 was enacted.
The word 'judgment ' used in the Letters Patent does not mean a 'judgment ' as defined in the Code.
At the same time it does not include every possible order final, preliminary or interlocutory passed by a Judge of the High Court.
[251 D E] Mt. Shahzadi Begum vs Alak Nath & Ors.
A.I.R. 1935 All 628.
Under the Code of Civil Procedure a judgment consists of reasons and grounds for a decree passed by a Court.
As a judgment constitutes the reasons for the decree, it follows as a matter of course that the judgment must be a formal adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy.
The concept of a judgment as defined in the Code seems to be rather narrow and the limitations engrafted by section 2(2) cannot be physically imported into the definition of the word 'judgment ' as used in clause 15 of the Letters Patent because the Letters Patent has advisedly not used the terms 'order ' or 'decree ' anywhere.
The intention of the givers of the Letters Patent was that the word 'judgment ' should receive a much wider and more liberal interpretation than the word 'judgment ' used in the Code of Civil Procedure.
At the same time, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent.
The word 'judgment ' has a concept of finality in a broader and not a narrower sense.
[2 52 G H; 253 A C] A judgment can be of three kinds: (1) A final judgment: A judgment, which decides all the questions or issues in controversy so far as the trial Judge is concerned and leaves nothing else to be decided is a final judgment.
This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full.
Such an order passed by the trial Judge is a judgment within the 192 meaning of the Letters Patent and amounts to a decree so that an appeal would lie from such a judgment to a Division Bench.
[254 D E] (2) A preliminary judgment: A preliminary judgment may be of two forms: (i) where the trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable.
Since the suit is finally decided one way or the other, the order passed by the trial judge would be a 'judgment ' finally deciding the cause so far as the trial Judge is concerned and, therefore, appealable to a larger bench; (ii) where the trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to the maintainability of the suit as for example, bar of jurisdiction, res judicata, a manifest defect in the suit, absence of notice under section 80 and the like.
An order of the trial Judge rejecting these objections adversely affects a valuable right of the defendant who, if his objections were held to be valid, is entitled to get the suit dismissed on preliminary grounds.
Such an order, though it keeps the suit alive, decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger bench.
[254 F H; 255 A B] (3) Intermediary or Interlocutory judgment: Most of the interlocutory orders which contain the quality of finality are clearly specified in clause (a) to (w) of Order 43 Rule 1.
They are judgments within the meaning of the Letters Patent and, therefore, appealable.
There may also be interlocutory orders not covered by Order 43 Rule 1 but possessing the characteristics and trappings of finality because they adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.
Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote.
Thus when an order vitally affects a valuable right of the defendant it will be a judgment within the meaning of Letters Patent so as to be appealable to a larger bench.
[255 C E; 256 A] Every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned.
[256 H 257 A] The following considerations should prevail with the Court in deciding whether or not an order is a judgment: (1) The trial Judge being a senior court with vast experience of various branches of law occupying a very high status, should be trusted to pass discretionary or interlocutory orders with due regard to the well settled principles of civil justice.
Thus any discretion exercised or routine orders passed by the trial Judge in the course of the suit which may cause some inconvenience or, to some extent, prejudice one party or the other cannot be treated as a judgment.[258D E] (2) An interlocutory order, in order to be a judgment, must contain the traits and trappings of finality either when the order decides the question in controversy in ancillary proceeding or in the suit itself or in a part of the proceedings.
[258 G] 193 It is not the form of adjudication which has to be seen but its actual effects on the suit or proceedings.
[243 H] If irrespective of the form of the suit or proceeding, the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment.
[244A] If the effect of the order, if not complied with, is to terminate the proceedings, the said order would amount to a judgment.
[244 B] An order in an independent proceeding which is ancillary to the suit, (not being a step towards judgment) but is designed to render the judgment effectively can also be termed as judgment within the meaning of the Letters Patent.
[244C] An order may be a judgment even if it does not affect the merits of the suit or proceedings or does not determine any rights in question raised in the suit or proceedings.
[244 D E] An adjudication based on a refusal to exercise discretion, the effect of which is to dispose of the suit, so far as that particular adjudication is concerned, would amount to a judgment within the meaning of the Letters Patent.
[244 E F] Some illustrations of interlocutory orders which may be treated as judgments may be stated thus: (1) An order granting leave to amend the plaint by introducing a new cause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant.
[258 B C] (2) An order rejecting the plaint.
[258 C] (3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure.
[258 C] (4) An order rescinding leave to the trial Judge granted by him under clause 12 of the Letters Patent.
[258 D] (5) An order deciding a preliminary objection to the maintainability of the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive.
[258 D E] (6) An order rejecting an application for a judgment on admission under Order 12 Rule 6.
[258 E F] (7) An order refusing to add necessary parties in a suit under section 92 of the Code of Civil Procedure.
[258 F] (8) An order varying or amending a decree.
[258 F G] (9) An order refusing leave to sue in forma pauperis.
[258 F G] (10) An order granting review.
[258 F G] 194 (11) An order allowing withdrawal of the suit with liberty to file a fresh one.
[258 G H] (12) An order holding that the defendants are not agriculturists within the meaning of the special law.
[258 G H] (13) An order staying or refusing to stay a suit under section 10 of the Code of Civil Procedure.
[258 H] (14) An order granting or refusing to stay execution of the decree.
[259A] (15) An order deciding payment of court fee against the plaintiff.
[259 B] (per Amarendra Nath Sen J concurring) On a plain reading and proper construction of the various provisions of the Code of Civil Procedure, section 104 of the Code applies to the original side of the High Court of Bombay and the impugned order of the single Judge is appealable to a Division Bench under this section read with Order 43 thereof.
[279 H; 280 A] The right of appeal under clause 15 of the Letters Patent is in no way curtailed or affected by section 104.
By virtue of the provisions of section 104(1) a litigant enjoys the right of preferring an appeal in respect of various orders mentioned therein, even though such orders may or may not be appealable under clause 15 of the Letters Patent as a judgment and the right of appeal under clause 15 remains clearly unimpaired.
[275 E G] The argument of the respondent, based mainly on the provisions of sections 3 and 4 of the Code of Civil Procedure that even if various other provisions of the Code apply to the Bombay High Court, including its original side, the provisions of section 104 read with Order 43 could not apply to the original side of a Chartered High Court because the jurisdiction conferred by clause 15 of the Letters Patent is a special jurisdiction is without force.
[267 B C] That by virtue of section 1 (which provides for territorial extent of the operation of the Code) the Civil Procedure Code applies to the State of Maharashtra cannot be disputed.
[268 E F] Section 3 which deals with subordination of Courts to the High Court has no bearing on the point in issue and does not create any bar to the competence and maintainability of an appeal from an order passed by a single Judge on the original side if the order is otherwise appealable.
While dealing with any matter on the original side of the High Court a single Judge is in no way subordinate to the High Court.
Nor again, could there be a question of his being a subordinate to the Division Bench which hears an appeal from his judgment.
If any order passed by him on the original side is a 'judgment ' within the meaning of clause 15 of the Letters Patent an appeal lies to a Division Bench.
[272 E G] Similarly there is no force in the argument that since section 104 and Order 43 of the Code affect the special jurisdiction conferred on the High Court under 195 clause 15 of Letters Patent these provisions are not applicable to the present case.
[273 C D] Section 4 of the Code cannot be said to be in conflict with the provisions of clause 15; nor can it be said that it limits or otherwise affects the power and jurisdiction of the High Court under clause 15.
[274 A B] Section 4 provides that nothing in the Code shall be deemed to limit or otherwise affect any special or local law in force or any special jurisdiction conferred by or under any law for the time being in force.
Clause 15 confers on the litigant a right to prefer an appeal from the court of original jurisdiction to the High Court in its appellate jurisdiction.
It confers a right of appeal from a judgment of any Judge on the original side to the High Court.
Though this clause is a special provision it cannot be said that it is intended to lay down that no appeal would lie from an order of a single Judge on the original side even if specific provision is made in any statute making the order appealable.
By virtue of this provision any order considered to be a judgment would be appealable.
If a statute confers on the litigant right of appeal, it cannot be said that such provision would affect the special provisions of clause 15.
This special power is in no way affected and is fully retained.
In addition, the High Court may be competent to entertain other appeals by virtue of specific statutory provisions.
[273 C H: 274 A] On the contrary, the Code contains specific provisions indicating cases in which its provisions are or are not applicable, as for example section 5, which makes specific provision regarding the nature and manner of applicability of the Code to revenue courts.
Sections 116 to 120 clearly indicate that section 104 and order 43 apply to the original side of the High Court.
Section 104 and Order 43 which is attracted by section 104, clearly provide that an appeal shall lie from the orders mentioned in rule 1 of Order 43.
The impugned order is one such order and is clearly appealable.
When the legislature conferred such a right on the litigant a Court would be slow to deprive him of the statutory right merely on the ground that the order had been passed by a single Judge on the original side of the High Court.
[274 B E] Section 104 recognises that, apart from the orders made appealable under the Code, there may be other orders appealable by any law for the time being in force.
It further provides that no appeal will lie from any orders other than orders expressly provided in the Code or by any other law in force.
The right of appeal against a judgment of a single Judge on the original side under clause 15 is a right conferred by "any other law in force".
[275 C E] Union of India vs Mohindra Supply Co. ; and Mt. Savitri Thakurain vs Savi and Anr.
referred to.
Mathura Sundari Dassi vs Haran Chandra Shaha, A.I.R. and Lea Badin vs Upendra Mohan Roy Choudhary, A.I.R. 1935 Cal.
35 approved.
Vaman Raoji Kulkarni vs Nagesh Vishnu Joshi, A.I.R. overruled.
Hurrish Chander Chowdhry vs Kali Sundari Debia, 10 I.A. 4, held in applicable.
196 Unless a right is conferred on him by law, a litigant does not have an inherent right of appeal.
An order appealable under the C.P.C. or any other statute becomes appealable because the concerned statute confers a right of appeal on the litigant.
But yet such an order may or may not be appealable as 'judgment ' under clause 15 of the Letters Patent.
An order appealable under clause 15 as a 'judgment ' becomes appealable because the Letters Patent confers the right of appeal against such order as 'judgment '.
Similarly an order appealable under the Letters Patent may or may not be appealable under the Code.
[281 C E] The Letters Patent, by clause 15, confers a right of appeal against a 'judgment ' and therefore an order which satisfies the requirements of 'judgment ' within the meaning of clause 15 becomes appealable.
What kind of order will constitute a 'judgment ' within the meaning of this clause and become appealable as such must necessarily depend on the facts and circumstances of each case and on the nature and character of the order passed.
[281 F G] A comprehensive definition of 'judgment ' contemplated by clause 15 cannot properly be given.
Letters Patent itself does not define 'judgment '.
The expression has necessarily to be construed and interpreted in each case.
But yet it is safe to say that if an order has the effect of finally determining any controversy forming the subject matter of the suit itself or any part thereto or the same affects the question of the Court 's jurisdiction or the question of limitation, it normally constitutes 'judgment ' within the meaning of clause 15 of Letters Patent.
[282 E G]
|
N: Criminal Appeal No. 368 of 1986.
From the Judgment and order dated 11.4.1986 of the Calcutta High Court in Crl .
No . 1181 of 1985 .
WITH Criminal Appeals Nos. 251 252 of 1986.
From the Judgment and order dated 26.7.1975 of the Calcutta High Court in Crl.
222 and 448 of 1985.
Dr. Y.S. Chitale and H.K. Puri for the Appellant.
Parijat Sinha for the Respondent in Crl.
A. No. 368 of 1986.
S.K. Kapur, Ranjan Dev and Mrs. Indra Sawhney for the Respondents in Crl.
A. No. 251 252 of 1986.
Tapas Roy and D.K. Sinha for the State of West Bengal.
D.K. Sinha, K.R. Nambiar, Ms. Reba Roy, K.K. Lahitri and Ms Apsi Ditta for the Interveners.
The following order of the Court was delivered O R D E R After hearing Shri S.K. Kapoor, learned counsel appearing for respondent No. 1 in Criminal Appeals Nos.
251 252 of 1986 at quite some length, we are not persuaded to take a view different from the one expressed by this Court in the recent judgment in Baldev Krishna Sahi vs Shipping Corporation of India Ltd. & Anr., [ 1987] 4 SCC 361 overruling the judgment of the Calcutta High Court in Amrit Lal Chum vs Devi Ranjan Jha, as to the scope and effect of sub section
(1) of section 630 of the .
The Court in Baldev Krishna Sahi 's case has placed a beneficent construction on the provisions contained in sub section
(1) of section 630 of the Act 785 and according to it the term 'officer or employee ' in sub section
(1) of section 630 must be interpreted to mean not only the present officers and employees of a company but also to include the past officers and employees of the Company.
It has also taken the view that the words 'any such property ' in cl.
(b) thereof qualify the words 'any property of a company ' appearing in cl.
As observed in Baldev Krishna Sahi 's case, section 630 of the Act plainly makes it an offence if an officer or employee of a company who was permitted to use the property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment.
It is the wrongful withholding of such property, meaning the property of the company after termination of the employment, which is an offence under section 630(l)(b) of the Act.
The construction placed by this Court in Baldev Krishna Sahi 's case is the only construction possible.
There is therefore no warrant to give a restrictive meaning to the term 'officer or employee ' appearing in sub section
(1) of section 630 of the Act as meaning only the existing officers and employees and not those whose employment have been terminated.
The Court in Baldev Krishna Sahi 's case has expressly overruled the judgment of the Calcutta High Court in Amrit Lal Chum vs Devi Ranjan Jha, supra, against which these appeals have been filed and upheld the consistent view to the contrary taken by the High Court of Bombay in a series of cases.
[See Harkishin Lakhimal Gidwani vs Achyut Kashinath Wagh, and Govind T. Jagtiani vs Sirajuddin section Kazi, Accordingly, these appeals must succeed and are allowed with costs.
The judgment of the High Court allowing the applications under section 482 of the Code of Criminal Procedure, 1973 are set aside.
Shri S.K. Kapoor, learned counsel appearing for respondent No. 1 in Criminal Appeals Nos. 251 252 of 1986 and Shri Parijat Sinha, learned counsel for respondent No. 1 in Criminal Appeal No. 368 of 1986 pray for time to vacate the premises in their occupation.
We grant the respondents time till June 30, 1988 to vacate the premises subject to their furnishing the usual undertaking in this Court within four weeks from today.
If there is a failure on the part of the respondents to comply with these conditions, namely, failure to file the said undertaking and/or to vacate the premises within the time allowed, the cases against them i.e. Complaint Case No. 1053/83 in the Court of IIIrd Additional Judicial Magistrate, Alipore, 24 Paraganas and Complaint Case No. 2788/84 in the Court of Special Divisional Judicial Magistrate, Alipore, 24 Paraganas shall continue.
In the event of respondents ' failure to file the undertaking and/or vacate the premises within 786 the time specified, the learned Magistrates shall proceed with the trial of these cases and dispose them of as expeditiously as possible and in any event, not later than October 31, 1988.
The intervention application filed by Tata Iron and Steel Company Limited is not pressed.
N. P.V. Appeals allowed.
| % Section 630 of the empowers the court, on the complaint of the Company, or any creditor or contributory thereof, to punish an officer or employee of such company, by levy of fine, if such officer or employee wrongfully obtains possession of, or having obtained possession, wrongfully withholds or knowingly misapplies, the property of the company, and also order him to deliver up or refund, within a stipulated time, such property or, in default, to suffer imprisonment.
In these appeals against the Judgment of the High Court, the question for consideration was as to the scope and interpretation of this provision.
E Allowing the appeals, ^ HELD: Section 630 of the plainly makes it an offence if an officer or employee of a company who was permitted to use the property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment.
It is the wrongful withholding of such property, meaning the property of the company after termination of the employment, which is an offence under section 630(l) of the Act.
[785B C] There is, therefore, no warrant to give a restrictive meaning to the term "officer or employee" appearing in sub section (1) of section 630 of the Act as meaning only the existing officers and employees and not those whose employment has been terminated.
[785C D] Baldev Krishna Sahi vs Shipping Corporation of India Ltd. & Anr., [ 1987} 4 SCC 361, followed.
H 784 [Time granted to respondents till June 30, 1988 to vacate the premises subject to the furnishing of usual undertaking.
In the event of failure to furnish the undertaking and/or vacate the premises within the time stipulated, the cases against the respondents to continue and the trial court to proceed with the trial and dispose them of expeditiously, but not later than 31.10.88.] [785G H; 786A]
|
ition (Civil) No. 422 of 1987.
(Under Article 32 of the Constitution of India).
Dr. Y.S. Chitale, K.J. John, Atul Chitale and Miss Naina for the Petitioners.
577 K. Parasaran, Attorney General, T.S. Krishnamoorthy Iyer, G.A. Shah, V. Jagannatha Rao Advocate General, B.B. Ahuja, Miss A. Subhashini, T.V.S.N. Chari, Miss Vrinda Grover, Badri Nath, Dr. N.M. Ghatate, M. Veerappa, A.M. Khanwilkar, A.S. Bhasme, R. Mohan, R. Ayyam Perumal, A. Subha Rao, M.N. Shroff, J.R. Das, D.K. Sinha, S.N. Khare, T.C. Sharma, S.K. Bhattacharya, Kailash Vasudev and Probir Choudhary for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The India Cement Limited, Chettinad Cement Corporation, Dalmia Cement (Bharat) Limited and Tamil Nadu Cement Corporation Limited being petitioners 1, 6, 9 and 12 in this application under Article 32 of the Constitution are manufacturers of cement, each of them having its manufacturing unit as also registered offices located within the State of Tamil Nadu; petitioners 2, 7, and 10 are shareholders of petitioners 1, 6 and 9 respectively and are citizens of India, while the remaining petitioners are authorised stockists of the different manufacturers having their places of business at different places located in the States of Karnataka, Kerala and Tamil Nadu.
Manufacturer petitioners have been selling their cement in the States of Karnataka and Kerala and for such purpose they have places of business within those States.
The State of Andhra Pradesh in exercise of powers conferred under sub section ( 1) of Section 9 of the Andhra Pradesh General Sales Tax Act, 1957 made an order on January 27, 1987 (Annexure A) reducing the rate of tax on sale of cement made to the manufacturing units of cement products in the State of Andhra Pradesh.
That order runs thus: "In exercise of the powers conferred by sub section ( 1) of Section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act, No. VI of 1957), the Governor of Andhra Pradesh hereby directs that the tax leviable under clause (a) of sub section (2) of Section 5 read with Item 18 in the First Schedule to the said Act, shall, in respect of Cement manufactured by Cement Factories situated in the State and sold to the manufacturing units situated within the State for the purpose of manufacture of Cement products such as Cement sheets, Asbestos Sheets, Cement flooring stones, Cement concrete pipes, hume pipes, Cement water and sanitary fitting, concrete poles and other Cement products, be at the reduced rate of four paise in the rupee at the point of first sale in the State with effect on 578 and from the Ist January, 1987.
" On the same day, another order was made to the following effect: "In exercise of the powers conferred by sub section (5) of Section 8 of the (Central Act 74 of 1956), Governor of Andhra Pradesh hereby directs that the tax leviable under the said Act, shall, in respect of the sales of cement in the course of inter State trade or commerce be at a lower rate of two per cent with or without 'C ' Form, with effect from 1st January, 1987.
" The State of Karnataka issued the following notification on 28.2.1987: "In exercise of the powers conferred by sub section (5) of Section 8 of the (Central Act 74 of 1956), the Government of Karnataka, being satisfied that it is necessary so to do in public interest, hereby reduces with immediate effect the rate of tax payable under the said Act on the sale of cement made in the course of inter State trade or commerce from 15% to 2%.
" Petitioners in this application challenge the vires of Section 8(5) of the (Central Act 74 of 1956) and the notifications referred to above as ultra vires the provisions contained in Part XIII of the Constitution providing that trade, commerce and inter course throughout the territory of India shall be free.
According to the petitioners the three orders referred to above create trade barriers and directly impinge upon the freedom of trade, commerce and inter course provided for in Article 301 of the Constitution.
Since the vires of Section 8(5) of the Central Act 74 of 1956 had been assailed, notice had been issued to the Union of India and learned Attorney General.
Notice was also directed to all the States.
Pursuant to the notice, the State of Madhya Pradesh and Sikkim have filed their affidavits with reference to the challenge against Section 8(5) of the Act.
At the hearing of the writ petition, however, learned counsel for the petitioners gave up that challenge.
In that view of the matter, reference to the counter affidavits of the States of Madhya Pradesh and Sikkim becomes irrelevant and the petition has to be con fined to the challenge against the two notifications of the State of T 579 Andhra Pradesh and the lone notification of the State of Karnataka.
The return to the rule nisi on behalf of the State of Andhra Pradesh is made by the Commercial Tax officer, Company Circle 11, Hyderabad.
He has stated that the State of Andhra Pradesh has surplus production of cement.
In 1986 87, the production of cement was around six million tonnes out of which local consumption was to the tune of about three million tonnes.
In 1987 88 and 1988 89, production was likely to go up by 1.5 million tonnes and three million tonnes respectively and the local consumption was estimated to be within the range of 40% of the production.
60% of the manufactured cement had, therefore, to be marketed out.
Within the State there were certain bulk consumers of cement who use the commodity as raw material for manufacturing Cement sheets, Asbestos sheets, hume pipes, Cement bricks, tiles etc.
Such bulk consumers found products of cement from outside the State to be cheaper in view of the higher incidence of local State tax.
In this background Government considered it necessary to reduce the tax rate under the Andhra Pradesh General Sales Tax Act to help the Cement Industries in easing out their marketing difficulty.
Keeping in view the fact that marketing of indigenous cement had to be inside the State, Government decided to reduce the rate of tax under the Andhra Pradesh General Sales Tax Act to 4%.
That is how the first notification was made reducing the rate of tax in respect of sale of cement to local manufacturers as aforesaid.
Government by the second notification reduced the rate of tax leviable under the in course of inter State trade or commerce to 2% with or without 'C ' Form with effect from 1.1.1987.
In another place of the same affidavit, it has been pleaded: " The classification of the manufacturers and dealers in cement of Andhra Pradesh vis a vis the other States is a reasonable classification and it is not violative of Articles 14 and 19(1)(g)".
"The concession in the rate of tax extended by the State of Andhra Pradesh to the manufacturers and dealers of Andhra Pradesh is well within the statutory powers of the State.
It does not effect the business interest of the manufacturers and dealers of other States.
It is the policy of the State of Andhra Pradesh to help the cement Industries to organise the marketability of their full production to improve the overall industrial activity of the country.
Hence this contention tenable".
580 "As already mentioned earlier, the notifications were issued in public interest and in the interest of State revenue".
Yet at another place in the return.
it has been stated: "The contention that the policy of the Legislature is to promote sales only through registered dealers is not based on correct appreciation of the law.
Any law to that effect would impose a restriction on the rights of the common man and would result in the violation of the provisions of the Constitution which ensures certain fundamental rights to the common man. ' ' The State of Karnataka chose not to make any return to the rule nisi but its counsel joined at the hearing and contended that the order made by the Karnataka State did not affect the provisions in Part XIII of the Constitution.
In view of the fact that counsel for petitioners gave up the challenge to the vires of Section 8(5) of the , learned Attorney General confined his submissions to the scope of of the Constitution and the effect of the notifications on the scheme contained in that part.
In case the notifications operate against the provisions of Article 3o1 of the Constitution, they have got to satisfy the requirements contained in that Part.
We shall now refer to the relevant Articles and to several decisions of this Court which are binding precedents.
The title for Part XIII is "Trade, Commerce and Inter course within the Territory of India.
" The relevant Articles in that Part are 30 1, 302, 303 and 304.
We may now reproduce them: "3o1.
Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free.
Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest (underlining is ours) 303 .
( 1) Notwithstanding anything in Article 302, 581 neither Parliament nor the legislature of a State shall have power to make any law giving, or authorising the giving, or any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.
(2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of.
any preference or making, or authorising the making of.
any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
Notwithstanding anything in Article 30 1 or Article 303, the Legislature of a State may by law: (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " Judicial authority in regard to interpretation of this Part of the Constitution is abundant.
We shall presently refer to some of the decisions of this Court .
In Ataibari Tea Co. Ltd. vs The State of Assam & Ors., [1961] I SCR 609 a Constitution Bench of this Court was testing the validity of the provisions of the Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954 by applying the provisions of this Part of the Constitution.
At page 830 of the Reports.
Sinha, CJ, stated: "Article 301,with which part III commences,con 582 tains the crucial words shall be free and provides the key to the solution of the problems posed by the whole Part.
The freedom declared by this Article is not an absolute freedom from all legislations.
As already indicated, the several entries in the three Lists would suggest that both Parliament and State Legislatures have been given the power to legislate in respect of trade, commerce and intercourse, but it is equally clear that legislation should not have the effect of putting impediments in the way of free flow of trade and commerce.
In my opinion, it is equally clear that the freedom envisaged by the Article is not an absolute freedom from the incidence of taxation in respect of trade, commerce and intercourse, as shown by entries 89 and 92A in the List I, entries 52, 54 and 56 to 6() in List II and entry 35 in List III.
All these entries in terms speak of taxation in relation to different aspects of trade, commerce and intercourse.
The Union and State Legislature, therefore, have the power to legislate by way of taxation in respect of trade, commerce and intercourse, so as not to erect trade barriers, tariff walls or imposts, which have a deleterious effect on the free flow of trade, commerce and intercourse.
That freedom has further been circumscribed by the power vested in Parliament or in the Legislature of a State to impose restrictions in public interest.
Parliament has further been authorised to legislate in the way of giving preference or making discrimination in certain strictly limited circumstances indicated in clause (2) of Article 303.
Thus, on a fair construction of the provisions of Part XIII, the following propositions emerge: (1) trade, commerce and intercourse throughout the territory of India are not absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a State; (2) the freedom declared by Article 301 does not mean freedom from taxation simpliciter, but does not mean freedom from taxation which has the effect of directly impeding the free flow of trade, commerce and intercourse; (3) the freedom envisaged in Article 301 is subject to non discriminatory restrictions imposed by Parliament in public interest (Article 302); (4) even discriminatory or preferential legislation may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (Article 303(2)); (5) reasonable restrictions may be imposed by the Legislature of a State in the public interest 583 (Article 304(b)); (6) non discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced or manufactured in that State (Article 304(a)); and lastly (7) restrictions imposed by existing laws have been continued, except in so far as the President may by order otherwise direct (Article 305)"; Gajendragadkar, J., as he then was, at page 843 of the Reports observed: "In drafting the relevant Articles of Part XIII, the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal policy which had been adopted by the Constitution for the governance of the country.
Political freedom which had been won, and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity.
It was realised that in course of time, different political parties believing in different economic theories or idealogies may come in power in the several constituent units of the Union, and that may conceivably give rise to local and regional pulls and pressures in economic matters.
Local or regional fears or apprehensions raised by local or regional problems may persuade the State legislatures to adopt remedial measures intended solely for the protection of the regional interests without due regard to their effect on the economy of the nation as a whole.
The object of Part XIII was to avoid such a possibility.
Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustaining and improving living standards of the country.
The provision contained in Article 301 guaranting the freedom.
Of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of 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 . . " 584 Then came the case of The Automobile Transport (Rajasthan) Limited vs The State of Rajasthan & orS., [1963] SCR 491 Das, J. who spoke for the Constitution Bench referred to the views expressed in Atiabari Tea Company 's case (supra) and proceeded to say: "We have tried to summarise above the various stand points and views which were canvassed before us and we shall now proceed to consider which, according to us, is the correct interpretation of the relevant Articles in Part XIII of the Constitution.
We may first take the widest view, the view expressed by Shah, J. in the Atiabari Tea C0mpany 's case, a view which has been supported by the appellants and one or two of the interveners before us.
This view we apprehend, is based on a purely textual interpretation of the relevant Articles in Part XIII of the Constitution and this textual interpretation proceeds in the following way.
Article 30 I which is in general terms and is made subject to the other provisions of Part XIII imposes a general limitation on the exercise of legislative powers, whether by the Union or the States, under any of the topics taxation topics as well as other topics enumerated in the three Lists of the Seventh Schedule, in order to make certain 'trade commerce and intercourse throughout the territory of India shall be free '.
Having placed a general limitation on the exercise of legislative powers by Parliament and the State Legislatures, Article 302 relaxes that restriction in favour of Parliament by providing that that authority 'may by law impose such restrictions on the freedom of trade, commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interest '.
Having relaxed the restriction in respect of Parliament under Article 302, a restriction is put up on the relaxation by Article 303(1) to the effect that Parliament shall not have the power to make any law giving any preference to any one State over another or discriminate in between one State and another by virtue of any entry relating to trade and commerce in Lists I and III of the Seventh Schedule.
Articles 303( 1) which places a ban on Parliament against the giving of preferences to one State over another or of discriminating between one State and another, also provides that the same kind of ban should be placed upon the State Legislature also legislating by virtue of any entry relating to trade and commerce in Lists II and 585 III of the Seventh Schedule.
Article 303(2) again carves out an exception to the restriction placed by Article 303( 1) on the powers of Parliament by providing that nothing in Article 303(a) shall prevent Parliament from making any law giving preference to one State over another or discriminating between one State and another, if it is necessary to do so tor the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
This exception applies only to Parliament and not to the State Legislatures.
Article 304 comprises two clauses and each clause operates as a proviso to Articles 301 and 303.
Clause (a) of that Article provides that the Legislature of a State may 'impose on goods imported from other States and any tax to which similar goods manufactured or produced in that State are subject so, however, as not to discriminate between goods so imported and goods so manufactured or produced '.
This clause, therefore, permits the levy on goods from sister States any tax which similar gods manufactured or produced in that State are subject to under its taxing laws.
In other words, goods imported from sister States are placed on par with similar goods manufactured or produced inside the State in regard to State taxation within the State allocated field.
Thus the States in India have full powers of imposing what in American State Legislation is called the use tax, gross receipts tax etc., not to speak of the familiar property tax, subject only to the condition that such tax is imposed on all goods of the same kind produced or manufactured in the taxing State, although such taxation is undoubtedly calculated to fetter interstate trade and commerce .
Now clause (b) of Article 304 provides that notwithstanding anything in Article 301 or 303 the Legislature of a State may by law imposes such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest.
The proviso to clause (b) says that no bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
This provision appears to be the State analogue to the Union Parliament 's authority defined by Article 302, in spite of the omission of the word 'reasonable ' before the word 'restrictions ' in the latter Article.
Leaving aside the pre requisite of previous Presidential sanction for the validity of State 586 Legislation under clause (b) provided in the proviso thereto, there are two important differences between Arti cles 302 and 304(b) which require special mention.
The first is that while the power of Parliament under Article 302 is subject to the prohibition of preferences and discrimina tions decreed byArticle 303(1) unless Parliament makes the declaration contained in Article 303(2), the State 's power contained in Article 304(b) is made expressly free from the prohibition contained in Article 303(1), because the open ing words of Article 304 contain a non obstante clause both to Article 30 1 and Article 303.
The second difference spr ings from the fact that while Parliament 's to impose restricC tions under Article 302 upon freedom of commerce in the public interest is not subject to the requirement of reason ableness, the power of the State to impose restrictions on the freedom of commerce in the public interest under Arti cle 304 is subject to the condition that they are reason able".
The next authority to which we may now refer is the case of State of Madras vs N.K. Nataraja Mudaliar, ; Shah, J., as he then was, referred to Part XIII of the Constitution at page 839 of the Reports.
On page 841 of the Reports, the learned Judge proceeded to say: "Tax under the on inter State sales, it must be noticed, is in its essence a tax which encumbers movement of trade or commerce, since by the definition in section 3 of the Act a sale or purchase of goods is deemed to take place in the course of inter State trade or commerce, if it (a) occasions the movement of goods from one State to another; (b) is effected by a transfer of docu ments of title to the goods during their movement from one State to another.
The question which then falls to be determined is whether the tax imposed in the present case is saved by the operation of the other provisions of Part XIII.
Article 302 of the Constitution provides that Parlia ment may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.
Thereby the Parliament is, notwithstanding the protection conferred by Article 30 1, authorised to impose restrictions on the freedom of trade, 587 commerce or intercourse in the public interest.
The expression "between one State and another ' does not imply that it is only intended to confer upon the Union Parliament the power to remove the fetter upon legislative authority only so as to keep trade, commerce or intercourse free between one State Government and another.
It is intended to declare trade, commerce and intercourse free between residents in one State and residents in another State.
That is clear because Article 302 expressly provides that on the freedom of trade restrictions may be imposed not only as between one State and another, but also within any part of the territory of India.
As we have already observed, Article 30I does not merely protect inter State trade or operate against inter State barriers: all trade is protected whether it is intra State or inter State by the prohibition imposed by Article 30I, and there is nothing in the language or the context for restricting the power of the Parliament which it otherwise possesses in the public interest to impose restrictions on the freedom of trade, commerce or intercoursc, operative only as between one State and another as two entities.
There is also no doubt that exercise of the power to tax may normally be presumed to be in the public interest . .
It is worthwhile to refer to tne observations made by Hegde, J.
At page 855 of the Reports, the learned Judge observed with reference to section 8(5) of the as follows; "Sub section (5) of section 8 provides for giving individual exemptions in public interest.
Such a power is there in all taxation measures.
It is to provide for unforeseen contingencies.
Take for example, when there was famine in Bihar, if a dealer in Punjab had undertaken to sell goods to a charitable society in that State at a reasonable price for distribution to those who were starving, it would have been in public interest if the Punjab Government had exempted that dealer from paying sales tax.
Such a power cannot immediately or directly affect the free flow of trade.
The power in question cannot be said to be bad.
If there is any misuse of that power, the same can be challenged.
" The true purpose of the provisions contained in of the Constitution.
as elucidated in the different decisions of the constitution 588 Benches, is that the restriction provided for in Article 30 I can within A the ambit be limited by law made by the Parliament and the State Legislature.
No power is vested in the executive authority to act in any manner which affects or hinders the very essence and thesis contained in the scheme of Part XIII of the Constitution.
It is equally clear that the declaration contained in Part XIII of the Constitution is against creation of economic barriers and/or pockets which would stand against the free flow of trade, commerce and intercourse There can be no dispute that taxation is a deterrent against free flow.
As a result of favourable or unfavourable treatment by way of taxation, the course of flow of trade gets regulated either adversely or favourably.
If the scheme which Part XIII guarantees has to be pre served in national interest, it is necessary that the provisions in theArticle must be strictly complied with.
One has to recall the farsighted observations of Gajendragadkar, J. in Atiabari Tea Co. case (supra) and the observations then made obviously apply to cases of the type which is now before us.
The two notifications of the Andhra Pradesh Government may now be referred to.
Under the first notification made under section 9(1) of the Andhra Pradesh General Sales Tax Act, the rate of tax has been reduced to 4 per cent in respect of sales made by indigenous cement manufacturers to manufacturers of cement products.
Admit tedly, the Tamil Nadu producers have sales officers in Andhra Pradeshand in regard to their sale to such manufacturers of cement products the benefit of reduced rate of taxation is not applicable.
The prescribed rate of tax under the Andhra Act is 13.75 per cent on cement.
Thus under the Andhra Notification in regard to the local tax the indigenous producers of cement have a benefit of 9.75 per cent.
The return made to the Court admits of the position that preference has been shown to local manufacturers.
Two reasons have been advanced by way of justification.
One is that it is beneficial to the State revenue and secondly it protects the local manufacturers too.
The counsel for the State Government has not been able to demonstrate to us how the reduction in the rate of sales tax is beneficial to the State revenue.
The other justification is what provisions of Part XIII of the Constitution do not permit.
The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part Xlll.
Coming to the second notification relating to inter state transac 589 tions, the justification pleaded by the State of Andhra Pradesh has already been extracted by us.
We may usefully refer to the decision of the Constitution Bench in the case of Gwalior Rayon Silk Mfg.
(Wvg) Co. Ltd. vs The Assistant Commissioner of Sales Tax & orS., [ ; At page 883 of the Reports, Khanna, J. speaking for the Court observed: "It has been argued on behalf of the appellants that the fixation of rate of tax is a legislative function and as the Parliament has, under section 8(2)(b) of the Act, not fixed the rate of central sales tax but has adopted the rate applicable to the sale or purchase of goods inside the appropriate State in case such rate exceeds lO per cent, the Parliament has abdicated its legislative function.
The above provision is consequently stated to be constitutionally invalid because of excessive delegation of legislative power.
This contention, in our opinion, is not well founded.
Section 8(2)(b) of the Act has plainly been enacted with a view to prevent evasion of the payment of the central sales tax.
The Act prescribed a low rate of tax of 3 per cent in the case of inter State sales only if the goods are sold to the Government or to a registered dealer other than the Government.
In the case of such a registered dealer, it is essential that the goods should be of the description mentioned in subsection (3) of section 8 of the Act.
In order, however, to avail of the benefit of such a low rate of tax under section 8(1) of the Act, it is also essential that the dealer selling the goods should furnish 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 in prescribed form obtained from the prescribed authority, or if the goods are sold to the Government not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government.
In cases not falling under sub section (1), the tax payable by any dealer in respect of inter State sale of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate state vide section 8(2) of the Act.
As regards the goods other than the declared goods, section 8(2)(b) provides that the tax payable by any dealer on the sale of such goods in the course of inter State trade or commerce shall be calculated at the rate of lO per cent or at the rate 590 applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher.
The question with which we are concerned is whether the Parliament is not fixing the rate itself and in adopting the rate applicable to the sale or purchase of goods inside the appropriate State has not laid down any legislative pol icy and has abdicated its legislative function.
In this con nection we are of the view that a clear legislative policy can be found in the provisions of section 8(2)(b) of the Act.
The policy of the law in this respect is that in case the rate of local sales tax be less than 10 per cent, in such an event the dealer, if the case does not fall within section 8(1) of the Act, should pay central sales tax at the rate of 10 per cent.
If, however, the rate of local sales tax for the goods con cerned be more than 10 per cent, in that event the policy is that the rate of the central sales tax shall also be the same as that of the local sales tax for the said goods.
The object of law thus is that the rate of the central sales tax shall in no event be less than the rate of local sales tax for the goods in question though it may exceed the local rate in case thas t rate be less than 10 per cent.
For example, if the local rate of tax in the appropriate State for the non declared goods be 6 per cent, in such an event a dealer, whose case is not covered by section 8(1) of the Act, would have to pay cent ral sales tax at a rate of lO per cent.
In case, however, the rate of local sales tax for such goods be 12 per cent, the rate of central sales tax would also be 12 per cent because otherwise, if the rate of central sales tax were only lO per cent, the unregistered dealer who purchases goods in the course of inter State trade would be in a better position than an intra State purchaser and there would be no disin centive to the dealers to desist from selling goods to unre gistered purchasers in the course of inter State trade.
The object of the law apparently is to deter inter State sales to unregistered dealers as such inter State sales would faciliG tate evasion of tax.
It is also not possible to fix the max imum rate under section 8(2)(b) because the rate of local sales tax varies from State to State.
The rate of local sales tax can also be changed by the State legislatures from time to time.
It is not within the competence of the Parliament to fix the maximum rate of local sales tax.
The fixation of the rate of local sales tax is essentially a matter for the State 591 Legislatures and the Parliament does not have any control in the matter.
The Parliament has therefore necessarily, if it wants to prevent evasion of payment of central sales tax, to tag the rate of such tax with that of local sales tax, in case the rate of local sales tax exceeds a particular limit.
" Reference may also be made to another decision of the Constitution Bench in the case of State of Tamil Nadu etc.
vs Sitalakshmi Mills etc.
,[1974]1 1 SCR 1.
At page 6 of the Reports, Mathew, J. stated: "As already stated, section 8(2)(b) deals with sale of goods other than declared goods and it is confined to interState sale of goods to persons other than registered dealers or Governments.
The rate of tax prescribed is 10 per cent or the rate of tax imposed on sale or purchase of goods inside the appropriate State, whichever is higher.
The report of the Taxation Inquiry Committee would indicate that the main reason for electing the provision was to canalize inter State trade through registered dealers, over whom the appropriate Government has a great deal of control and thus to prevent evasion of tax: Where transactions take place between registered dealers in one State and unregistered dealers or consumers in another, this low rate of levy will not be suitable, as it is likely to encourage avoidance of tax on more or less the same scale as the present provisions of Article 286 have done.
If this is to be prevented, it is necessary that transactions of this type should be taxable at the same rates which exporting States impose on similar transactions within their own territories.
The unregistered dealers and consumers in the importing States will then find themselves unable to secure any advantage over the consumers of locally purchased articles; nor of course will they, under this system, be able to escape the taxation altogether, as many of them do at present.
" (See Report of the Taxation Enquiry Commission, 195354, Vol.3, p. 57) In other words it was to discourage inter State sale to unregistered dealers that Parliament provided a high rate of tax, namely, IO%.
But even that might not serve the 592 purpose if the rate applicable to intra State of such goods was more than 10%.
The rate of 10% would then be favour able and they would be at an advantage compared to local cosumers.
It is because of this that Parliament provided, as a matter of legislative policy that the rate of tax shall be 10% or the rate applicable to intra State sales whichever is higher.
If prevention of evasiorl of tax is a measure in the public interest, there can be no doubt that Parliament is competent to make a provision for that purpose under Article 302 even if the provision would impose restrictions on the inter State trade or commerce.
Variation of the rate of inter State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution.
The notification extends the benefit even to unregistered dealers and the observations of Hegde, J. on this aspect of the matter are relevant.
Both the notifications of the Andhra Pradesh Government are, therefore, bad and are hit by the provisions of Part XIII of the Constitution.
They cannot be sustained in law.
Now coming to.
the notification of the Karnataka State, we have already pointed out that no return has been made and no attempt has been made, therefore, to place facts and circumstances to justify the action.
The notification suffers from the same vice as the second notification of the State of Andhra Pradesh suffers and no distinction can be drawn.
We accordingly hold that the notification of the Karnataka Government is also bad in law.
It may be pointed out that the rate of sales tax in Karnataka is 19.5 per cent.in regard to intra State sales.
In view of what we have indicated above, the writ petition has to succeed and the two impugned notifications of the Andhra Pradesh Government and the impugned notification of the Karnataka Government are quashed.
The writ petition is accordingly allowed with costs.
Hearing fees is assessed at Rs.5,OOO and this shall be shared equally by the States of Andhra Pradesh and Karnataka.
section L. Petition allowed.
| % The State of Andhra Pradesh in exercise of powers conferred under sub section (1) of section 9 of the Andhra Pradesh General Sales Tax Act, 1957, made an order on January 27, 1987, reducing the rate of tax on sale of Cement made to the manufacturing units of Cement products in the State.
On the same date, the State of Andhra pradesh made another order in exercise of the powers conferred by sub section (5) of section 8 of the , reducing the tax leviable under the said Act in respect of sales of Cement in the course of the inter State trade or commerce.
The State of Karnataka in exercise of the powers conferred by sub section (5) of section 8 of the , issued a notification on 28.10.1987, reducing the rate of tax payable under the said Act on the sale of Cement in the course of the inter State trade or commerce.
The petitioners cement manufacturing concerns, their shareholders and their authorised stockists filed this writ petition, challenging the vires of section 8(5) of the (Central Act 74 of 1956) and the notifications referred to above as ultra vires the provisions contained in Part XIII of the Constitution providing that trade, commerce and inter course throughout the territory of India shall be free.
According to the petitioners the three orders referred to above created trade barriers and directly impinged upon the freedom of trade, commerce and inter course provided for in Article 301 of the constitution.
Since the vires of section 8(5) of the Central Act 74 of 1956 had been assailed, notice had been issued to the Union of India, Attorney General, and all the States but at the hearing of the writ petition, the 575 petitioners gave up the challenge against section 8(5) of the Central Act.
In view of that, the writ petition was confined to the challenge against the two notification of the State of Andhra Pradesh and the lone notification of the State of Karnataka.
The return to the rule nisi was made on behalf of the State of Andhra Pradesh.
The State of Karnataka chose not to make any return to the rule nisi, but its counsel joined at the hearing and contended that the order made by the Karnataka State did not affect the provisions in Part XllI of the Constitution.
The Attorney General confined his submission to the scope of Part III of the Constitution and the effect of the notifications on the scheme contained in that part.
Allowing the writ petition, the Court, ^ HELD: The title for Part XIII.
which contains the relevant Articles 30 l, 302, 303 and 304 is "Trade Commerce and inter course within the Territory of India.
" The true purpose of the provisions contained in Part Xlll of the Constitution, as elucidated in the different decisions of the Constitution Benches of this Court, is that the restriction provided for in Article 301 can within the ambit be limited by law made by the Parliament and the State legislature.
No power is vested in the executive authority to act in any manner affecting or hindering the very essence and thesis contained in the scheme of Part XIII of the Constitution.
lt is equally clear that the declaration contained in Part XIIl of the Constitution is against the creation of economic barriers and or pockets which stand against the free now of trade, commerce and inter course.
[580F; 587H; 588A B] Taxation is a deterrent against free flow.
As a result of favourable or unfavourable treatment by way of taxation, the course of flow of trade gets regulated either adversely or favourably.
If the scheme which Part XIII guarantees has to be preserved in national interest, it is necessary that the provisions in the Article must be strictly complied with.
One has to recall the far sighted observations of Gajendragadkar.
J. in Atiabari Tea Co. Ltd. vs The State of Assam & Ors., [1961] 1.S.C.R. 609 and the observations then made obviously apply to cases of the type now before the Court.[588C D] Under the first notification made under section 9(1) of the Andhra Pradesh General Sales Tax Act, the rate of tax was reduced to 4 percent in respect of the sales made by the indigenous cement manufacturers to manufacturers of Cement products.
The Tamil Nadu producers had sales officers in Andhra Pradesh and in regard to their sale to such manufacturers of cement products, the benefit of the reduced rate of 576 taxation was not applicable.
Two reasons were advanced by way of justification.
One was that it was beneficial to the State revenue and secondly, that it protected the local manufacturers too.
It could not be demonstrated to the Court how the reduction in the rate of sales tax was beneificial to the State revenue.
The other justification was what the provisions of Part XIII of the Constitution did not permit.
The reasonable restriction contemplated in Part XIII have to be backed by law and not by executive action, provided the same are within the limitations prescribed under the Scheme of Part XIII.[588D H] The second notification related to the inter State transactions.
Variation of the rate of inter State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution.
The notification extended the benefit even to the unregistered dealers.
Both the notifications of the Andhra Pradesh Government were bad and hit by the provisions of Part Xlll of the Constitution.
They could not be sustained in law.[592D] In the case of the notification of the Karnataka State, as already said, no return had been made and no attempt had been made to place the facts and circumstances to justify the action.
The notification suffered from the same vice as the second notification of the State of Andhra Pradesh suffered, and no distinction could be drawn.
The notification of the Karnataka Government was also bad in law.
[597E F] The writ petition succeeded and the two impugned notifications of the Andhra Pradesh Government and the impugned notification of the Karnataka Government were quashed.
[592G] Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; The Automobile Transport (Rajasthan) Limited vs The State of Rajasthan & Ors., [1963] S.C.R. 491; State of Madras vs N.K. Nataraja Mudaliar., [1968] 3 S.C.R. 829; Gwalior Rayon Silk Mfg.
(Wvg.) Co. Ltd. vs The Assistant Commissioner of Sales Tax & Ors., [1974] 2 S.C.R. 879 and State of Tamil Nadu, etc.
vs Sitalakshmi Mills, etc.; , , referred to.
|
Appeal No. 61/1959.
Appeal by special leave from the judgment and order dated December 4, 1957, of the Orissa High Court in O.J.C. No. 449 of 1956.
607 C. K. Daphtary, Solicitor General of India, D. N. Mukherjee and T. M. Sen, for the appellants.
The respondent did not appear.
September 8.
The Judgment of the Court was delivered by SHAH J.
The respondent was appointed in the year 1950 a Sub Inspector on probation in the Orissa Police force.
In view of the adverse reports received against him on July 28, 1954, notice was served on the respondent calling upon him to show cause why he should not be discharged from service " for gross neglect of duties and unsatisfactory work ".
In the notice, ten specific instances of neglect of duty and two instances of misconduct acceptance of illegal grati fication and fabrication of official record were set out.
By his explanation, the respondent submitted that action had already been taken against him by the Superintendent of Police in respect of instances of neglect of duty set out in the notice and no further action in respect thereof could on that account be taken against him, because to do so would amount to imposing double punishment.
He denied the charge relating to misconduct and submitted that it was based on the uncorroborated statements of witnesses who were inimical to him.
He also asked for an opportunity to cross examine those witnesses.
The Deputy Inspector General of Police considered the explanation and observed: "I have carefully gone through the representation of the probationary section I.
His argument that he has already been punished by the section P. for specific instances of bad ' work does not help him very much since all these instances of bad work during the period of probation have to be taken together in considering his merits for confirmation or otherwise.
The section 1. has already had long enough of chance to work under different section Ps.
though in one District, but he has not been able to procure a good chit from anyone.
He has also been adversely reported against after the representation dealt with therein was submitted.
It 78 608 is, therefore, no good retaining him further in service.
He is discharged from the date on which this order is served on him ".
The Deputy Inspector General of Police on December 11, 1954, in discharging the respondent from service, passed a formal order as follows: " Probationary section I. Ramnarayan Das of Cuttack District is discharged from service for unsatisfactory work and conduct with effect from the date the order is served on him ".
The respondent then presented a petition under article 226 of the Constitution in the High Court of Judicature, Orissa, challenging the validity of the order passed and praying for the issue of a writ in the nature of certiorari or any other writ quashing the order of discharge.
Inter alia, the respondent urged, (1) that the order of discharge was invalid since he was not given a reasonable opportunity to show cause against the action proposed to be taken in regard to him within the meaning of article 311(2) of the Consti tution, (2) that the order of discharge was invalid since he was not afforded an opportunity to be heard nor was any evidence taken on the charges framed.
The High Court by order dated December 4, 1957, set aside the order of discharge.
In the view of the High Court, the Deputy Inspector General of Police had taken into consideration allegations of corruption in passing the impugned order and also that he had refused to give to the respondent an opportunity to cross examine witnesses on whose statements the charge of misconduct was made.
The High Court observed that by discharging the respondent from service without holding an enquiry as contemplated by r. 55 of the Civil Services (Classification, Control and Appeal) Rules and without complying with the requirements of article 311(2) of the Constitution, an " indelible stigma affecting his future career " had been cast.
Against the order issuing the writ quashing the order discharging the respondent from service, this appeal has been preferred by special leave.
The respondent was undoubtedly at the time when proceedings were started against him and when he 609 was discharged from service, a probationer, and had no right to the post held by him.
Under the terms of his appointment the respondent was liable to be( discharged at any time during tile period of his probation.
By r. 668 of the Police Manual of the Orissa State, in so far as it is material, it is provided : " All officers shall in the first instance be appointed or promoted on probation.
Where the period of probation is not otherwise provided for in the Rules, it shall be for a period of two years in the case of executive officers.
The authority empowered to make such appointment or promotion may at any time during such probation period and without the formalities laid down in Rule 820 remove an executive officer directly appointed or revert such an officer promoted who has not fulfilled the conditions of his appointment or who has shown himself unfitted for such appointment or promotion ".
Rule 681 of the Police Manual by cl.
(b) in so far as it is material provides, " Those promoted from the rank of Assistant Sub Inspector shall be confirmed (Rule 659(e)) and those appointed direct shall be on probation for a period of two years.
At the end of that period, those pronounced competent and fit will be confirmed by the Deputy Inspector General.
The others will be discharged by the same authority ".
Rule 55 B of the Civil Services (Classification, Control and Appeal) Rules, in so far as it is material provides : " Where it is proposed to terminate the employment of a probationer, whether during or at the end of the period of probation, for any specific fault or on account of his unsuitability for the service, the probationer shall be apprised of the grounds of such proposal and given an opportunity to show cause against it, before orders are passed by the authority competent to terminate the employment".
Notice to show cause whether the employment of the respondent should be terminated was, by r. 55 B made obligatory.
The Deputy Inspector General of Police who had appointed the respondent apprised 610 him by notice of the grounds on which the order of discharge was proposed to be made and required him ,,to show cause why action as proposed should not be taken.
The notice consisted of two parts, (1) relating ;to ten heads of " gross neglect of duty and unsatisfactory work " and (2) " suspicious and un police man like conduct " in which specific instances of fabrication of public records and acceptance of illegal gratification were set out.
The Deputy Inspector General of Police by his order which ha; been set out hereinbefore, expressly observed that he had, in considering the case of the respondent for confirmation, to take into account the reports received by him.
The formal order communicated to the respondent also stated that the respondent was discharged from service for unsatisfactory work and conduct.
The reasons given in the order clearly indicate that the notice served upon the respondent was under r. 55 B of the Civil Services (Classification, Control and Appeal) Rules for ascertaining whether he should be confirmed or his employment terminated.
Prima facie, the order is one terminating employment of the respondent as a probationer, and it is not an order dismissing him from service.
The High Court has however held that the order of discharge amounted to imposing punishment, because the respondent had been " visited with evil consequences leaving an ineligible stigma on him affecting his future career ".
The respondent has not appeared before us to support the judgment of the High Court, but the learned Solicitor General who appeared in support of the appeal has very fairly invited our attention to all the materials on the record and the relevant authorities which have a bearing on the case of the respondent.
In Shyam Lal vs The State of Uttar Pradesh and the Union of India (1), it was held that compulsory retirement under the Civil Services (Classification, Control and Appeal) Rules of an officer did not amount to dismissal or removal within the meaning of article 311 of the Constitution.
In that case, the public servant (1) ; 611 concerned was served with a notice to show cause in respect of three specific items of misdemeanor as a public servant to which he submitted his explanation.
Thereafter, the President, after considering the case and the recommendation of the commission appointed to investigate the case, decided that the public servant should be retired forthwith from service ".
This order was challenged by a petition under 226 of the Constitution filed in the High Court at Allahabad.
In an appeal against the order dismissing the petition, this court held that the order compulsorily retiring the public servant involved " no element of charge or imputation " and did not amount to dismissal or removal within the meaning of article 311(2) of the Constitution and the order of the President was not liable to be challenged on the ground that the public servant had not been afforded full opportunity to show cause against the action proposed to be taken in regard to him.
In Parshottam Lal Dhingra vs Union of India (1) this court by a majority held that if an officer holding an officiating post had no right under the rules governing his service to continue in it, and such appointment under the general law being terminable at any time on reasonable notice, the reversion of the public servant to his substantive post did not operate as a forfeiture of any right: that order " visited him with no evil consequences " and could not be regarded as a reduction in rank by way of punishment.
Bose, J., who disagreed with the majority observed that the real test was whether evil consequences over and above those that ensued from a contractual termination, were likely to ensue as a consequence of the impugned order: if they were, article 311 of the Constitution would be attracted even though such evil consequences were not prescribed as penalties under the Rules.
In that case, Das; C. J., in delivering the judgment of the majority, entered upon an exhaustive review of the law applicable to the termination of employment of public servants and at pp.
861.863 summarised it as follows: (1) ; 612 " Any and every termination of service is not a dismissal, removal or reduction in rank.
A termination of service brought about by the exercise of a contractual right is not per se dismissal or removal, as has been held by this court in Satish Chander Anand vs The Union of India (1).
Like wise the termination of service by compulsory retirement in terms of a specific rule regulating the conditions of service is not tantamount to the infliction of a punishment and does not attract article 311(2) as has also been held by this court in Shyam Lal vs The State of Uttar Pradesh (2). .
In short, if the termination of service is founded on the right flowing from contract or the service rules then, prima facie, the termination is not a punishment and carries with it no evil consequences and so article 311 is not attracted.
But even if the Government has, by contract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal, or removal or reduction in rank, the Government may, nevertheless, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punishment and the requirements of article 311 must be complied with.
As already stated, if the servant has got a right to continue in the post, then, unless the contract of employment or the rules provide to the contrary, his services cannot be terminated otherwise than for misconduct, negligence, inefficiency or other good and sufficient cause.
A termination of the service of such a servant on such grounds must be a punishment and, therefore, a dismissal or removal within article 31 1, for it operates as a forfeiture of his right and he is visited with the evil consequences of loss of pay and allowances.
It puts an indelible stigma on the officer affecting his future career. .
But the mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to a lower post does not mean that an order of reduction of a servant (1) ; (2) ; 613 to a lower post or rank cannot in any circumstances be a punishment.
The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences. .
The use of the expression, " terminate " or " discharge " is not conclusive.
In spite of the use of such innocuous expressions, the court has to apply the two tests mentioned above, namely, (1) Whether the servant had a right to the post or the rank or (2) Whether he has been visited with evil consequences of the kind hereinbefore referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service. . " The respondent had no right to the post held by him.
Under the terms of his employment, the respondent could be discharged in the manner provided by r. 55 B. Again mere termination of employment does not carry with it " any evil consequences " such as forfeiture of his pay or allowances, loss of his seniority, stoppage or postponement of his future chances of promotion etc.
It is then difficult to appreciate what " indelible stigma affecting the future career " of the respondent was cast on him by the order dis charging him from employment for unsatisfactory work and conduct.
The use of the expression " discharge " in the order terminating employment of a public servant is not decisive : it may, in certain cases amount to dismissal.
If a confirmed public servant holding a substantive post is discharged, the order would amount to dismissal or removal from service; but an order discharging a temporary public servant may or may not amount to dismissal.
Whether it amounts to an order of dismissal depends upon the nature of the enquiry, if any, the proceedings taken therein and the substance of the final order passed on such enquiry.
Where under the rules governing a public servant holding a post on probation, an order terminating the probation is to be preceded by a notice to show cause 614 why his service should not be terminated, and a notice is issued asking the public servant to show cause whether probation should be continued or the officer should be discharged from service the order discharging him cannot be said to amount to dismissal involving punishment.
Undoubtedly, the Government may hold a formal enquiry against a probationer on charges of misconduct with a view to dismiss him from service, and if an order terminating his employment is made in such an enquiry, without giving him reasonable opportunity to show cause against the action proposed to be taken against him within the meaning of article 311(2) of the Constitution, the order would undoubtedly be invalid.
The Solicitor General invited our attention to a recent judgment of this court, State of Bihar vs Gopi Kishore Prasad (1)in which, delivering the judgment of the court, the learned Chief Justice extracted five propositions from the authorities and particularly from Parshottam Lal Dhingra 's case (2), dealing with the termination of employment of temporary servants and probationers.
The third proposition set out in the judgment is as follows: " But instead of terminating such a person 's service without any enquiry, the employer chooses to hold an enquiry into his alleged misconduct, or inefficiency, or for some similar reason, the termination of service is by way of punishment, because it puts a stigma on his competence and thus affects his future career.
In such a case, he is entitled to the protection of article 311(2) of the Constitution ".
This proposition, in our judgment, does not derogate from the principle of the other cases relating to termination of employment of probationers decided by this court nor is it inconsistent with what we have observed earlier.
The enquiry against the respondent was for ascertaining whether he was fit to be ' confirmed.
An order discharging a public servant, even if a probationer, in an enquiry on charges of misconduct, negligence, inefficiency or other disqualification, may (1) A.I.R. [1960] section C. 689.
(2) ; 615 appropriately be regarded as one by way of punishment, but an order discharging a probationer following upon an enquiry to ascertain whether he should be 0 confirmed, is not of that nature.
In Gopi Kishore Prasad 's case (1), the public servant was discharged from service consequent upon an enquiry into alleged misconduct, the Enquiry Officer having found that the public servant was " unsuitable " for the post.
The order was not one merely discharging a probationer following upon an enquiry to ascertain whether he should be continued in service, but it was an order as observed by the court " clearly by way of punishment ".
There is in our judgment no real inconsistency between the observations made in parshottam.
Lal Dhingra 's case (2) and Gopi Kishore Prasad 's case (1).
The third proposition in the latter case refers to an enquiry into allegations of misconduct or inefficiency with a view, if they were found established, to imposing punishment and not to an enquiry whether a probationer should be confirmed.
Therefore the fact of the holding of an enquiry is not decisive of the question.
What is decisive is whether the order is by way of punishment, in the light of the tests laid down in Parshottam Lal Dhingra 's case (2).
We have carefully considered the evidence and the authorities to which our attention has been invited and we are definitely of opinion that the High Court was in error in holding that the order discharging the respondent from service amounted to dismissal which attracted the protection of article 311(2) of the Constitution.
In that view of the case, this appeal will be allowed and the petition for a writ dismissed.
There will be no order as to costs throughout.
Appeal allowed.
(1) A.I.R. 1960 S.C. 689.
| The respondent was appointed a Sub Inspector on probation in the Orissa Police Force.
A notice was served on him to show cause why he should not be discharged from service " for gross neglect of duties and unsatisfactory work ".
He submitted his explanation and asked for opportunity to cross examine certain witnesses.
The Deputy Inspector General of Police considered the explanation unsatisfactory and passed an order discharging the respondent from service " for unsatisfactory work and conduct ".
The respondent contended that the order was invalid on two grounds: (i) that he was not given a reasonable opportunity to show cause against the proposed action within the meaning of article 311(2), and (ii) that he was not afforded an opportunity to be heard nor was any evidence taken on the charges.
Held, that the order of discharge did not amount to dismis sal and did not attract the protection of article 311(2) of the Constitution and was a valid order.
The services of the respondent, ' who was a probationer, were terminated in accordance with the rules and not by way of punishment.
He had no right to the post held by him and under the terms of his appointment he was liable to be discharged at any time during the period of his probation.
The notice given to the respondent was under Rule 55 B of the Civil Services (Classification, Control and Appeal) Rules which made it obligatory to give such notice before terminating the services of a probationer.
The enquiry was merely for ascertaining whether he was fit to be confirmed.
Shyam Lal vs The State of U. P., ; and Purshottam Lal Dhingra vs Union of India, ; , referred to.
State of Bihar vs Gopi Kishore Prasad, A.I.R. 1960 S.C. 689, distinguished.
|
ivil Appeal Nos.
1088 of 1976 and 480 of 1977.
Appeals from the Judgments and Orders dated 19 4 1976 and 12 10 1976 of the Gujarat High Court in S.C.A. No. 495/76 and S.C.A. No. 1641/76 respectively.
P.R. Mridul, P.H. Parekh and C.B. Singh and Miss Vineeta Caprihan for the Appellant in CA No. 480/77.
65 Gobind Das, A.N. Karkhanis and T. Sridharan and Mrs. Sunanda Bhandare for the Respondent in CA No. 480/77.
Y.S. Chitale, P.H. Parekh, R. Karan Jawala and Miss Vineeta Caprihan for the Appellant in CA No. 1088/76.
Y.M. Tarkunde, K.L. Hathi and P.C. Kapur for the Respondent in CA No. 1088/76.
Shanker Ghosh, G.B. Pai, and D.N. Gupta for the Intervener.
(Superintendent, Mines and Quarries, Bisra Stone Lime Co. Ltd. & Anr.) Anil Kumar Gupta for the Intervener (Baba Jha Bhai Talekar).
The Judgment of the Court was delivered by GUPTA, J.
A common question arises for consideration in these two appeals relating to the mode of calculating fifteen days ' wages of a monthly rated employee under section 4(2) of the (hereinafter referred to as the Act).
Section 4(2) provides: "For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days ' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days ' wages for each season." "Wages" has been defined in section 2(s) of the Act as follows: ""wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
" It is not necessary to state the facts in any great detail.
In both cases the respondent was a monthly rated employee and the appellant, a public limited company, was his employer.
In Civil Appeal No. 1088 of 1976 (Shri Digvijay Woollen Mills Limited appellant vs 66 Shri Mahendra Prataprai Buch respondent) the respondent ceased to be an employee on attaining the age of superannuation after completing 19 years of service.
The appellant company calculated the amount of gratuity payable to him on the basis that fifteen days ' wages was half of the monthly wages last drawn by him.
The respondent demanded an additional sum as gratuity on the ground that his monthly wages should be taken as what he got for 26 working days, his daily wages should be ascertained on that basis and his fifteen days ' wages worked out accordingly, not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30.
The Controlling Authority under the Act accepted the respondent 's contention and his decision was affirmed by the appellate authority.
A division bench of the High Court of Gujarat at Ahmedabad summarily dismissed the petition under Article 227 of the Constitution made by the appellant company challenging the decision of the authorities under the Act.
The learned Judges however gave reasons in support of the order made.
The appeal before us is by special leave.
In Civil Appeal 480 of 1977 (The Maharana Mills Limited appellant vs Shri Gopal Das Ladhabhai Kakkad respondent) the respondent resigned his job after a little over 22 years of service.
The appellant company paid him gratuity calculating his daily wages by dividing his monthly wages by 30 and computing fifteen days ' wages on that basis.
Here also the respondent claimed an additional sum as gratuity and the basis of the claim was the same as in the other appeal.
The Controlling Authority accepted the respondent 's contention and the appellate authority affirmed his decision following the view taken by the Gujarat High Court in the other case.
In this case also the Gujarat High Court summarily rejected the petition made by the appellant company challenging the decision of the authorities under the Act.
This appeal however is brought on a certificate granted by the High Court.
In dismissing the petition in Digvijay Woollen Mills case the division bench of the Gujarat High Court observed as follows: "The employee is to be paid gratuity for every completed year of service and the only yardstick provided is that the rate of wages last drawn by an employee concerned shall be utilised and on that basis at the rate of fifteen days ' wages for each year of service, the gratuity would be computed.
In any factory it is well known that an employee never works and could never be permitted to work for all the 30 days of the month.
He gets 52 Sundays in a year as paid holidays and, therefore, the basic wages 67 and dearness allowance are always fixed by taking into consideration this economic reality. .
A worker gets full month 's wages not by remaining on duty for all the 30 days within a month but by remaining on work and doing duty for only 26 days.
The other extra holidays may make some marginal variation into 26 working days, but all wage boards and wage fixing authorities or Tribunals in the country have always followed this pattern of fixation of wages by this method of 26 working days.
" The view expressed in the extract quoted above appears to be legitimate and reasonable.
Ordinarily of course a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court cannot be called perverse.
It is not necessary to consider whether another view is possible.
The High Court summarily dismissed the petition of the appellant in both the appeals before us and upheld the decision of the authorities under the Act.
We are not inclined to interfere with the decision of the High Court because it seems to us that the view taken by the authorities is not in any way unreasonable or perverse.
Incidentally, to indicate that treating monthly wages as wages for 26 working days is not anything unique or unknown, we may refer to a passage from the judgment of this Court in Delhi Cloth and General Mills Company Ltd. vs Workmen and other etc.(1) which disposed of several appeals arising out of an award made by the Industrial Tribunal, Delhi.
In the award schemes were framed relating to the payment of gratuity.
The expression "average of the basic wage" occurring in the schemes was explained by this Court as follows: "It was also urged by Mr. Ramamurthi that the expression "average of the basic wage" in the definition of "wages" in Cl.
4 of the Schemes is likely to create complications in the implementation of the Schemes.
He urged that if the wages earned by a workman during a month are divided by the total number of working days, the expression "wages" will have an artificial meaning and especially where the workman is old or disabled or incapacitated from rendering service, gratuity payable to him will be substantially reduced.
We do not think that there is any cause for such apprehension.
The expression "average of the basic wage" can only mean the wage earned by a workman during a month divided by the number of days for which he has worked 68 and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable.
Counsel for the employers agree to this interpretation.
" In the view we take we do not find it necessary to consider the decisions of some of the High Courts cited at the bar taking one view or the other on the question involved in these appeals; also, the decisions based on some provisions of the Minimum Wages Act and other statutes which were relied on by either side are in our opinion not relevant on the question of computation of fifteen days ' wages under section 4(2) of the .
The appeals are dismissed, in civil appeal 480 of 1977 with costs, in civil appeal 1088 of 1976 this Court while granting special leave on September 22, 1976 had directed the appellant to pay the costs of the appeal in any event accordingly respondent Mahendra Prataprai Buch will be entitled to his costs.
P.B.R. Appeals dismissed.
| Raja Ugra Sen, who was governed by the Benaras School of Mitakshara law established "Bettiah Raj" in or about the middle of 17th century.
It was known as Riyasat of Sirkar Champaran consisting of four Perghunnas known as Majhwa, Simrown, Babra and Maihsi and an impartible estate.
After the death of his great grand son, Raja Dhrub Singh dying issueless in 1762, Raja Jugal Kishore Singh, son of Raja Dhrub Singh 's daughter Benga Babui, entered into possession of the estate of "Bettiah Raj".
The East India Company officers seized the estate from him and later allotted only the zamindari of Majhwa and Simrown, while those of Maihsi and Babra were allotted to Srikishen Singh and Abdhoot Singh.
The last male holder of Raja Jugal Kishore Singh was Maharaja Bahadur Narendra Kishore Singh who died issueless on March 26, 1893, leaving behind him two widows Maharani Sheo Ratna Kuer and Maharani Janki Kuer, who succeeded him one after the other.
During the lifetime of Maharani Sheo Ratna Kuer, two suits were filed claiming the estate but they were lost in all courts including the Privy Council.
In 1897, the management of the estate was taken over by the court of Wards Bihar and the Government of Uttar Pradesh in respect of the areas falling in these two States.
Maharani Janki Kuer died on November 27, 1954.
The State of Bihar, therefore, made an application before the Board of Revenue, Bihar, praying that the estate of Maharaja Narendra Singh which was held by late Maharani Janki Kuer as a limited owner but managed by the Court of Wards be handed over to the State of Bihar by virtue of the rule of escheat.
The Board of Revenue published a Notification calling upon interested parties to prefer the claim, if any, to the properties comprised in the estate.
Since there were several claimants taking inconsistent pleas, the Board of Revenue declined to release the estate in favour of any of the claimants and as per its order dated January 18, 1955 directed that the properties would be retained by the Court of Wards until the dispute as to its succession was determined by competent Civil Court.
The title suit having been lost.
The appellants have come up in appeals by certificate.
The State of Bihar which claimed title by the rule of escheat also preferred appeals.
Dismissing Civil Appeals Nos.
114 119 of 1976, the Court ^ HELD: (1) While interpreting the ancient texts of Smritis and commentaries on Hindu Dharmasastra, it should be borne in mind the dynamic role played by learned commentators who were like Roman Juris Consults.
The 2 commentators tried to interpret the texts so as to bring them in conformity with the prevailing conditions in the contemporary society.
That such was the role of a commentator is clear even from the Mitakshara itself at least in two places first, on the point of allotment of a larger share at a partition to the eldest son and secondly on the question of right of inheritance of all agnates.
[56F H] (2) Etymologically, the word 'putrika ' means a daughter (especially a daughter appointed to raise male issue to be adopted by a father who has no sons), and 'putrika putra ' means a daughter 's son who by agreement or adoption becomes the son of her father [20C D] A careful reading of the ancient texts Manu, Yajnavalkya, (Mitakshara) (Vijnanesvara) and Apararka (Aparaditya) Baudhayana Dharmasutra, Vishnu Dharmasastra, Vasishtha Dharmasutra, Parasara Madhava, Smriti Chandrika of Devannabhatta, Dattaka Chandrika and Dattaka Mimansa by Nanda Pandita leads to the inference that the institution of "Putrika Putra" had become obsolete and not recognised by Hindu society for several centuries prior to the time when Smriti Chandrika or Dattaka Chandrika were written and these two commentaries belong to a period far behind the life time of Raja Dhrub Singh [32B C] Further, absence of cases before courts within living memory in which a claim had been preferred on the basis of application in "Putrika Putra" form showed that the said practice had become obsolete.
[34A] Thakoor Jeebnath Singh vs The Court of Wards, (1875) 2 I.A. 163 (PC), quoted with approval.
Sri Raja Venkata Narasimha Appa Row Bahadur vs Sri Rajesh Sraneni Venkata Purushotama Jaganadha Gopala Row Bahadur & Ors., I.L.R. Babui Rita Kuer vs Puran Mal, A.I.R. 1916 Patna 8 approved.
Tribhawan Nath Singh vs Deputy Commissioner, Fyzabad & Ors,. , overruled.
(3) All digests, lectures and treatises support the view that the practice of appointing a daughter as a putrika and of treating her son as "putrika putra" had become obsolete several centuries ago.
And, the reason for the abandonment of the practice of appointing a daughter to raise a son by the Hindu society is clear from the following situation.
[46C, 49F] In ancient times, the daughter and daughter 's son were given preference over even the widow of a person in the matter of succession.
Ancient commentators like Madhathithi and Haradatta had declared that the widow was no heir and notwithstanding some texts in her favour, her right was not fully recognised till Yajnavalkya stated that the widow would succeed to the estate of a sonless person.
In Yajnavalkya Smriti, the order of succession to a male was indicated in the following order (1) son, grandson, great grandson, (2) putrika putra, (3) other subsidiary or secondary sons, (4) widow and (5) daughter.
It was not expressly stated that daughter 's son would succeed, but the parents were shown as the successors.
Vijnanesvara, however, interpreted the word "cha", which meant "also" in "Duhitaraschaiva" in the text of Yajnavalkya laying down the compact series of heirs as referring to daughter 's son.
But for this interpretation a daughter 's son would have come in as an heir after all agnates (gotrajas), as the daughter 's son is only a cognate (Bandhu).
As a result of this interpretation, the daughter 's son was promoted in rank next only to his maternal grand mother and his mother whose interest in the estate was only a limited one.
[48H, 49A C, E F] 3 When a person had two or more daughters, the appointment of one of them would give her primacy over the wife and the other daughters (not so appointed) and her son (appointed daughter 's son) would succeed to the exclusion of the wife and other daughters and their sons and also to the exclusion of his own uterine brothers (i.e. the other sons of the appointed daughter).
Whereas in the case of plurality of sons all sons would succeed equally, in the case of appointment of a daughter, other daughters and their sons alongwith the wife would get excluded.
To prevent this kind of inequality which would arise among the daughters and daughter 's sons, the practice of appointing a single daughter as a putrika to raise an issue came to be abandoned in course of time when people were satisfied that their religious feelings were satisfied by the statement of Manu that all sons of daughters whether appointed or not had the right to offer oblations and their filial yearnings were satisfied by the promotion of the daughter 's sons in the order of succession next only to the son as the wife and daughters had been interposed only as limited holders.
[49F H, 50A C] Ghanta Chinna Ramasubbayya & Anr.
vs Moparthi Chenchuramayya, 74 I.A. 162, followed.
(4) It is incorrect to suggest that the theory of "a practice once recognised by law becoming obsolete" was unknown and that it would continue to be in existence until it was taken away by a competent legislature.
The court can declare it to be so.
[53G] Shiromani & Ors.
vs Hem Kumar & Ors., [1968] 3 S.C.R. 639, applied.
(5) The contention that the rule against the appointment of a daughter by a Hindu to beget an issue for himself in Kali age enunciated by Saunaka and others should be treated as only directory and if any person appointed a daughter for that purpose in contravention of that rule still her son would become "putrika putra" of the person so appointing, with all the privileges of a putrika putra is highly tenuous.
Where there is predominant opinion of commentators supporting its non existence in the last few centuries extending to a period, in the instant case, prior to the life of Raja Dhrub Singh and there are good reasons for the Hindu Society abandoning it, it would be inappropriate to resurrect the practice.
[58E F, 61A C] Sri Balusu Gurulingaswami vs Sri Balusu Ramalakshmamma
|
vil Appeal Nos.
80405 of 1975.
From the Judgment and Order dated 28.12.1973 of the Andhra Pradesh High Court in S.T.A. Nos. 1 and 3 of 1971.
P.R. Seetharaman and T.V.S.N. Chari for the Appellant.
M.C. Bhandare, A.V.V. Nair for the Respondent.
Under the provisions of the said Act, on 7 9 1949 the Gosha hospital at Vizianagaram which was till then manned by the hereditary landlord and zamindar of the impartible Estate of Vizianagaram (hereinafter referred to as the Estate) was handed over to the State.
The late Maharani Appalakondayamba otherwise popularly known as "Rani of Rewa" had executed a Will on 14 12 1911 creating a permanent endowment of a sum of Rs.1,00,000 for the maintenance of the said hospital.
This amount was kept in deposit with the Estate.
Since the Government had taken over the hospital by its Application No. TOP 123/58 to the Estates Abolition Tribunal and Distt.
Judge, Vishakhapatnam, the Government claimed the recovery of the said amount with interest at the rate of 6% per annum and also claimed a priority over the other creditors.
The Tribunal by its Order dated 15 12 62 allowed the claim for the amount, but rejected the claim for priority.
The Tribunal also directed the payment of Rs.36,695 to the Government out of the total amount of compensation which was then 137 deposited with it.
The Government filed an appeal against the said Order being STA No. 1/64 in the High Court, but the same was dismissed.
It appears that subsequently, another sum of compensation being Rs.11,78,581.09 was deposited, and hence the Government filed another application, viz. TOP 5/69 for payment of the balance of Rs.63,305 with interest thereon at the rate of 6% per annum from 1 7 49 till the date of payment.
In this application, the appellant did not dispute the Government 's claim for Rs.63,305 but contended that no interest on the sum of Rupees one lakh or on any part thereof was payable since according to him the Tribunal had rejected the claim for interest by its earlier Order of 15 12 62 in TOP 123/58.
The Tribunal accepted the appel lant 's contention and held that the claim for interest was rejected earlier and disallowed the same.
Against the said Order, the Government preferred an appeal to the High Court being STA 1/71. 3.
The late Rani of Rewa by her same Will had also deposited another sum of Rupees one lakh with the Estate with the direction that the interest thereon should be utilised in feeding Telugu Brahmin students studying ad vanced Sanskrit Literature and Shastras at Banaras.
The said fund will hereinafter be referred to as the Banaras Chari ties Fund.
It appears that sufficient number of Telugu Brahmin students were not available and hence the Executor of the Will had applied for utilisation of the said amount for the Gosha hospital, and in that application, the High Court had directed that out of the accumulated surplus interest of Rs.47,897 in the said Banaras Charities Fund, a sum of Rs.30,000 be capitalised and deposited with the Estate and the interest thereon at the rate of 3% per annum be utilised to meet the recurring annual expenditure of the Gosha hospital.
After the abolition of the Estate, the Government filed before the Tribunal a claim application being TOP No. 124/58 for recovery of the said sum of Rs.30,000 with interest at the rate of 6% per annum.
The Government also claimed priority over the other creditors for the said amount as well.
The Tribunal by its same order of 15 12 62 allowed the Government 's claim for the amount, but rejected the claim for priority.
The Tribunal also directed that a sum of Rs.11,008.50 be paid to the Govern ment from out of the amount of compensation which was then deposited.
Against the said order, the Government preferred an appeal to the High Court being STA No. 2/64 which was dismissed.
On the subsequent deposit of further compensa tion, the Government preferred another application being TOP 6/69, for the balance of Rs.18,991.50 and for interest thereon at the rate of 6% per annum from 1 7 49 till the date of payment.
The appellant did not dispute the 138 claim for the payment of the balance amount of Rs.10,991.50, but resisted the claim for interest, firstly on the ground that there was no provision for payment of interest in the Act and secondly on the ground which was urged in the other appeal, viz. that in TOP 124/58 it was rejected by the Tribunal earlier.
The Tribunal accepted the appellant 's contention and disallowed the claim for interest.
Against the said order, the Government preferred an appeal to the High Court being STA No. 3/71.
Thus before the High Court the only question in both the appeals was whether the Tribunal by its earlier order of 15 12 62 in TOP 123 and 124/58 had allowed or rejected the claim for interest? The High Court by its common order dated 28 12 73 held that the Tribunal by its earlier order of 15 12 62 had not only allowed the claim for the principal endowed amounts of Rupees one lakh and Rs.30,000 respective ly, but also interest thereon, and directed the payment of interest thereon from 1 7 49 as claimed.
It is this order which is challenged by the appellant by these two separate appeals.
Civil Appeal No. 804 is against the order of the High Court in STA No. 1/71 arising out of TOP 5/69 (corresponding to earlier TOP 123/58) and Civil Appeal No. 805 is against the order in STA No. 3/71 arising out of TOP 6/69 (corre sponding to earlier TOP 124/58).
Mr. Bhandare, learned counsel appearing for the appellant in both the appeals contended firstly, that the Tribunal while disposing of TOPs Nos. 123 and 124 of 1958 should be deemed to have rejected the claim for interest because in the operative part of the order, the Tribunal did not state that it was granting interest, but only mentioned that it was granting the amounts which were claimed in the applications.
The expression 'amount ' claimed in the appli cation should be construed to mean the principal amount only and not interest.
He also tried to derive support to this submission from the fact that while directing the payment of specific amounts, the Tribunal had considered only the principal amounts in both cases as is evident from the orders of the Tribunal in that behalf.
Hence he submitted that the issue with regard to the interest was barred by resjudicata and the interest could not have been claimed by the Government in its subsequent applications.
His second contention was that assuming without admitting that there was a direction given by the Tribunal to pay the interest, such direction was without jurisdiction because there was no provision in the Act for payment of interest.
Thirdly, he submitted that in any case it would be inequitable to ask the Estate to pay interest 139 when the compensation which was paid to the Estate did not bear any interest.
Fourthly, he contended that in any event, the appellant personally cannot be held liable to pay the interest since the endowed amounts were always a part of the Estate which was abolished, and the compensation which was paid and later on distributed among the sharers of the Estate, covered the said endowed amounts.
The interest, according to him, therefore, has to come out of the shares of all the sharers and the appellant alone cannot be direct ed to pay the same.
Fifthly, his contention was that assum ing without admitting that the appellant as an executor had retained the said amounts and applied them to purposes other than the objects of the endowment, he cannot be penalised for the same under the Act by making him pay the interest on them.
At the most he may be liable for misfeasance as a trustee under the appropriate law.
Lastly, he submitted that in any case since other sharers are not made parties to the present proceedings, no direction can be given in the present proceedings for payment of interest which has to come out of the compensation received by all the sharers.
As regards the first contention, namely, that the Tribunal had not directed the payment of interest in TOPs 123 and 124/58, it may be pointed out that in the applica tions made by the State Government to the Tribunal for the recovery of the two endowed amounts, the Government had in clear terms claimed that they were entitled to the said sums with interest @ 6% per annum from 1 7 49 till the date of payment, and that the Government was entitled to this amount after the compensation was deposited.
The Government had also made a further claim that it was entitled to the pay ment of the said amount in priority over the claims of all other persons.
Pursuant to these averments, the Tribunal had framed Issue No. 2 in TOP 123/58 and Issue No. 3 in TOP 124/58 in identical terms as follows: "Whether the Government is entitled to claim the said amount with interest from the date of abolition . . ?" While recording its findings in both the TOPs, the Tribunal had in paragraph 21 state as follows: "Under these circumstances, I hold under point 3 that the Government is entitled to get payment of the amounts claimed in TOPs Nos. 123 24/58.
" The Tribunal further reiterated the said finding in para graph 29 as follows: 140 "It is not in dispute that the amount of these two lakhs of rupees continued to be with the Samsthanam and the Samstha nam was paying interest on those amounts for the purposes of the endowments . .
From that time onwards all along these two amounts have been treated as debts payable by the Samsthanam.
The amounts claimed under TOP Nos . . 123 24/58 relate to this amount of Rupees two lakhs and interest accrued thereon.
Under these circumstances I hold that the amounts claimed under the said petitions are debts payable from and out of the assets of the Impartible Estate.
" Again later in the same paragraph, it is stated as follows: "Under these circumstances I hold under point 15 that the amounts claimed in TOP Nos . . . . 123 24/ 58 . . . . are debts to be paid from and out the assets of the Impartible Estate of Vizianagaram and therefore they are debts which come under the category of debts contemplated under Section 45(3) of the Abolition Act and those debts are liable to be paid from out of the com pensation amount before any division of it can be made between the sharers and maintenance holders.
" In paragraph 32 the Tribunal has observed as follows: "From the above discussion it is clear that out of the amount of Rs.3,63,007 in dispute concerned in the first instance the State Government is entitled to payment of the amount due to it under TOP No. 122/58 and out of the balance remaining the amounts payable under TOP Nos. 123 24/58 . . should be paid.
" It is, therefore, more than clear that the Tribunal had by its order in question given a finding that the Government was entitled to the entire amount claimed by it, namely, the principal endowed amount and also interest claimed thereon.
The contention that because the Tribunal had not reiterated the word 'interest ' in the next sentence of its direction and had only mentioned "the amount" payable under the TOPs and, therefore, it should be held that the Tribunal had rejected the claim for interest is too facile to be accepted.
For the same.
reason, we are also not impres 141 sed by the argument that since the Tribunal had while di recting the payment of specific amounts had only referred to a part of the principal amounts it should be held that the Tribunal had rejected the claim for interest.
Under the scheme of the Act itself, the Tribunal was required to apportion the amounts according to the priorities depending upon the amount of compensation deposited at the time of the giving of the direction in question.
It was, therefore, only to be expected that the Tribunal would first give directions with regard to the payment of the principal amounts and defer the payment of interest to a future date.
That is exactly what the Tribunal had done in the present case and, hence, in the second set of applications made by the Govern ment, the Government had not only claimed the balance of the principal amounts but also interest on the entire of the said amounts from 1 7 49.
The High Court was, therefore, right in holding that the Tribunal by its order of 15 12 62 had allowed the claim for interest.
In the circumstances, the issue with regard to the claim for interest in the subsequent applications, namely, applications TOPs 5/69 and 6/69 was not barred by resjudicata, as contended by Shri Bhandare.
The second contention that the Tribunal could not have directed the payment of interest because there was no jurisdiction to do so is also misconceived, for the simple reason that in the Will in question, both the said amounts were deposited by the testator with the Estate, and the beneficiaries of the endowment, namely, Gosha hospital and the Banaras Charities Fund were to be financed from the interest accruing on the said two amounts respectively.
It was not in dispute that these two amounts were lying depos ited with the Estate and the Estate was paying interest @ 6% per annum on the amount of Rupees one lakh which was meant for Gosha hospital and @ 5% per annum on the amount meant for the Banaras Charities Fund.
Hence, all that the Tribunal had done was to direct the Estate to pay the amounts in question to the Government together with interest at the admitted rate, which interest was in any case payable to wards the endowment objects.
Under the Act the Tribunal had, among other things, to determine the liability of the Es tate.
The endowment amounts together with the interest admittedly accruing thereon together formed the total li ability of the Estate.
The interest, further was a recurring one and the objects of the endowment were to be financed from out of the said interest.
When, therefore, the Tribunal directed the payment of interest together with the principal amount it did nothing more than direct the Estate to honour its liability.
As regards the third contention that it was inequitable for 142 SUPREME COURT REPORTS [1990] 1 S.C.R. the Tribunal to ask the Estate to pay the interest since the compensation paid to the Estate did not bear any interest, we are afraid that the submission is beside the point.
In the first instance, under the scheme of the Act the amount of compensation was to be paid in stages as and when the compensation was deposited.
Secondly, whether the Estate was paid or not paid the interest on compensation due to it, has nothing to do with the Estate 's liability towards the endow ments.
The interest directed to be paid by the Tribunal was not interest over and above the endowed amounts.
It is the principal amount together with the interest accruing thereon which constituted the total endowed amounts at the time of the abolition of the Estates.
The next three contentions can be dealt with togeth er.
There is no doubt that the amounts were deposited with the Estate, and it was the Estate which was paying interest to the beneficiary or beneficiaries under the endowments.
Hence, as observed by the Tribunal, in the first instance, the endowment amounts together with the interest accruing thereon had to be set apart, from out of the compensation payable to the Estate, and it is the balance which had to be distributed among the sharers or the creditors of the shar ers as the case may be.
As we read the Tribunal 's order of 15 12 62 as well as the impugned order of the High Court, we see no direction to the appellant to pay the said amount personally, as indeed on such direction could have been given, since the facts show, that both the amounts were lying with the Estate and not with the appellant in his individual capacity.
What is recorded in the Tribunal 's order is that it is the Estate holder who had not made over the two amounts to the Government on the date of its taking over.
Hence, the direction of the High Court to pay the said amount will have to be read as a direction to the appellant to do so in his capacity as the Estate holder and not in his individual capacity.
If the final amounts are already dis tributed among all the sharers and/or the creditors, the Government has to look for the amount of interest to all the sharers and/or their creditors including of course the appellant.
All the sharers will be liable to contribute towards the payment of the amount of interest in proportion to their share in the compensation.
That is how the impugned order of the High Court and the earlier order of 15 12 62 passed by the Tribunal will have to be read and construed.
In the circumstances, it matters not whether all the sharers were parties to the proceedings.
The proceedings were essen tially against the Estate, and the present appellant in his capacity as an Estate holder represented the Estate and all the sharers.
The order passed in the proceedings is, there fore, binding on all the sharers in the Estate notwithstand ing the fact that all the sharers 143 were not parties to the proceedings.
We, therefore, find no substance in the contention that the present proceedings were bad in law because all the sharers were not made par ties to the same.
In the result, both the appeals fail.
In the circum stances, however, there will be no order as to costs.
G.N. Appeals dis missed.
| Under the provisions of the Andhra Pradesh (Andhra Area) Estates (Abolitian and Conversion into Ryotwari) Act, 1948, (the Act), the Government took over a hospital which was run by a Zamindar of an impartible estate.
After the take over, the Government made applications before the Estate Abolition Tribunal claiming recovery of certain amounts which were endowed to the hospital by the erstwhile ruler, from out of the compensation paid on the abolition of the estate.
Claims for interest and priority over other creditors were also made.
In the first of such applications, the Tribunal allowed the amount claimed without specific reference to interest but rejected the claim for priority.
In the subsequent proceedings, the Tribunal rejected the claim for interest as also priority and held that in the earlier proceeding also, it has disallowed the claim for interest.
Aggrieved against the Tribunal 's orders, Government preferred appeals before the High Court.
The High Court took the view that while allowing the claim the Tribunal had not only allowed the claim for principal but also interest thereon, and ordered payment of interest as claimed.
These appeals are against the High Court 's orders and the appellant contended that there was no provision in the Act for payment of interest; that the expression 'amount ' claimed before the Tribunal should be construed to mean the principal amount only; that the subsequent claims for inter est were barred by resjudicata; that it would be 135 inequitable to claim interest on the amounts endowed since no interest was paid on compensation; that while the compen sation was shared by others also, the appellant cannot be singled out to pay the interest.
Dismissing the appeals, this Court, HELD: 1.1 The High Court was right in holding that the Tribunal by its order of 15.12.02 had allowed the claim for interest.
Under the scheme of the Act itself, the Tribunal was required to apportion the amounts according to the priorities depending upon the amount of compensation depos ited at the time of giving of the direction in question.
It was, therefore, only to be expected that the Tribunal would first give directions with regard to the payment of princi pal amounts and defer the payment of interest to a future date.
That is exactly what the Tribunal had done in the present case and, hence, in the second set of applications made by the Government, the Government had not only claimed the balance of the principal amounts but also interest thereon.
Thus, the issue with regard to the claim for inter est in the subsequent applications was not barred by resju dicata.
[141B C, D].
1.2 All that the Tribunal had done was to direct the Estate to pay the amounts in question to the Government together with interest at the admitted rate, which interest was in any case payable towards the endowment objects.
Under the Act, the Tribunal had, among other things, to determine the liability of the Estate.
The endowment amounts together with the interest admittedly accruing thereon formed the total liability of the Estate.
The interest, further was a recurring one and the objects of the endowment were to be financed from out of the said interest.
When the Tribunal directed the payment of interest together with the principal amount, it did nothing more than direct the Estate to honour its liability.
[141F G] 2.
Whether or not interest was paid on compensation due to the Estate, it has nothing to do with the Estate 's li ability towards the endowments.
The interest directed to be paid by the Tribunal was not interest over and above the endowed amounts.
It is the principal amount together with the interest accruing thereon which constituted the total endowed amounts at the time of abolition of the Estates, [142A B] 3.
The direction of the High Court to pay the said amount will have to be read as a direction to the appellant to do so in his capacity as the Estate holder and not in his individual capacity.
If the final amounts 136 are already distributed among all the sharers and/or the creditors, the Government has to look for the amount of interest to all the sharers and/or their creditors including of course the appellant.
All the sharers will be liable to contribute towards the payment of the amount of interest in proportion to their share in the compensation.
That is how the order of the High Court and the earlier order passed by the Tribunal will have to be read and construed.
[142E H; 143A]
|
iminal Appeal No. 17 of 1968.
Appeal by special leave from the judgment and order dated August 17, 1967 of the Bombay High Court in Criminal Revision Application No. 668 of 1967.
section Bhutani and Urmila Kapur, for the appellant.
B. R. L. Iyengar and P. C. Bhartari, for the respondents.
The Judgment of the Court was delivered by Shelat, J.
At all material times respondent I had her office premises in Nawab Building, Fort, Bombay, which consisted of two cabins.
On July 10, 1964, she entered into an agreement with the appellant permitting him, to occupy one of the cabins on leave 82 and licence for a period of eleven months.
On June 9, 1965, the agreement was extended for a period of eleven months.
The appellant 's case was that it was further extended for another eleven months as from May 10, 1966 and respondent 1 accordingly accepted Rs. 450 as compensation for May 1966.
Respondent I thereafter demanded higher compensation which he refused to pay and thereupon respondent 1 refused to execute the renewal and threatened to eject him forcibly if he did not vacate.
His case further was that in the morning of June 11, 1966 respondent 1 broke open the staple of the cabin, removed the door from its hinges, removed all his belongings lying in the cabin and dumped them in the passage outside.
She then handed over possession of the cabin to respondents 2 and 3 purporting to do so under an agreement of licence dated June 1, 1966.
When he went to the cabin he found the cabin occupied by respondents 2 and 3.
On his asking them to place back his belongings and to restore possession to him, the respondents threatened him with dire consequences.
He, therefore, went to the police station but the police refused to take action and only recorded his N.C. complaint.
From the police station he and his friend, Mahomed Salim returned to the cabin when, on their demanding possession of the cabin, the respondents attacked them.
In the course of that attack, the said Salim received injuries.
He and the said Salim once again went to the police station but the police again refused to take action and recorded another N.C. complaint and sent Salim to the hospital for examination.
Due to the persistent refusal by the police to help him to get back the cabin, the appellant approached higher authorities in consequence of which the police at last recorded a case of assault against respondent 1.
They then arrested respondent 1 but released her on bail.
Respondent 1, however, kept some persons near the cabin to prevent the appellant from recovering possession.
There was, therefore, every likelihood of a breach of the peace had he gone to the cabin to regain possession.
In these circumstances he filed an application before the Additional Chief Presidency Magistrate under section 145 of the Code of Criminal Procedure.
The Magistrate then directed the parties to file affidavits and to adduce such further evidence as they desired.
Accordingly, the parties filed affidavits of various persons who had their offices in the same building.
The appellant, besides other affidavits, also filed an affidavit of one Nathani, the Manager of his company at whose instance, it was the case of respondent 1, the appellant had agreed to hand over and actually did hand over possession of the cabin in the morning of June 11, 1966.
That affidavit, however, did not support respondent 1 but, on the contrary, denied that Nathani had agreed that the appellant could vacate or that the appellant at his instance had agreed to do so. 83 In her written.
statement, respondent I denied that the said licence was renewed a second time in May 1966.
Her case was that at the request of the appellant she had permitted him to continue in possession, till May 1966 on his promising to vacate by the end of that month, that on June, 11, 1966, the appellant vacated the cabin, kept his belongings in the passage and thereupon she permitted respondents 2 and 3 to occupy it as, relying on the appellant 's promise that he would vacate by the end of May 1966, she had already entered into an agreement of licence on June 1, 1966 with respondent 3.
She denied that any incident, as alleged by the appellant, had occurred on that day or that the appellant or the said Salim was assaulted by her or by respondent 2 or 3.
She, therefore, denied that any dispute existed on that day or that there was any likelihood of a breach of the peace.
Respondents 2 and 3 also filed their written statements on the lines taken by respondent 1.
But after filing them, they did not participate any more in the proceedings as they had since then vacated the said cabin.
Possession, therefore, of the cabin since then remained with respondent 1.
Respondent 1 in the meantime filed a suit in the City Civil Court and took out a notice of motion for restraining the appellant from, interfering with her possession of the cabin.
The Court dismissed the notice of motion refusing to rely on the said agreement.
In the proceedings before the Magistrate the main question was whether the appellant was in actual possession on June 11, 1966 and whether he was forcibly and worngfully dispossessed by respondent 1 or whether he had vacated and surrendered the cabin to respondent 1.
After considering the affidavits and the evidence led by the parties, the Magistrate reached the following findings.
(1) that respondent 1 started harassing the appellant from the beginning of June 1966 and gave threats to forcibly dispossess him if he did not vacate; (2) that the appellant 's version that the respondents had forcibly and wrongfully taken possession of the cabin in the morning of June 11, 1966 was true; and (3) that when the appellant and the said Salim went to the cabin, the respondents manhandled them as a result of which Salim received injuries.
On these findings, he held that the appellant was in actual possession on June 11, 1966 and that under the second proviso to section 145 (4), though he had been dispossessed on June 1 1, he must be deemed to be in possession on June 20, 1966 when the Magistrate passed his preliminary order.
By his final order dated ' June 22, 1967 passed under sub section
(6), the Magistrate directed restoration of possession to the appellant till he would be evicted ' in due course of law and prohibited the respondents from interferring with his possession till then.
In the revision before the High Court, the respondents raised two contentions : (1) that the Magistrate, in entertaining the said 84 application and passing the said preliminary order,.
misconceived the scope of proceedings under section 145, and (2) that he had no jurisdiction to pass the said preliminary order as in the events that had happened there was no existing dispute likely to result in a breach of the peace.
, The High Court accepted these contentions .and set aside the order of the Magistrate.
In doing so, it observed that the object of section 145 was to, preserve peace and to provide a speedy remedy against a likely breach of peace where there is an existing dispute regarding possession of an immovable property until such dispute is adjudicated upon by a proper tribunal.
That section, therefore, can be invoked where these two conditions exist, namely, an existing dispute and an apprehension of breach of peace.
The Magistrate, therefore, had to be satisfied as to the existing of these two conditions when he passed the preliminary order.
The High Court then observed that assuming that the appellant was forcibly and wrongfully dispossessed and the said Salim was assaulted by respondent 1 and her men, it could not even then necessarily mean that there was an existing dispute relating to possession of the cabin which was likely to cause breach of peace on June 20, 1966 when the Magistrate passed his preliminary order.
The acts of respondent I might constitute an offence, for which the appellant had filed a complaint under section 341 of the Penal Code and the police had arrested respondent 1. and released her on bail, In the light of these facts the Magistrate ought to have held that on that day there did not any longer exist any dispute regarding possession of the said cabin which was likely to lead to a breach of the peace.
The High Court, further, observed that the preliminary order did not also record the reasons for the Magistrate 's satisfaction as to the two conditions and that all that it stated was that on the facts stated in the said application, he was satisfied that there was a dispute which was, likely to cause breach of the peace.
The High Court also observed that all that the application showed was that there was forcibly dispossession and an attempted assault; that from these two facts it was difficult to see bow, without any further enquiry, the Magistrate could come to the conclusion that there was likelihood of breach of peace unless it was assumed that in every case of a dispute over possession of an immoveable property and forcibly dispossession there would be continuous possibility of breach of peace.
The High Court complained that the Magistrate did not call for a police report and simply relied on the bare allegations of an interested party.
On this reasoning, it held that the Magistrate had misconceived the scope of proceedings under section 145 and passed the preliminary order as if it was a process issued by him in a non cognisable case.
The High Court also noted that respondent I had placed respondent (3) in possession, that respondent 3 had remained in possession for nearly a year by the time the Magistrate passed his final order, that the final order would, therefore, affect his vested rights, and that 85 this fact coupled with the fact of the appellants complaint under section 341 of the Penal Code on June 13, 1966 ought to have been considered by the Magistrate before passing the final order.
As aforesaid, the High Court set aside the Magistrate 's order whereupon the appellant obtained special leave and filed this appeal challenging the correctness of the High Court 's order.
Before proceeding further, we may mention that respondents 2 and 3 had vacated the premises long before the Magistrate passed the final order.
There was, therefore, no question of the Magistrate having to consider the question of their having been in possession for about a year or their having any vested rights under the agreement dated June 1, 1966.
It may also be recalled that the City Civil Court had refused to rely on the said agreement and to pass an interim injunction restraining the appellant from disturbing the possession of respondent 1.
The object of section 145, no doubt, is to prevent breach of peace and for that end to provide a speedy remedy by bringing the parties before the court and ascertaining who of them was in actual possession and to maintain status quo until their rights are determined a competent court.
The section requires that the Magistrate must be satisfied before initiating proceedings that a dispute, regarding an immoveable property exists and that such dispute is likely to cause breach of peace.
But once he is satisfied of these two conditions, the section requires him to pass a preliminary order under sub section
(1) and thereafter to make an enquiry under sub section
(4) and pass a final order under sub section
It is not necessary that at the time of passing the final order the apprehension of breach of peace should continue or exist.
The enquiry under section 145 is limited to the question as to who was in actual possession on the date of the preliminary order irrespective of the rights of the parties.
Under the second proviso, the party who is found to have been forcibly and wrongfully dispossessed within two months next preceding the date of the preliminary order may for the purpose of the enquiry be deemed to have been in possession on the date of that order.
The opposite party may of course prove that dispossession took place more than two months next preceding the date of that order and in that case the Magistrate would have to cancel his preliminary order.
On the other hand, if he is satisfied that dispossession was both forcible and wrongful and took place within the prescribed period, the party dispossessed would be deemed to be in actual possession on the date of the preliminary order and the Magistrate would then proceed to make his final order directing the dispossessor to restore possession and prohibit him from interfering with that possession until the applicant is evicted in due course of law.
This is broadly the scheme of 145.
86 The satisfaction under sub section
(1) is of the Magistrate.
The question whether on the materials before him, he should initiate proceedings or not is, therefore, in his discretion which, no doubt, ,has to be exercised in accordance with the well recognised rules of law in that behalf.
No hard and fast rule can, therefore, be laid down as to the sufficiency of material for his satisfaction.
The language of the sub section is clear and unambiguous that he can .arrive at his satisfaction both from the police report or "from other information" which must include an application by the party dispossessed.
The High Court, in the exercise of its revisional jurisdiction, would not go into the question of sufficiency of material which has satisfied the Magistrate.
The question is whether the preliminary order passed by the Magistrate was in breach of section 145(1), that is, in the absence of either of the two conditions precedent.
One of the grounds on which the High Court interfered was that the Magistrate failed to record in his preliminary order the reasons for his satisfaction.
The section, no doubt, requires him to record reasons.
The Magistrate has expressed his satisfaction.
on the basis of the facts set out in the application before him and after he had examined the appellant on oath. 'That means that those facts were prima facie sufficient and were the reasons leading to his satisfaction.
The other reason which, according to the High Court, vitiated the order was that the Magistrate acted only on the allegations in the appellant 's application without making any further enquiry and issued the order as if he was issuing a process in a N.C. case.
But counsel for the respondents conceded that before passing the order the Magistrate had examined the appellant on oath and it was then only that he made the order recording his satisfaction.
But apart from the allegations in the application as to his forcible and wrongful dispossession and assault, there was the fact that on .
June 11, 1966 the appellant had gone twice to the police station, requested the police to take action and had lodged two N.C. complaints.
This material being before the Magistrate, it was hardly 'fair to blame the Magistrate that he had passed his preliminary order lightly or without being satisfied as to the existence of the 'two conditions required by the sub section.
Was the High Court next justified in observing that the Magistrate ought to, have got a police report on the allegations made in the application before he passed his said order ? Such a view has been taken in some decisions.
In Phutania vs Emperor(1) the view taken was that it was a safe general rule for a Magistrate to refuse to take action under section 145 except on a police report and that the .absence of such.
a report is almost conclusive indication of the absence of any likelihood of breach of peace.
A similar opinion has also been expressed in Ganesh vs Venkataswara(2) where, (1) (1924) 25 Cr.
L.J.1109.
(2) 87 relying on Raja of Karvetnagar V. Sowcar Lodd Govind Doss(1), the Mysore High Court observed that law and order being the, concern of the police it is but natural that the Magistrate should either be moved by the police or if moved by a private party, he should call for a police report regarding the likelihood of breach of peace.
But the High Court of Madras in the case of Raja of Karvetnagar(1), did not lay down any such proposition but merely sounded a note of caution that in the absence of a police report the statements of an interested party should not be relied on without caution and without corroboration. ' the proposition that the Magistrate before proceeding under section 145 (1) must, as a rule, call for a police report where he is moved by a private party or that the absence of a police report is a sure indication of the absence of possibility of breach of peace, is not warranted by the clear language of the section which permits the Magistrate to initiate proceedings either on the police report or "on other information".
The words "other information" are wide enough to include an application by a private party.
The jurisdiction under section 145 being, no doubt, of an emergency nature, the Magistrate must act with caution but that does not mean that where on an application by one of the parties to the dispute he is satisfied that the requirements of the section are.
existent, he cannot initiate proceedings without a police report.
The view taken in the aforesaid two decisions unnecessarily and without any warrant from the language of sub section
(1) limits the discretion of the Magistrate and renders the words "other information" either superfluous or qualifies them to mean other information verified by the police.
In our view, once the Magistrate, having examined the applicant on oath, was satisfied that his application disclosed the existence of the dispute and the likelihood of breach of peace, there was no bar against his acting under section 145(1).
The next ground for the High Court 's interference was that assuming that the appellant was forcibly and wrongfully dispossessed and the said Salim was assaulted, the said dispossession was completed, a complaint of assault was lodged and the police had already taken action before the preliminary order was passed on June 20, 1966.
Therefore, it was said, there was no longer any dispute on the date of the order likely to lead to breach of peace and consequently the order did not comply with the requirements of section 145(1) and was without jurisdiction.
This reasoning would mean that if a party takes the, law into his hands and deprives forcibly and wrongfully the other party of his possession and completes his act of dispossession, the party so dispossessed cannot have the benefit of section 145, as by the time he files his application and the Magistrate passes his order, the dispossession would be complete and, therefore, there would be no existing, dispute likely (1) (1906) I.L.R .29 Mad.561. 88 to cause breach of peace.
Such a construction of section 145, in our view, is not correct, for it does not take into consideration the second proviso to sub section
(4) which was introduced precisely to meet such cases.
The Magistrate has first to decide who is in actual possession at the date of his preliminary order.
If, however, the party in de facto possession is found to have obtained possession by forcibly and wrongfully dispossession the other party within two months next preceding the date of his order, the Magistrate can treat the dispossessed party as if he was in possession on such date, restore possession to him and prohibit the dispossessor from interfering with that possession until eviction of that person in due course of law.
The proviso is founded on the principle that forcible and wrongful dispossession is not to be recognised under the criminal law.
So that it is not possible to say that such an act of dispossession was completed before the date of the order.
To say otherwise would mean that if a party who is forcibly and wrongfully dispossessed does not in retaliation take the law into his hands, be should be at disadvantage and cannot have the benefit of section 145.
The word "dispossessed" in the second proviso means to be out of possession, removed from the premises, ousted, ejected or Excluded.
Even where a person has a right to possession but taking the law into his hands makes a forcible entry otherwise than in due course of law, it would be a case of both forcible and wrongful dispossession : (of Edwick vs Hawkes(1) and jiba vs Chandulal) (2).
Sub section (6) of section 145 in such a case permits the Magistrate to direct restoration of possession with the legal effect that is valid until eviction in due course of law.
In Jiba vs Chandulal (2) the High Court of Bombay held that it would be unfair to allow the other party the advantages of his forcible and wrongful possession and the fact that time has elapsed since such dispossession and that the dispossessor has since then been in possession or has filed a suit for a declaration of title and for injunction restraining disturbance of his possession is no ground for the Magistrate to refuse to pass an order for restoration of possession once he is satisfied that the dispossessed party was in actual or demand possession under the second proviso.
Similarly, in A. N. Shah vs Nageswar Rao(") it was held that merely because there has been no further violence after one of the parties had wrongfully and forcibly dispossessed the other it cannot be said that there cannot be breach of peace and that, therefore, proceedings under section 145 should be dropped.
It may be that a party may not take the law in his hands in reply to the other party forcibly and wrongfully dispossessing him.
That does not mean that he is not to have the benefit of the remedy under section 145, The (1) (2) A.I.R. 1926 Bom.
(3) A.I.R.1947 Mad. 133. 89 second proviso to sub section (4 ) and sub section (6) contemplate not a fugitive act of trespass or interference with the possession of the applicant, the dispossession there referred to is one that amounts to a completed act of forcible and wrongful driving out a party from his possession: (of Subarna Sunami vs Kartika Kudal) (1) It is thus fairly clear that the fact that dispossession of the appellant was a completed act and the appellant had filed a criminal complaint and the police had taken action thereunder do not mean that the Magistrate could not proceed under section 145 and give direction permissible under sub section
In our view, the High Court erred in holding that merely be cause dispossession of the appellant was completed before June, 20.
1966, there was no dispute existing on that day which was likely to lead to breach of peace or that the Magistrate was, therefore, prevented from passing his preliminary order and proceeding thence to continue the enquiry and pass his final order.
In our view, reading section 145 as a whole, it is clear that even though respondent 1 had taken over possession of the said cabin, since that incident took place within the prescribed period of two months next before the date of the preliminary order, the appellant was deemed to be in possession on the date of that order and the Magistrate was competent to pass the final order directing restoration of possession and restraining respondent 1 from interfering with that possession until the appellant 's eviction in due course of law.
We, therefore, allow the appeal, set side the High Court 's order and restore that of the Trial Magistrate.
G.C. Appeal allowed.
(1) (1954) I.L.R.Cuttak 215.
| A postcard written by R to a lady M requesting her to ask another lady to meet him, was made over to the first appellant a Police SubInspector.
The first appellant asked the second appellant his writer constable to fetch R.
On his arrival, R was asked to pay money otherwise he would be harassed.
R approached the Deputy Superintendent of Police, Anti Corruption Department, as a result of which a trap was laid and the currency notes treated with anthracene given to R for the payment R and one D went to the first appellant, who directed R to pay it to the second appellant.
The first appellant took Out the postcard, tore it and burnt it, while R paid the money.
Another police Sub Inspector and constable both belonging to the Anti Corruption Department were keeping a watch from nearby compound.
The second appellant went to two shot)s and changed some currency notes there.
The Dy.
S.P. searched the first appellant but nothing incriminating was found.
he seized the burnt pieces of postcard, sonic of the unburnt pieces were recognised by R. The Dy.
S.P. seized the currency notes from the shops and their number tallied.
The second appellant was arrested and considerable anthracene powder was found on his person.
The appellants were tried tinder sections 161 ind 165A IPC and sections 5(1)(d) and 5(2) of the Prevention of Corruption Act by Special Judge, Ahmedabad.
An objection was taken to the trial that in view of Bombay State Commissioner of Police Act, 1959, the investigation should have been made by a Superintendent of Police is there was a Police Commissioner in that city, which was upheld and it fresh investigation ordered by a Superintendent of Police.
Because of the fresh investigation, in respect of most witnesses, the police diary contained two statements one recorded by the Dv. S.P. and the other by the S.P.
While deposing in the trial Court, M asserted that she had destroyed the postcard as soon as she read it, and she was cross examined by the prosecution in reference to her earlier statement to the Dy, S.P, to the effect that he had Liven the postcard to the first appellant.
The Trial Court accepted the prosecution case and convicted the appellants, which was upheld by the High Court.
In appeal before this Court, the appellants contended that (i) in view of the order of reinvestigation, the record of the investigation made by the Dy.
S.P.stood wiped out, and therefore M could not have been crossexamined with reference thereof; (ii) the conviction could not solely be,based on the evidence of R and Police witnesses, who were all interested witnesses; (iii) no offence.
was made out under section 161 IPC, as the prosecution had to establish that they were public servants and had obtained illegal gratification for showing or forbearing to show in exercise of their official 'functions, favour, or disfavour to R; and (iv) the Prosecution was barred 23 by limitation by section 161(1)of the Bombay Police Act, 1951 as it was instituted more than six months of the offence.
HELD : The appeal must be dismissed.
(i)Though the first investigation was not in accordance law, but yet it was in no sense non est.
Investigation includes laying of trap.
That part of the investigation was done by the Dy.
The Statements recorded by the Dy.
S.P. in the course of his investigation, though the investigation in question was illegal, were still statements recorded by a police officer in the course of investigation under Chapter XIV of the Code of Criminal Procedure and consequently they fell within the scope of sections 161 and 162 of the Code.[27C F] S.N. Bose vs State of Bihar, Cr.
A. 109 of 1967 decided on March 26, 1968;H. N. Rishbud vs The State of Delhi. ; ; and The State of Bihar vs Basawan Singh, ; , followed.
(ii) While in the case of evidence of an accomplice no conviction can be based on his evidence unless it is corroborated in material particulars but ,is regards the evidence of a partisan witness it is open to a court to convict an accused solely on that evidence, if it is satisfied that that evidence is reliable.
But it may in appropriate case look for coroboration.
In this case, R. and the police witnesses could not be said to be accomplices, and both the courts below have fully accepted their evidence.
So it was open to them to convict the appellants on the basis of their evidence.
That apart their evidence was substaintially coroborated by the evidence of D and the shopkeepers.
[29B D] The State of Bihar vs Basawan Singh, ; ; followed.
Rao Shiv Bahadur Singh vs State of Vindhya Pradesh, , overruled.
Major E.G. Barsay vs The State of Bombay; [1962] 2 S.C.R. 195, distinguished.
(iii) Offence under section 161 IPC was made out, The question whether there was any offence which the first appellant could have investigated or not was irrelevant.
If he had used his official position to extract illegal gratification, the requirement of law was satisfied.
[29F] Mahesh Prasad vs The State of U.P. ; ; Dhaneshwar Narain Saxena vs The Delhi Administration ; , followed.
(iv) Section 161(1) of the Bombay Police, Act, 1951 was inapplicable to this case.
The appellants could not be said to have received bribe under the colour of their duty.
There was no connection between the duties to he performed by them and the receipt of the bribe in question.
All that could be, said was that the first appellant a police officer, taking advantage of his position as a police officer and availing himself of the opportunity afforded by the letter M handed over to him coerced R to pay illegal gratification to him.
This could not be said 4to have been done " under colour of duty".
The charge against the second appellant was that he aided the first appellant in his illegal activity.
[30G 31A] The State of Andhra Pradesh vs N. Venugopal, [1964] 3 S.C.R. 742, referred to.
Virupaxappa Veerappa Kadampur vs The State of Mysore, [1963] Supp. 2 S.C.R. 6, held inapplicable.
|
Appeal No. 242 of 1965.
Appeal from the judgment and order dated February 19, 1962 of the Madhya Pradesh High Court in Misc.
Petition No. 395 of 1958.
A. K. Sen, R. M. Hazarnavis, D. N. Verma, O. P. Malhotra, O. C. Mathur, J. B. Dadachanji and Ravinder Narain, for the appellant.
B. Sen and I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by certificate, from the judgment of the High Court of Madhya Pradesh dated February 19, 1962 in Miscellaneous Petition No. 395 of 1958.
The appellant is a firm carrying on the business of manufac turing and selling bidis.
During the period April 1, 1951 to September 6, 1955, the appellant was registered as a "dealer" under the Central Provinces & Berar Sales Tax Act, 1947 (C.P. & Berar Act 21 of 1947) (hereinafter called the 'Act ').
For the purposes of manufacture of bidis, the appellant imported from the State of Bombay large quantities of tobacco.
During the period from November 7, 1953 to October 26, 1954, the appellant imported from that State tobacco worth Rs. 84,29,580 15 0 and during the period from October 27, 1954 to November 14, 1955 the appellant imported tobacco worth Rs. 1,38,27,630 12 6.
In the usual course, the tobacco, after being imported into the State of Madhya Pradesh, was rolled into bidis which were largely exported to other States for sale and consumption in those States.
In respect of the imports of tobacco the Sales Tax authorities required the appellant to file returns in Part B of Form IV clause 2 of which stated as follows: M19Sup.
CI/66 7 90 "2.
Purchase price of goods other than those mentioned in Schedule 11 purchased on declaration under rule 26 as being goods specified in the registration certificate as intended for use as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose; such as one 's own consumption or for export outside the State for which deduction is claimed under section 27 A or for use in the manufacture of goods exported outside the State for which deduction is claimed under section 27 A, etc.
" The appellant filed a return for the quarter from May 3, 1954 to July 29, 1954 showing the amount of Rs. 16,47,567 3 3 as the purchase price of goods purchased on declaration as being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose.
In the return which was filed for the quarter beginning from July 27, 1954 and ending with October 26, 1954, the appellant did not fill in any figure but showed the above item as blank contending that the Sales Tax authorities were not entitled to levy any purchase tax against it in respect of the same. 'Me appellant thereafter moved this Court under article 32 of the Constitution for the issue of a writ of mandamus or any other suitable writ to restrain the respondents from enforcing the provisions of the Act and for other consequential reliefs.
In Writ Peti tion No. 67 of 1955 decided on September 20, 1955 M/s Mohanlal Hargovind Das vs The State of Madhya Pradesh(1) this court observed in the course of its judgment as follows: "All the transactions entered into by a registered dealer, however, do not necessarily import a liability to pay tax under the Act because, whenever the question arises in regard to his liability to pay any tax under the Act, such liability would have to be determined in spite of his being a registered dealer with reference, inter alia, to the provisions of Section 27 A of the Act which incorporates within its terms the bans which have been imposed on the powers of the State Legislatures to tax under Article 286(1) (a) and (2) of the Constitution.
If, therefore, a dealer who has got himself registered as dealer under the provisions of Section 8(1) of the Act is sought to be made liable in respect of transactions of sale effected by him he could claim exemption from such liability if the transactions of sale or purchase took place in the course of inter State trade or commerce after the 31st March, 1951, except in so far (1) ; 91 as Parliament may by law otherwise provide.
In the case before us there was no such provision made by Parliament and the transactions in question were all after the 31st.
March, 1951, with the result that the ban imposed by Article 286(2) was in operation and if the transactions took place in the course of inter State trade or commerce not only were Shri Chhaganlal Ugarchand Nipani and Shri Maniklal Chunanlal Baroda exempt from the liability to pay the tax on these transactions but the petitioners also were similarly exempt.
No liability, therefore, could be imposed either for Sales Tax or for Purchase Tax within the terms of the Act on these transactions which as above stated took place in the course of inter State trade or commerce." This Court accordingly granted a writ to the following effect: "The respondents will be restrained from enforcing the Central Provinces and Berar Sales Tax Act, 1947, and its provisions against the petitioners and from imposing a tax in respect of the transactions in question and in particular from imposing a tax on the purchase price of goods purchased on the declarations under Rule 26 being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose under the provisions of Section 4(6) of the Act.
" In view of this writ the Assistant Commissioner of Sales Tax, Jabalpur, by his two orders dated September 9, 1956 and September 10, 1956, exempted the appellant from tax on the purchases of tobacco made in the State of Bombay, which, after being imported into the State of Madhya Pradesh, was used as raw material for manufacturing bidis exported to other States.
The appellant preferred appeals to the Deputy Commissioner or Sales Tax against the two orders dated September 9, 1956 and September 10, 1956.
In the meantime, on March 21, 1956, the Sales Tax Laws Validation Act, 1956 (Act 7 of 1956), which repealed the Sales Tax Validation Ordinance 3 of 1956, had come into force.
Thereupon, on December 5, 1958, the Deputy Commissioner of Sales Tax issued two notices to the appellant proposing to levy tax on purchases of tobacco during the period from November 7, 1953 to September 5, 1955 from non resident dealers under section 4(6) of the Act.
The appellant filed in the High Court of Madhya Pradesh Miscellaneous Petition No. 395 of 1953 praying for grant of a writ of certiorari to quash the notices dated December 5, 1958 issued by the Deputy Commissioner of Sales Tax and for a writ in the nature 92 of mandamus restraining the respondents from enforcing the provisions of the Act and of the Central Act 7 of 1956 and from imposing any tax on purchases of tobacco and other raw materials from non resident dealers.
By its judgment dated February 19, 1962, the High Court of Madhya Pradesh rejected the petition of the appellant.
By the Madhya Pradesh Sales Tax (Amendment) Act, 1953 (M.P. Act 20 of 1953) certain amendments were made in the Act.
The material provisions of the latter Act, as amended by the former Act, were as follows: "2.
(c) "dealer" means any person who whether as principal or agent, carries on in Madhya Pradesh the business of selling or supplying goods, whether for commission, remuneration or otherwise and includes a firm, a partnership. . . "2. (g) "sale" with all its grammatical variations and cognate expressions mean any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract. . and the word 'purchase ' shall be construed accordingly; Explanation (II). (Notwithstanding anything to the contrary in the Indian , but subject to the provision contained in the Explanation to clause (i) of Article 286 of the Constitution) the sale or purchase of any goods shall be deemed for the purposes of this Act, to have taken place in this State wherever the contract of sale or purchase might have been made (a) if the goods were actually in this State at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced or found in this State at any time after the contract of sale or purchase in respect thereof was made; Explanation (III).
Notwithstanding anything to the contrary in the Indian , the sale of any goods which have actually been delivered in the State of Madhya Pradesh as a direct result of such sale for the purpose of consumption in the said State, shall be deemed, 93 for the purpose of this Act, to have taken place in the said State, irrespective of the fact that the property in the goods has, by reason of such sale passed in another State." "2.
(j) 'turnover ' means the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of sales or supply of goods in the carrying out of any contract affected or made during the prescribed period; and the expression 'taxable turnover ' means that part of a dealer 's turnover during such period which remains after deducting therefrom (a) his turnover during that period on (ii)sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State or of goods specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, and of containers and other materials used in the packing of such goods;" "4.
(6) Where any goods are purchased by a registered dealer as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State, or as being goods specified in such dealer 's certificate of registration as intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and such goods are utilised by him for any other purpose, the price paid by him for such goods shall be included in his turnover and be liable to tax in accordance with the provisions of this Act." "27 A. (a) Notwithstanding anything contained in this Act (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Madhya Pradesh; or (ii)where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territories of India; 94 (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
(2) The Explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of subclause (i) of clause (a) of sub section (1).
" Article 286(1) and (2) of the Constitution, as it stood at the material time, is reproduced below: "286(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place: (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2)Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce.
Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty first day of March, 1951.
" In m/s Mohanlal Hargovind Das vs The State of Madhya Pradesh,(1) it was held by this Court that the transaction of purchase of tobacco by the appellant from dealers outside the territory of Madhya Pradesh were transactions in the course of inter State (1) ; 95 trade or commerce and since the ban imposed by article 286(2) was in operation, the appellant was exempt from liability to pay tax on those transactions.
On January 30, 1956, the President of India promulgated an Ordinance called 'The Sales Tax Laws Validation Ordinance, 1956 ' (Ordinance No. 3 of 1956) which was repealed and replaced by the Sales Tax Law Validation Act, 1956 (Act 7 of 1956) which came into force on March 21, 1956.
Section 2 of this Act states: "Notwithstanding any judgment, decree or order of any Court, no law of a State imposing or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the Ist day of April, 1951 and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter State trade or commerce; and all such taxes levied or collected or purporting to have been validly levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law.
Explanation.
In this section 'law of a State ' in relation to a State specified in Part C of the First Schedule to the Constitution, means any law made by the Legislative Assembly, if any, of that Sate or extended to that State by a notification issued under Section 2 of the Part C States (Laws) Act, 1950 (30 of 1950)".
It was argued by Mr. A. K. Sen on behalf of the appellant, in the first place, that section 27 A of the Act places a restriction on the power of the taxing authorities and so long as it stood unrepealed there was no pre existing law authorising the imposition of tax on sales made in the course of inter State trade or commerce and in consequence the Sales Tax Laws Validation Act, 1956 which merely lifted the ban and did not impose any tax, bad no application to the case of the appellant.
To put it differently, the contention of Mr. A. K. Sen was that before advantage could be taken of the Sales Tax Laws Validation Act, 1956 there had to be in existence a State Act imposing tax on such sales and section 27 A of the Act imposed no such tax on the sales.
We are unable to accept this argument as correct.
An identical question was the subject matter of consideration by this Court in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh & another(1) and it was held that section 22 of the Madras Sales Tax Act had a positive content and the Explanation in the context of section 22 authorised the State of (1) ; 96 Madras to impose tax on sales falling within its purview.
In the course of his judgment Venkatarama Aiyar, J., speaking for the Court, observed: "These considerations will clearly be inapposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to levy and collect tax.
When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as article 286(2).
It should be remembered that unlike the Constitution, the law of a State can speak only within its own territories.
It cannot operate either to invest another State with a power which it does not possess, or divest it of a power which it does possess under the Constitution.
Its mandates can run only within its own borders.
That being the position, what purpose would the Explanation serve in section 22 of the Madras Act, if it merely meant that when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which property in the goods passes has no power to tax the sale? That is not the concern of the State of Madras, and indeed, the Legislature of Madras would be incompetent to enact such a law.
In its context and setting, therefore, the Explanation to section 22 must mean that it authorises the State of Madras to impose a tax on sales falling within its purview.
Thus, while in the context of article 286(1) (a) the Explanation thereto could be construed as purely negative in character though positive in form, it cannot be so construed in its setting in section 22 of the Madras Act, where it must have a positive content.
" Section 22 of the Madras Act is couched in a similar language to section 27 A of the Act.
In our opinion, the principle of the decision in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh & another(1) therefore governs the present case.
We should also refer to the additional circumstance that in the present case the third Explanation to section 2(g)incorporates into the definition of 'sale ' the Explanation occurring in article 286 in contrast to the Madras Act where there is no such incorporation in the definition.of sale under section 2(h) of that Act.
We are accordingly of the opinion that the argument of the appellant must be rejected on this aspect of the case.
(1) ; 97 The next question to be considered in this appeal is whether the provisions of section 4(6) of the Act are attracted in the circumstances of the case.
It was submitted for the appellant that the section has no application because tobacco was not specified in the certificate of registration granted to the appellant "as intended for use by it as raw material in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State".
Section 2(j) of the Act, as it originally stood, was to the following effect : "Sales to a registered dealer of goods specified in such dealer 's certificate of registration as being intended for resale by him, or for use by him in the manufacture of any goods for sale or in the execution of any contract and on sales to a registered dealer of containers and other materials for the packing of such goods;" The section was amended from time to time until, with effect from December 1, 1953 it stood as follows: "Sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State or of goods specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, and of containers and other materials used in the packing of such goods;" Section 4(6) of the Act was also inserted with effect from December 1, 1953 by the Madhya Pradesh Sales Tax (Amendment) Act 1953 (Act 20 of 1953).
In consequence of these amend ments it became necessary to amend the certificate of registration granted to the appellant before the amendment of the Act.
Therefore, on January 5, 1954, even before the relevant Rule was amended, the appellant applied for substitution of the words "raw materials" for the words "for the purpose of manufacture".
In allowing the application the Sales Tax Officer did not comply with the language of Form II but merely specified as raw materials "Tendu leaves, Tobacco, Yarn" The contention of the appellant is that the purchase of tobacco cannot be taxed because it was not "specified in the dealers ' certificate of registration as intended for use by him as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State" as required by section 4(6) of the Act.
We are unable to accept the argument of the appellant as correct.
It is true that there is a technical omission in the order of the Sales Tax Officer amending the certificate of registration, but the certificate must be fairly construed in the light of the language 98 of section 8 and other relevant provisions of the Act.
Before the amendment made by Act XX of 1953 section 8(3) read as follows: "8.
(3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who himself manufactures any goods for purposes of sale shall specify the class or classes of goods which are intended to be used by him in the manufacture of such goods." After the amendment the sub section was to the following effect: "8.
(3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who manufac tures any goods for purposes of sale by 'actual delivery in Madhya Pradesh for the purpose of consumption in that State shall specify the raw materials which are intended to be used by him in the manufacture of such goods.
" In this connection reference may be made to section 2(j) (a) (ii) Which states that a selling dealer is entitled to deduct from his turnover sales to a registered dealer of goods "specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State".
It is manifest that the only legitimate object which the purchasing dealer seeks in having a class of good specified in the certificate of registration as "raw materials" is to purchase the goods tax free in the sense contemplated by the Act.
By asking for such specification the dealer represents that he intends to use the goods specified in the manufacture of other goods for the purpose of sale by actual delivery in the State of Madhya Pradesh for the purpose of consumption in that State.
In this context reference should be made to declarations made by the appellant to the Bombay dealers printed at page 88 of the Paper Book.
In these declarations the appellant stated that it was purchasing tobacco for use as raw materials in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and that tobacco was so specified in its certificate of registration.
As we have already said, the certificate of registration granted to the .appellant must be construed in the context of section 8 as it stood after ,its amendment and the declarations of the appellant made to the Bombay dealers.
If the language of the certificate is so construed 99 in the context of the amended section 8 of the Act and along with the declarations of the appellant, it is manifest that the appellant is liable to pay tax on tobacco imported from Bombay dealers for the relevant periods and that the requirements of section 4 (6) of the Act are satisfied in this case.
The view that we have taken is borne out by the decision of this Court in Modi Spinning & Weaving Mills Co. Ltd. vs Commissioner of Sales Tax Punjab, and another(1) in which it was held that the registration certificate was only evidence that the assessee was a registered dealer for purposes of certain commodities to be used in manufacture and any formal defect in the registration certificate was not material.
We therefore hold that the technical omission of the Sales Tax Officer to make a specific entry in the certificate will not confer any benefit on the appellant if there is other incontrovertible evidence in the case to show that the appellant did purchase the goods specified in the certificate as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State.
We, therefore, hold that Mr. A. K. Sen has not been able to make good his argument on this aspect of the case.
For these reasons this appeal fails and must be dismissed with costs.
G.C. (1) 16 section T. C. 310.
Appeal dismissed.
| The appellant was a firm in Madhya Pradesh and was registered as a dealer ' under the Central Provinces and Berar Sales Tax Act, 1947 as amended by the Madhya Pradesh Sales Tax (Amendment) Act, 1953.
During 1951 and 1955 the firm imported tobacco from the State of Bombay on the declaration that it would be used as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for consumption in that State.
Tobacco was mentioned as one of the raw materials in the firm 's registration certificate issued under section 8 of the Act.
However the goods manufactured by the firm were utilised for a different purposes i.e. for export outside the State.
Under section 4(6) of the Act when goods were used for a different purpose other than the one declared and mentioned in the registration certificate the price paid by the dealer for such goods would be included in his taxable turnover.
However in a writ petition before the High Court the appellant firm contended that the goods exempt as interstate sales were exempted from levy of sales ,,tax under section 27A of the Act which incorporated the bans in article 286 of ,the Constitution.
The writ petition was allowed in September 1955.
However in '1956 the Sales tax Validation Ordinance and thereafter the Sales Tax Laws Validation Act were passed.
Accordingly the Sales Tax ,Authorities issued notices to the appellant firm proposing to levy purchase ,tax on the tobacco purchased by it from non resident dealers during the period November 7, 1953 to September 5, 1955.
The appellant thereupon filed another writ petition before the High Court challenging the levy but it was dismissed.
With certificate the appellant came to this "court.
It was urged on behalf of the appellant that (i) before advantage could be taken of the Sales Tax Laws Validation Act.
1956 there had to be in existence a State Act imposing tax on inter State.sales and section 27A of the Act imposed no such tax, (ii) section 4(6) had no application because tobacco was not specified in the certificate of registration granted to the appellant as intended for use by it as raw material in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State.
" HELD : (i) Read with the third explanation to section 2(g)of the Act section 27 A had a positive and not merely a negative content.
It gave power to the State of Madhya Pradesh, to impose a tax on a transaction falling 'Within its purview.
It was therefore a pre existing law validated by the Sales Tax Laws Validation Act, 1956 and the appellant could be taxed under it in respect,of inter State sales only during the relevant period.
[95 H; 96 G H] 89 M.P.V. Sundararamier & Co. vs The State of Andhra Pradesh, ; , relied on.
(ii)The declaration made by the appellant to the Bombay dealers was for the purpose of obtaining exemption from purchase tax.
The same was the purpose of the mention of tobacco in the registration certificate under section 8.
If the language of the certificate were construed in the context of the section 8.
of the Act (as amended) and along with the declaration of the appellant, it was manifest that the appellant was liable to pay tax on tobacco imported from Bombay dealers and that the requirements of a. 4(6) were satisfied.
The technical omission of the Sales Tax Officer to make a specific entry in the certificate would not confer any benefit on the appellant when there was other incontrovertible evidence to show that the appellant did purchase the goods specified in the certificate as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State.
[98 F H; 99 A] Modi Spinning & Weaving Mills Co. Ltd. vs Commissioner of Sales Tax, Punjab & Anr.
16 S.T.C. 310, relied on.
|
vil Appeal No. 1134 (NT) of 1987.
From the Judgment and Order dated 2.3.
1984 of the Allahabad High Court in Sales Tax Revision No. 146 of 1983.
Prithvi Raj, Ashok K. Srivastava for the Appellant.
S.T. Desai, K.B. Rohtagi, S.K. Dhingra, Baldev Atreya and Shashank Shekhar for the Respondent.
The following Judgments of the Court were delivered RANGANATH MISRA, J. Special leave granted.
Delay of six days is condoned.
The short question for consideration in this appeal at the instance of the Revenue is whether the High Court was justified in holding that in the absence of a notification withdrawing the earlier notification dated 25.11.
1958 made in exercise of power vested under section 4 of the U.P. Sales Tax Act, 1948, Sales Tax would not be exigible in terms of the notification dated 1.12.
1973 issued under section 3A of that Act.
The notification of 1958 exempted 'cotton fabrics of all varieties ' from sales tax.
It is not disputed that under it sale of patta, the goods in question on being treated as cotton fabric was exempted from sales tax.
The notification of 1973 made under section 3A of the Act prescribed sales tax of seven per cent on the sale of beltings of all kinds.
There is no dispute now that patta is a kind of belting material.
Section 3 of the Act contains the charging provision and prescribes a uniform rate of tax on sales.
Section 3A empow ers the State Government to modify the rate of tax by noti fication.
The notification of 1973 in fact prescribes a rate of tax higher than provided by section 3.
In 1958, under the notification referred to above, patta as an item of cotton fabric stood exempted from tax liability.
The High Court has 96 referred to some of its earlier decisions and has concluded thus: "Thus the consistent view of this court throughout has been that by issuing a separate notification under section 3A, the earlier exemption granted under section 4 of the Act cannot be negatived.
If the State wanted to tax 'beltings of all kinds ', it has to amend the general notification issued under section 4 by deleting cotton fabric belts from the notification issued under section 4 of the Act. ' ' As has been pointed out above, section 3 is the charging provision; section 3A authorises variation of the rate of tax and section 4 provides for exemption from tax.
All the three sections are parts of the taxing scheme incorporated in the Act and the power both under sections 3A as also under section 4 is exercisable by the State Government only.
When after a notification under section 4 granting exemption from liability, a subsequent notification under section 3A prescribes the rate of tax, it is beyond doubt that the intention is to withdraw the exemption and make the sale liable to tax at the rate prescribed in the notification.
As the power both for the grant of exemption and the variation of the rate of tax vests in the State Government and it is not the requirement of the statute that a notification of recall of exemption is a condition precedent to imposing tax at any prescribed rate by a valid notification under section 3A, we see no force in the contention of the assessee which has been upheld by the High Court.
In fact, the second notification can easily be treated as a combined notifica tion both for withdrawal of exemption and also for provid ing higher tax.
When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the 2nd notifica tion.
We would like to point out that the exemption was in regard to a class of goods and while the exemption continues a specific item has now been notified under section 3A of the Act.
The appeal is allowed.
The order of the Tribunal which has been affirmed by the High Court is set aside and the assessment is restored.
Parties are directed to bear their respective costs throughout.
B.C. Ray, J. I have had the privilege of going through the judgment rendered by my learned brother but I am unable to concur with the reasonings recorded by my learned brother in his judgment so far as it relates to the scope and effect of the notification dated 1.12.1973 made under Section 3A of the U.P. Sales Tax Act, 1948 by providing for imposition of sales tax on "beltings of all kinds" for the reasons given hereunder: 97 Under Section 4 of the 1J.P. Sales Tax Act, 1948 the Government issued two notifications No. S.T. 4486/x dated 14.12.1957 and No. 4064/x 960(4)/58 dated 25.11.
1958 where by "cotton fabrics of all kinds" were exempted from the imposition of sales tax under the Act.
Thereafter on 1st of December 1973 a notification was issued by the Government under Section 3 A of the said Act which introduces in the Schedule in Item No. 8 "beltings of all kinds" for imposi tion of sales tax.
The sole question arising in this appeal is whether beltings of all kinds are excisable to sales tax by virtue of the notification dated 1.12.
1973 even though they fall within "cotton fabrics of all kinds" which are exempted from tax by virtue of the notifications dated 14.12.
1957 and 25.11.
Similar question arose in the case of Porritts & Spencer Asia Ltd. vs State of Haryana, [1978] 42 S.T.C. 433 (SC) before this Court for considera tion.
It was held by this Court that the words "all varie ties of cotton, woollen or silken textiles".
In item 30 of Schedule B to the Punjab General Sales Tax Act must be interpreted according to its popular sense, meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it.
" This Court further observed "whatever be the mode of weaving employed, woven fabric would be "textiles".
What is neces sary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric.
Moreover a textile need not be of any particular size or strength or weight.
It may be in small pieces or in big rolls: It may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the pur chaser.
The use to which it may be put is also immaterial and does not bear in its character as a textile.
It may be used for making wearing apparel, or it may be used as a covering or bed sheet or it may be used as tapestry or upholstery or as duster for clearing or as towel for drying the body.
A textile may have diverse uses and it is not the use which determines its character as textile.
" It was also held that the textile has only one meaning namely a woven fabric and that is the meaning which it bears in ordinary parlance.
The Court therefore held that dryer felts are textiles as these were made of yarn and the proc ess employed was that of weaving according to warp and woof pattern.
It therefore falls within the meaning of textiles and so exempted from tax.
Similar question arose in the case of State of Tamil Nadu vs Navinchandra & Company, [1981] (48) S.T.C. 118 (Madras) where exemption was claimed on the basis of a notification under Section 4 of the Tamil Nadu General Sales Tax Act 1959 in respect of hair belting 98 and cotton belting as falling within item No. 4 of the Third Schedule of the said Act.
This item No. 4 reads as follows: "All varieties of textiles (other than durries, carpets, druggets and pure silk cloth) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool includ ing handkerchiefs, towels, napkins, dusters, cotton velvets and velvetten, tapes, niwars and laces and hosiery cloth in lengths.
" It was held that textiles haying a wider meaning than fab rics cottonbelting and hair belting were included in the expression cotton fabrics and as such they are exempted from taxation falling within Item No. 4 of the Third Schedule as it stood prior to its amendment.
It is pertinent to mention in this connection that in the case of Delhi cloth and General Mills Co. Ltd. vs State of Rajasthan and Others, ; the question arose whether rayon tyre cord fabric manufactured by the appellate company included within item No. 18 inserted in the Schedule by the Rajasthan Taxation Laws (Amendment) Act, 1964 and rayon or artificial silk fabrics extended to exemp tion under Section 4(1) of the Rajasthan Sales Tax Act which provides for exemption of sales tax of goods specified in the Schedule.
It has been held that the product falls within the exempted item rayon or artificial silk fabrics in item No. 18 of the Schedule inserted by Section 4 of the said Act.
This judgment was rendered by this Court to which one of us was a party.
In the instant case the question arising for considera tion is whether patta covered by "cotton fabrics of all varieties" is excisable to sales tax under the notification dated 1.12.
1973 namely "beltings of all kinds".
In view of the decisions referred to hereinbefore cotton beltings fall within the textiles of all varieties as notified under Section 4 of the said Act being exempt from the imposition of sales tax.
The question that falls for consideration is what is the effect of the notification issued under Section 3 A of the said Act on 1.12.
1973 mentioned in the Schedule "beltings of all kinds".
There is no dispute nor any chal lenge that these beltings.are cotton beltings falling within cotton fabrics of all kinds and as there is a general exemp tion granted by the notification issued in 1957 and 1958 exempting 'cotton fabrics of all kinds ', it is not possible to hold in any view of the matter that it will be excisable to sales tax on the basis of the notification dated 1.12.1973 under Section 3 A of the said Act, by the Govern ment.
The next question for consideration is what is the effect of a 99 notification under Section 3 A including an item in the Schedule for imposition of sales tax though there is a general exemption from sales tax under Section 4 of the Sales Tax Act.
It has been held in the case of Commissioner of Sales Tax vs M/s Dayal Singh Kulfi Wala, Lucknow, [1980] U.P.T.C. 360 as follows: "A fiscal statute like the one before me has to be interpreted strictly.
If there is any ambiguity or doubt it should be resolved in favour of the subject.
There is no equity about tax.
The taxing liability must be express and absolute.
In the present case, the specification of the goods for purpose of section 3 A is one thing, but whether or not such goods would be exempted from tax is the power conferred upon the State Government under section 4 of the Act.
So long the exemption continues, the dealer can cer tainly urge and with jurtisification that the mere specifi cation of goods under section 3 A or declaring the point of sales at such turnover liable to tax would not take away the exemption from payment of tax which the goods enjoyed by virtue of the exercise of power by the State Government under Section 4 of the Act.
The operating fields of the two sections namely sections 3 A by itself cannot override the power under section 4.
On the other hand, if certain goods have been classified for purposes of by the State Govern ment, if such goods had been exempted from sales, the De partment cannot contend that the exemption should not be construed in favour of the assessee.
" In this case the question arose whether the general exemption granted under Section 4 of the Act in respect of milk and milk products is sufficient to exempt kulfi and lassi in respect of which a separate notification was issued under Section 3 A for imposition of tax.
A similar question also arose in the case of Commission er of Sales Tax vs Rita Ice Cream Co., Gorakhpur, [1981] U.P.T.C. 1239 and it was held that so long as the general exemption under Section 4 continues a particular item noti fied under Section 3 A of the Sales Tax Act cannot be taxed.
On a conspectus of all these decisions aforesaid, the only irresistible inference follows that so long as the general exemption granted under Section 4 with regard to cotton fabrics of all kinds continues no sales tax can be imposed on beltings of all kinds which fall within the cotton fabrics of all kinds and the general exemption under section 4 will prevail over the notification made under section 3 A of the Sales Tax Act.
I am unable to subscribe to the view that since the notification under section 3 A of the U.P. Sales Tax Act has been made subse 100 quent to the notification issued under Section 4 of the said Act, the subsequent notification under Section 3 A will prevail over the general exemption granted under Section 4 of the said Act.
In my considered opinion the reasonings and conclusions arrived at by the High Court are unexception able.
The appeal is accordingly dismissed and the judgment and order of the High Court of Allahabad is hereby affirmed.
N.P.V. Appeal allowed.
| The appellants, by an agreement, let out two trucks on hire to the respondent.
The respondent terminated the agreement but failed to return the trucks on the fixed date on the plea that they had already been returned to a partner of the appellants.
The appellants served the statutory notice under section 80 of the Code of Civil Procedure and, on the respondent 's failure to comply, brought a suit for wrongful detention claiming, inter alia, return of the trucks or their value in the alternative as stated in the notice and damages for wrongful detention till delivery.
Claim was also made for such appreciated value of the trucks as would prevail at the date of the decree by paying additional Court fee.
The trial court held that the return of the trucks as alleged by the respondent was not justified, and, besides the rent claimed in the suit, passed a decree for recovery of the price of the trucks in the alternative as stated in the notice and interest thereon by way of damages, holding that the price as at the date of the tort was sufficient compensation in law either for wrongful conversion or for wrongful detention.
The High Court affirmed the decision of the trial court so far as the recovery of the price in the alternative was concerned holding that the respondent could not be called upon to pay more than what it was asked to pay by the notice, but disagreed on the question of award of damages and enhanced the decree to the extent of the claim as tentatively laid in the appeal.
Held, that the courts below were in error in deciding the matter as they did and the appeal must be allowed.
Where the bailee fails to deliver the goods, the bailor has normally the right to elect his own remedy and sue him either for wrongful conversion or for wrongful detention.
If he chooses to adopt the latter remedy, the bailee cannot take advantage of his own wrongful conversion and compel the bailor to choose the other remedy to his disadvantage.
Reeve vs Palmer, ; , and Wilkinson vs Verity, , referred to.
The cause of action in a suit for wrongful detention, unlike that in a suit for wrongful conversion is a continuing one ,and 782 the measure of damages must be the value of the goods not as at the date of the tort but as at the date of the judgment.
Although the cause of action arises with the refusal of the bailee to deliver the goods, it continues till delivery is made by the bailee or he is compelled to do so by a decree of court.
While in a suit for wrongful conversion the plaintiff abandons his title and claims damages in lieu of the goods, in a case of wrongful detention the plaintiff claims delivery of the goods on the basis of his title that subsists till the date of decree.
Consequently, the value of the goods in the alternative on failure of delivery can be ascertained only at the date of the decree.
Rosenthal vs Alderton & Sons Ltd., , referred to.
Case law discussed.
It is well settled that in a suit for wrongful detention the plaintiff is entitled not merely to the delivery of the goods or their value in the alternative but also to damages for the wrongful detention till the date of the decree.
The principle for assessing such damages must be the same as in any other case where the wrongful act of one so injures something belonging to another as to render it unusable or something is taken away so that it can no longer be used, and the amount of damages must be ascertained by a reasonable calculation after taking all relevant circumstances into consideration.
In the instant case the High Court should have made a reasonable calculation of the number of days the trucks could have been put to use by the appellants and awarded damages accordingly.
Strand Electric & Engineering Co., Ltd., , Owners of the Steamship " Mediana " vs Owners, Master and Crew of Lightship "Comet", , referred to.
Anderson vs Passman, ; , held inapplicable.
While the terms of section 80 of the Code of Civil Procedure must be strictly complied with, that does not mean that the terms of the section should be construed in a pedantic manner or in a manner completely divorced from common sense.
There can be no doubt on a reasonable construction of the terms of the section that the value of the trucks as stated in the notice in the instant case, could be no other than the value as on the date fixed for delivery and, consequently, it could be no bar to the recovery of such appreciated value as prevailed at the date of the judgment.
Bhagchand Dagadusa vs Secretary of State, (1927) L.R. 54 I.A. 338, considered.
Jones vs Nicholls, ; E.R. 149, and Chandu Lal Vadilal vs Government of Bombay, I.L.R. , referred to.
|
ivil Appeal No. 2413 of 1989.
From the Judgment and Order dated 3.10.1988/12.10.1988 of the Central Administrative Tribunal, Hyderabad in O.A. No. 307 of 1987.
Anil Dev Singh, B. Parthasarthy, Hemant Sharma and C.V. Subba Rao for the Appellants.
Mrs. Kitty Kumaramangalam, Ms. Vijayalaxmi, Kailash Vasdev, P. Parmeshwaran and A.T.M. Sampath for the Respond ent.
The Judgment of the Court was delivered by AHMADI, J.
The Central Administrative Tribunal, Hydera bad by its order dated 3rd October, 1988 held that the Divisional Railway Manager (BG) SC Railway, Secunderabad was not competent to pass the impugned order dated 25th April, 1986 retiring the railway servant Shaik Ali from service under Rule 2046(h)(ii) of Indian Railway Establishment Code, Volume II Pension Rules (hereinafter called 'the Code ').
The Union of India feeling aggrieved by the said order has come in appeal to this Court by special leave.
The respondent Shaik Ali joined the erstwhile Nizam State Railway Service as Pointsman in 1953 or thereabouts and secured promotions from time to time in the course of his service, the last promotion being as Yard Master in the revised scale of Rs.550 750 on 31st January, 1986.
The facts show that he was on duty between 14.00 and 22.00 hours on 23rd February, 1986 at Sanatnagar Station.
As his reliever did not turn up at 23.00 hours, he was compelled to perform 459 duty from 22.00 hours to 08.00 hours of 24th February, 1986.
At about 23.15 hours, he permitted the staff working under him to have their meals and report for duty as soon as possible.
As the staff members did not return to duty within a reasonable time he went towards the cabin where they usually took their meals.
At that time the Divisional Safety Officer, A. Bharat Bhushan, came down from the cabin and inquired of the respondent 's identity.
The respondent coun tered by inquiring about the identity of the said officer.
It is the respondent 's say that as he did not know the said officer he asked for his identity before disclosing his identity.
The officer was annoyed at the behaviour of the respondent and threatened him with dire consequences.
It is the respondent 's case that immediately thereafter he was placed under suspension.
When he went to meet the officer at the suggestion of the Station Superintendent, the said officer behaved rudely and refused to listen to his explana tion.
By a subsequent order dated 19th March, 1986, the respondent was kept under further suspension w.e.f. 4th March, 1986.
He was not charge sheeted nor was any inquiry held against him but he was visited with the order of prema ture retirement dated 25th April, 1986, the relevant part whereof reads as under: "Whereas the Divisional Railway Manager (BG), Secunderabad is of the opinion that it is in the public interest to do so.
Now therefore, in exercise of the powers conferred by Clause (h)(ii) of Rule 2046 of Indian Railway Establishment Code, Volume II Pension Rules, the Divisional Railway Manager (BG), Secunderabad hereby retires Shri Shaik Ali, Assistant Ward Master, Sanatnagar with immediate effect that he having already completed 30 years of qualify ing service.
It was further directed that the respondent should be paid a sum equivalent to the amount of his pay plus allowances for a period of three months in lieu of three months notice calculated at the rate at which he was drawing salary imme diately before his retirement.
The respondent challenged this order of premature retirement by preferring an applica tion under Section 19 of the .
The Central Administrative Tribunal after reading the relevant Rule 2046(h)(ii) with Para 620(ii) of the Railway Pension Manual came to the conclusion that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order.
In taking this view the Tribunal relied on an earlier 460 decision of the Full Bench in AISLJ wherein it held that the highest authority among_ the appointing authorities alone was competent to impose any of the punish ments specified in Article 311 of the Constitution.
In this view that the Tribunal took, the Tribunal set aside the impugned order of premature retirement dated 25th April, 1986.
It is against the said order that the Union of India has preferred this appeal.
Under Rule 2046(a) of the Code ordinarily every railway servant would retire on the day he attains the age of 58 years.
However, notwithstanding the said provision, Rule 2046(h) entitles the appointing authority to retire him before he reaches the age of superannuation.
Rule 2046(h), insofar as it is relevant for our purposes, reads as under: "2046(h).
Notwithstanding anything contained in this rule, the appointing authority shall, if it is of the opinion that it is in the public interest to do so, have the absolute right to retire any railway servant giving him notice of not less than three months in writ ing or three months ' pay and allowances in lieu of such notice (i) if he is in Class I or Class II service or post and had entered Government service before attaining the age of thirty five years, after he has attained the age of fifty years.
(ii) in any other case after he has attained the age of fiftyfive years.
" Since the respondent was indisputably in Class III service at the time the impugned order came to be made his case was governed by the second clause of Rule 2046(h).
The impugned order recites that the respondent had already completed thirty years of qualifying service but it does not state that he had attained the age of fifty five years.
The re spondent 's contention was that he could not be prematurely retired under clause (ii) of Rule 2046(h) since he had not attained the age of fifty five years on the date of the impugned order.
According to him he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Realising this difficulty an attempt was made by the department to fall back on paragraph 620(ii) of the Railway Pension Manual which reads as under: 461 "620(ii).
The authority competent to remove the railway servant from service may also require him to retire any time after he has completed thirty years ' qualifying service provided that the authority shall give in this behalf, a notice in writing to the railway servant, at least three months before the date on which he is required to retire or three month 's pay and allowances in lieu of such notice.
" Reliance was also placed on the decision of this Court in Union of India vs R. Narasimhan, ; in support of the contention that a railway servant governed by the Railway Pension Manual may be prematurely retired by 'the authority competent to remove him from service ' on his completing thirty years of qualifying service.
Under this rule, power is conferred on the authority competent to remove him from service to retire a railway servant who has completed thirty years of quarrying service regardless of his age.
The Tribunal took the view that although Rule 2046(h)(ii) would not be attracted in the absence of evi dence that the incumbent had attained the age of fifty five years, the department would be entitled to rely on para 620(ii) to support the order if it can show that the officer who passed the order was competent to do s0 under the said paragraph.
The Tribunal was however, of the opinion that since the power under paragraph 620(ii) could be exercised only by the authority competent to remove the railway serv ant from service, the Divisional Railway Manager not being such authority was not competent to pass the impugned order and hence the order was clearly void and inoperative in law.
In taking this view, the Tribunal relied on an earlier Full Bench decision referred to above.
We were told that as the said Full Bench decision of the Tribunal was under scrutiny by this Court, this Civil Appeal should be tagged on with similar matters pending in this Court.
However, the learned counsel for the respondent employee submitted that it was not necessary to tag on this matter with other matters arising out of the Tribunal 's Full Bench decision since in the instant case she proposed to support the Tribunal 's order on the twin grounds (i) that paragraph 620(ii) was ultra vires Article 14 of the Constitution and (ii) that the impugned order was punitive in nature and could not have been passed without a proper enquiry.
Insofar as the first contention is concerned she placed reliance on this Court 's decision in Senior Superintendent of Post Office & Ors.
vs Izhar Hussain; , wherein a similar Rule 2(2) of the Liberalised Pension Rules, 1950 was struck down as offending Article 14 of the Constitution.
So far as the second limb of her submission is concerned she stated that the respondent had been promoted to the post of Yard Master on 31st 462 January, 1986 and hence there was no occasion to prematurely terminate his service by the impugned order.
In Izhar Hus sain 's case the Court was concerned with F.R. 56(j) and Rule 2(2) of the Pension Rules.
F.R. 56(j) is substantially the same as Rule 2046(h)(ii) of the Code and Rule 2(2) is sub stantially the same as paragraph 620 with which we are concerned.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
The learned counsel for the Railway Administration, realising this difficulty tried to support the impugned order on the ground that it was in public interest to retire the respondent.
Counsel for the respond ent contended that the railway administration has been shifting its stand, it first passed the impugned order under Rule 2046(h)(ii) of the Code and then relied on Rule 2(2) of the Pension Rules and when that was found to be of no as sistance switched over to paragraph 620(ii) of the Railway Pension Manual and is now trying to support the order on an extraneous ground which does not find a mention in the impugned order.
We think the criticism is well founded.
We are, therefore, of the view that apart from the competence of the Divisional Railway Manager to pass the order, the impugned order cannot be supported under paragraph 620(ii) for the aforesaid reason.
We next find that the learned counsel for the responden temployee is on terra firma so far as the second limb of her contention is concerned.
The facts clearly reveal that after the respondent joined the Nizam.
State Railway service in 1953 he secured promotions in due course and was appointed an Assistant Yard Master by an order dated 22nd August, 1984.
Thereafter, he was promoted to the next higher post of Yard Master by the order of 31st January, 1986.
While he was discharging duties as Yard Master On 24th February, 1986, the incident in question occurred which is said to be form ing the basis for the impunged order of 25th April, 1986.
We find from the facts that the Divisional Safety Officer was annoyed by the fact that the respondent had demanded that he disclose his identity before he (the respondent) did so.
The respondent was immediately placed under suspension and the said officer refused to listen to his explanation.
The suspension order was further extended by the order of 19th March, 1966.
This was followed by the impugned order of retirement dated 25th April, 1986.
The order was passed under Rule 2046(h)(ii) of the Code without verifying whether or not the incumbent had attained the age of fiftyfive years.
Even if the order was intended to be under Rule 2(2) of the Pension Rules, this requirement had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortunate incident of 23/24th February, 1986.
But for that 463 incident there was no occasion for the Review Committee to examine the case of the respondent.
If the service record of the respondent was so bad as is now sought to be made out, he would not have been promoted to the post of Assistant Yard Master on 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
We are, therefore, satis fied that the impugned order of premature retirement is punitive in nature and having been passed in flagrant viola tion of the principles of natural justice cannot be allowed to stand.
For the above reasons (different from the one on which the Tribunal rounded its decision), we are of the opinion that the ultimate order passed by the Tribunal does not require interference.
We, therefore, dismiss this appeal with costs.
Cost quantified at Rs.3,000.
Before we part we may observe that the concerned author ities will do well to amend Rule 2(2) of the Pension Rules and Paragraph 620(ii) referred to above so as to incorporate therein the requirement of public interest, that is to say, the premature retirement on completion of qualifying service of thirty years can be ordered in public interest only.
G.N. Appeal dismissed.
| The petitioner was directed to be detained under section 3(2) of the Gujarat Prevention of Anti social Activities Act, 1985.
In the grounds of detention it was alleged that the petitioner was conducting anti social activities of illegally storing indigenous and foreign liquor in his possession and selling it by himself and through his men and that he and his men beat innocent citizens thereby creating an atmosphere of fear and terror and he had thus become obstructionist in the maintenance of public order.
Reference was made to a previous order of detention which had been set aside by the High Court, and to the fact that notwithstand ing the previous detention, the petitioner continued to carry on his criminal and anti social activities affecting maintenance of public order.
It was further stated in the grounds that the detaining authority had considered taking action against the petitioner section 93 of the Prohibition Act for good conduct, and under sections 56B and 57(c) of the Bombay Police Act for his externment, but all these steps were either found not feasible or adequate.
It was then stated that there was a possibility of the petitioner, who was in jail, being released on bail and continuing his criminal activities, and to prevent the same there was no other alternative except to pass the order of detention.
Allowing the writ petition and quashing the order of detention this Court, HELD: (1) The satisfaction of the detaining authority is not open to judicial review but a citizen is entitled to protection within the meaning of Article 22(5) of the Con stitution of the procedural guarantees envisaged by law, and the Court frowns upon any deviation or infraction of the procedural requirements.
[184A B] (2) The fact that the detenu was in jail at the time the order of 178 detention was made and the possibility of his release from jail being made a ground of detention is not approved of by this Court.
[184C] Ramesh Yadav vs District Magistrate, Etah, ; Binod Singh vs District Magistrate, Dhanbad, Bihar & Ors., ; and Smt.
Shashi Aggarwal vs State of U.P., ; , referred to.
(3) The detaining authority must disclose in a case where the detenu is already in jail that there is cogent and relevant material constituting fresh facts to necessitate making of an order of detention.
[184F] Abdul Razak Abdul Wahib Sheikh vs Shri S.N. Sinha, Commissioner of Police, Ahmedabad & Anr.,, J.T. and Ramesh vs State of Gujarat, J.T. , referred to.
(4) There is a wide gap between law and order and public order.
The criminal offence may relate to the field of law and order but such an offence would not necessarily give rise to a situation of public order.
Depending upon peculiar situations, an act which may otherwise have been overlooked as innocuous might constitute a problem of public order.
Selling of liquor by the petitioner would certainly amount to an offence under the Prohibition Act but without some thing more would not give rise to a problem of public order.
Similarly commission of any other criminal offence even assault or threat Of assault would not bring the matter within the ambit of public order.
[185B C] (5) Disclosure of adequate facts to enable a full and adequate representation to the Preventive Detention Board is one of the positive guarantees within the scope of Article 22(5) of the Constitution.
In the present case the grounds of detention show that the allegations are more or less vague and have the effect of making it difficult for the petitioner to make an adequate representation.
[185D E] A.K. Roy 's case, , referred to.
(6) The grounds of detention show how helpless the authorities feel in the matter of enforcing prohibition within the State.
[186B] (7) It is perhaps necessary to indicate that the provi sions of the Prohibition Act of 1949 or the Bombay Police Act should be suitably amended to meet the requirements of society.
Even if the provisions under those Acts are made stringent the person proceeded against has the benefit of a trial or a regular hearing and pursuing an appeal 179 against adverse orders, but in a case of preventive deten tion trial is avoided and liberty is taken away without providing a right to defend himself.
[185H; 186A]
|
ON: Civil Appeal No. 2732 of 1980.
From the Judgment and Order dated 25.8.1980 of the Andhra Pradesh High Court in C.R.P. No. 7974 of 1979.
155 A.V. Rangam for the Appellant.
C. Setharamaiah, P.K. Rao, V.A. Babu and K.R. Nagaraja for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal by Special Leave against the judgment of a learned Single Judge of the Andhra Pradesh High Court in Civil ' Revision Petition No. 7974 of 1979.
The appellant before us is the tenant and the original respond ent is the landlord who is dead and is represented by his legal representatives.
The premises in question are in Eluru Town in Andhra Pradesh.
The appellant is carrying on business in the name and style of Sri Panduranga Engineering Company.
According to the original respondent (who will hereinafter be referred to as "the respondent") he was the owner of the building in which the said premises situated and hence, the owner of the said premises.
The respondent filed an eviction petition against the appellant on the ground of bona fide requirement as he wanted to set up his eldest son in business by start ing a photo studio in the said premises.
The appellant disputed the correctness of the said claim.
The appellant in his counter to the eviction petition, inter alia, alleged that the said property in which the said premises were situated was the absolute endowed property of punyamurthula vari Choultry of which the original respondent was the de facto trustee and that the original respondent had no per sonal or proprietary interest in the said property.
He asserted that the said property belonged to the said Choul try and that the original respondent had no manner of right to evict the appellant on the ground of personal use and occupation.
The appellant asserted that the said premises were not the individual property of the original respondent but trust property.
The respondent filed a rejoinder denying that the said premises were the endowed property or that the said property was a part of punyamurthulavari Choultry.
He asserted that he was the absolute owner of the said property which was purchased by his father under a registered sale deed dated 29th June, 1908.
The respondent submitted that the appellant had denied his title and, as the said denial was not bona fide, the appellant was liable to be evicted also on the ground of denial of title of the landlord.
The Rent Controller passed a decree for eviction on the ground that the bona fide requirement of the landlord respondent was made out and also on the ground that the appellant tenant had denied the title of respondent landlord which 156 denial was not bona fide.
The appellant preferred an appeal against the said decision to the Appellate Authority.
The Appellate Authority, however, dismissed the appeal upholding both the grounds of eviction found by the Rent Controller.
Against this decision, the appellant preferred a revision petition to the High Court.
The High Court in its impugned judgment upheld the order of eviction only on the ground of denial of title which was not a bona fide denial.
It is this decision of the High Court which is challenged before us.
The finding that the denial of title was not bona fide, is essentially a finding of fact and, fairly enough, no dispute has been raised by learned counsel for the appellant in respect of that finding.
It is, however, submitted by him that in order to constitute a ground for eviction the denial of title .must be anterior to the filing of the eviction petition and a denial of title in the course of eviction petition would not constitute a ground for eviction.
He drew our attention to the provisions of section 10 of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960 (hereinafter referred to as "the A.P. Rent Act").
The A.P. Rent Act was enacted with a view to consolidate the law relating to regulation of leasing of buildings, control of rent thereof and prevention of unreasonable eviction of tenants in the State of Andhra Pradesh.
Section 10 of the A.P. Rent Act deals with eviction of tenants.
Sub section (1) of that section prohibits eviction of tenants except in accordance with the provisions of that section or sections 12 and 13 of that Act.
The relevant part of sub section (2) of section 10 of the A.P. Rent Act runs as follows: "(2) A landlord who seeks to evict his tenant shall apply to the controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the application, is satisfied; (i) x x x x (ii) x x x x (iii) x x x x (iv) x x x x (v) x x x x (vi) that the tenant has denied the title of the land lord or claimed a right of permanent tenancy and that such denial or claim was not bona fide, the Controller shall make an order directing the tenant to put the landlord in possession of the building and 157 if the controller is not so satisfied he shall make an order rejecting the application.
" It was urged by learned counsel for the appellant that the ground for eviction must come into existence before the application to the Rent Controller for eviction is made and hence, a denial of title which can be relied upon by the landlord respondent for eviction must be.
anterior to the eviction petition.
In support of his contention, Mr. Rangam, learned coun sel for the appellant placed reliance on the decision of a Bench of this Court in Kundan Mal vs Gurudutta, Judgments Today In that case it has been observed that in providing disclaimer as a ground for eviction of a tenant in clause (f) of section 13(1) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 the Legis lature decided to give effect to the provisions of clause (g) of section 111 of the Transfer of Property Act.
The principle of forfeiture on disclaimer is rounded on the rule that a man cannot approbate and reprobate at the same time.
Since the consequence of applying the rule is very serious, it must be held that the denial of title to has to be clear and in unequivocal terms.
In our view, this decision is hardly of any assistance to learned counsel.
The principle laid down in that case is that, in order to constitute a ground for eviction, the denial of title has to be clear and in unequivocal terms.
In the present case, the facts found show that the denial of title of the respondent by the appellant was in dear and unequivocal terms.
Although it is observed in the said judgment that in providing this ground for eviction, the Legislature of the State of Rajasthan decided to give effect to the provisions of clause (g) of section 111 of the Transfer of Property Act, the judgment nowhere lays down that the denial of title must be anterior to the eviction petition nor does it say that the provisions relating to eviction of tenants under the Transfer of Property Act are applicable to the eviction of tenants under the Rajasthan Rent Act.
In this connection we may point out that it is well settled that the Court hearing a suit or appeal can take into account events which are subsequent to the filing of the suit in order to give appropriate relief or mould the relief appropriately.
Moreover, it is signifi cant that in the present case, the denial of the landlord 's title was not the only ground pleaded in support of the claim for eviction but it was also contended by the respond ent that the appellant was liable to be evicted as the respondent wanted the said premises for his personal bona fide use and occupation.
158 It was argued by learned counsel for the appellant that even accepting that there was a denial of title by the appellant and the result would be only that the respondent landlord became entitled to forfeit the lease and in order to be a ground for eviction in a suit that forfeiture would have to precede the suit or petition for eviction.
It was submitted by him that it was not open to a landlord to take advantage of a denial of title by the tenant in the very proceedings for eviction in the course of which the denial was made.
The denial must be anterior to the eviction pro ceedings.
In support of this argument learned counsel placed reliance on the decision in Maharaja of Jeypore vs Rukmani Pattamahdevi, 46 I.A. 109; AIR 1919 P.C. 1.
In our view, this argument also does not stand scrutiny.
In V. Dhanapal Chettiar vs Yesodai Arnrnal, ; a Constitution Bench of this Court comprising seven learned Judges held that in the matter of determination of tenancy the State Rent Acts do not permit a landlord to snap his relationship with the tenant merely by serving on him a notice to quit as is the position under the Transfer of Property Act.
The landlord can recover possession of the property only on one or more of the grounds enacted in the relevant section of the Rent Acts.
Even after the termination of the contractual tenancy the landlord under the definitions of landlord and tenant contained in the Rent Acts, remains a landlord and a tenant remains a tenant because of the express provision made in the enactments that a tenant means 'a person contin uing in possession after the termination of the tenancy in his favour '.
Yet another important feature of the Rent Acts is that either by way of a non obstante clause or by neces sary implication these enactments have done away with the law contained in section 108 of the Transfer of Property Act dealing with rights and liabilities of the lessor and the lessee.
The difference between the position obtaining under the Transfer of Property Act and the Rent Acts in the matter of determination of a lease is that under the former Act in order to recover possession of the leased premises determi nation of the lease is necessary because during the continu ance of the lease the landlord cannot recover possession of the premises while under the Rent Acts the landlord becomes entitled to recover possession only on the fulfilment of the conditions laid down in the relevant sections.
He cannot recover possession merely by determining the tenancy.
Nor can he be stopped from doing so on the ground that he has not terminated the contractual tenancy.
In the case before us, we find that the denial of landlord 's title by the tenant has been expressly made a ground for eviction under section 10(2)(vi) of the A.P. Rent Act which we have already set out earlier.
In view of this, the entire basis for the argument that the denial of title must be anterior to the proceedings for eviction under the A.P. Rent 159 Act is knocked out.
In our opinion, the argument of learned counsel for the appellant must, therefore, be rejected.
We find, on the other hand, that a number of High Courts have taken the view that even a denial of the landlord 's title by a tenant in a written statement in an eviction petition under the Rent Act concerned furnishes a ground for eviction and can be relied upon in the very proceedings in which a written statement containing the denial has been filed (See: Sada Ram and Others vs Gajjan Shiama, AIR 1970 Punjab & Haryana 511; Shiv Parshad vs Smt.
Shila Rani, AIR 1974 H.P. 22 and Machavaram Venkata Narayana Rao vs Sarvepalli Nara yana Rao Sarada and another, As ob served by the Punjab and Haryana High Court to insist that a denial of title in the written statement cannot be taken advantage of in that suit but can be taken advantage of only in a subsequent suit to be filed by the landlord would only lead to unnecessary multiplicity of legal proceedings as the landlord would be obliged to file a second suit for eject ment of the tenant on the ground of forfeiture entailed by the tenant 's denial of his character as a tenant in the written statement.
It was submitted by learned counsel for the appellant that, in any event, the respondent failed to apply for amendment of his plaint and incorporate the ground of denial of title therein as he was bound to do so in order to get relief on that ground which had arisen after the eviction petition was filed.
We agree that normally this would have been so but, in the present case, we find that the Trial Court, namely, the Rent Controller, framed an issue as to whether the tenant 's denial of the landlord 's title to the schedule property including the said premises was bona fide.
The parties went to trial on this clear issue and the appel lant had full knowledge of the ground alleged against him.
It was open to him to have objected to the framing of this issue on the ground that it was not alleged in the eviction petition that the appellant had denied the title of the respondent and that the denial of title was bona fide.
If he had done that the respondent could have well applied for an amendment of the eviction petition to incorporate that ground.
Having failed to raise that contention at that stage it is not open now to the appellant to say that the eviction decree could not be passed against him as the ground of denial of title was not pleaded in the eviction petition.
No other argument have been advanced before us.
In the result, the appeal fails and is dismissal with costs.
S.K.A. Appeal dis missed.
| These two appeals were preferred against the decision of the Nagpur High Court in an appeal under 'section 19(1)(f) of the Defence of India Act, 1939, modifying an award of compensation made 1178 under section 19(i)(b) of that Act in respect of certain premises requisitioned by the Government under 75(A) of the Rules framed under the Act.
Both the parties applied for and obtained leave to appeal to the Federal Court under sections 109 and 110 of the Code of Civil Procedure.
A preliminary objection was taken on behalf of the Government that the decision of the High Court was an award and not a judgment, decree or order within the meaning of sections 109 and 110 of the Code and as such no appeal lay therefrom : Held, that the objection must prevail and both the appeals stand dismissed.
There could be no doubt that an appeal to the High Court under section 19(1)(f) Of the Defence of India Act from an award made under section 19(i)(b) of that Act was essentially an arbitration proceeding and as such the decision in such appeal cold not be a judgment, decree or order either under the Code of civil procedure or under Cl. 29 Of the Letters patent of the Nagpur High Court.
Kollegal Silk Filatures Ltd. vs province, of Madyas, I. I,.
R. , approved.
There is a well recognised distinction between a decision given by the Court in a case which it 'hears on merits and one given by it in a proceeding for the filing of an award.
The former is a judgment, decree or order of the Court appellable under the general law while, the latter is an adjudication of a private individual with the sanction of the Court stamped on it and where it does not exceed the terms of the reference, it is final and not appealable.
There can be no difference in law between an arbitaration by agreement of parties and one under a statute.
A referrence to arbitration under a statute to a court may be to it either as a court or as an arbitrator.
If it is to it as a court, the decision is a judgment, decree or order appealable under the ordinary law unless the statute provides otherwise, while in the latter case the Court functions as a persona designata and its decision is air award not appealable under the ordinary law but only under the statute and to the extent provided by it.
An appeal being essentially a continuation of the original proceedings, what *as at its inception an arbitration proceeding must retain its character as an arbitration proceeding even where the statute provides for an appeal, Rangoon Botatung Company vs The Collecter , Rangoon (1912) L.R. 39 I.A. 197 .The special officer sales the building sites Dassabhai Beznoji, Bom 506 the special officer sales the Building sites vs Dassabhai Bozanji Motiwala Manavikram Tirumalpad vs the Collector of the Nilagrie, Mad 943 and secretary of state for India in council vs Hindustan Co operative Insurance society Limited ,(1931) L.R. 58 I. A 259 relied on.
National Telephone Company Limited vs Postmaster General, , explained.
|
Civil Appeal Nos. 95 and 96 of 1971.
From the Judgment and order dated 3rd October, 1969 of the Allahabad High Court in Writ Petitions Nos. 351 and 462/69.
section C. Manchanda and o. P. Rana, for the Appellants.
Promod Swarup and section Markendeya, for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
These appeals by the sales tax officer have come up to this Court by certificate of fitness granted by the High Court of Allahabad.
The appeals involve a very short point, turning upon the interpretation of rule 7A of the U.P. Sales Tax Act (hereinafter referred to as the Act).
It appears that the respondent is a partnership firm, carrying on business in the district of Moradabad.
The assessment quarters in question are two quarters of 1968.
By an order dated 31st December, 1968, the sales tax officer found from the 777 turn over of the firm as revealed from the quarterly returns filed by the assessee that it disclose an assessable income.
The sales tax officer, therefore, proceeded to make a provisional assessment in respect of the portion of the assessment year concerned, purporting to act under section 7A of the U.P. Sales Tax Act.
The assessee being aggrieved by this order, instead of going in appeal against the order, challenging the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return.
This argument appears to have found favour with the High Court which quashed the order of the sales tax officer and held that the sales tax officer could have made a provisional assessment to the best of his judgment only if no return had been filed by the assessee.
Mr. Manchanda appearing in support of the appeals has contended that the High Court has completely overlooked the purport ambit of section 7A of the Act, which does not exclude but in fact implies the provisions of the Act, including section 7(3).
The sheet anchor of the High Court 's judgment is section 7(3) which runs thus "If no return is submitted by the dealer under sub section (1) within the period prescribed in that behalf or, if the return submitted by him ` appears to the assessing authority to be incorrect or incomplete, the assessing authority shall after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof. ' Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him.
" The High Court was of the opinion that as conditions mentioned in section 7(3) did not apply to the facts of the present case inasmuch as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer.
In our opinion, the High Court was in error in taking this view.
Section 7A runs thus: (1) "The State Government may require any dealer to submit return of his turn over of a portion of the assessment year, and the assessing authority may, without prejudice to the provisions of section 7 may provisional assessment in respect of such portion of the assessment year in accordance with the provisions of this Act in so far as they may be made applicable if the turn over of the dealer as determined by the assessing authority for such portion of the amount, if any, specified in or notified under sub section (2) of Section 3 or sub section (2) of Section 3 D, as the case may be, as the period under assessment years to twelve months.
19 L925SCI /75 778 (2) Where the assessing authority has made a provisional assessment under sub section(1), it shall not, by reason of such assessment,, be precluded from redetermining in the turn over and making the assessment for the whole year.
" This section clearly authorizes the assessing authority to make a provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all.
On the other hand, it applies the provisions of the Act which includes the provisions of section 7(3), which is the provision that confers power on the assessing authority to make all assessment to the best of his judgment.
The High Court was rather carried away by the language of rule 41(3) which runs thus: "(3) If no return is submitted in respect of any quarter or month, as the case may be, within the period or if the return is submitted without the payment of tax in the manner prescribed in Rule 48, the Sales Tax Officer shall, after making such enquiries as he considers necessary, determine the turnover Lo the best of his judgment, provisionally assess the tax payable for the quarter or the month, as the case may be and serve upon the dealer a notice in Form XI and the dealer shall pay the sum demanded within the time and in the manner specified in the notice.
| Under Article 233(2) of the Constitution a person not already in service of the Union or of the State shall only be eligible to be appointed a District Judge, if he has been for not less than 7 years an advocate or pleader and is recommended by the High Court for appointment.
After interviewing a large number of candidates to fill six posts of District Judges the High Court recommended six persons as the most suitable candidates from among the applicants.
The appellant was one of ' them.
This recommendation having leaked out, the Government requested the High Court to send a list of persons whom the High Court considered to have reasonable claims to the appointment. 'The High Court sent the entire list of the candidates interviewed by it with the marks obtained by them, but without offering any remarks.
Treating the entire list of candidates sent by the High Court as candidates recommended by it in the order of merit, respondents 3 to 6 were selected, in addition to two candidates earlier recommended by the High Court.
The appellant 's name did not find place in the final list.
He, therefore moved the High Court contending that respondents 3 to 6 were appointed in violation of the provisions contained in article 233.
The High Court dismissed the petition holding that the entire list of the candidates should be taken as recommended by the High Court.
Allowing the appeal to this Court, ^ HELD :In the case of appointment of District Judges from the Bar it is not open to the Government to choose a candidate for appointment unless and until this name is recommended by the High Court.
The word 'recommend ' means "suggest as rut for employment." (2) 'The Government was not bound to accept all the recommendations made by the High Court but could tell the High Court its reasons for not accepting its recommendations in regard to certain persons.
If the High Court agreed with the reasons in case of a particular person the recommendation in his case stood withdrawn and there was no question of appointing him.
But it was certainly wrong and incompetent for the Government to write to the High Court and ask it to send the list of persons whom it considered to have reasonable claim to the appointment.
It was very much wrong on the part of the High Court to forward the entire list of the candidates interviewed with the marks obtained by them and adding at the same time that the High Court had no further remarks to offer. 'The reply sent by the High Court was by no means a recommendation of the High Court of all the candidates interviewed that all of them had reasonable claims or in other words were fit to be appointed as District Judges.
[623 H; 624 B, D E] Chandra Mohan vs State of Uttar Pradesh & Ors. , referred to (3) Respondents 3 to 6 were not eligible to be appointed as District Judges as their names had never been recommended by the High Court.
[625 A]
|
Civil Appeal No. 2468 of 1987 From the Judgment and order dated 13.5.1987 of the Allahabad High Court in W.P. No. 1822 of 1987.
359 R.K. Jain and R.P. Gupta for the Appellant.
S.N. Kacker, Dileep Tandon, R.B. Mehrotra, P.N. Bhatta and R.A. Gupta for the Respondents The Judgment of the Court was delivered by DUTT, J.
Both the parties have made elaborate submissions at the preliminary hearing of the special leave petition filed by the appellant Dr. Smt.
Kuntesh Gupta.
The special leave is granted and we proceed to dispose of the appeal on merit.
The appeal is directed against the judgment of the Allahabad High Court dismissing the writ petition of the appellant on the ground of existence of an alternative remedy under section 68 of the U.P. State Universities Act, 1973.
The appellant, Dr. Smt.
Kuntesh Gupta, was appointed the Principal of Hindu Kanya Mahavidyalaya, Sitapur, U.P., on June 4, 1984 and was confirmed in the said post on May 4, 1985.
In view of existence of two unrecognised rival Committees of Management the State Government, in exercise of its power under section 58 of the U.P. State Universities Act, appointed one of the Additional District Magistrates of the District the Authorised Controller of the Institution.
The Authorised Controller was entitled to exercise all the powers of the Committee of Management.
It appears that the appellant, as the Principal of the Institution, and the Authorised Controller could not see eye to eye with each other and there were disputes and differences between them in regard to the management of the Institution.
The differences between them reached to such a degree that the Authorised Controller by his order dated January 27, 1986 suspended the appellant.
The order of suspension was, however, stayed by the Vice Chancellor of the University on January 29, 1986.
After hearing the appellant and the Authorised Controller, the Vice Chancellor maintained the stay order.
Thereafter, the Authorised Controller held an ex parte enquiry and by his order dated April 21, 1986 dismissed the appellant from service in exercise of the powers of the Managing Committee vested in him by Statute 17.06 of the Statutes of the University.
Statute 17.06 provides for the giving of an opportunity of being heard to the teacher concerned and prescribes a procedure for enquiry which, according to the appellant, was not followed by the Authorised Controller.
A copy of 360 the said order of dismissal was sent to the Director of Education and to the Vice Chancellor for approval, as required under Statute 17.06(3).
The Vice Chancellor after hearing the parties, by her order dated January 24, 1987 disapproved the order of dismissal of the appellant on the ground that the charges against the appellant did not warrant her dismissal from service and directed that the appellant should be allowed to function as Principal of the College forthwith.
After the said order was passed by the Vice Chancellor reinstating the appellant and granting liberty to the Authorised Controller to impose lesser punishment on the appellant, if deemed necessary, the Authorised Controller without passing any lesser punishment, by his order dated January 27, 1987 allowed the appellant to function as the Principal, but put various restraints and constraints on her powers and duties as Principal and directed her to vacate the quarters in which she was residing.
Feeling aggrieved, the appellant moved the High Court under Article 226 of the Constitution of India against the imposition of such restraints and constraints on her powers and duties as the Principal of the College.
The High Court, after considering the fact and circumstances of the case, by its judgment dated March 10, 1987 quashed the said order dated January 27, 1987 of the Authorised Controller and directed him to allow the appellant to function as the full fledged Principal of the Institution in accordance with law.
The High Court further granted liberty to the Authorised Controller to go ahead with the imposition of minor penalty on the appellant in accordance with law and as provided in the said order of the Vice Chancellor.
It appears that while the matter was pending before the High Court, at the instance of the appellant, the Vice Chancellor passed an order dated March 7, 1987, that is to say, three days before the date of the judgment of the High Court, reviewing her earlier order disapproving the dismissal of the appellant from service.
By the order dated March 7, 1987 passed on review, the Vice Chancellor approved the order of the Authorised Controller dismissing the appellant from service on the basis of two reports of the Joint Director of Higher Education, U.P., one dated August 1, 1986 and the other dated July 18, 1986, alleging great financial irregularities committed by the appellant.
Although the said order dated March 7, 1987 was passed by the Vice Chancellor on review three days before the delivery of the judgment by the High Court, no steps were taken by the Authorised Controller, who was a party in the writ petition, to bring to the notice of the High Court the said order of the Vice Chancellor dated March 7, 1987 361 It is alleged by the appellant that the said order was passed by the Vice Chancellor in collusion with the Authorised Controller with a view to rendering the writ petition of the appellant and also the judgment of the High Court infructuous.
While we reject the allegation of the appellant that the said order was passed by the Vice Chancellor in collusion with the Authorised Controller, for there is no material whatsoever in support of that allegation, we are of the view that the Authorised Controller should have brought to the notice of the High Court the order of the Vice Chancellor passed on review.
Be that as it may, the appellant again filed a writ petition under Article 226 of the Constitution of India against the said order dated March 7, 1987 of the Vice Chancellor passed on review.
The High Court, however, took the view that the impugned order could be challenged on a reference to the Chancellor of University under section 68 of the U.P. State Universities Act, 1973 and, accordingly, dismissed the writ petition on the ground of existence of an alternative remedy.
Hence this appeal.
It has been strenuously urged by Mr. Jain, learned.
Counsel appearing on behalf of the appellant, that the Vice chancellor had no power of review under the Statutes of the University or under the U.P. State Universities Act, 1973 and, as such, the Vice Chancellor acted wholly without jurisdiction in entertaining an application for review filed by the Authorised Controller.
On the other hand, it is submitted by Mr. Kacker, learned Counsel appearing on behalf of the Vice Chancellor, that as the two reports dated August 1, 1986 and July 18, 1986 of the Joint Director of Higher Education, U.P., alleging certain grave financial irregularities, were not before the Vice Chancellor, the Vice Chancellor was entitled to review her order and after considering the said reports reviewed her order and approved the order of dismissal of the appellant from service.
Further, it is submitted by the learned Counsel that the High Court was justified in not entertaining the writ petition of the appellant, as there was an alternative remedy under section 68 of the U.P. State Universities Act and the impugned order could be challenged before the Chancellor of the University on a reference of the question to the Chancellor under the provision of section 68.
It is now well established that a quasi judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction.
The Vice Chancellor in considering the question of approval of an order of 362 dismissal of the Principal, acts as a quasi judicial authority.
It is not disputed that the provisions of the U.P. State Universities Act, 1973 or of the Statutes of the University do not confer any power of review on the Vice Chancellor.
In the circumstances, it must be held that the Vice Chancellor acted wholly without jurisdiction in reviewing her order dated January 24, 1987 by her order dated March 7, 1987.
The R said order of the Vice Chancellor dated March 7, 1987 was a nullity.
The next question that falls for our consideration is whether the High Court was justified in dismissing the writ petition of the appellant on the ground of availability of an alternative remedy.
It is true that there was an alternative remedy for challenging the impugned order by referring the question to the Chancellor under section 68 of the U.P. State Universities Act.
It is well established that an alternative remedy is not an absolute bar to the maintainability of a writ petition.
When an authority has acted wholly without jurisdiction, the High Court should not refuse to exercise its jurisdiction under Article 226 of the Constitution on the ground of existence of an alternative remedy.
In the instant case., the Vice Chancellor had no power of review and the exercise of such a power by her was absolutely without jurisdiction.
Indeed, the order passed by the Vice Chancellor on review was a nullity; such an order could surely be challenged before the High Court by a petition under Article 226 of the Constitution and, in our opinion, the High Court was not justified in dismissing the writ petition on the ground that an alternative remedy was available to the appellant under section 68 of the U.P. State Universities Act.
As the impugned order of the Vice Chancellor is a nullity, it would be a useless formality to send the matter back to the High Court for disposal of the writ petition on merits.
We would, accordingly, quash the impugned order of the Vice Chancellor dated March 7, 1987 and direct the reinstatement of the appellant forthwith to the post of Principal of the Institution.
The judgment of the High Court is set aside and the appeal is allowed.
There will, however, be no order as to costs.
We, however, make it clear that the respondents will be at liberty to initiate a departmental proceeding against the appellant, if they so think fit and proper, on the basis of the allegations as made in the said reports of the Joint Director of Higher Education, U.P. H.L.C. Appeal allowed.
| % Under an agreement of sale entered into by respondents the appellant had paid the major portion of the agreed price long time ago and the balance thereof that was to be paid at the time of execution of the documents was a sum of Rs. 75 only.
Possession of the premises was with the appellant for all these years in part performance of the agreement.
Upon failure of the respondents to execute documents of title, the appellant sought specific performance of the agreement.
The respondents canvassed the question of limitation before the High Court.
The High Court, however, without deciding that question took the view that due to passage of time prices of lands had gone up sky high and it would be unjust to enforce the agreement of sale.
Allowing the appeal by special leave, ^ HELD: The High Court exercised discretion on wrong principles.
Without deciding the question whether the claim of the plaintiff was barred by limitation or not it proceeded to refuse to grant the relief on the ground that there has been good deal of delay and the parties would suffer if specific performance of the agreement was granted.
This principle was not applicable to the facts of the case and the exercise of discretion was not proper.
The matter remanded to the High Court for decision in merits.
[1100G; E; 1101B] Madamsetty Satyanarayana vs G. Yellogi Rao & Ors.
, ; ; Dr. Jiwan Lal & Ors.
vs Brij Mohan Mehra & Anr., ; and Debendra Nath Mandal vs Sakhilal Kar & Ors., AIR 1950 Calcutta 526, referred to.
|
iminal Appeal No. 46 of 1958.
Appeal from the judgment and order dated March 17, 1958, of the Allahabad High Court in Criminal Appeal No. 1635 of 1953, 123 A. section R. Chari, section Pichai and section Venkatakrishnan, for the appellant.
SarjooPrasad, G.C.Mathur and G.P.Lal, for the respondent.
March 28.
The Judgement of the Court was delivered by GAJENDRAGADKAR, J. The appellant R.R. Chari was a permanent employee in a gazetted post under the Government of Assam.
In 1941, his services were lent to the Government of India.
The first appointment which the appellant held under the government of India was that of the Deputy Director of Metals in the Munitions Production Department at Calcutta.
Then he came to Delhi on similar work in the office of the Master General of Ordnance which was the Steel Priority Authority during the War period.
He was subsequently trans ferred to Kanpur as Assistant Iron a Steel Controller in 1945.
Sometime thereafter, he become the Deputy Iron & Steel Controller, Kanpur Circle; which post he held for one month in September, 1945.
From January, 1946, be was appointed to the said post and he held that post until September 20 1946.
The period covered by the charges which were eventually formed against the appellant and, others is from January 1, 1946 to September 20, 1946.
On the latter date, the appellant proceeded on leave for four months and did not return to ' service either under the Government of India or under the Assam Government.
It appears that while the appellant had proceeded on leave the Government of India wrote to the Assam Government on February 8, 1947, intimating that it had desided to replace the services of the appellant at the disposal of the Assam Government on the expiry of the leave granted to him with effect from September, 21, 1946.
The Government of India also added that the exact 124 period of the leave granted to the appellant would be intimated to the Assam Government later.
On April 28, 1947, leave granted to the appellant was gazetted with effect from September 21, 1946 for a period of four months.
A subsequent notification issued by the Central Government extended the leave up to May 13, 1947.
On this latter date, the Central Government suspended the appellant, and on a warrant issued by the District Magistrate, Kanpur, he was arrested on the October 28, 1947.
Subsequently, he was released on bail.
Thereafter, the Government of India accorded sanction for the prosecution of the appellant under section 197 of the Criminal Procedure Code on the January 31, 1949.
A Charge sheet was submitted by the prosecution alleging that the appellant along with three of his former assistants had committed various acts of conspiracy, corruption and forgery during the period 1, 1.1946 to 20 9 1946 The other persons who were alleged to be co conspirators with the appellant, were vaish, a clerk in charge of licensing under the appellant, Rizwi and Rawat who were also working as clerks under the appellant.
Bizwi abs conded to Pakistan and Rawat died.
In the result, the case instituted on the ,,aid charge sheet proceeded against the appellant and Mr. Vaish.
Broadly stated the prosecution case was that during the period December 1945 to September 20, 1946, the appellant and Vaish and other entered into a criminal conspiracy to do illegal acts, such as the commission of offenses under, sections 161, 165, 467.
Indian Penal Code or in the alternative, Offenses such as were prescribed by r. 47 (3) read with r. 47 (2) of the Defence of India Rules, 1939 and.
abetment in the acquisition and sale of Iron and .steel, in contravention of the Iron and Steel (Control of Distribution) Order 1941 ; and that in pursuance of the said conspiracy, they did commit the aforesaid illegal acts from time to time and thus rendred themselves liable to be punished under s.120 B 125 of the Indian Penal Code.
That was the substance of the first charge.
The Second Charge was in regard to the commission of the offence under section 161 and it set out in detail the bribes accepted by the appellant from 14 specified persons.
In the alternative, it was alleged that by virtue of the fact that the appellant accepted valuable things from the persons specified, he had committed as offence under section 165 Indian Penal Code.
The third charge was under section 467 Indian Penal Code or in the alternative, under r. 47(3) read with r. 47(2) (a) of the Defence of India Rules.
The substance of this charge was that in furtherance of the conspiracy, the appellant fraudulently or dishonestly made, signed or executed fourteen documents specified in clauses (a) to (n) in the charge.
Amongst these documents were included the orders prepared in the names of several dealers and licences issued in their favour.
The fourth charge was that the appellant had abetted the firms specified in clauses (a) to (k) in the commission of the offence under r 81(2) of the Defence of India Rules.
That, in brief, is the nature of the prosecution case against the appellant as set out in the several charges.
At the initial stage of the trial, the appellant took a preliminary objection that the sanction accorded by the Government of India to the prosecution of appellant under section 197 Code of Criminal Procedure was invalid.
This objection was considered by Harish Chandra J. of the Allahabad High Court and was rejected on the July, 18th 1949.
The learned Judge directed that since he found no substance in the preliminary contention raised by the appellant, the record should be sent back to the trial Court without delay so that it may proceed with the trial of the case.
On 126 May 7 1953, the appellant alone with Vaish was tried by the Additional District and Sessions Judge at Kanpur.
The charge under section 120 B was tried by the learned Judge with the aid of assessors, whereas the remaining charges were tried by him with the aid of the jury.
Agreeing with the opinion of the assessors and the unanimous verdict of the jury, the learned Judge convicted the appellant under section 120 B and sentenced him to two years ' rigorous imprisonment.
He also convicted him under section section 161 and sentenced him to two years Rigorous imprisonment and a fine of Rs, 25,000/ .
in default to suffer further rigorous imprisonment for six months.
For the offence under section 467 Indian Penal Code of which the appellant was convicted, the learned Judge sentenced him to four years ' rigorous imprisonment.
Be was also convicted under r. 81 (4) read with r. 121 and cls.
4,5, 11 b (3) and 12 of the Iron and Steel Order of 1941 and sentenced to two years 'rigorous imprisonments.
All the sentences thus imposed on the appellant were to run concurrently.
Vaish who was also tried along with the appellant was similarly convicted and sentenced to different terms of imprisonment.
The appellant and Vaish then appealed to the High Court against the said order of convictions and sentence.
It was urged on their behalf before the High Court that the charge delivered by the Judge to the jury suffered from grave misdirections and non directions amounting to misdirections.
his plea was accepted by the High Court and so, the High Court examined the evidence for itself.
In the main, the High Court considered the ten instances adduced by the prosecution for showing that the appellant had accepted illegal gratification and had committed the other offenses charged, and came to the conclusion that the prosecution evidence in respect of eight instances could not be acted upon, whereas the said evidence in respect of two instances could be safely acted upon.
These two instances 127 were deposed to by Lala Sheo Karan Das and other witnesses and by Sher Singh Arora and other witnesses.
In the result, the High Court confirmed the appellant 's conviction under sections 161 and 467 and the sentences imposed by the trial Court in that behalf.
His conviction under section 120 B Indian Penal Code, and under r. 81(4) read with r. 121 Defence of India Rules was set aside and he was acquitted of the said offenses.
The High Court directed that the sentences imposed on the appellant under sections 161 and 467 should run concurrently.
The appeal preferred by Vaish was allowed and the order of conviction and sentence passed against him by the trial Court in respect of all the charges was set aside.
This order was passed on March 17th, 1958.
The appellant then applied for and obtained a certificate from the High Court and it is with that certificate that he has come to this Court in appeal.
At, this stage, it would be useful to indicate briefly the main findings recorded by the High Court against the appellant.
As we have just indicated, there are only two instances out of ten on which the High Court has made a finding against the appellant.
The first is the case of Lala Sheo Karan Das.
According to the prosecution case, as a motive or reward for issuing written orders and expediting supply of iron by the stock holders ' Association Kanpur to Lala Sheo Karan Das, the appellant accepted from him Rs. 4,000/ on 31.3.1946, Rs. 2,000/ on 9.4.1946; Rs. 1,060/ on 11.4.1946 and Rs. 1,000/ on 12.5 1946 as illegal gratification.
That is the basis of the charge under section 161.
The prosecution case further is that in regard to the supply of iron to Lala Sheo Karan Das, certain documents were forged and it is alleged that the written orders issued in that behalf Exhibits P 341 and P 342 were ante dated and the licences issued in that behalf were similarly ante dated.
In support of this case, oral evidence was given by 128 Lala Sheo Karan Das himself, his son Bhola Nath and Parshotam Das, his nephew who is a partner with him.
This oral evidence was sought to be corroborated by relevant entries in kachhi rokar books.
These entries indicated that the several amounts had been paid by the firm to the appellant.
The High Court considered the oral evidence and held that the said evidence was corroborated by entries in the account books.
The argument that dacca rokar books had not been produced did not appear to the High Court to minimise the value of the kachhi rokar books which were actually produced, and the contention that the books of Account kept by accomplices themselves could not, in law, corroborate their oral evidence, did not appeal to the High Court as sound.
It held that even though Sheo Karan Das, his son and his nephew may be black marketeers, it did not necessarily follow that they were liars.
Besides, the High Court took the view that there were certain pieces of circumstantial evidence which lent support to the oral testimony of the accomplices.
The ante dating of the orders, and the supply of a large quantity of iron, were two of these circumstances.
It is on these grounds that the High Court accepted the prosecution case against the appellant under section 161 Indian Penal Code.
The High Court then examined the evidence in support of the charge under section 467 and it held that the manner in which the dates in the quota register had been tampered with supported the oral testimony of the witnesses that the applications made by Sheo Karan Das had been deliberately and fraudulently ante dated and orders passed on them and the licences issued pursuant to the said orders all were fraudulent documents which proved the charge under section 467 as well as under r. 47 (3) read with 47(2)(a).
On these grounds, the appellant 's conviction under section 467 was also confirmed.
As to the prosecution case in respect of the bribes offered by Sher Singh Arora, the High Court 129 was not satisfied with the evidence adduced in respect of the actual offer of money, but it held that the evidence adduced by the prosecution in respect of the offer and acceptance of certain valuable things was satisfactory.
These valuable things were a three piece sofa sot, a centre piece, two stools and a revolving chair (Exts.
16 to 21).
These were offered on behalf of Sher Singh Arora and accepted by the appellant in January, 1946.
In dealing with this part of the prosecution case, the High Court considered the statements made by the appellant and ultimately concluded that the charge under section 161 had been proved in respect of the said articles.
In regard to the charge under section 467, the High Court adopted the same reasons as it had done in dealing with the said charge in respect of Sheo Karan Das 's transactions and held that the said .charge had been proved.
The licences which are alleged to have been ante dated are Exts.
P 535 and P 536.
The application which is alleged to have been ante dated is Ext.
P 294, and the High Court thought that the relevant entries in the quota register showed that the dates had been tampered with.
In the result, the charge under section 467 in respect of this transaction was held to be established.
An alternative charge was also proved against the appellant under r. 47(3) read with r. 47(2) (c) Defence of India Rules.
The first point which Mr. Chari has raised before us is that the Addl.
District & Sessions Judge had no jurisdiction to try this case, because at the relevant time, the Criminal Law Amendment Act, 1952(46 of 1952) had come into operation and the case against the appellant could have been tried only by a Special Judge appointed under the said Act.
This argument has been rejected by the High Court and Mr. Chari contends that the decision Of the High Court in erroneous in law.
In order to deal with the merits of this point, it is necessary to 130 refer to some dates.
The order of commitment was passed in the present proceedings on March 1, 1952.
It appears that thereafter a list of defence witnesses was tiled by the appellant before the Commiting Magistrate on July 24, 1952.
On July 28, 1952, the Criminal Law Amendment Act came into force.
On August 14, 1952, Vaish filed a list of witnesses before the committing Magistrate and requested that one of the prosecution witnesses should be recalled for cross examination.
On September 18, 1952, the District & Sessions Judge at Kanpur was appointed a Special Judge under the Act.
On December 19, 1952, the case was taken up before the Special Judge and the question as to where the case should be tried was argued.
The Special judge held that the question had been considered by the Madras High Court in the case of P. K. Swamy and it had been held that the Special Judge had no jurisdiction to hear the case because the order of commitment ' had been passed prior to the passing of the Criminal Law Amendment Act.
Since the order of commitment in the present case had also been passed before July 28, 1952, the Special Judge held that the case against the appellant must be tried under the provisions of the Criminal Procedure Code and not under the provisions of the Criminal Law Amendment Act; and so, an order was passed that the trial should be held by the Additional District & Sessions Judge at Kanpur.
After the case was thus transferred to the Add1.
Sessions Judge at Kanpur, it was actually taken up before him on May 7, 1953, when the charge was read out to the accused persons and the jury was empanelled.
It is in the light of these facts.
that the question about the jurisdictions of the trial Judge has to be determined.
Two provisions of the Criminal Law Amendment Act fall to be considered in this connections Section 7 provides that notwithstanding anything contained in the Code of Criminal Procedure, or in 131 any other law, the offenses specified in sub section (1) of section 6 shall be triable by a Special Judge only, Offenses under sections 161 and 165 Indian Penal Code are amongst the offenses specified by section 6(1).
Section 7(2)(b) provides that when trying any case, a Special Judge may also try any offence other than an offence specified in section 6 with which the accused may, under the Code of Criminal Procedure be charged at the same time.
Therefore, if the offence under section 161 falls under section 7(1) and has to be tried by a Special Judge, the other offenses charged would also have to be tried by the same Special Judge as a result of section 7(2)(b).
It is clear that the provisions of a. 7 are prospective.
This position is not disputed.
But it would be noticed that section 7 does not provide for the transfer of pending cases to the special Judge and so, unless the appellant 's case falls under the provisions of section 10 which provides for transfer, it would be tried under the ordinary law in spite of the fact that the main offence charged against the appellant falls under section 6(1) of the Criminal Law Amendment Act.
That takes us to section 10 which deals with the transfer of certain pending cases.
This section provides that all cases triable by a special Judge under section 7 which immediately before the commencement of the Act, were pending before any Magistrate shall, on such commencement, be forwarded for trial to the special Judge having jurisdiction over such cases.
It is thus clear that of the cases made triable by a special Judge by section 7, it is only such pending cases as are covered by s.10 that would be tried by the special Judge.
In other words, it is only cases triable by a special Judge under section 7 which were pending before any Magistrate immediately before the commencement of this Act that would tie transferred to the special Judge and thereafter tried by him.
So, the question to consider is whether the appellant 's case could be said to have been pending 132 before any Magistrate immediately before the commencement of the Act.
This position also is not in dispute.
The dispute centres round the question as to whether the appellant 's case can be said to have been pending before a magistrate at the relevant time, and this dispute has to be decided in the light of the provisions contained in section 219 of the Code of Criminal Procedure.
This section occurs in Chapter 18 which deals with the enquiry into cases triable by the Court of Sessions or High Court.
We have already seen that on March 1, 1952, an order of commitment had been passed in the present case and that means that the jurisdiction of the committing Court had been exercised by the said Court under section 213 of the Code.
Mr Chari contends that though the order of commitment had been passed, that does not mean that the case had ceased to be pending before the committing Magistrate.
It is not disputed that once an order of commitment is made, the committing Magistrate has no jurisdiction to deal with the said matter; he cannot either change the order or set it aside.
So far as the order of commitment is concerned, the jurisdiction of the Magistrate has come to an end.
The said order can be quashed only by the High Court and that too on a point of law.
That is the effect of section 215 of the Code.
It is, however, urged that section 216 confers jurisdiction on the committing magistrate to summon witnesses for defence as did not appear before the said Magistrate and to direct that they should appear before the Court to which the accused had been committed.
Similarly, before the said Magistrate, bonds of complainants and witnesses can he executed as prescribed by section 217.
Section 219 confers power on the committing Magistrate to summon and examine supplementary witnesses after the commitment and before the commencement of the trial, and to bind them over in manner here in before provided to appear and give evidence.
It is on the 133 provisions of this section that the appellant 's case rests.
The argument is that since the committing magistrate is given power to summon supplementary witnesses even after an order of commitment has been passed, that shows that the committing magistrate still hold jurisdiction over the case and in that sense, the case must be deemed to be pending before him.
We are not impressed by this argument.
The power to summon supplementary witnesses and take their evidence is merely a supplementary power for recording evidence and no more.
This supplementary power does not postulate the continuance of jurisdiction in the committing magistrate to deal with the case.
It is significant that this power can be exercised even by a Magistrate other than the committing magistrate, provided he is empowered by or under section 206 and clearly, the case covered by the commitment order passed by one magistrate cannot be said to be pending before another magistrate who may be empowered to summon supplementary witnesses.
When section 10 of the Criminal law Amendment Act refer to cases pending before any magistrate, it obviously refers to cases pending before magistrates who can deal with them on the merits in accordance with law and this requirement is plainly not satisfied in regard to any case in which a commitment order had been passed by the committing magistrate.
After the order of commitment is passed, the case cannot be said to be pending before the committing magistrate within the meaning Of section 10.
Therefore, we are satisfied that the High Court was right in coming to the conclusion that section 10 did not apply to the present case and so, the Addl.
Sessions Judge had jurisdiction to try the case in accordance with the provisions of the Code of Criminal Procedure.
It is true that in dealing with this point, the High Court has pro ceeded on the consideration that the appellant 's trial had actually commenced befere the 134 Addl.
Sessions Judge even prior to July 28, 1952.
In fact, it is on that basis alone that the High Court has rejected the appellant 's contention as to absence of jurisdiction in the. trial Judge.
We do not think that the reason given by the High Court in support of this conclusion is right, because the trial of the appellant could not be said to have commenced before May 7, 1953.
However, it is unnecessary to pursue this point any further because we are inclined to take the view that the appellant 's case does not fall under section 10 of the Criminal Law Amendment Act and that is enough to reject the contention of the appellant on this point.
The next argument raised is in regard to the validity of the sanction given by the Government of India to the prosecution of the appellant.
This sanction Ext.
P 550 purports to have been granted by the Governor General of India under section 197 of the Code for the institution of criminal proceedings against the appellant.
It has been signed by Mr. section Boothalingam, Joint Secretary to the Government of India on January 31, 1949.
The sanction sets out with meticulous care all the details of the prosecution case on which the prosecution rested their charges against the appellant and so, it would not be right to contend that the, sanction has been granted as a mere matter of formality.
The several details set out in the sanction indicate that prima facie, the whole case had been considered before the sanction was accorded.
Mr. Chari, however, attempted to argue that on the face of it, the sanction does not show that the Governor General granted the sanction after exercising his individual judgment.
Section 197 of the code at the relevant time required that sanction for the prosecution of the appellant should have been given by the Governor General exercising his individual Judgment, and since, in terms ' , it does not say that the Governor General in exercise of his individual 135 judgment had accorded sanction, the requirement of section 197 is not satisfied.
That is the substance of the contention.
In support of this contention, reliance is sought to be placed on certain statements made by Mr. Boothalingam in his evidence.
Mr. Boothalingam stated that sanction of the Governor General was conveyed by him as Joint Secretary to the Government of India.
He also added that authorities of the Government of India competent to act in this behalf accorded the sanction and he conveyed it.
His evidence also showed that the matter had been considered by the competent authorities and that he was one of those authorities.
Mr. Chari argues that Mr. Boothalingam has not, expressly stated that the Governor General applied his individual mind to the problem and exercising his individual Judgment, came to the conclusion that the sanction should be accorded.
This contention had not been raised at any stage before and the point had not been put to Mr. Boothalingam who gave evidence to prove the sanction.
If the point had been expressly put to Mr. Boothalingam be would have either given evidence himself on that point or would have adduced other evidence to show that the Governor General had exercised his indi vidual judgment in dealing with the matter.
Therefore, we do not think that this plea can be allowed to be raised for the first time in this Court.
The next ground of attach against the validity of the sanction is based on the assumption that at the time when the sanctions was (riven, the appellant had ceased to be in the employment of the Government of India and had reverted to the Assam Government.
.If it is established that at the relevant time, the ,appellant was a person employed in connection with the affairs of the Assam State, then of course, it is the Assam Government that would be competent to give the sanction.
The High Court has found that at the relevant time, the appellant continued to be 136 in the employment of the affairs of the Federation and had not reverted to the Assam Government ; and in our opinion, this finding of the High Court is right.
We have already referred to the course of events that led to the granting: of the leave to the appellant by the Government of India; to the extension of the leave by the said Government and to his subsequent suspension.
The appellant 's argument is that after he went on leave, he moved the Assam Government for extension of his leave and was, in fact, asked by the Assam Government to appear before a medical board appointed by it.
We do not think that these facts are enough to prove that the appellant had reverted to the service of the Assam Government.
In fact., it is clear that the Government of India had intimated to the Assam Government that the appellant continued to be under its employment and that the Assam Government had expressly told the Government of India that it had no desire that the appellant should revert to its service until the 'criminal proceedings instituted against him were over.
The Assam Government also pointed out that the appellant himself did not wish to rejoin in his post of Superintendent of the Assam Government 's Press but had only asked for Leave Preparatory to Retirement following medical advice.
It is thus clear that though the Government of India had originally thought of replacing the appellant 's services with the Assam Government at the end of the leave which was proposed to be granted to him, subsequent events which led to an investigation against the appellant and his suspension caused a change in the attitude of the Government of India and it decided to continue him in its employment in order that he should face a trial on the charges which were then the subject matter of investigation.
There is no order reverting him to the Assam Government passed by the Govt.
of India and there is no order passed by the Assam Government at all on this subject.
Therefore 137 there can be no doubt that at the relevant time, the appellant continued to be employed in the affairs of the Federation.
It was then sought to be argued that the effect of SR 215 was that the reversion of the appellant to the Assam Government should be deemed to have taken effect from the date when the leave was granted to him by the Government of India.
In our opinion, there is no substance in this argument.
The portion on which the appellant relies is merely an administrative direction under the Rule and it cannot possibly over ride the specific orders issued by the Government of India in respect of the appellant 's leave and reversion.
Besides, even the requirements of the said Rule are not satisfied in the present case.
Therefore, the conclusion is inescapable that the appellant was employed in the affairs of the Federation at the time when the sanction was accorded.
That takes us to the question as to whether the Government of India was competent to grant the sanction even if the appellant was at the relevant time a person employed in connection with the affairs of the Federation.
Mr. Chari contends that in the case of the appellant whose services had been loaned by the Assam Government to the Government of India, it could not be said that he was a parson permanently employed in connection with the affairs of the Federation and so, cl.
(a) of section 197 (1) would not apply to him at all.
He was a person permanently employed in connection with the affairs of a State and that took the case under cl.
(b) which means that it is the Governor of Assam exercising his individual judgment who could have a(, corded valid sanction to the appellant 's prosecution.
We are not impressed by this argument.
It is clear that the first part of section 197 (1) provides a special protection, inter alia, to public servants who are not removable from their offices save by or with the 138 sanction of the State Government or the Central Government where they are charged with having committed offenses while acting or purporting to act in the discharge of their official duties; and the form which this protection has taken is that before a criminal court can take cognizance of any offence alleged to have been committed by such public servants, a sanction should have been accorded to the said prosecution by the appropriate authorities.
In other words, the appropriate authorities must be satisfied that there is a prima facie, case for starting the prosecution and this prima facie satisfaction has been interposed as a safeguard before the actual prosecution commences.
The object of section 197(1) clearly is to save public servants from frivolous prosecution, Vide, Afzelur Rahman vs The King Emperor(1).
That being the object of the section, it is clear that if persons happened to be employed in connection with the affair 's of the Federation, it was the Governer General who gave sanction and if persons happened to be employed in connection with the affairs of the State, it was the Governor.
What is relevant for the purpose of deciding as to who should give the sanction, is to ask the question where is the public servant employed at the relevant time ? If he is employed in the affairs of the Federation, it must be the Governor General in spite of the fact that such employment may be temporary and may be the result of the fact that the services of the public servant have been loaned by the State Government to the Government of India.
Therefore, having regard to the fact that at the relevant time the appellant was employed in connection with the affairs of the Federation, it was the Governor General alone who was competent to accord sanction.
Therefore, our conclusion is that the sanction granted by the Governor General for the prosecution of the appellant is valid.
That still leaves the validity of the sanction to be tested in the light of the provisions of (1) ,12.
139 a. (6) of the prevention of the Corruption Act, 1947.
At the relevant time, section 6 read thus: "No court shall take cognizance of an offence punishable under section 161 or section 165 of the Indian Penal Code (XIV of 1860) or under sub section (2) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction: (a) In the case of a person who is employed in connection with the affairs of the Federation and is not removable from his office save by or with the sanction of the Central Government or some higher authority, Central Government.
(b) In the case of a person who is employed in connection with the affairs of a province and is not.
removable from his office save by or with the sanction of the Provincial Government or some higher authority, Provincial Government: (c) in the case of any other person, of the authority competent to remove him from his service".
It would be noticed that the scheme of this section is different from that of section 197 of the Code of Criminal Procedure.
The requirement of the first part of section 197 (1) which constitutes a sort of preamble to the provisions of section 197(1)(a) & (b) respectively, has been introduced by s.6 severalty in cls.
(a) and (b).
In other words, under els.
(a) and (b) of section 197(1) the authority competent to grant the sanction is determined only by reference to one test and that is the test provided by ,,the affairs in connection with which the public servant is employed"; if the said affairs are the affairs of the Federation, the Governor General grants the sanction ; if the said affairs are the affairs of a Province, the 140 Governor grants the sanction.
That is the position under section 197(1) as it then stood.
The position under section 6 of the Prevention of Corruption Act is substantially different.
Clauses (a) & (b) of this section deal with persons permanently employed in connection with the affairs of the Federation or in connection with the affairs of the Province respectively, and in regard to them, the appropriates authorities are the Central Government and the Provincial Government.
The case of a public servant whose services are loaned by one Government to the other, does not fall either under cl.
(a) or under cl.(b), but it falls under el.
Having regard to the scheme of the three clauses of section 6, it is difficult to construe the word "employed in cls.
(a) & (b) as meaning "employed for the time being".
The said Words, in the context, must mean ,,,permanently employed".
It is not disputed that if the services of a public servant permanently employed by a Provincial Government are loaned to the Central Govt., the authority to remove such public servant from office would not be the borrowing Government but the loaning Government which is the Provincial Government, and so, there can be no doubt that the employment referred to in cls.
(a) & (b) must mean the employment of a permanent character and would not include the ad hoc or temporary employment of an officer whose services have been loaned by one Government to the other.
Therefore, the appellant 's case for the purpose of sanction under section 6 will fall under el.
(c) and that inevitably means that it is.
only the Provincial Government of Assam which could have given a valid sanction under section 6.
At the relevant time, section 6 had come into operation, and section 6 expressly bars the cognizance of offenses under s.161 unless a valid sanction had been obtained as required by it.
Therefore, in the absence of a valid sanction, the charge against the appellant under a. 161 and section 163 could not have been tried and that renders the 141 proceedings against the appellant in respect of those two charges without jurisdiction.
The result is that the contention of the appellant that the sanction required for his prosecution under section 161 and section 165 is invalid, succeeds and his trail in respect of those two offenses must, therefore, be held to be invalid and without jurisdiction.
That being so, it is unnecessary to consider whether the finding of the High Court in respect of the charge under section 161 is justified or not.
So, we do not propose to consider the evidence led by the prosecution in respect of the said charge in relation to the two cases of Lala Shoo Karan Das and Sher Singh Arora.
The charge under section 467 or the alternative charge under Defence of India Rules still remains to be considered, because the said offenses are outside the scope of section 6 of the Prevention of Corruption Act and the sanction accorded by the Governor General in respect of the appellant 's prosecution for the said offenses is valid under section 197 of the Code of Criminal Procedure.
What, then, are the material facts on which the conclusion of the High Court is based? The first point on which stress has been laid both by Mr. Chari and Mr. Sarjoo Prasad relates to the background of the case.
Mr. Chari contends that the prosecution of the appellant is, in substance, the result of the attempts successfully made by the back marketeers in Kanpur to involve the appellant in false charges and in support of his plea, Mr. Chari has very strongly relied on the evidence of Mr. Kanhaiya Singh.
This witness was, at the relevant time, an Inspecting Assistant Commissioner of Income tax at Kanpur and his evidence seems to show that unlike his predecessor Mr. Talwar, the appellant gave whole hearted co operation to the witness in discovering the illegal dealings of black marketeers in Kanpur in 142 iron.
According to the witness, the black marketeers came to know about the cooperation between him and the appellant and that disturbed them very rudely.
Some lists were prepared by the appellant giving the witness detailed infor mation about the activities of the black marketeers and the witness suggested that in order to destroy the papers thus supplied to him by the appellant, a burgulary was arranged in his house in May or June, 1946.
A similar burgulary took place in the appellant 's house.
There was also a fire in the appellant 's house.
The witness was asked whether any of the persons who have given evidence against the appellant in the present case, were included in the list supplied by the appellant to him, and the witness refused to answer the said question and.
claimed protection under section 54 of the Income Tax Act.
Mr Chari 's argument is that the activities of the appellant in cooperation with Mr. Kanhaiya Singh frightened the black marketeers and so, they organised the present plot to involve the appellant in a false case.
In that connection, Mr. Chari also relies on the fact that out of the ten instances, the story deposed to in respect of eight has been rejected by the High Court.
On the other hand, Mr. Sarjoo Prasad has argued that as soon as the appellant took charge from Mr. Talwar, he evolved a very clever scheme of establishing personal contacts with the black marketeers; dispensed with the enquiry which used to be held prior to the granting of licences to them and.
thus introduced a practice of direct dealings with the black marketeers which facilitated the commission of the offenses charged against him.
He has also referred us to the evidence given by Mr. Sen which tends to show that the appellant was frightened by the prospect of investigation and so, suddenly left Kanpur under the pretext of illness.
In other words, Mr. Sarjoo Prasad 's argument is that the appellant deliberately adopted a very clever 143 modus operandi in discharging his duties as a public servant and has, 'in fact, committed the several offenses charged against him.
We do not think that the ultimate decision of the narrow point with which we are concerned in the present_ appeal can be determined either on the basis that the appellant is more sinned against than a sinner or that he is a cold blooded offender.
Ultimately, we will have to examine the evidence specifically connected with the commission of the offence and decide whether that evidence can legitimately sustain the charge under section 467.
Let us take the case as disclosed by the evidence of Sheo Karan Das in respect of the charge under section 467.
According to Sheo Karan Das, the two applications Exts.
35 and 36 were given by him in the office of the appellant on the 29th or 30th March, 1946, but the appellant asked the witness to get other applications in which the date should be prior to 23rd of March.
Accordingly, the witness put the date 22nd March on his applications.
On the 29th or 30th March when the witness met the appellant, he asked for 130 tons and the appellant told him that he could give him more than that, provided, of course, the appellant got his profit.
Accordingly, after these applications were antedated, the appellant passed orders and licences were issued.
Thus, it would be seen that the prosecution case is that the applications which were presented by Sheo Karan Das on the 29th or 30th of March, were deliberately ante dated in order that the orders subsequently passed by the appellant and the licences issued thereunder should also appear to have been issued prior to the 23rd of March and that, in substance, is the essence of the charge under section 467.
When this case was put to the appellant, he made a somewhat elaborate statement which it is necessary to consider.
According to this statement, 144 the appellant left Kanpur on March 23, 1946, for a meeting with Mr. Spooner who was the Iron Steel Controller at Calcutta.
Mr. Spooner told him in confidence that there would be no more need to issue licences after March 31, on account of decontrol.
He also expressly desired that no further licences need be issued by any Regional Dy.
Iron & Steel Controller after March 26, 1946.
The appellant returned to Kanpur on March 28, and attended office on ,he 29th.
He then found that the office had placed on his table a number of licences for which he had already issued orders before he left Kanpur on the 23rd.
Some new applications had also come thereafter and these included applications from Government bodies and other public institutions.
These were also placed on his table.
The appellant urged that statutorily he had the power to issue licences until March 31, even so, in order to comply with the desire expressed by Mr. Spooner, he ordered that all licences should be issued as on March 23.
The appellant emphasised that even if he had dated the licences and his own orders as on the 30th or 31st March, that would have introduced no invalidity in the orders or licences respectively, and so, he contended that even though in form, the orders and the licences can be said to have been ante dated, the ante dating did not introduce, any criminal element at all.
It appears that after his return to Kanpur on the 28th, a large number of licences were issued in this way.
This statement of the appellant thus shows that even on applications admittedly received after the 23rd, licences were issued as on the 23rd and orders had been passed by the appellant in support of the issue of such licences.
This antedating of the licences is a circumstance on which the prosecution strongly relies in support of the charge under section 467.
It is, however, significant that besides the testimony of the accomplices, there is no other 145 evidence on the record to show that the applications given by Sheo Karan Das had been brought to the office of the appellant for the first time on the 29th or 30th of March as deposed to by him.
No register had been produced from the office showing the date of the receipt of the said applications.
It is true that in the quota register, dates had been tampered with, but there is no evidence to show who tampered with those dates and so, the fact that dates had been tampered with will not afford any legal evidence in support of the case that the applications presented by Sheo Karan Das had in fact, been presented for the first time on the 29th of March and had not been filed on the 22nd of March as pleaded by the appellant.
The ante dating of the applications is a very important fact and of this fact there is no other evidence at all.
Therefore, in our opinion, the crucial fact on which the charge under section 467 is based is deposed to only by accomplice witnesses and their statements are Dot corroborated by any other evidence on the record.
The admission made by the appellant does not necessarily show that the applications had been ante dated.
Indeed, it is very curious that the appellant should have passed necessary orders and should have directed the issue of licences as on the 23rd of March even in regard to the applications received by him subsequent to the 23rd March and this has been done in respect of applications received from Government bodies and public institutions.
This fact lends some support to the appellant 's theory that he did not want to appear to have contravened the desire expressed by Mr. Spooner that no license should be issued subsequent to the 26th March.
There is no doubt that the appellant was competent to issue licences until the 31st of March and so, it is not as if it was essential for him to ante date his orders or to ante date the licences issued in accordance with them.
Then as to the orders passed by the appellant on the applications presented by 146 Sheo Karan Das, there is no date put by the appellant below his signature, though the date 22nd March appears at the top of the document.
But it may be assumed that the order was passed on the 29th.
That, however, does not show that the applications were made on the 29th and without proving by satisfactory evidence that the applications were made on the 29th, the prosecution cannot establish its charge against the appellant under section 467.
In our opinion, the High Court appears to have misjudged the effect of the admissions alleged to have been made by the appellant when it came to the conclusion that the said admissions corroborated the accomplice 's case that the applications had been presented by him for the first time on the 29th March.
The fact that there is no evidence offered by any of the prosecution witnesses examined from the appellant 's office to show the dates when the applications were received, has not been considered by the High Court at all.
Therefore, the finding of the High Court on the essential part of the prosecution story in respect of the charge under section 467 really rests on the evidence of the accomplice uncorroborated by any other evidence.
That being so, we must hold that the High Court erred in law in making a finding against the appellant in respect of the charge under section 467 as well as the alternative charge under the relevant Defence of India Rules.
What we have said about this charge in respect of the licences issued to Sheo Karan Das applies with the same force to the said charge in respect of the licences issued to Sher Singh Arora.
In respect of those licences also, there is no evidence to show that the applications made by Sher Singh Arora had been ante dated, and so, the charge in respect of the said licences also cannot be held to have been established.
The result is, the finding Of the High Court in respect of the charge against the appellant under section 467 or the alternative charge under the relevant Defence of India Rules must be reversed, his 147 conviction for the, said offenses set aside and be should be ordered to be acquitted and discharged in respect of those offenses.
That raises the question as to whether we should order a retrial of the appellant for the offence under section 161.
Mr. Sarjoo Prasad has argued that the interests of justice require that the appellant should be asked to face a new trial in respect of the charge under a. 161, Indian Penal Code if and after a valid sanction is obtained for his prosecution for the same.
We are not inclined to accept this argument.
Two facts have weighed in our minds in coming to the conclusion that a retrial need not be ordered in this case.
The first consideration is that the accused has had to face a long and protracted criminal trial and the sword has been hanging over his head for over 14 years.
The accused was suspended in 1947 and since then these proceedings have gone on all the time, The second factor which has weighed in our minds is that though the prosecution began with a charge of a comprehensive conspiracy supported by several instances of bribery, on the finding of the High Court it is reduced to a case of bribery offered by two persons; and then again, the substantial evidence is the evidence of accomplices supported by what the High Court thought to be corroborating circumstances.
It is true that offenses of this kind should not be allowed to go unpunished, but having regard to all the facts to which our attention has been drawn in the present case, we are not inclined to take the view that the ends of justice require that the accused should be ordered to face a fresh trial.
The result is that the conviction of the appellant under section 161 is set aside on the ground that his trial for the said offence was without jurisdiction since his prosecution in that behalf was commenced without a valid sanction as required by s.6 of the prevention of Corruption Act.
Appeal allowed.
| The appellant was in the permanent service of the Assam Government but his services were lent to the Central Government.
At the relevant time, i e , December 1945 to September 1946, he was posted at Kanpur as Deputy Iron & Steel Controller.
In connection with the granting of permits to certain persons charges under sections 120B, 161, 165 and 467 Indian Penal Code, and under r. 473(3) read with r.472, Defence of India Rules were leveled ' against him.
Sanction for his prosecution was granted by the Central Government on January 31, 1919, and a charge sheet was submitted against him.
On March 1, 1952, the appellant was committed to the Court of Sessions for trial.
The trial commenced on May, 7, 1953, and the Sessions judge convicted the appellant of all the charges.
On appeal the High Court upheld the conviction under sections 161 and 467 Indian Penal Code and set aside the conviction on the other charges.
The appellant contended (i) that the trial by the Sessions judge was illegal as after the coming into force of the Criminal Law Amendment Act, 1952, on July 28, 1952, he could only be tried by a Special judge, and (ii) that the sanction granted by the Central Government was invalid and of no avail as sanction for the prosecution of the appellant could only be granted by the Assam Government in whose permanent employment the appellant was.
Held, that the Sessions Judge had jurisdiction to hold the trial and it was not required that the appellant should have been tried by a special judge.
Though s.7 of the Criminal Law Amendment required all offenses under sections 1 61 and 165 Indian Penal Code to be tried by a Special judge, the section was only prospective and did not provide for transfer of all pending cases.
Under s.10 of the Act only such cases triable by a Special Judge under s.7as were ac tually pending before any Magistrate immediately before 122 the commencement of the Act could be transferred to the Special judge.
The case against the appellant having already been committed to the Sessions was no longer pending before the Magistrate.
The mere fact that the Magistrate still had power, under s.216 of the Code of Criminal, Procedure to summon witnesses for the defence and bind them to appear before the Court of Sessions, did not imply that his jurisdiction to deal with the merits of the case continued.
Held, further that though the sanction granted by the Central Government was a good sanction under section 197 of the Code of Criminal Procedure it was not a valid sanction under s.6 of the Prevention of Corruption Act.
At the time when the sanction was granted the appellant was in the permanent employment of the Assam Government but he was employed in the affairs of, the Federation.
Under s.197, in cases of persons employed in connection with the affairs of the Federation the Governor General was the authority to grant the sanction and in cases of persons employed in connection with the affairs of the States it was the Governor.
Under s.6 of the Corruption Act the position was different.
Clauses (a) and (b) of the section dealt with persons permanently employed in connection with the affairs of the Federation or of the Provinces and in regard to them, the appropriate authorities were the Central Government and the Provincial Government.
The word "employed" in cls.(a) and (b) referred to employment of a permanent character.
The case of a public servant whose services were loaned by one Government to another fell under cl.(c) under which sanction could be ranted by the authority competent to remove him from his service.
The authority competent to remove the appellant from his service was the Assam Government and that Government alone could have granted a valid sanction for the prosecution of the appellant.
Accordingly the trial of the appellant for offenses under sections 161 and 165 was without jurisdiction.
Held, further that the convinction of the appellant for the offence under s.467 could not stand as it was based entirely upon the uncorroborated testimony of accomplices.
|
Appeal No. 402 of 1958.
Appeal by special leave from the Award dated January 29, 1957, of the Industrial Tribunal, Bihar, at Patna in Reference No. 7 of 1956.
Sukumar Ghose, for the appellant.
M. K. Ramamurthi, R. K. Garg, A. N. Nag and Suresh Aggarwal, for the respondents.
section P. Varma, for the intervener (State of Bihar).
March 9.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the award of the Industrial Tribunal, Patna.
The appellant is a Sugar Mill in District Saran in the State of Bihar.
One Ramkrishna Prasad was appointed as clerk in this mill in 1933.
Gradually, he worked his way up and was drawing Rs. 140 per month in October 1952.
The mill created a new post of store in charge about that time as the work in the Stores Department of the Mill had increased.
On October 4, 1952, Babulal Parekh was appointed to this new post on a consolidated salary of Rs. 180 per menses.
A letter of appointment was issued to him on that date and he was told that he would be on probation for one year.
He was also asked by another letter to take charge immediately.
He took charge on October 7, 1952.
On November 28, 1952, an order was passed by the mill distributing the duties between the various clerks employed in the Stores Department and it was stated therein that all the staff of the Stores Department would work as subordinate to Babulal Parekh.
On December 2, 1952, another order was passed by which Ramkrishna Prasad was ordered to hand over the keys of the stores to Babulal Parekh.
Thereafter Ramkrishna Prasad made a representation against his being made subordinate to the stores in charge.
This representation was rejected.
A dispute was then raised by the union and a reference was made by the Government of Bihar on May 9, 1956, in which the 216 following three matters were referred to the tribunal: 1.Whether the status of workman, Sri Ramkrishna Prasad, Store keeper, and the nature of the job performed by him has been changed to his prejudice with the appointment of a separate store in charge; 2.Whether in view of the satisfactory performance of duties of store keeper for the last 20 years by the above named workman, it was at all necessary to appoint a separate store in charge over him with higher emoluments and whether Shri Ramkrishna Prasad is entitled to be appointed to the post of store in charge; and 3.Whether the claim of the above named workman for promotion to higher grades has been overlooked by the management, and if so, what relief the workman is entitled to.
When the matter came up before the tribunal, the main contention on behalf of the mill was that it was exclusively the management function to decide its labour strength, both qualitatively and quantitatively, and that so far as Ramkrishna Prasad was concerned his position had not been prejudicially affected by the creation of the new post of a store in charge.
The workmen on the other hand contended that Babulal Parekh was first appointed as a mere clerk under Ramkrishna Prasad to begin with and it was only on November 28, 1952, that he was promoted over the head of Ramkrishna Prasad as a store in charge, thus superseding Ramkrishna Prasad.
This stand of the workmen was controverted by the mill and its case was that Babulal Parekh was from the very beginning appointed as store in charge.
The tribunal came to the conclusion after a consideration of the evidence produced that Babulal was first appointed as an ordinary clerk in the Stores Department and was subsequently made a store incharge.
It held that this caused reasonable heart burning to Ramkrishna Prasad.
The tribunal was conscious of the principle that promotion to a higher post was the exclusive function of the management and should not ordinarily be interfered with.
But 217 in spite of that it was of the view that this was a fit case for interference; but on other considerations which were not specified in the order by the tribunal it held that it would not interfere with the arrangement made by the mill; it instead granted an increment of Rs. 30 per month from the date of its order to Ramkrishna Prasad to meet the ends of justice.
It is this order which is being challenged before us.
Two points have been urged before us on behalf of the appellant.
In the first place it is urged that the reference was incompetent as sugar was a controlled industry and only the Central Government could have made the reference and not the State Government.
Secondly, it is urged that the order of the tribunal granting an increment of Rs. 30 per month to Ramkrishna Prasad was patently perverse and that there was no change in the status or emoluments of Ramkrishna Prasad by the creation of the new post and the employment of Babulal Parekh on it.
So far as the question of the competence of the reference is concerned, we are of opinion that there is no force in it, A similar question was raised before this Court in The Bijoy Cotton Mills Ltd. vs Their Workmen and Another (1) and it was held there on the language of section 2(a)(1) of the , that before that provision could apply to a controlled industry there must be a notification by the Central Government for the purposes of section 2(a)(1) of the .
Section 2(a)(1) is in these terms " I Appropriate Government ' means in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or by a railway company or concerning any such controlled industry as maybe specified in this behalf by the Central Government, or in relation to an industrial dispute concerning a banking or an insurance company, a mine, an oil field or a, major port, the Central Government.
" The argument is that as sugar is a controlled industry under the Schedule to the Industries (Development and Regulation) Act, No. 65 of 1951, the appropriate (1) [1960] 2 S.C.R 982, 28 218 Government for the purposes of section 2(a)(1) with reference to the sugar Industry is the Central Government.
Reliance is placed on the words " concerning any such controlled industry as may be specified in this behalf by the Central Government " appearing in section 2 (a)(1).
It is true that sugar is a controlled industry under the Industries (Development and Regulation) Act, 1951, but that in our opinion does not conclude the matter.
In order that the appropriate government under section 2(a)(1) may be the Central Government for a controlled industry, it is necessary that such controlled industry should be specified by the Central Government for the purposes of section 2(a)(1).
This in our opinion is obvious from the words " controlled industry as may be specified in this behalf by the Central Government " appearing in section 2(a)(1).
It is not enough that an industry should be a controlled industry to attract this provision of section 2(a)(1) ; it is further necessary that it should be specified in this behalf, namely for the purposes of section 2(a)(1), as a controlled industry by the Central Government, before the Central Government can become the appropriate government within the meaning of section 2(a)(1).
We may in this connection refer to Firebricks and Potteries Ltd., etc.
vs Firebricks and Potteries Ltd. Workers Union Ltd. (1) where the same view has been taken.
We are of opinion that is the correct meaning of these words appearing in section 2(a)(1), as already held in The Bijoy Cotton Mills Ltd. (2) .
The objection that the reference was not competent therefore fails.
We next come to the contention raised on behalf of the mill that there was in fact no prejudice whatsoever so far as the status and emoluments of Ramkrishna Prasad were concerned by the creation of the new post and the appointment of Babulal Parekh on it, and that the tribunal was not justified in any case in granting an increment of Rs. 30 per menses to Ramkrishna Prasad.
The main consideration which influenced the tribunal in passing the order which it did was that in the view of the tribunal Ramkrishna Prasad was superseded by Babulal Parekh who was first appointed as a clerk under him.
This view of (1) I.L.R. [1955] MYS.
(2) ; 219 the tribunal in our opinion is patently erroneous.
The appointment order dated October 4, 1952, clearly shows that Babulal Parekh was appointed as store inches from the very beginning at Rs. 180 per month.
The tribunal referred to certain entries in the attendance register to hold that Babulal Parekh worked as clerk to begin with.
It appears from the attendance register for the months of October, November and December that Babulal Parekh was marked present from October 7 to November 9.
Thereafter from November 11 to the end of December he signed the attendance register.
The statement of Cbaudhari, Labour Welfare Officer of the mill was that the practice in the mill was that officers used to be marked present in the attendance register while clerks used to sign it themselves.
The tribunal has concluded from the fact that Babulal.
Parekh signed the register in November that he must have been a clerk to begin with.
The tribunal, however, completely overlooked that from October 7 to November 9, Babulal Parekh was marked present which would show that he was not a clerk.
The tribunal also overlooked that even from November 28 to the end of December when Babulal Parekh admittedly was not a clerk but store in charge he still signed the register, though he should have been marked present.
Chaudhari was unable to explain how this happened, but he was hardly the person to explain this.
It is, however, clear from this confusion that no importance can be attached to whether Babulal Parekh was marked present in the register or signed it.
The real thing which determined the status of Babulal Parekh was the appointment order dated October 4, 1952, which the tribunal has accepted as correct.
A question was certainly put to Chaudhari at the end of his cross examination that he had manufactured the statements put in by him only the night before but he denied it.
We cannot accept the suggestion on behalf of the respondents that the appointment order was ante dated, for no such suggestion was made to Chaudhari and the tribunal itself does not find so.
It is clear therefore that the finding of the tribunal that Babulal Parekh was appointed as 220 clerk under Ramkrishna Prasad to begin with is patently perverse and it must be held that Babulal Parekh was from the very beginning working as store in charge.
Now in so far as Ramkrishna Prasad was concerned his work and emoluments remained the same after the appointment of Babulal Parekh.
If a higher post was created in the Stores Department because of the increase in work, Ramkrishna Prasad could not claim promotion to it merely because he was working as a store keeper before.
There is of course no question of supersession in this case and therefore there is no reasonable cause for any heart burning.
As the learned tribunal itself points out, " promotion to higher post was the exclusive function of the management " and if a new post is created and a new man appointed, as in this case, it cannot be said that Ramkrishna Prasad 's status was in any way prejudicially affected.
It is also remarkable that after saying all that it could in favour of Ramkrishna Prasad the tribunal did not interfere with the arrangement made by the mill for reasons which were not specified by it in the order.
As such there was no reason for granting an increment of Rs. 30 per mensem to Ramkrishna Prasad, for even the workmen did not claim that he was entitled to any compensation in the shape of an increment in his pay because of the appointment of Babulal Parekh.
The order of the tribunal therefore is patently unsupportable and must be set aside.
We therefore allow the appeal and set aside the order of the tribunal and hold that no relief is due to Ramkrishna Prasad.
In the circumstances we pass no order as to costs.
Appeal allowed.
| A dispute relating to a workman in the appellant sugar mill, situate in Bihar, was raised by the Workers Union and a reference was made by the State Government.
Under section 2 (a) (1) of the , " 'Appropriate Government ' means in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government. or concerning any such controlled industry as may be specified in this behalf by the Central Government. the Central Government ".
The question was whether the State Government was competent to make the reference, as sugar was a controlled industry under the Industries (Development and Regulation) Act, 1951.
Held, that in order that the appropriate government under section 2 (a) (1) of the , may be the Central Government for a controlled industry it is necessary that such controlled industry should be specified by the Central Government, and that in the absence of a notification for the 215 purposes of section 2 (a) (1) of the Act, the State Government was competent to make the reference.
The Bijoy Colton Mills Ltd. vs Their Workmen and Another ; , followed.
|
Criminal Appeal No. 173/1956.
Appeal from the judgment and order dated May 23, 1956, of the Punjab High Court in Criminal Revision No. 1058/1954.
K. L. Arora, for the appellant.
N. section Bindra and R. H. Dhebar, for the respondent.
November 11.
The Judgment of the Court was delivered by AYYANGAR J.
This appeal on a certificate under articles 132 and 134(1) of the Constitution granted by the High Court of Punjab raises for consideration the constitutionality of section 7(1) of the Punjab Trade Employees Act, 1940.
The appellant Manohar Lal has a shop at Ferozepore Cantt.
in which business is carried on under the name and style of I Imperial Book Depot '.
Section 7 of the Punjab Trade Employees Act, 1940 (hereinafter called the Act), enacts: " 7.
(1) Save as otherwise provided by this Act, every shop or commercial establishment shall remain closed on a close day.
(2)(i).
The choice of a close day shall rest with the occupier of a shop or commercial establishment and shall be intimated to the prescribed authority within two months of the date on which this Act comes into force." to extract the provision relevant to this appeal.
The 345 appellant had chosen Friday as " the close day ", i.e., the day of the week on which his shop would remain closed.
The Inspector of Shops and Commercial Establishments, Ferozepore Circle, visited the appellant 's shop on Friday, the 29th of January, 1954, and found the shop open and the appellant 's son selling articles.
Obviously, if section 7(1) were valid, the appellant was guilty of a contravention of its terms and he was accordingly prosecuted in the Court of the Additional District Magistrate, Ferozepore, for an offence under section 16 of the Act which ran: " Subject to the other provisions of this Act, whoever contravenes any of the provisions of this Act . . . . . . . . shall be liable on conviction to a fine not exceeding twenty five rupees for the first offence and one hundred rupees for every subsequent offence ".
The appellant admitted the facts but he pleaded that the Act would not apply to his shop or establishment for the reason that he had engaged no strangers as employees but that the entire work in the shop was being done by himself and by the members of his family, and that to hold that section 7(1) of the Act would apply to his shop would be unconstitutional as violative of the fundamental rights guaranteed by articles 14, 19(1)(f) and (g) of the Constitution.
The additional District Magistrate rejected the plea raised by the appellant regarding the constitutionality of section 7(1) in its application to shops where no " employees " were engaged and sentenced him to a fine of Rs. 100 and simple imprisonment in default of payment of the fine (since the appellant had been convicted once before).
The appellant applied to the High Court of Punjab to revise this order, but the Revision was dismissed.
The learned Judges, however, granted a cer tificate of fitness which has enabled the appellant to file the appeal to this Court.
Though the validity of section 7(1) of the Act was challenged in the High Court on various grounds, learned Counsel who appeared before us rested his attack on one point.
He urged that the provision violated the 44 346 appellant 's right to carry on his trade or business guaranteed by article 19(1)(g) and that the restriction imposed was not reasonable within article 19(6) because it was not in the interest of the general public.
Learned Counsel drew our attention to the long title of the Act reading " An Act to limit the hours of work of Shop Assistants and Commercial Employees and to make certain regulations concerning their holidays, wages and terms of service " and pointed out that the insistence on the appellant to close his shop, in which there were no " employees ", was really outside the purview of the legislation and could not be said to subserve the purposes for which the Act was enacted.
In short, the submission of the learned Counsel was that the provision for the compulsory closure of his shop for one day in the week served no interests of the general public and that it was unduly and unnecessarily restrictive of his freedom to carry on a lawful trade or business, otherwise in accordance with law, as he thought best and in a manner or mode most con venient or profitable.
We are clearly of the opinion that the submissions of the learned Counsel should be repelled.
The long title of the Act extracted earlier and on which learned Counsel placed considerable reliance as a guide for the determination of the scope of the Act and the policy underlying the legislation, no doubt, indicates the main purposes of the enactment but cannot, obviously, control the express operative provisions of the Act, such as for example the terms of section 7(1).
Nor is the learned counsel right in his argument that the terms of section 7(1) are irrelevant to secure the purposes or to subserve the underlying policy of the Act.
The ratio of the legislation is social interest in the health of the worker who forms an essential part of the com munity and in whose welfare, therefore, the community is vitally interested.
It is in the light of this purpose that the provisions of the Act have to be scrutinized.
Thus,, section 3 which lays down the restrictions subject to which alone "I young persons ", defined as those under the age of 14, could be employed in any shop or commercial establishment, is obviously with a view to 347 ensuring the health of the rising generation of citizens.
Section 4 is concerned with imposing restrictions regarding the hours of work which might be extracted from workers other than " young persons ".
Section 4(1) enacts: " Subject to the provisions of this Act, no person shall be employed about the business of a shop or commercial establishment for more than the normal maximum working hours, that is to say, fifty four hours in any one week and ten hours in any one day.
bringing the law in India as respects maximum working hours in line with the norms suggested by the International Labour Convention.
Sub clauses (4) and (5) of this section are of some relevance to the matter now under consideration: " (4) No person who has to the knowledge of the occupier of a shop or commercial establishment been previously employed on any day in a factory shall be employed on that day about the business of the shop or commercial establishment for a longer period than will, together with the time during which he has been previously employed on that day in the factory, complete the number of hours permitted by this Act.
(5) No person shall work about the business of a shop or commercial establishment or two or more shops or commercial establishments or a shop or commercial establishment and a factory in excess of the period during which he may be lawfully employed under this Act.
" It will be seen that while under sub cl.
(4) employers are injuncted from employing persons who had already worked for the maximum number of permitted hours in another establishment, sub cl.
(5) lays an embargo on the worker himself from injuring his health by overwork in an endeavour to earn more.
From this it would be apparent that the Act is concerned and properly concerned with the welfare of the worker and seeks to prevent injury to it, not merely from the action of the employer but from his own.
In other words, the worker is prevented from attempting to earn more wages by working longer hours than is good 348 for him.
If such a condition is necessary or proper in the case of a worker, there does not seem to be anything unreasonable in applying the same or similar principles to the employer who works on his own business.
The learned Judges of the High Court have rested their decision on this part of the case on the reasoning that the terms of the impugned section might be justified on the ground that it is designed in the interest of the owner of the shop or establishment himself and that his health and welfare is a matter of interest not only to himself but to the general public The legislation is in effect the exercise of social control over the manner in which business should be carried on regulated in the interests of the health and welfare not merely of those employed in it but of all those engaged in it.
A restriction imposed with a view to secure this purpose would, in our opinion, be clearly saved by article 19(6).
Apart from this, the constitutionality of the impugned provision might be sustained on another ground also, viz., with a view to avoid evasion of provisions specifically designed for the protection of workmen employed.
It may be pointed out that acts innocent in themselves may be prohibited and the restrictions in that regard would be reasonable, if the same were necessary to secure the efficient enforcement of valid provisions.
The inclusion of a reasonable margin to ensure effective enforcement will not stamp a law otherwise valid as within legislative competence with the character of unconstitutionality as being unreasonable.
The provisions could, therefore, be justified as for securing administrative convenience and for the proper enforcement of it without evasion.
As pointed out by this Court in Manohar Lal vs The State (1) (when the appellant challenged the validity of this identical provision but on other grounds): " The legislature may have felt it necessary, in order to reduce the possibilities of evasion to a minimum, to encroach upon the liberties of those who would not otherwise have been affected. .
To require a shopkeeper, who employs one or two men, (1) ; , 675. 349 to close and permit his rival, who employs perhaps a dozen members of his family, to remain open, clearly places the former at a grave commercial disadvantage.
To permit such a distinction might well engender discontent and in the end react upon the relations between employer and employed.
" We have, therefore, no hesitation in repelling the attack on the constitutionality of section 7(1) of the Act.
The appeal fails and is dismissed.
Appeal dismissed.
| The appellant was a member of a joint Hindu family which carried on the business of Government stockists of grain under a contract with the Government of Bihar.
His nomination for election to the Bihar Legislative Assembly was rejected on the ground that he was disqualified under section 7(d) of the Representation of the People Act, 195T, as he had an interest in a contract for the performance of services undertaken by the Bihar Government.
The appellant contended that the service undertaken by the Government was the sale of foodgrains under the Grain Supply Scheme and the contract was not for the sale of such foodgrains and did not attract the provisions of section 7(d).
Held, that the contract was not one for the performance of any service undertaken by the Government and the appellant was not disqualified under section 7(d).
A contract of bailment which imposed on the bailee the obligation to stock and store the foodgrains in his godowns was not a contract for the purpose of the service of sale of grain which the Government had undertaken.
The Government had undertaken the work of supplying grain but the contract was not one for the supply of grain.
N. Satyanathan vs K. Subramanyam, ; and V. V. Ramaswamy vs Election Tribunal, Tirunelveli, , distinguished.
|
he refund of cess paid by them.
[304D] & CIVIL ORIGINAL JURISDICTION: Writ Petitions Nos.
2687, 5822 of 1983 etc.
(Under Article 32 of the Constitution of India).
Dr. Shankar Ghosh, T.S.K. Iyer, M.L. Lahoty, P.S. Jha, D.D. Gupta, S.K. Jain, D.P. Mukherjee, S.R. Srivastava, P.N. Tewari and Parijat Sinha for the petitioners.
Tapas Ray, Anil B. Dewan, T.C. Roy, G.S. Chatterjee, Dalip Sinha and H.K. Puri for the respondents.
The judgment of the Court was delivered by PATHAK, CJ.
By these writ petitions and transferred cases the petitioners challenge the validity of the levy of cess in respect of tea estates under the West Bengal Rural Employment and Production Act, 1976.
The West Bengal Rural Employment and Production Act, 1976, (shortly referred to as the "West Bengal Act") is intended to provide the additional resources for the promo tion of employment in rural areas and for implementing rural production programmes.
The additional resources are sought to be raised from two sources, a surcharge on land revenue under section 3 of the Act and a rural employment cess under section 4 of the Act.
We are concerned here with the levy of the rural employment cess.
297 Originally section 4 of the West Bengal Act provided as follows: "4.(1) On and from the commencement of this Act, all immovable properties on which road and public work cesses are assessed according to the provisions of the Cess Act, 1880, shall be liable to the payment of rural employment cess: Provided that no raiyat who is exempted from paying revenue in respect of his holding under clause (a) of subsection (1) of section 23B of the West Bengal Land Reforms Act, 1955, shall be liable to pay rural em ployment cess.
(2) The rural employment cess shall be levied annually (a) in respect of lands, at the rate of six paise on each rupee of development value thereof; (b) in respect of coal mines, at the rate of fifty paise on each tonne of coal on the annual dispatches therefrom; (c) in respect of mines other than coal mines and quarries, at the rate of six paise on each rupee of annual net profits thereof.
" The West Bengal Taxation Laws (Amendment) Act, 1982 amended the West Bengal Act and by section 7(b) thereof amend ments were made in section 4(2) of the West Bengal Act with effect from 1 April, 1981.
As a result, as from that date, section 4(2) in so far as it is material read as follows: 4(2).
The rural employment cess shall be levied annually (a) in respect of lands, other than a tea estate, at the rate of six paise on each rupee of development value thereof; (aa) in respect of a tea estate at such rate, not exceeding rupees six on each kilogram of tea on the dispatches from such tea estate of tea grown therein, as the State Government may, by notification in the Offi cial Gazette, fix in this behalf: 298 Provided that in calculating the dispatches of tea for the purpose of levy of rural employment cess, such dispatches for sale made at such tea auction centres as may be recognised by the State Government by notification in the Official Gazette shall be excluded.
Provided further that the State Government may fix different rates on des patches of different classes of tea.
Explanation For the purpose of this section, "tea" means the plant Camellia Sinen sis (L) O. Kuntze as well as all varieties of the product known commercially as tea made from the leaves of the plant Camellia Sinensis (L) O. Kuntze, including green tea and green tea leaves, processed or unprocessed;" Section 4 was also amended further by the insertion of sub section
(4) which provided: "(4) The State Government may, if it considers necessary so to do, by notification in the Official Gazette, exempt such categories of despatches or such percentage of despatches from the liability to pay the whole or any part of the rural employment cess, or reduce the rate of the rural employment cess payable thereon, under clause (aa) of sub section (2), on such terms and conditions as may be speci fied in the notification.
Provided that the State Government may, at any time, add to, amend, vary of rescind any such notification.
" Thereafter the West Bengal Taxation Laws (Amendment) Act, 1982 was enacted with effect from 1 October, 1982.
section 4(2) of the West Bengal Act was amended and under clause (aa) thereof the first proviso was omitted.
Pursuant to the amendments in the West Bengal Act in 1981 and 1982, various notifications were issued by the State Government, which for our purpose broadly cover these different periods: (a) First Period: 1 April, 1981 to 30 Septem ber, 1982 299 Rural employment cess was levied at the rate of Rs.5 per Kg.
on all despatches of tea, but in respect of despatches to two tea auction centres within West Bengal the rate of duty was nil, and in respect of tea sold in West Bengal through registered dealers otherwise than through the two tea auction centres the rate of tax was Rs.2.50 per Kg.
(b) Second Period: 1 October, 1982 to 28 March, 1984 Rural employment cess was levied at the rate of Rs. 1.50 per Kg.
on all despatches of tea except that for despatches to the said two tea auction centres the rate of levy was 30 paise per Kg.
(c) Third Period: 29 March, 1984 onwards Rural employment cess was levied at the rate of Rs.3 per Kg.
on all despatches of tea except that for despatches to the said two tea auction centres in West Bengal the rate of tax was only 30 paise per Kg.
Learned counsel for the petitioners contend that the levy of the cess under section 4(1) read with section 4(2)(aa) of the West Bengal Act as amended in 1981 and 1982 is ultra vires inasmuch as the statutory provisions violate Article 14 and Article 301 of the Constitution and also lie outside the legislative competence of the State Government.
It seems to us that these cases can be disposed of on the short ground based on Article 301 of the Constitution and want of legis lative competence.
There can be no dispute that the rural employment cess is a tax.
cannot also be disputed that if the levy of a tax on goods has the direct and immediate effect of impeding the movement of goods throughout the territory of India, there is a violation of Article 301 of the Constitution.
If, however, the impact of the levy is indirect or remote, no valid complaint can be made in relation to Article 301.
In Atiabari Tea Co., Ltd. vs The State of Assam and Others, ; , Gajendragadkar, J (as he then was) speaking for the majority in that case held that tax laws would effect trade and commerce and could be violative of the freedom guaranteed by Article 30 1, provided they di rectly or immediately affect the freedom of trade and com merce and not indirectly or in a remote manner.
This princi ple was affirmed by this Court in The Automobile Transport (Rajasthan) 300 Ltd. vs The State of Rajasthan and Others, [1963] 1 S.C.R. 491 and again in Firm A.T.B. Mehtab Majid and Company vs State of Madras and Another, [1963] Suppl.
2 S.C.R. 435.
But the declaration in Article 301 that trade, commerce and intercourse throughout the territory of India shall be free is subject to Article 304(b) which provides: "304.
Restrictions on trade, commerce and intercourse among States.
Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law ( a ) .
. . (b) impose such reasonable restrictions on the freedom of trade, commerce or inter course 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 intro duced or moved in the Legislature of a State without the previous sanction of the Presi dent.
" Therefore, there is no violation of Article 30 1 if the case falls under Article 304(b) and its proviso.
In Kalyani Stores vs The State of Orissa and Others, [1966] 1 S.C.R. 865 this Court held that a restriction on the freedom of trade and commerce which is guaranteed by Article 301 cannot be justified unless the procedure provided in Article 304 is followed.
That was also the view taken in State of Mysore vs H. Sanjeeviah; , and Andhra Sugars Ltd. & Anr.
vs State of Andhra Pradesh & Ors.
, [1968] 1 S.C.R. 705.
In other words, if the Legislature of a State enacts a law which imposes such reasonable restrictions on the free dom of trade, commerce or intercourse with or within that State as may be required in the public interest and further that the Bill or amendment for the purposes of clause (b) has been introduced or moved in the Legislature of a State with the previous sanction of the President, such enactment will not offend the Article 301.
The question then is whether the impugned levy impedes the free flow of trade and commerce throughout the territory of India, and if it does, whether it fails within the excep tion carved out in Article 304(b).
If the levy imposes a cess in respect of tea estates, it may well De said that even though the free flow of tea is impeded in its movement throughout the territory of India it is in consequence of an indirect or 301 remote effect of the levy and that it cannot be said that Article 301 is contravened.
The contention of the petition ers is, however, that it is ostensibly only in respect of tea estates but in fact it is a levy on despatches of tea.
If that contention is sound, there can be no doubt that it constitutes a violation of Article 301 unless the legisla tion is brought within the scope of Article 304(b).
To determine whether the levy is in respect of tea estates or is a levy on despatches of tea, the substance of the legis lation must be ascertained from the relevant provisions of the statute.
It cannot be disputed that the subject of the levy, the nature of which defines the quality of the levy, must not be confused with the measure of liability, that is to say, the quantum of the tax.
There is a plenitude of case law supporting that principle, among the cases being Union of India and Others vs Bombay Tyre International Ltd. and Others, ; But what is the position here? The statute speaks of a levy "in respect of a tea estate", and it says that the levy will not exceed Rs.6 on each Kilogram of tea on the des patches from such tea estate of tea grown therein.
The statute also provides that in calculating the despatches of tea for the purpose of levy of rural employment cess, the despatches for sale made at such tea auction centres as may be recognised by the State Government shall be excluded.
And there is a proviso which empowers the State Government to fix different rates on despatches of different classes of tea.
There is also section 4(4) which empowers the State Govern ment to exempt such categories of despatches or such per centage of despatches from the liability to pay the whole or any part of the rural employment cess, or to reduce the rate of the rural employment cess payable thereon under clause (aa) of sub section
(2) on such terms and conditions as it may specify by notification.
As from 1 October, 1982 the posi tion remained the same except that the first proviso to section 4(2)(aa) excluding the despatches for sale made at recog nised tea auction centres was deleted.
The remaining provi sions continued as before.
Now, for determining the true nature of the legislation, whether it is a legislation in respect of tea estates.
and therefore of land, or in respect of despatches of tea, we must, as we have said, take all the relevant provisions of the legislation into account and ascertain the essential substance of it.
It seems to us that although the impugned provisions speak of a levy of cess in respect of tea estates, what is really contemplated is a levy on despatches of tea instead.
The entire structure of the levy points to that conclusion.
If the levy is regarded as one in respect of tea estates and the measure of the liability is defined in terms of the weight of tea des patched from the tea estate there must be a nexus between the two indicating a 302 relationship between the levy on the tea estate and the criteria for determining the measure of liability.
If there is no nexus at all it can conceivably be inferred that the levy iS not what it purports to be.
The statutory provisions for measuring the liability on account of the levy throws light on the general character of the tax as observed by the Privy Council in Re: A Reference under the Government of Ireland Act, 1920 and Section 3 of the Finance Act (Northern Ireland), 1934, In R.R. Engineering Co. vs Zila Parishad, Bareilly & Anr., ; , this Court observed that the standard on which the tax is levied was a relevant consideration for determining the nature of the tax, although it could not be regarded as conclusive in the matter.
Again in The Hingir Rampur Coal Co. Ltd. and Others.
vs The State of Orissa and Others, ; , this Court observed that the method of determining the rate of levy would be relevant in consider ing the character of the levy.
All these cases were referred to in Bombay Tyre International Ltd. (supra) where in the discussion on the point at page 367 this Court said: "Any standard which maintains a nexus with the essential character of the levy can be regard ed as a valid basis for assessing the measure of the levy.
" It is apparent that the standards laid down for measur ing the liability under the levy must bear a relationship to the nature of the levy.
In the case before us, however, we find that the nexus with the tea estate is lost altogether in the provisions for exemption or reduction of the levy and that throughout the nexus is confined to despatches of tea rather than related to the tea estate.
There is nothing to suggest that a particular tea estate produces only one class of tea, and when reference is made to a certain class of tea the reference identifies a certain class of tea estates.
We may presume that a tea estate produces different classes of tea and not one class of tea only.
While there must always be a nexus between the subject of the levy and the measure of the levy that nexus extends into different dimensions.
Variations considered appropriate for the purpose of deter mining the measure must correspond to variations in the subject of the levy.
If the measure of levy is to vary with the despatches of different classes of tea there must be something in the class of tea concerned which points to a reason located in the particular tea estate or classes of tea estates which are made the subject of the levy.
So also if the measure varies with the centre of sale of tea, the variation must relate to a reason to be found in the nature of the tea estate or classes of tea estates.
In other words, there must be a reason why one class of tea is treated 303 differently from another class of tea when deciding upon the rate to be applied to different classes of tea and that reason must be found in the nature of the tea estate con cerned.
Ultimately the benefit of exemption or reduced levy must be related to the need for exempting the tea estate from that levy or relieving it from part of the normal levy.
When the provisions before us are examined in their totali ty, we find no such relationship or nexus between the tea estate and the varied treatment accorded in respect of despatches of different kinds of tea.
It seems to us that having regard to all the relevant provisions of the statute, including section 4(2)(aa) and section 4(4), in substance the impugned levy is a levy in respect of despatches of tea and not in respect of tea estates.
Treating it as a levy on despatches of tea it is evident that the levy must be regarded as constituting a direct and immediate restriction on the flow of trade and commerce in tea throughout the territory of India, and the levy can avoid the injunction declared in Article 301 only if it satisfies the provisions of Article 304(b) and the proviso thereto.
For bringing the legislation within the saving provisions of Article 304(b) it is necessary that the Bill or amendment should have been introduced or moved in the Legislature of the State with the previous sanction of the President.
It is not disputed that the amendments to the West Bengal Act made in 198 1 and 1982 did not satisfy that requirement.
Indeed, it appears that the West Bengal Govern ment had sent an earlier Bill to the President with the object of levying a tax on the income from tea but the Presidential assent was not granted.
It appears further that the Finance Minister of WeSt Bengal made a statement in the West Bengal Legislature on 27 February, 1981 stating that he would introduce the rural employment cess on despatches of tea.
He referred to a Bill for amending the West Bengal Marketing (Regulation) Act, 1972 having been sent to the President and the President not having signified his consent to the amendment.
In our opinion, the impugned provisions brought into the West Bengal Act by the amendments in 1981 and 1982 so far as they purport to relate to tea estates are unconstitutional and void and cannot be given effect to.
Another aspect of the matter may be considered, and that relates to legislative competence.
If the impugned legisla tion were to be regarded as a levy in respect of tea es tates, it would be referable to Entry 49 in List II of the Seventh Schedule of the Constitution which speaks of "taxes on lands and buildings".
But if the legislation is in sub stance legislation in respect of despatches of tea, legisla tive authority must be 304 found for it with reference to some other Entry.
We have not been shown any Entry in List II or in List III of the Sev enth Schedule which would be pertinent.
It may be noted that Parliament had made a declaration in section 2 of the that it was expedient in the public interest that the Union should take under its control the tea industry.
Under the , Parliament has assumed control of the tea industry including the tea trade and control of tea prices.
Under section 25 of the Act a cess on tea produced in India has also been imposed.
It appears to us that the impugned legis lation is also void for want of legislative competence as it pertains to a covered field.
We do not consider it necessary to express our opinion on the other points raised between the parties in this case.
In the result, the writ petitions filed in this Court and the petitions in the Transferred Cases are allowed, the impugned amendments effected in the West Bengal Rural Em ployment and Production Act, 1976 by the amending Acts of 1981 and 1982 so far as they purport to relate to tea es tates are declared void and the petitioners are held enti tled to the refund of cess paid by them under the impugned statutory provisions.
The petitioners are entitled to their costs.
P.S.S. Petitions allowed.
| The Hotel Receipts Tax Act, 1980 came into force on 9.12.1980.
The Act imposed a special tax of 15% on the gross receipts of certain hotels, where the room charges for residential accommodation provided to any person during the previous year were Rs.75 or more per day per individual.
The levy commenced from the assessment year 1981 82 but was discontinued from 27.2.1982.
Charges received from persons within the purview of certain Vienna Conventions were exempt from the tax.
The constitutional validity of the said Act was chal lenged in these writ petitions, on grounds of lack of legis lative competence and of violation of Articles 14 and 19(1)(g).
It was contended on behalf of the petitioners that the reliance on Entry 82, List I in support of the tax was wholly misconceived and the tax in pith and substance was an impost under Entry 62, List II reserved to the States.
It was also contended that the Act is patently violative of Article 14 since the basis of classification has no nexus with the object of the tax, in that other hotels which have much higher gross receipts are left out.
It was contended by the petitioners that the law imposed unreasonable burden on their freedom of business and constituted a violation of Article 19(1)(g) of the Constitution.
881 On behalf of the Respondent it was contended that the said tax fails under Entry 82, List I and the word 'income ' should not be read in a narrow and pedantic sense, but must be given its widest amplitude.
The challenge to the Act on the ground that it was violative of Articles 14 and 19(1)(g), was also resisted by the Respondent.
Dismissing the writ petitions, HELD: 1.1.
The word 'income ' is of elastic import.
In interpreting expressions in the legislative lists a very 'wide meaning should be given to the entries.
In understand ing the scope and amplitude of the expression 'income ' in Entry 82, List 1, any meaning which fails to accord with the plenitude of the concept of 'income ' in all its width and comprehensiveness should be avoided.
The cardinal rule of interpretation is that the entries in the legislative lists are not to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
The widest possible construc tion, according to the ordinary meaning of the words in the entry, must be put upon them.
Reference to legislative practice maybe admissible in reconciling two conflicting provisions in rival legislative lists.
In construing the words in a constitutional document confering legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude.
The expression 'income ' in Entry 82, List I, cannot be subjected, by implication, to any restriction by the way in which that term might have been deployed in a fiscal statute.
A particular statute enacted under the Entry might, as a matter of fiscal policy, seek to tax some species of income alone.
The definitions would, therefore, be limited by the consideration of fiscal policy of a particular stat ute.
But the expression 'income ' in the legislative entry has always been understood in a wide and comprehensive connotation to embrace within it every kind of receipt or gain either of a capital nature or of a revenue nature.
The 'taxable receipts ' as defined in the statute cannot be held to fail outside such a 'wider connotation ' of 'income ' in the wider constitutional meaning and sense of the term as understood in Entry 82, List I. Navinchandra Mafatlal vs CIT, Bombay City, [1955] 1 SCR 829 and Bhagwandas Jain vs Union of India, AIR 1981 S.C. 907, relied on.
Navnitlal vs K.K. Sen, ; ; Governor Gener al in Council vs Province of Madras, and Kamakshya 882 Narain Singh vs CIT, , referred to.
It is now well settled that a very wide latitude is available to the legislature in the matter of classification of objects, for purposes of taxation.
It must needs to be so, having regard to the complexities involved in the formu lation of a taxation policy.
Taxation is not now a mere source of raising money to defray expenses of Government.
It is a recognised fiscal tool to achieve fiscal and social objectives.
The differentia of classification presupposes and proceeds on the premise that it distinguishes and keeps apart as a distinct class hotels, with higher economic status reflected in one of the indicia of such economic superiority.
The presumption of constitutionality has not been dislodged by the petitioners by demonstrating how even hotels, not brought into the class, have also equal or higher chargeable receipts and how the assumption of econom ic superiority of hotels to which the Act is applied is erroneous or irrelevant.
As regards reasonableness of classification and restriction on the petitioners ' freedom of trade and busi ness, similar contentions were raised in a connected case.
As has been held in that case and for the reasons given therein, the challenge to constitutionality of the provi sions of the Act, based on Articles 14 and 19(1)(g) is rejected.
Federation of Hotel & Restaurant Association of India etc.
vs Union of India, , followed.
|
vil Appeal No. 1622 of 1987.
From the Judgment and Order dated 23.6.1986 of the Bombay High Court in W.P. No. 562 of 1986.
S.N. Kacker, Mrs. J. Wad and Mrs. Aruna Mathur for the Appellant.
G. Ramaswamy, Additional Solicitor General, A.S. Bhasme, K.R. Nagaraja and R.S. Hegde for the Respondents.
A. Mariarputham for the Intervener.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The question involved in this case relates to the right of a person to obtain a special permit under sub section (6) of section 63 of the (hereinafter referred to as `the Act ') to ply a public service vehicle on routes or portions thereof in respect of which a scheme approved under section 68 D of the Act providing for exclusive operation of contract carriages on the said routes by a State transport undertaking to the complete exclusion of all other persons has been brought into force.
By a notification dated 29th November, 1973 published under section 68 D(3) of the Act by the Government of Maharashtra, the Maharashtra State Road Transport Corporation (hereinafter referred to as `the Corporation ') was authorised to operate contract carriage services in the entire area of the State of Maharashtra and on all routes and portions thereof falling within the said area to the complete exclusion of all other persons except those falling under the seven categories of persons mentioned therein, namely, (1) a State Transport Undertaking, as defined under 8section 68 A(b) of the Act; (2) holders of duly countersigned permits on inter State routes save those falling under the second proviso to section 63(1) of the Act, (3) holders of contract carriage permits for operation of motor cars; (4) holders of contract carriage permits granted for operation of air conditioned vehicles only, (5) PG NO 451 holders of contract carriage permits for operation of vehicles owned by them exclusively for transportation of person, employed by them or students or members of their institutions from and to their residences and respective places of work or study and for occasional tours and excursions; (6) holders of contract carriage permits for operation wholly within the municipal limits of Greater Bombay, and cities of Poona, Sholapur and Kolhapur where the municipal authorities are operating road transport service; and (7) holders of contract carriage permits granted to them exclusively for the daily transportation at appointed hours and between specified terminals and pick up points of only the persons employed by or studying in establishments and institutions with which the said permit holders have specified contract for the purpose.
The said scheme came into force on January, 1974.
The appellant, who did not belong to any one of the above seven categories applied to the Regional Transport Authority, Bombay (C) for a special permit under sub section (6) of section 63 of the Act in relation to the motor vehicle bearing No. MRL 8088 for plying it on the route Bombay to Ashtu Vinayak via Panvel, Mahad, Poona, Shirdi etc.
for a period of five days, namely from 18.9.1985 to 22.9.1985 in Form P. Co. Sp.
A in accordance with rule 80 of the Bombay Motor Vehicles Rules, 1959.
The application made by the appellant for the special permit was rejected by the Secretary, Regional Transport Authority on the ground that the appellant had not produced a `No Objection Certificate ' issued by the Corporation for the grant of a special permit by his Order dated 17.9.1985.
It was also stated that the Corporation being the operator having the exclusive privilege in the entire area of Maharashtra State to operate contract carriages under the scheme it was the primary duty of the Corporation to provide transport facilities to the intending passengers and if it failed to do so, the Corporation could issue a `No Objection Certificate ' to enable other intending operators to enter into contract.
Hence it was held that in the absence of the `No Objection Certificate ' issued by the Corporation no special permit could be issued under section 63(6) of the Act.
Aggrieved by the order passed by the Regional Transport Authority, the appellant filed an appeal under section 64 of the Act before the Maharashtra State Transport Appellate Tribunal, Bombay.
The Tribunal allowed the appeal holding that a special permit issued under section 63(6) of the Act was not a contract carriage permit issued under the Act and that the scheme relied upon by the Corporation under which it had exclusive monopoly to operate contract carriages in the State of Maharashtra to the complete exclusion of all persons other than these who were specifically saved from the operation of the scheme did not have the effect of preventing any person from applying for a special permit PG NO 452 under section 63(6) of the Act to operate a public service vehicle on any of the routes in the State of Maharashtra.
The judgment of the Tribunal was delivered on December 19, 1983.
Aggrieved by the judgment of the Tribunal, the corporation filed a writ petition in Writ Petition No. 562 of 1986 on the file of the High Court of Bombay questioning the correctness of the order of the Tribunal.
The said Writ Petition was heard along with another Writ Petition which had been filed by the Corporation against M/s. Auto Hirers, Tardeo, Bombay and others in Writ Petition No. 561 of 1986.
By a common judgment the High Court allowed the Writ Petition and set aside the order of the Tribunal.
This appeal by special leave is filed against the judgment of the High Court.
It is necessary to refer to some of the provisions of the Act at this stage.
A `contract carriage ' is defined in section 2(3) of the Act as a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum (i) on a time basis whether or not with reference to any route or distance, or (ii) from one point to another, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract, and includes a motor cab notwithstanding that the passengers may pay separate fares.
An application for a contract carriage permit is required to be made in accordance with section 49 of the Act which provides that an application for a permit to use one of more motor vehicles as a contract carriage or carriages shall contain the following particulars, namely, (a) the type and seating capacity of the vehicle or each of the vehicles, (b) the area for which the permit is required; (c) in the case of a motor vehicle other than a motor cab, the manner in which it is claimed that the public convenience will be served by the vehicle; and (d) any other particulars which may be prescribed.
Section 50 of the Act specifies the procedure to be followed by the Regional Transport Authority in considering the application for contract carriage permit.
It says that a Regional Transport Authority shall in considering an application for a contract carriage permit, have regard to the extent to which additional contract carriages may be necessary or desirable in the public interest; and shall also take into consideration any representations which may then be made or which may previously have been made by persons already holding contract carriage permits in the region or by any local authority or police authority in the region or by any local authority or police authority in the region to the effect that the number of contract carriages for which permits have already been granted is sufficient for or in excess of the needs of the region or any area within the PG NO 453 region.
Section 51 of the Act provides for grant of contract carriage permits.
That section provides that subject to the provisions of section 50, a Regional Transport Authority, may, on an application made to it under section 49, grant a contract carriage permit in accordance with the application or with such modifications as it deems fit or refuse to grant such a permit.
In the event of the Regional Transport Authority deciding to grant a contract carriage permit it can attach to the permit any one or more of the conditions specified in sub section (2) of section 51 of the Act.
Section 58 of the Act deals with the duration of a contract carriage permit.
It provides that a stage carriage permit or a contract carriage permit other than a temporary permit issued under section 62 of the Act shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority may specify in the permit.
Such a permit may be renewed on an application made and disposed of as if it was an application for a permit under sub section (2) of section 58 of the Act.
Section 62 of the Act lays down the provisions for grant of a temporary permit to be effective for a limited period not exceeding four months.
Then follows section 63 of the Act which deals with the validation of permits for use outside the region in which granted.
Sub section (1) of Section 63 provides that except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been counter signed by the Regional Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless counter signed by the State Transport Authority or that other State or by the Regional Transport Authority concerned.
Sub section (6) of section 63 of the Act with which we are concerned in this case reads thus: "(6) Notwithstanding anything contained in sub section (1), but subject to any rules that may be made under this Act, the Regional Transport Authority or any one region may, for the convenience of the public, grant a special permit in relation to a public service vehicle for carrying a passenger or passengers for hire or reward under a contract, express or implied, for the use of the vehicle as a whole without stopping to pick up or set down along the line of route passengers not included in the contract, and in every case where such special permit is granted, the Regional Transport Authority shall assign to the vehicle, for display thereon, a special distinguishing mark in the form and PG NO 454 manner specified by the Central Government and such special permit shall be valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or of the State Transport Authority of the other region or of the State Transport Authority of the other State, as the case may be.
" It is no doubt true that the special permit issued under sub section (6) of section 63 of the Act has same of the features of a contract carriage permit but it is not the same as a contract carriage permit.
The distinguishing features of these two types of permits are these: (1) A permit for which an application is made under section 49 of the Act and which is granted under section 51 of the Act is called a contract carriage permit.
A permit issued under section 63(6) of the Act is called a special permit.
(2) While a contract carriage permit issued by a Regional Transport Authority of any one region is not valid in any other region unless the permit has been countersigned by the Regional Transport Authority of the other region as provided under section 63(1) of the Act a special permit issued by one Regional Transport Authority under section 63(6) of the Act is valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or the other State as the case may be.
(3) While the duration of a contract carriage permit is as prescribed under section 58(1) of the Act, a special permit can be issued only for a specific period which may be for a few days only as in the present case in accordance with the rules prescribed for that purpose.
(4) A contract carriage permit is renewable under section 58(2) of the Act, but there is no corresponding provision providing for renewal of a special permit.
Thus it is seen that a contract carriage permit and a special permit are not one and the same.
A special permit is ordinarily taken to meet a need that exists for a few days like carrying a marriage party or persons going on a pilgrimage etc.
The learned counsel for the Corporation relied upon two decisions of the Andhra Pradesh High Court, i.e., Mohd. Basha and Others vs The Secretary, Regional Transport Authority and Another, and G. Shaikh Shavalli, Uravakonda and Others vs The Secretary, Regional Transport Authority, Anantapur and Another A.I.R. 1982 A.P. 296 in support of his contention that a special permit is not in any way different from a contract carriage permit.
In the first case the question involved was whether it was open to a Regional Transport Authority to insist upon the furnishing of the names of passengers who were included in the contract.
The High Court in that case held that the Regional Transport Authority was entitled to call upon the PG NO 455 applicant for a special permit to furnish the names of the passengers in order to satisfy itself that the application was a genuine application for the purposes mentioned in section 63(6) of the Act and was not intended to be a camouflage for using the vehicle unauthorisedly and in deciding the said case the learned Judge, who decided the case, no doubt referred to the common feature, that existed between a contract carriage permit and a special permit, namely, that the passengers could be carried in them only under a single contract without stopping to pick up or to set down along the line of the route passengers not including in the contract.
In the second case the question was whether it was open to the holder of a special permit issued under section 63(6) of the Act to take his bus empty from his State into another State and to pick up passengers there and transport them to the end of their voyage, set them down at their starting point in the other State and drive the bus back to the home State empty.
The High Court said that the holder of a special permit could not be permitted to do so since such a permit can be issued for carrying passenger or passengers for hire or reward in a contract express or implied for the use of the vehicle as a whole without stopping to pick up along the line of the route passengers not included in the contract.
In these decisions it was enough to deal with one of the common features that existed in a contract carriage permit and in a special permit and the ratio of each of the said decisions depended on that common feature.
There was no necessity to examine all the features of the two kinds of permits referred to above in order to determine whether they were the same for all intents and purposes.
In neither of these two decisions the features that distinguished a contract carriage permit from a special permit have been considered.
There was also no consideration of the question whether on the publication of an approved scheme under section 68 D(3) of the Act excluding the operation of contract carriages by persons other than the State Transport Undertaking concerned special permit under section 63(6) of the Act could or could not be issued.
On the other hand there are two decisions of the Karnataka High Court where a special permit issued under section 63(6) of the Act has been held to be different from a contract carriage permit issued under section 51 of the Act.
In S.R.M.S. Tourist Service Co., Bangalore and Others vs The Secretary, Regional Transport Authority, A.I.R. 1975 Karnataka 166 the State Government had published a scheme under section 68 C of the Act proposing to nationalise contract carriage services.
The question for consideration before the Court was whether after the publication of the said scheme it was open to the Regional Transport Authority PG NO 456 to grant a special permit under section 63(6) of the Act.
K. Jagannatha Shetty, J. (as he then was) taking into consideration the peculiar features of a special permit took the view that it was impossible to reach the conclusion that the Legislature intended to equate a contract carriage permit with a special permit and held that one was totally different from the other.
He accordingly held that the publication of a scheme under section 68 C of the Act proposing to nationalise contract carriage service was not an impediment for the grant of permits under section 63(6) of the Act in respect of the routes covered by the scheme.
In K.N. Sreekantaiah vs Deputy Transport Commissioner, Bangalore & Another, a Division Bench of the Karnataka High Court, has taken the view that a special permit issued under section 63(6) of the Act was different from a contract carriage permit issued under section 51 of Act.
While doing so it approved the decision of Jagannatha Shetty, J referred to above.
We are in agreement with the decisions of the Karnataka High Court.
We hasten to add that the conclusions reached in the two Andhra Pradesh High Court decisions are also correct.
It is open to the Regional Transport Authority if it wishes to do so to insist upon the furnishing of the names of passengers, who are proposed to be carried in a bus under the special permit for which an application is made and also that a holder of a special permit cannot run his bus empty to another State to pick up passengers, who are not covered by the contract, there, to drop them in that State at the end of the journey and to return to his own State where he had obtained the special permit in an empty bus, because these two conclusions are based on the condition to be found in section 63(6) itself which provides that a holder of a special permit cannot pick up or set down on the route passengers nor covered by the contract.
In the present case the High Court of Bombay erred in not taking note of the distinguishing features that existed between a contract carriage permit and a special permit.
it is significant that in the State of Maharashtra the Regional Transport Authorities had not taken the view until the High Court pronounced this judgment that in no event a special permit could be issued to a person other than the Corporation and the seven classes of persons who were excluded from the operation of the scheme.
They were issuing special permits to such persons on the production of a `No Objection Certificate ' issued by the Corporation.
A special permit could not be issued after the publication of the approved scheme even when the Corporation had issued a `No Objection Certificate ' because the scheme did not provide that the clause regarding exclusion of other persons from operating contract carriages would cease to operate if the Corporation PG NO 457 issued a `No Objection Certificate '.
The insistence on he production of a `No Objection Certificate ' by the Corporation by a person applying for a special permit under section 63(6) of the Act was therefore wholly unwarranted.
We are of the view that the provision in the scheme which excludes operation of contract carriage services by persons other than those who are permitted to do so under the Scheme refers to only those persons who wish to operated contract carriage services under permits issued under section 51 of the Act.
The scheme does not in any way prevent the issuing of special permits under section 63(6) of the Act by the Regional Transport Authorities in accordance with law as it does not say that holders of special permits under section 63(6) would also be excluded from running the public service vehicles on the rates in question.
It now becomes obvious that the decision in Adarsh Travels Bus Service and another vs State of Uttar Pradesh & Others, [1985] Supp.
(3) S.C.R. 661 on which the High Court has relied has no application at all to the case on hand.
That decision would have been relevant if a contract carriage permit and a special permit were of the same type.
We, therefore, set aside the judgment of the High Court of Bombay against which this appeal is filed.
Since the period in respect of which the special permit was sought has expired, there is no necessity to issue a writ directing the Regional Transport Authority to consider the application of the appellant for a special permit again.
Hence, we do not issue any such direction.
The true legal position has, however, been set out above.
The appeal is accordingly disposed of.
No costs.
R.S.S. Appeals disposed of.
| The appellant, an employee of Respondent No. 1, was subjected to disciplinary proceedings as also a criminal prosecution simultaneously on the allegation that he physically assaulted a supervising officer.
He filed a civil action in the trial court asking for injunction against the disciplinary action pending criminal trial.
The trial court stayed further proceedings in the disciplinary action till disposal of the criminal case.
In appeal, the appellate court affirmed the aforesaid order.
However, the High Court allowed the Revision Application of the Respondent and set aside the impugned order on the ground that there is no bar for an employer to proceed with the departmental proceeding with regard to the same allegation for which a criminal case is pending.
Allowing the appeal to this Court, HELD: l.
The order of the High Court is vacated and that of the trial court as affirmed in appeal is restored.
The criminal action and the disciplinary proceedings were grounded upon the same set of facts.
The disciplinary proceedings should have been stayed and the High Court was not right in interfering with the trial court 's order of injunction which had been affirmed in appeal.
[826A B] 2(i) While there could be no legal bar for simultaneous proceedings being taken, yet, there may be cases where it would be appropriate to defer disciplinary proceedings awaiting disposal of the criminal case.
In the latter class of cases it would be open to the delinquent employee to seek such an order of stay or injunction from the court.
[825E F] 2(ii) Whether, in the facts and circumstances of a particular case, there should or should not be such simultaneity of the proceedings would then receive judicial consideration and the Court will decide in the given circumstances of a particular case as to whether the PG NO 821 PG NO 822 disciplinary proceedings should be interdicted, pending criminal trial.
[825F G] The Delhi Cloth and General Mills Ltd. vs Kushal Bhan, ; ; Tata Oil Mills Co. Ltd. vs Its Workmen, ; and Jung Bahadur Singh vs Baij Nath Tiwari, ; , relied upon.
Rama P. C. vs Superintendent of Police, Kolar & Anr., AIR ; Ali Mohd. & Ors.
vs Chairman T.A. & C. Udhampur, ; Moulindra Singh vs The Deputy Commissioner & Ors., 1564; Shaikh Kasim vs Superintendent of Post Office, Chingletut, AIR 1965 Mad. 502; Khusi Ram vs Union of India, and Project Manager, ONGC vs Lal Chand Wazir Chand Chandna, , referred to.
It is neither possible nor advisable to evolve a hard and fast, straight jacket formula valid for all cases and of general application without regard to the particularities of the individual situation.
|
(C) No. 655 of 1991.
(Under Article 32 of the Constitution of India).
Santosh Kumar Rungta and R.P. Gupta for the Petitioner.
V.C. Mahajan, Ms. Niranjana Singh and Ms. A. Subhashini for the Respondents.
The Judgment of he Court was delivered by KULDIP SINGH, J. National Federation of Blind a representative body of visually handicapped persons in India has filed this petition under Article 32 of the Constitution of India seeking a writ in the nature of mandamus directing the Union of India and the Union Public Service Commission to permit the blind candidates to compete for the Indian Administrative Service and the Allied Services and further to provide them the facility of writing and civil services examination either in Braille script or with the help of a Scribe.
Braille is a system of writing for the blind in which the characters consist of raised dots to be read by the fingers.
Further relief sought in the petition is that Group A and B posts in Government and public sector undertakings which have already been identified for the visually handicapped persons be offered to them on preferential basis.
The visually handicapped constitute a significant section of our society and as such it is necessary to encourage their participation in every walk of life.
The Ministry of Welfare, Government of India has been undertaking various measures to utilise the potentialities of the visually handicapped persons.
The Central as well as the State Governments have launched several schemes to educate, train and provide useful employment to the handicapped.
The Central Government has provided reservations to the extent of 3% vacancies in Group C and D posts for the physically handicapped including blind and partially blind.
There has been a growing demand from the visually handicapped persons to provide reservations for them in Group A and B posts under the Central Government.
The Ministry of Welfare, Government of India has a standing Committee or identification of jobs in various Mini stries/Departments and public sector undertakings for the physically hand 559 icapped.
By an order dated December 30, 1985 the Government of India directed the Standing Committee to undertake the identification of jobs for the handicapped in Group A and B Services under the Government and public sector undertakings.
The Committee submitted its report which was published on October 31, 1986.
Copy of the report has been placed on the record of this petition.
In the introduction to the report given by Mr. M.C. Narsimhan, Joint Secretary to Government of India and Chairman, Stating committee on identification of jobs for handicapped, it has been stated as under: "A Sub Committee, which was set up to assist the Standing Committee visited a large number of Public Sector Undertakings and observed people actually working in a variety of jobs and the working conditions in which these jobs are performed.
The Sub Committee had detailed discussions with the Chiefs and Senior Officers of the Public Sector Undertakings as also with officers of the Central Government Departments.
A fist of the public sector undertakings and the list of the officers of the Undertakings with whom the Sub Committee had discussions is annexed to the report.
The Committee after detailed discussions and on the spot study has prepared a comprehensive list of 416 categories in Group A and B posts in Government Offices and Public Sector Undertakings, with their jobs descriptions, the physical requirement of each group of job and matched them with various categories of disabilities.
" The Committee devoted special attention to the visually handicapped.
Para 8 of the report which relates to the blind is as under: "However, in the case of the blind the position is somewhat different.
Seeing, reading, writing and movement are essential ingredients of most Government jobs.
Therefore, a similar approach in respect of blind persons may be difficult.
It would not be possible to generalise that blind person can do most jobs as we have found for those with locomotor and hearing disabilities.
The Committee found 560 that in higher posts is Government the help of a personal assistant or a stenographer is generally available.
But this facility is.
not available even in higher posts in public sector undertakings.
Wherever this facility is available a blind person may not find it difficult, in certain groups of posts, to handle the job.
It is also possible, in relation to other posts where stenographic assistance is not available that some other facilities can be provided to a blind employee.
To compensate 'reading deficiency, readers ' allowance can be provided to blind employees to enable them to engage a reader.
Similarly, to compensate for "writing deficiency", the blind employee should be required to know typing.
Adequate knowledge of typing should be prescribed as an essential qualification for blind employees for public employment.
Where mobility may also be one of the main ingredients of a job it is difficult to compensate blind employees for this "deficiency.
The Committee would also emphasise that the blind employee should be fully responsible for the duties assigned to them, despite the provision of reader 's allowance and typing skill.
The Committee would also suggest that the maximum reader 's allowance should be limited to Rs.200 p.m. to blind employees recruited to Group A and B post. ' The Committee has identified about 416 categories of Group A and B posts which are suitable for the handicapped.
The Committee has further specified that the visually handicapped (blind and partially blind) are suitable for appointment to the following categories of Group A and B post: No. in the List Category of Group Annexed to the Post Report 178 to 187 Hindi officers A & B 191 to 192 Job Analyst A & B 193 to 199 Labour Welfare Officers A & B 200 to 209 Law Officers A & B 561 237 to 242 Personal Assistants B 243 to 256 Personnel Officers A & B 279 to 291 Public Relations Officers A & B 295 to 317 Research Officers A & B 354 to 363 Training Officers A & B 364 to 376 Administrative Officer (Non Secretarial) A 377 to 384 Administrative Officers (Secretarial Sr.) A 385 to 401 Administrative Officers (Secretarial Junior) A & B 409 Asstt.
Admin.
Officer We have only quoted the list of categories from the report to illustrate the point that the Committee appointed by the Government has in its report identified certain categories of posts to which the blind and the partially blind can be appointed.
Government of India Through Ministry of Personnel issued office memorandum dated November 25, 1986 wherein it accepted the report of the Committee and took a policy decision that in respect of the posts identified by the Committee the handicapped persons shall be given preference in the matter of recruitment to those posts.
The office memorandum is re produced hereunder: "No.
F.36034/4/86 Estt.(SCT) Government of India Ministry of Personnel, Public Grievances & Pensions Department of Personnel & Training . . .
New Delhi, the 25th November, 1986 OFFICE MEMORANDUM Subject: Identification of jobs for the physically handicapped persons in Groups 'A ' and 'B ' posts filled by direct recruitment in the Central Government services and Public Sector Undertakings.
562 The undersigned is directed to say that with a view to effecting optimum utilisation of potentialities of physically handicapped which constitutes a significant section of the population in the country, the Ministry of Welfare constituted a Standing Committee for identification of jobs for the physically handicapped in the Central Government services and Public Sector Undertakings.
The Standing Committee on identification of jobs set up a sub Committee for on the spot identification of jobs for the physically handicapped persons in Group 'A and 'B ' posts after making an in depth study of Undertakings as well as in consultation with the concerned authorities.
This subCommittee in its Report (submitted to the parent Committee) identified 420 jobs in Group 'A ' and Group posts/services alongwith the physical requirements and functional classifications of disabilities indicating what jobs can be held by each category of disabled people and with what disability.
It has been decided that in respect of identified posts which can be held by physically handicapped persons preferences to physically handicapped persons will be ,given in the matter of recruitment to those posts.
A copy of the report of the Committee referred to in para 1 is enclosed for information guidance and necessary action.
The list of jobs identified by the Committee on suitable for being held by physically handicapped persons is not exhaustive.
The Ministries/Departments can further supplement the list based on their knowledge for jobs requirements, essential qualifications etc.
The Ministries/Departments after identifying all the posts which can be held by physically handicapped persons may inform the UPSC at the time of sending their requisitions for filling vacancies in respect of those posts, that preference is to be given to physically handicapped persons in the matter of recruitment.
The UPSC have agreed in principle to give preference to physically handicapped persons in filling the identified posts.
The Depart 563 ment of Personnel and Training will be issuing general instructions to enable preference being given to the physically handicapped persons in such cases.
The Ministry of Finance etc.
are requested to bring these instructions to the notice of all concerned.
Sd/ (BATA K, DEY) DIRECTOR (JCA) ' From the office memorandum quoted above it is obvious that the Government of India has taken the following policy decisions to implement the Committee report: 1.
The Government of India has taken cognizance of the fact that the Standing Committee on identification of jobs through its Sub Committee has identified 420 jobs in Group A and Group B posts/services along with the physical requirements and functional Classifications of disabilities indicating what jobs can be held by each category of disabled people and with what disability.
The decision has been taken that in respect of identified posts which can be held by physically handicapped persons preference to physically handicapped persons will be given in the matter of recruitment to those posts.
The list of jobs identified by the Committee is not exhaustive, the Ministries/Departments can further supplement the list based on their knowledge of job requirements, essential qualifications etc.
The Ministries/Departments after identifying all the posts which can be held by physically handicapped persons may inform the Union Public Service Commission at the time of sending their requisitions for filling vacancies in respect of those posts, that preference is to be given to physically handicapped persons in the matter of recruitment.
The Union Public Service Commission has agreed in principle to give preference to physically handicapped persons in filling identified posts.
564 6.
The Department of Personnel and Training will be issuing general instructions to enable preference being given to the physically handicapped persons in such cases.
Mr. S.K Rungta, learned counsel for the petitioner has contended that the memorandum dated November 25, 1986 was issued more than seven years back but so far the decisions taken therein have not been implemented.
Mr. Rungta (himself visually handicapped) has argued his case with utmost clarity.
Mr. Rungta was fully conversant with all the relevant annexures to the petition.
He referred to the relevant pages in the bulky paper book with perfect ease.
We did not feel even for a moment that the case was being argued by a visually handicapped lawyer.
Mr. Rungta 's performance before us amply.
proves the point that the visually handicapped persons can perform the jobs entrusted to them with equal efficiency.
The question of giving preference to the handicapped in the matter of recruitment to the identified posts is a matter for the Government of India to decide.
The matter is pending for decision with the Government of India for the last several years.
While appreciating various measures undertaken by the Government to provide useful employment to the handicapped persons we commend the Government of India to decide the question of providing preference/reservation to the handicapped in Group A and B posts as expeditiously as possible.
So far as the claim of visually handicapped for writing the civil services examinations, in Braille script or with the help of Scribe, is concerned, we are of the view that their demand is legally justified.
The fist of category A and B posts, identified as suitable for the visually handicapped by the Committee, includes number of posts which are filled as a result of the civil services examinations.
When there are posts to which blind and partially blind can be appointed, we see no ground to deprive them of their right to compete for those posts along with other candidates belonging to general category.
Mr. V.K. Cherian, Under Secretary to Government of India, Ministry of Personnel in his affidavit dated March 10, 1992 filed before this Court has stated as under: 565 "If there were Group 'A ' and 'B ' jobs, which could be filled up by the blind, the same should also be identified.
Once the jobs were identified, they could be filled up from among the blind and also other handicapped persons such as deaf and orthopaedically handicapped.
Going by the Report of the Committee and the posts identified by it, the Union Public Service Commission made the observation that the posts identified as suitable to be held by the physically handicapped persons, particularly those iden tified for the blind are not such which are required to be filled on the basis of competitive examination conducted by the Commission '.
The observations of the Union Public Service Commission as projected by Mr. V.K. Cherian in his above quoted affidavit do not seem to be correct.
After going through the list of the posts identified as suitable for visually handicapped (blind and partially blind) it is obvious that there are number of posts which are required to be filled through the civil services examination and other competitive examinations conducted by the Commission.
Group A and B posts in the category of Administrative Officers (Secretarial Senior) and Administrative Officer (Secretarial Junior) are necessarily to be filled as a result of civil services examination by the Union Public Service Commission.
If some of the posts in the Indian Administrative Service and other Allied Services, as identified by the Committee, can be filled from amongst the visually handicapped persons then we see no reason why they should not be permitted to sit and write the civil services examination.
We make it clear that once recruited to the lowest level of the service the visually handicapped persons shall not be entitled to claim promotion to the higher posts in the service irrespective of the physical requirements of the jobs.
If in the hierarchy of promotional posts it is found by the Government that a particular post is not suitable for the visually handicapped person he shall not have any right to claim the said post.
In the light of the above discussion we partly allow the writ petition and direct the Government of India and the Union Public Service Commission to permit the visually handicapped (blind and partially blind) eligible candidates to compete and write the civil services examination which is ordinarily held yearly by the Union Public Service Commission.
566 We further direct that they shall be permitted to write the examination in Braille script or with the help of a Scribe.
There shall be no orders as to costs.
S.P.S. Petition allowed partly.
| The Public Works Department of Government of Haryana consists of three wings viz., Irrigation, Roads and Buildings and The Engineering Service in the Irrigation Branch comprises both Class I service consisting of Assistant Executive Engineers, Executive Engineers and Superintending Engineers and Class II service including Assistant Engineers.
While the Assistant Executive Engineers are recruited by direct recruitment only, the Executive Engineers are recruited by (i) direct recruitment; (ii) by transfer; (iii) by promotion from Class II service.
, The cadre strength of Assistant Engineers, fixed under tie Rules is very large 354 as compared to the cadre strength of Assistant Executive Engineers.
For the purposes of promotion to Executive Engineers both Assistant Executive Engineers and Assistant Engineers are eligible for which inter se quota is fixed under the Rules.
The Haryana Public Service Commission issued a notification in 1985 inviting applications for selection to the posts of Assistant Executive Engineers for all the three wings of the P.W.D.
Although the requisition from the Government was to select Assistant Executive Engineers only for two wings viz. Public Health and Buildings and Roads yet the Commission notified the vacancies with respect to Irrigation Branch also stating that posts in the said category are also likely to be filled from the suitable candidates from this very advertisement after the receipt of demand from the Government.
On the basis of written test and interview selections were made for Public Health and Buildings and Roads wings but no selections were made for the Irrigation wing because even by the date of finalisation of selections, no requisition or demand had come from the Government.
The appellants, who were not selected, filed writ petitions in the Punjab and Haryana High Court for a direction to respondents to fill up vacancies of Assistant Executive Engineers and others falling to the quota of direct recruits from amongst the applicants who had applied in pursuance to the advertisement and for a further direction to the State of Haryana to send requisition to the Commission to fill up all vacancies which are meant for direct recruits.
The High Court dimissed all the petitions.
In appeals to this Court it was contended on behalf of the appellants that (1) the Government acted arbitrarily in not sending the requisition, inspite of the fact that vacancies in Irrigation Branch existed for a number of years; (2) when the rules created a particular category and the cadre strength was also fixed therefor and more particularly when a quota was reserved for them in the channel of promotion to the category of Executive Engineers, it was not open to the Government to nullify the spirit and object behind the Rules by refusing to make appointment to the said category , (3) the procedure adopted by the Haryana Public Service Com mission was contrary to Rules because under the Rules a candidate obtaining 50 per cent marks in the written test is entitled to be called for viva voce, but the Commission arbitrarily prescribed a threshold of 65 per 355 cent which resulted in denial of opportunity of selection to the appellants.
The stand taken by the Government of Haryana was that the decision not to send requisition for filling up the vacant posts of Assistant Executive Engineers in Irrigation Branch was bona fide and actuated by relevant considerations because a large number of Assistant Engineers, who can be posted only as Sub Divisional Officers/Sub Divisional En gineers, are in surplus over and above the cadre strength and if the Assistant Executive Engineers are also appointed as demanded by the appellants, they will be in further surplus inasmuch as they too can be posted only as Sub Divisional Officers/Sub Divisional Engineers.
Allowing the appeals in part, this Court, HELD:1.
The Public service commission had no authority to include the vacancies in the Irrigation Branch in the notification issued by it when the Government had not asked for it.
May be the Commission did so bona fide.
Even so,, the fact remains that none were selected against the vacancies in the Irrigation Branch, evidently because no demand/requisition ever arrived from the Government.
Indeed, it is not as if the appellants appeared only for the vacancies in Irrigation Branch.
It was a composite notification for all the three wings.
The appellants do not say that they confined their applications to Irrigation wing alone.
nose selected for the other two wings had admittedly scored more marks at the selection.
Therefore, the mere appearance at the selection does not clothe them with the right to selection or appointment.
[366G H, 367A C] State of Haryana vs Subhash Chandra Marwaha, [1974] 3 S.C.C. 220 and LJ.
Divakar vs Government of Andhra Pradesh, A.I.R. , relied on.
Where the Rules have created a particular category, fixed its cadre strength and have also prescribed a quota for such categroy in the matter of promotion to the higher category, the Government would not be justified in not making appointments to such category for over a decade unless there are very strong and good reasons therefor.
The Government would not be justified in nullifying though not in word, but in spirit the Rules in this manner.
[367C D] 2.1.
There is no reason why the Government did not think it fit to 356 make some ad hoc.
appointments to the category of Assistant Executive Engineers when it was recruiting such a large number, on ad hoc basis, to the category of Assistant Engineers.
At the same time, the Courts have to think twice before adding the numbers to the already over loaded service.
It is not so much a question of 'punishing ' the errant but one of what to do with the surplus personnel and the consequent unwarranted burden upon the public exchequer.
On balancing the contending rights and equities, the Court is of the opinion that at least part of the cadre strength of Assistant Executive Engineers in the Irrigation Branch should be riled up in the near future.
[367E G] 3.
The selection held in which the appellants had appeared, cannot be directed to be finalised.
The only direction that can properly be made herein is to direct the Government to take steps for filling up the vacancies existing in the category of Assistant Executive Engineers in the Irrigation Branch as early as possible.
Atleast half the vacancies therein should be filed within a period of one year from today.
[367H, 368A B] I.J. Divakar vs Government of Andhra Pradesh, A.I.R. 1982 S.C. 1555, distinguished.
A reading of the first proviso to Sub.
Rule (2) of Rule 7 shows that it prescribes a minimum percentage of marks in the written test both for appointment as well as for being called for interview (viva voce).
It does not create a right in the candidate, who has obtained the prescribed percentage of marks, to be called for interview.
[363A] Ashok Kumar Yadav vs State of Haryana, A.I.R. 1987 S.C. 454, relied On.
Umesh Chandra vs Union of India, ; ; Nilima Shangla vs State of Haryana, ; and P.K Ramachandra Iyer & Ors.
vs Union of India & Ors.
, ; , referred to.
|
Appeal No. 2909 of 1993.
From the Judgment and Order dated 5.4.1990 of the Patna High Court in C.W.J.C. No. 1465 of 1989 (R).
S.B. Upadhyay for the Appellant.
Uday Sinha, S.K. Verma and Ranjit Kumar for the Respondents.
The following Order of the Court was delivered: Special leave granted.
The controversy in the present case is whether the appellant was qualified to appear for the M.D. (General Medicine) Examination as a teacher candidates The High Court by the impugned order has taken the view that he was not, on the around that he had not completed 3 years training period including one year of the house job, prior to qualifying himself for appearing for the examination.
912 The respondents, P.G. Medical Students Association had challenged the permission given to the appellant to appear for the said examination on two rounds.
The first ground was that he was not a teacher and the second ground was that he had not undergone the necessary training for 2 years and had also not done housemanship in General Medicine for one year.
The requirement of the relevant regulation is that the candidate must have done one year 's housemanship prior to the admission to the Post graduate degree in the same subject in which he wants to appear for the examination or at least six months housemanship in the same Department and the remaining six months in the allied Department.
The period of training thus, shall be 3 years after full registration including one year of the housejob.
The appellant claimed that he was teacher in the Department of Biochemistry in the Rajendra Medical College (R.M.C.) and filed an application for his registration as a student in M.D.
The University forwarded the application to the then Principal of Rajendra Medical College cum Dean, Faculty of Medicine, Dr. C.J.K. Singh.
He objected to his registration on the ground that the appellant was not posted in any of the teaching posts in medical college.
The then Head of the Department of Medicine, Dr. section Sinha also wrote to Dr. C.J.K. Singh that the appellant though attached to the Department of Medicine, was a Bio chemist attached to the Renal Unit and dealt entirely with the subject of Biochemistry.
The appellant filed a writ petition being C.W.J.C. No. 755 of 1988 praying for appropriate direction to the University to permit him to submit his thesis in M.D. (Medicine) examination.
The University contested his claim that he was a teacher and took the stand that since he was not a teacher, he was not eligible for training in M.D. (General Medicine).
For this purpose, the University relied upon the.
letters of Dr. C.J.K. Singh and Dr. section Sinha.
The Court dismissed the said petition on 23rd May, 1988 without deciding the issue as to whether the appellant held a teaching post but recorded a finding that the appellant was not entitled for admission to the examination in M.D. as he had not submitted his thesis and had also failed to produce a certificate of having undergone satisfactory training.
The High Court also held that the acceptance of the thesis was a pre requisite for appearing at the examination.
However, thereafter the present petition was filed by the respondent Association when the appellant was granted permission to appear for the said examination being satisfied that the post which he was holding was a teaching post as pointed out by the State Government.
In this petition, the University supported the appellant by asserting that the, appellant was appointed against a teaching post 913 in the Department of Medicine.
The High Court has again not decided the point whether the appellant was appointed against a teaching post in the Department of Medicine.
For not deciding the point, the High Court has given an additional reason, viz., that many persons who were in fact appointed as teachers would be prejudicially affected since they would become junior to the appellant and they were not before the Court.
For the purposes of the disposal of the writ petition, the High Court presumed that the appellant was teacher in the Department of Medicine in the Rajendra Medical College.
The Court has, however, made it clear that this presumption would be confined to the present case only and the appellant would not be entitled to claim any benefit on the basis of the said presumption.
The High Court has, however, allowed the respondents ' petition only on the grounds that the appellant had not undergone training for 3 years prior to his application to appear for the said examination.
In order to come to the said conclusion, the High Court relied on the fact that although the petitioner was registered with Dr. S.S. Prasad as a trainee on 6th February, 1986, he had not undergone training with him and it was only from 4th February; 1988 onwards that he had undergone the training with another Supervisor, viz., Dr. P.R. Prasad.
Hence, on the date he made the application for appearing in the examination, he had not completed the required 3 years ' training period.
In support of its finding that the appellant had not completed 2 years ' training with Dr. S.s.
Prasad, the former Supervisor, the High Court has relied upon two facts.
The first is that Dr. S.S. Prasad had written to the University that appellant had undergone no training under him.
The second circumstance relied upon is that the second Supervisor, viz., Dr. P.R. Prasad was not appointed as appellant 's Supervisor as per the suggestion of the Dean of the Faculty of Medicine since respondent No. 7 to the petition who had recommended Dr. P.R. Prasad was not the Dean of the Faculty of Medicine at the time of the recommendation.
Hence, according to the High Court even the training of the appellant under Dr. P.R. Prasad was not a valid training The record shows that admittedly the appellant was registered as a trainee under the former Supervisor, Dr. S.S. Prasad on 6th February, 1986 and he continued to be the trainee under him till 4th February, 1988 on which date he was changed as a Supervisor at the request of the appellant.
In his place Dr. P.R. Prasad was appointed as the appellant 's Supervisor on 17th December, 1988.
The appellant, thereafter continued to be the trainee under Dr. P.R. Prasad from 19th December, 1988 to 3rd August, 1989.
Thus the petitioner was registered for M.D. (General Medicine) examination of the University on 6th February, 1986 and by the 3rd August, 1989 when he was due to appear for the examination he had completed 3 years ' training under the two Supervisors.
914 Coming to the respondent Association 's contention that the earlier Supervisor, Dr. S.S. Prasad had denied that the appellant had received any training under him, the University has stated that for the purpose of training, the Supervisor has nothing more to do than guide the candidate for writing thesis.
But more than that, the letter written by Dr. P.V.P. Sinha, the Principal of RMC and Dean, Faculty of Medicines of the Ranchi University to the Registrar of the Ranchi University on 4th July, 1989 speaks volumes on the attitude adopted by Dr. S.S. Prasad towards the appellant.
This letter is Annexure 11 to the rejoinder of the appellant.
The letter makes a complaint that Dr. S.S. Prasad by bypassing the office of the Principal, RMC had addressed directly to the Registrar of the University two letters on 4th May and 3 1st May, 1989.
The Principal then states that he examined the original letter meaning thereby the letter dated 4th May, 1989 and the connected matter and found that Dr. S.S. Prasad had been telling lie to the University and trying to mislead and that is why he had sent the letter directly to the University.
Dr. Prasad had written another letter to the University on 16th May, 1988 regarding the appellant and in that letter he had written that the appellant had been prevented from doing research work connected with his thesis.
The Principal then proceeds to write that when he asked Dr. Prasad in writing vide his letter dated 21st June, 1989 to give him the letter of the Principal or the Dean or the University which had authorised him to prevent the appellant from doing his research work, Dr. Prasad failed to produce any letter.
Thus according to the Principal it became very clear that Dr. Prasad had written the letter dated 16.5.1988 directly to the University to harm the appellant 's career.
The Principal then proceeds to write to University that he would like to bring to the attention of the University that Dr.
Prasad had signed the thesis and certificate of another doctor, viz., Dr. Ashok Kumar Singh on 16.10.1984 when that doctor was registered as an M.D. student in General Medicine only on 26.7.1984 and when Dr. Prasad was not his guide.
It was Dr. R.C.N. Sahai who named the guide for the said Dr. Ashok Kumar Singh.
The Principal then writes that from the perusal of the records as well as from the reply to the explanation sought by him from Dr. Prasad, it had become clear that Dr. Prasad was not made the guide of Dr. Ashok Kumar Singh either by the University or by the Dean or by the Principal and yet he had signed the thesis of Dr. Ashok Kumar Singh barely after 3 months and 11 days of his registration.
The Principal then points out in that letter that a comparison of the two events made it apparent that Dr. Prasad had favoured Dr. Ashok Kumar Singh by violating all the norms statutes of the University and of the Medical Council of India and that even after the University had appointed Dr. P.R. Prasad as the guide of the appellant, Dr. S.S. Prasad was bent upon harming the career of the appellant.
The Principal then adds that there was no record in his office to show that the appellant was ever suspended by the University for doing his M.D. General Medicine.
He had asked Dr. S.S. Prasad to produce any notification of the University regarding the alleged 915 suspension and Dr. S.S. Prasad had failed to do so.
He then concludes the letter by stating that he would, in the circumstances, recommend the University to consider the desirability of removing Dr. S.S. Prasad from all examination work of the Ranchi University.
It is thus apparent that Dr. S.S. Prasad, the former Supervisor of the appellant had become hostile to him and was apparently not cooperating with him in his thesis.
Yet the appellant had proceeded to write a thesis and when it became unbearable, he requested for the change of his Supervisor on 4th February, 1988 pursuant to which the new Supervisor, Dr. P.R. Prasad was appointed on 17th December, 1988.
However, till the new Supervisor was appointed on 17th December, 1988, he continued to be registered with Dr. S.S. Prasad and there is no dispute that under the new Supervisor, viz., Dr. P.R. Prasad he completed his training from 17th December, 1988 to 4th August, 1989.
There is further no dispute that the appellant submitted his thesis prior to the examination.
As regard the qualification of the 7th respondent to make the appointment of Dr. P.R. Prasad as the guide, although the record before us does not show as to who the 7th respondent was, we take it that it is the then Principal, Dr. P.V.P. Sinha who was probably added later as the 7th respondent to the writ petition to whom the High Court has referred to in its judgment.
It is asserted from the Bar on behalf of the appellant that Dr. P.V.P. Sin ha was both the Principal and the Dean of the Faculty of Medicine of the University from a date much prior to 17th December, 1988.
That statement is not controverted nor does the counter filed by the 1st Respondent make any such point.
If that is so, then on the date that Dr. P.R. Prasad was appointed as a Supervisor he was so appointed by a duly qualified person.
Since the High Court has not one into the question as to whether the appellant was appointed against a teaching post and has proceeded on the footing that he was so appointed.
it is not necessary for us to go into the said question.
The appellant was thus fully qualified for appearing in the said examination and in fact on account of the interim orders passed by the High Court he has appeared for the examination.
The High Court has, however, by the impugned decision restrained the University from declaring his results in the examination.
The facts narrated above would reveal that this was a dispute relating to an individual and turned on the facts.
There was no question of law involved in it.
We have, therefore, not understood how the respondent Association could convert an individual dispute into a public interest litigation.
We are of the view that cases where what is strictly an individual dispute is sought to be converted into a public interest litigation should not be encouraged.
The present proceeding is one of the 916 kind.
The learned counsel appearing, for the respondent State wanted to support the respondent Association.
We did not think it necessary to hear the State since the dispute was essentially with regard to the interpretation of the facts relating to the training of an individual medical officer, viz., the appellant.
The University had on the facts of the case accepted the contention of the appellant that he had completed 3 years ' training.
We have not been able to understand as to what stake the State has in denying the said factual position.
It must be remembered in this connection that the State Government itself by its letter of 17th September, 1984 written to the Principal, RMC and had asserted that the post which the appellant was holding, viz., that of Bio chemist in the Artificial Kidney Unit of RM College and Hospital, was a teaching post and that the appellant was posted to that post since 12th February, 1982.
The letter further proceeded to state that the Principal and the Head of the Department of Medicine of RM College and Hospital has also given written certificate that the appellant was posted on a teaching post and therefore his teaching experience would be counted with the Kidney Unit.
A request was, therefore, made in the letter that the appellant 's application for his registration as M.D. General Medicine candidate [Teacher] be forwarded to the University and further action in that regard be intimated to the Regional Additional Commissioner cum Principal Secretary.
There is no dispute further that according to the rules, 4 years teaching experience in the College and the Hospital [which is always combined with practice in the Hospital] is considered equivalent to one year 's house job experience.
It the face of these facts, it is difficult to understand the stand taken by the State Government in the present proceedings.
There is no doubt in our mind that some forces are at work to obstruct the appellant 's career on one ground or the other.
The State Government should not become a party to this came.
In the circumstances, we allow the appeal, set aside the decision of the High Court and hold that the appellant was qualified to appear for the M.D. (General Medicine) examination as a teacher candidate.
Hence, we direct the University to declare his results in M.D. (General Medicine) examination for which he has appeared, forthwith.
There will be no order as to costs.
VPR Appeal allowed.
| The appellant was one of the Directors of a Company registered under the Companies Act This company was also registered under the Factories Act and its object was to manufacture Motorcycles and its accessories.
It had a Managing Director, Joint Managing Director and Directors including the appellant for managing the establishment.
The respondent an Enforcement Officer, Regional Provident Fund Commissioner 's Office laid 18 complaints against six accused including the appellant (A 6) and the Company employer, for the failure to deposit the contribution for the period October to December 1990 to the Provident Fund Account under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, Employees Provident Fund Scheme 1952, Employees Family Pension Scheme, 1971 and Employees Deposit Linked Insurance Scheme 1976, offences punishable under Section 14A of the 1952 Act read with para 76 of the 1952 Scheme.
On the Magistrate taking cognizance of the complaint, the appellant filed Criminal Miscellaneous Petitions in the High Court for quashing the complaint as they did not contain the relevant averments constituting offences against the appellant.
It was contended that the appellant was a mere Director of the Company, that he was neither incharge of the company nor was 509 responsible to comply with the provisions of the aforesaid Act and the Schemes thereunder.
Reliance was placed on the definition of 'employer ' in Section 2 (e) of the Act and the liability that had been fastened on the Managing Director or the Manager or occupier of the establishment to abide by the Act and the Schemes.
The High Court dismissed the applications.
The appellant appealed to this Court and contended that the reading the definition of 'employer ' in section 2(e) of the Act with Sections 30,14(1a) and para 31 of the Scheme, demonstrate that the employer in relation to the establishment means the owner or occupier of the factory which includes the Agent or the Manager of the factory under the Factories Act, that there was an occupier and Manager recorded for the instant company, and that they were Incharge of and were solely responsible to comply with the Act and the Schemes thereunder and that no specific averments have been made in the complaint making the appellant responsible for the management of the factory or the liability to comply with the Act and the Schemes.
The complaint laid against the appellant was therefore illegal and the cognizance taken by the Magistrate was vitiated by manifest error of law.
On the question: whether a Director of a Private Company, who is neither an occupier nor a manager can be prosecuted under Section 14(A) of the Employees ' Provident Fund and Miscellaneous Provisions Act, 1952 for violation of the Provident Fund Scheme.
Dismissing the appeals, this Court, HELD: (By the Court K. Ramaswamy & R.M. Sahai, JJ.) 1.
The Employees ' Provident Fund and Miscellaneous Provisions Act 1952 by Section 2(e) defines 'employer '.
It is an inclusive definition and consists of two clauses which are vide in their sweep.
In Clause (i) are included not only owner or occupier but even the agent or manager.
When it comes to establishments other than factory it is not confined to owner or occupier but to all these who have central or are responsible for the affairs of the company.
It includes even director.
Therefore, every such person who has the ultimate control of the affairs of the company becomes employer Section 2(k) defines `occupier ' which means the person who has the ultimate control of the factory, and where the said affairs are entrusted to a Managing Agent, such agent shall be deemed to be the occupier of the factory.
Therefore, by its extended definition its sweep is enlarged bringing within its scope the person who is incharge of or responsible for,the management or 1 510 ultimate control over the affairs of the factory or establishment.
In the event of entrustment to a Managing Agent, such Managing Agent shall also be deemed 'to be the occupier of the factory '.
(514 GH,) 2.
In the instant case, the appellant having been declared himself as one of the person Incharge of and was responsible for conduct of the business of the establishment or the factory in Form 5A the complaint and non compliance thereof having been enumerated in para 3 of the complaint, it was validly made against the appellant along with other accused for the alleged Contravention.
Necessary allegations bringing out the ingredient of offence have been made out in the complaint.
Therefore, the Magistrate has rightly taken cognizance of the offence alleged against the appellant.
(518 A B) (Per K. Ramaswamy, J.) 1.
The Act and the Schemes are self contained code for deduction from the salary of the employees and the responsibility to contribute in equiproportion of the employer 's share and deposit thereof in the account within the specified time under the Act and the Schemes into the account It is a welfare legislation to provide benefits to the employees as per the schemes.
They need mandatory compliance and violation thereof visits with penal action.
(514 E) 2.
Section 6 fastens the obligation on the employer.
It postulates that the contribution to the fund shall be made by the employer.
(515 A) 3.
Under para 30 of the Employees ' Provident Fund Scheme, 1952 and the other Schemes, the employer shall deposit the contribution to the Fund.
(515 B) 4.
The employer shall, in the first instance, pay both the contributions payable by himself(in the Scheme referred to as employer 's contribution) and also on behalf of the members employed by him directly or through a Contractor, the contribution payable by such member (in the Scheme re ferred to as member 's contribution).
(515 G) 5.
Para 38 provides that the employer shall send to the Commissioner within 15 days of the close of every month, pay the same to the Fund by separate Bank Drafts or cheques and the administrative charges within 25 days of close of the month, the employer shall submit a monthly consolidated 511 statement as per form 5 with particulars mentioned therein.
(515 H, 516 A) 6.
Para 76 also fastens criminal offence for non compliance of the provisions of the schemes on the persons incharge of and responsible for the management or control of the establishment.
Every person, who at the time the offence was committed, was Incharge of and was responsible to the establishment for conduct of its business as well as the company shall be liable to be proceeded against and punished accordingly.
(517 C) 8.
Form 5 A read with para 36A give an option to the employer to furnish particulars of ownership and the branches of the department, owners, occupiers, directors, partners, manager or other person or persons who have ultimate control over the affairs of such factory or establishment incharge of and responsible for the conduct of the business of the company and compliance of the statutory obligation fastened under the Act and the relevant schemes.
It is made mandatory to the employer to abide by the same and noncompliance thereof is liable for prosecution under Section 14A of the Act (517 D) Municipal Corpn.
of Delhi vs Ram Kishan Rohtagi & Ors.
; ; and Employees 'State Insurance Corpn.
vs Gurdial Singh & Ors.
[1991] Supp. 1 SCC 204, referred to.
Employees ' State Insurance Corporation vs Gurdial Singh & Ors.
(1991 Supp. 1 SCC 204, and Municipal Corporation of Delhi vs Ram Kishan Rohtagi & Ors.
, ; , distinguished.
(Per R.M. Sahai, J.) 1.
The Act is a welfare legislation enacted for the benefit of he employees engaged in the factories and establishments and is directed towards achieving this objective by enacting provisions requiring the employer to contribute towards Provident Fund, Family Pension and Insurance and keep the Commissioner informed of it by riling regular returns and submitting details in forms prescribed for that purpose.
(518 G) 512 2.
Paragraph 36A of the Provident Fund Scheme framed by Central Government under Section 5 of the Act requires the employer in relation to a factory or other establishment to furnish Form 5A mentioning details of its branches and departments, owners, occupiers, directors, partners, managers or any other person or persons who have ultimate control over the affairs of the factory or establishment.
The purpose of giving details of the owners, occupiers and directors etc, is not an empty formality but a deliberate intent to widen the net of responsibility on any and every one for any act or omission.
It is necessary as well as in absence of such responsibility the entire benevolent scheme may stand frustrated.
(519 A B) 3.
The anxiety of the Legislature to ensure that the employees are not put to any hardship in respect of Provident Fund is manifest from sections 10 and 11 of the Act.
The farmer grants immunity to provident fund from being attached for any debt outstanding against the employee.
And the latter provides for priority of provident fund contribution over other debts if the employer is adjudged insolvent or the company is winded up.
Such being the nature of provident fund any violation or breach in this regard has to be construed strictly and against the employer.
(519 C) 4.
Sections 14 and 14A provides for penalties.
The one applies to whosoever is guilty of avoiding payment of provident fund and to employer if he commits breach of provisions mentioned in its various clauses where as Section 14A fastens liability on certain person if the persons committing the offence is company.
The scope of the two sections is same.
Latter is wider in its sweep and reach.
The former applies to anyone who is an employer or owner or is himself responsible for making payment whereas latter fastens the liability on all those who are responsible or are in charge of the company for the offence committed by it.
(519 D E) 5.
Sub sections (1) and (2) of Section 14A extend the liability for any offence by any person including a partner by virtue of explanation if he was incharge or was responsible to the company at the time of committing the offence.
The expression, 'was in charge of and was responsible to the company for the conduct of the business ' are very wide in their import.
It could not, therefore, be confined to employer only.
(520 D) 6.
To say therefore that since paragraph 36A requires an employer to do certain acts the responsibility for any violation of the provision should be confined to such employer or owner would be ignoring the purpose and 513 objective of the Act and the extended meaning of 'employer ' in relation to establishments other than the factory.
The declaration therefore in Form 5A in the instant case including appellant as one of the persons in charge and responsible for affairs of the company was in accordance with law, therefore, his prosecution for violation of the scheme does not suffer from any error of jurisdiction or law.
(521 B C)
|
Appeal No. 425 of 1957.
Appeal from the judgment and order dated February 21, 1956, of the Patna High Court in Misc.
Judicial Case No. 53 of 1955.
B. K. P. Sinha and D. P. Singh, for the appellants.
L. K. Jha and R. C. Prasad, for the respondent.
May 3.
The Judgment of the Court was delivered by 688 SUBBA RAO, J.
This appeal by certificate raises the question of the construction of section 4(h) of the Bihar Land Reforms Act, 1950 (Act 30 of 1950) (hereinafter referred to as the Act), as amended by the Bihar Land Reforms (Amendment) Act, 1959 (Bihar Act 16 of 1959) (hereinafter called the Amending Act).
The facts giving rise to the appeal lie in a small compass.
Plots NOW.
383 and 1033 are tanks in village Lakshmipur alias Tarauni in the District of Darbhanga.
The respondent claims to have taken settlement of the said plots in the year 1943 from the landlords of Raghopur Estate of which the said plots formed a part.
After the coming into force of the Act, the said Estate vested in the State of Bihar.
Thereafter, one Sheonandan Jha and some other villagers of Lakshmipur filed a petition before the Collector alleging that the alleged settlement was not true, and that in fact the settlement was nominally effected only after January 1, 1946.
The Additional Collector, Darbhanga, in exercise of the powers conferred on him under section 4(h) of the Act, held that the said settlement was actually made after January 1, 1946, and that it was only a paper transaction; having annulled the said settlement, the Additional Collector, by his order dated January 18, 1955, called upon the respondent to give up possession of the said plots by January 30, 1955.
Aggrieved by the said order, the respondent filed a petition in the High Court of Judicature at Patna under article 226 of the Constitution for a rule in the nature of a writ of mandamus or any other appropriate writ cancelling the order of the Additional Collector dated January 18, 1955, and res training the appellants from interfering with his possession of the said two plots.
That petition came to be decided by a division bench of the High Court; and the learned Judges by their order dated February 21, 1956, held that the Additional Collector had no jurisdiction to entertain and decide the question whether the settlement, which was prima facie shown to have been made before January 1, 1946, was actually made after that date.
On the basis of that finding, the order of the Additional Collector was set aside.
689 The State of Bihar and the Additional Collector of Darbhanga have preferred the present appeal against the said order.
Learned counsel for the State contends that section 4(h) of the Act has been amended with retrospective effect, that under the amended section the Collector has power to decide whether a transfer is made before 1946 or thereafter, and that, therefore, the order of the High Court can no longer be sustained.
Learned counsel for the respondent, while conceding the retroactivity of the amendment, relies upon the second proviso added by the amendment to section 4(h) and contends that under the said proviso the order of the Collector cannot take effect nor possession taken thereunder, unless the said order has been confirmed by the State Government and that in the instant case there has not been any such confirmation.
Further he questions the constitutional validity of the said section on the ground that it infringes the fundamental right of the respondent under articles 14, 19 and 31 of the Constitution and is not saved by article 31A thereof.
The second contention of learned counsel for the respondent may be disposed of first.
Under article 31A of the Constitution, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31.
The question is whether section 4(h) of the Act is such a law as to be hit by article 31A of the Constitution.
Section 4(h) of the Act confers power on a Collector, inter alia, to make inquiries in respect of any transfer of any land comprised in an estate and to cancel the same if he is satisfied that such transfer was made any time after January 1, 1946, with the object of defeating any provisions of the Act or causing loss to the State or obtaining compensation thereunder.
It is said that the section ex proprio vigore does not provide for acquisition by the State of any estate or of 690 any rights therein or for the extinguishment or modification of any such rights and therefore, is not protected by article 31A of the Constitution This argument in effect disannexes section 4(h) of the Act from the setting in which it appears and seeks to test its validity independently of its interaction on the other provisions of the Act.
Section 4(h) is an integral part of the Act, and taken out of the Act it can only operate in vacuum.
Indeed, the object of the section is to offset the anticipatory attempts made by landlords to defeat the provisions of the Act.
Suppose the Collector cancels a transfer of land by the owner of an estate under the said section; the said land automatically vests in the State, with the result that the rights of the transferor and the transferee therein are extinguished.
The said result accrues on the basis that the said land continued to be a part of the estate at the time the Act came into force.
That apart, the section is a part of the Act designed to extinguish or modify the rights in an estate, and the power conferred on a Collector to cancel a transfer of any land in an estate is only to prevent fraud and to achieve effectively the object of the Act.
This question was directly raised and answered by this Court in Thakur Raghubir Singh vs State of Ajmer (1).
There, the constitutional validity of the Ajmer Abolition of Intermediaries and Land Reforms Act, 1955 (Ajmer III of 1955) and section 8 thereof was attacked.
Section 8 of the said Act conferred a power on the Collector to cancel a lease or contract, if he was satisfied that it was not made or entered into in the normal course of management, but in anticipation of legislation for the abolition of intermediaries.
Repelling the said contention, Wanchoo, J., speaking for the Court, observed thus: "The provision is not an independent provision; it is merely ancillary in character enacted for carrying out the objects of the Act more effectively.
Such cancellation would sub serve the purposes of the Act, and the provision for it therefore be an integral part of the Act, though ancillary to its main object, and would thus be protected under article 31A(1)(a) of the Constitution." (1) [1959] SUPP.
1 S.C.R. 478.
691 The same reasoning applies to section 4(h) of the Act, and for the same reasons we hold that section 4(h) of the Act is likewise protected by article 31A of the Constitution.
The first question turns upon the interpretation of the relevant provisions of the Amending Act.
To appreciate the argument it would be convenient to read the material provisions of the said Act.
Section 3.
Amendment of section 4 of Bihar Act XXX of 1950.
In section 4 of the said Act, (iv) in clause (h) (a) the words, figures and commas "made at any time after the first day of January, 1946," shall be omitted and shall be deemed always to have been omitted; (b) after the words "if he is satisfied that such transfer was made," the words, figures and commas "at any time after the first day of January, 1946," shall be inserted and shall be deemed always to have been inserted; and (c) the words "and with the previous sanction of the State Government" shall be omitted; (v) to clause (h) as amended above, the following provisos shall be added, namely: "Provided that an appeal against an order of the Collector under this clause, if preferred within sixty days of such order, shall lie to the proscribed authority not below the rank of the Collector of a district who shall dispose of the same according to the prescribed procedure: Provided further that no order annulling a transfer shall take effect nor &hall possession be taken in perursuance of it unless such an order has been confirmed by the State Government." After the said amendment the relevant part of the section reads: The Collector shall have power to make inquiries in respect of any transfer including the settlement. . if he is satisfied that such transfer was made at any time after th e first day of January, 1946, with the object of defeating any provisions of this Act or causing loss to tile State or obtaining higher 692 compensation thereunder, the Collector may, after giving reasonable notice to the parties concerned to appear and be heard and with the previous sanction of the State Government annul such transfer, dispossess the person claiming under it and take possession of such property on such terms as may appear to the Collector to be fair and equitable.
The main differences material to the present enquiry between the section as it was before.
the amendment and thereafter are that under the unmended section it was a moot point whether the Collector had the power to set aside a transfer, whether it was effected before or after January 1, 1946; whereas under the amended section such a power is clearly and expressly conferred on him: while under the original section, the Collector had to take the previous sanction of the State Government before he made the order annulling a transfer and dispossessing the person claiming under it, under the amended section the order made by the Collector shall neither take effect nor can he take possession before his order is confirmed.
The short question is whether the second proviso, added by the Amending Act, is retrospective in operation, that is, whether the order of the Collector made before the Amending Act, though made with the previous sanction of the State Government, would still require for its taking effect a subsequent confirmation by the State Government.
Learned Counsel for the State contends that the amendments made by section 3(iv)(a) and (b) are retrospective, but the amendment made by section 3(v) of the Amending Act is prospective.
This contention appears to be sound, both in letter as well as in spirit.
The different phraseology used in cls.
(a) and (b) of subs.
(iv) of section 3 of the Amending Act in the matter of omissions supports it.
While in cl.
(a) the omission ,%hall be deemed always to have been omitted, in cl.
(c) the words mentioned therein shall only be omitted indicating by contrast that the omission in the former is expressly made retrospective while in the latter it is necessarily prospective.
, If that be the true con struction, the condition of previous sanctions would 693 continue to operate in respect of the Collector 's order made before the amendment came into force.
If the proviso be given a retrospective operation, it directly comes into conflict with the result brought about by cl.
(c) of sub section
(iv) of section 3 of the Amending Act.
An order with the previous sanction of the Government may have been passed and possession also taken by the Collector, yet a further confirmation by the Government should be sought for to revalidate it.
This construction would not only attribute to the Legislature redundancy but would also enable a party to seek for restoration of the land taken possession of by the Collector on the basis of a technicality.
Even in a case where possession has not been taken by the Collector, the said anomaly would persist, for two sanctions would be required.
The alternative construction makes the working of the section smooth and avoids the introduction of the said incongruity and, therefore, we prefer to accept it, particularly when it is consistent with the plain meaning of the words used in the section.
The result is that in respect of an order already made by the Collector before the Amending Act, the previous sanction obtained would suffice, and in respect of an order made after the Amending Act, a subsequent confirmation by the State Government is required.
Even so, it is argued by learned counsel for the respondent that the High Court, presumably in view of its acceptance of the respondent 's preliminary point, did not consider the question whether the inquiry had been made by the Collector in strict compliance with the provisions of the section, and whether the previous sanction of the State Government was obtained before he made the said order.
In the affidavit filed in support of the petition in the High Court there is no specific allegation that no such inquiry has been made or that no such sanction has been obtained.
Nor did the counsel for the appellant raise the said question in the arguments before the High Court.
In the circumstances we do not think that this Court is justified in allowing 88 694 the respondent to raise the said question for the first time before us.
We, therefore, reject this plea.
In the result we set aside the order of the High Court and allow the appeal.
But, in the circumstances of this case, we direct the parties to bear their own costs here and in the High Court.
Appeal allowed.
| Section 4(h) of the Bihar Land Reforms Act, 1950, as amended by the Bihar Land Reforms (Amendment) Act, 1959, which empowers the Collector to annul anticipatory transfers of land designed to defeat the object of the Act, is protected by article 31A of the Constitution although it does not by itself provide for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of any such rights and its constitutional validity cannot be questioned under articles 14, 19 and 31 of the Constitution since the Act of which it is an integral part, is itself directed to that end and is protected by that Article.
Thakur Raghubir Singh vs State of Ajmer, [1959] Supp. 1 S.C.R. 478, applied.
On a true construction of section 3 of the Amending Act, the second proviso to section 4(h) cannot be retrospective in operation and therefore, in respect of an order of annulment made by the Collector before the Amending Act came into force the previous sanction obtained from the State Government would be sufficient, but subsequent confirmation by the State Government would be necessary in the case of an order made after the Amending Act came into force.
|
Criminal Appeal No. 82 of 1967.
Appeal by special leave from the judgment and order dated March 15.
1967 of the Rajasthan High Court in Criminal Appeal No. 219 of 1965.
Sobhag Mal Jain and V.S. Dave, for the appellant.
K.B. Mehta, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The appellant 's conviction by the learned Additional Sessions Judge, Jodhpur under section 314 read with section 109, Indian Penal Code, having been affirmed by the High Court of Rajasthan, he appeals to this Court after obtaining special leave.
The charge on the basis of which he was tried was that some 689 days prior to May 1, 1963, he abetted one Mst.
Radha at Jodhpur to cause the miscarriage of one Miss Atoshi Dass alias Amola, who as a result of administration of tablets and introduction of "laminaria dento" by the said Mst.
Radha, died on May 1, 1963.
The case for the prosecution is that in about the years 1962 63, the appellant was the 13resident of Gramotthan Pratishthan at Jalore.
Miss Atoshi Dass was a teacher working in Indra Bal Mandir, Tikhi, an institution under the management of the appellant.
She was young and unmarried.
Illicit relationship developed between the aforementioned Atoshi Dass and the appellant as a result of which Miss Atoshi Dass became pregnant.
With a view to cause abortion of the child in her womb, the appellant took Miss Dass to Jodhpur and there attempted to cause the miscarriage mentioned above through one Mst.
Radha.
The attempt was not successful.
The insertion of "laminaria dento" in the private pacts of Miss Dass caused septicaem as a result of which she died in the hospital on May 1, 1963.
The appellant 's case is that he had no illicit relation with Miss Atoshi Dass nor did he abet the alleged abortion.
He denies that Miss Atoshi Dass died as a result of any attempt at abortion.
As seen earlier the appellant was charged and tried for the offence of abetting Mst.
Radha to cause the miscarriage in question but he was ultimately convicted of the offence of abetting Miss Dass in the commission of the said offence.
It may be stated at this stage that one Mst.
Radha was tried along with the appellant in the trial court but she was acquitted on the ground that there was no evidence to show that she had anything to do with the abortion complained of.
Despite the contentions of the appellant to the contrary, we think there is satisfactory evidence to show that the death of Miss. Dass was due to septicaem resulting from the introduction of "laminaria dento" into her private parts.
On this point we have the unimpeachable evidence of Dr. A.J. Abraham.
P.W. 4.
There is also satisfactory evidence to show that the appellant was in terms of illicit intimacy with Miss Dass.
It is true that the principal witness on this point is Miss Chhayadass, P.W. 6, the sister of the deceased, a witness who has given false evidence in several respects.
But as regards the illicit relationship between the appellant and Miss Atoshi Dass, her evidence receives material corroboration from the evidence of P.W. 7, M.B. Sen and P.W. 5.
Misri Lal.
Further it also accords with the probabilities.
of the case.
It is not necessary to go into that question at length as we have come to the conclusion that the appellant is entitled to an acquittal for the reasons to be stated presently.
690 While we are of opinion that there was illicit intimacy between the appellant and the deceased, we are unable to accept the assertion of Miss Chhayadass that the appellant was her only paramour.
D. 3 conclusively proves that the deceased had illicit relationship with one Sood at Delhi.
In the committal court Miss Chhayadass admitted that the address on Exh.
D 3 is in the handwriting of the deceased.
In that court she was positive about it; but in the trial court she went back on that admission.
In many other respects also she had deviated from the evidence given by her in the committal court.
Hence we are unable to.
accept her statement in the trial court that the address found on Exh.
D 3, an inland letter is not in the handwriting of the deceased.
D 3, appears to be a self addressed letter sent by the deceased to one Sood.
The fact that the deceased had more than one paramour is not a material circumstance though it may indicate that the appellant could not have had any compelling motive to abet the abortion complained of.
The .fact that the appellant was on terms of illicit intimacy with the deceased, an unmarried girl and that she later became pregnant through him is without more, not sufficient to connect the appellant with the crime.
From the evidence of Misrilal and Sengupta, it is clear that the appellant and the deceased had gone together to Jodhpur on April 24, 1963.
But from the evidence of Sengupta, it is also clear that the deceased had some work to attend to at Jodhpur.
It is also clear from the evidence of Miss Chhayadass that the deceased and the appellant were going together to Jodhpur and other places off and on.
It may be noted that while returning from Jodhpur to his native place, the appellant left the deceased with Mr. and Mrs. Sengupta.
Hence the circumstance that the appellant and the deceased went together to Jodhpur on April 24, 1963.
cannot be held to be an incriminating circumstance.
This leaves us with the evidence relating to the actual abetment.
On this aspect of the case the only evidence brought to our notice is the evidence of Miss Chhayadass and the letter exhibit P.4.
Miss Chhayadass deposed in the trial court that when the pregnancy of the deceased became noticeable, the appellant told the deceased in the presence of that witness; that he would get the the child aborted through Mst.
Radha.
As mentioned earlier Miss Chhayadass is a highly unreliable witness.
She had admitted in the committal court that she had been tutored by the police to give evidence.
In fact she pointed out a police officer who was in the court as the person who had tutored her.
In the trial court she denied that fact.
There is no gainsaying the fact that she was completely under the thumb of the police.
She deviated from most of the important admissions made by her during her cross examination in the committal court.
Coming to the question of the abetment referred to earlier, this is what she stated during her cross examination in the committing court: 691 "My sister did not tell Madan Raj about her illness (arising from her pregnancy) in my presence.
On being enquired by me about my sister at Jalore I was informed that my sister had gone to Mst.
Radha Nayan in the hospital for treatment.
No talks about it were held before me prior to my talk at Jalore (talks between Madanraj and my sister about treatment).
" According to the admissions made by her in the committal court she came to know for the first time about her sister 's intention to cause miscarriage only after her death.
No reliance can be placed on the evidence of such a witness.
Now coming to Exh.
P.4, this is a letter said to have been written by the deceased sometime before her death intending to send the same to the appellant which in fact was not sent.
It was found in her personal belongings after her death.
There was some controversy before the courts below whether the same is admissible under section 32 (1 ) of the Evidence Act and whether it could be brought within the rule laid down by the Judicial Committee in Pakala Narayana Swami vs Emperor(1).
We have not thought it necessary to go into that question as in our opinion the contents of the said letter do not in any manner support the prosecution case that the appellant instigated the deceased to cause miscarriage.
The letter in question reads thus: "Santi Bhawan 28 4 63.
I went with your letter to.
the father.
Since I could not get money from him, I dropped you a letter.
I went to Mst.
Radha and asked her to give me medicine.
I further said that the money would be received.
She gave me a tablet and told me that injection would be given on receipt of full payment.
This tablet is causing unbearable pain and bleeding but the main trouble will not be removed without the injection.
How can I explain but the pain is untolerable.
I have left Sen 's residence.
He and particularly neighbouring doctor would have come to know everything by my condition, which is too serious.
(Meri is halat se unaki vishesker pas me Daktarji ko sub kuch pata chal jati powon tak ulati ho jati).
Firstly I intended to proceed to Jalore but on reaching the Station I could not dare to proceed.
I feel that you are experiencing uneasiness and trouble for me.
I am causing monetary as well as mental worries to you.
I have been feeling.
this for a considerable longer period.
Please do not be annoyed.
It has become very difficult for me to stay alone for the last several days.
(1) A.I.R. [1939] P.C. 47.
692 Had you accepted me as your better half you would have not left me alone in my such serious condition.
You cannot know what sort of trouble I am experiencing.
Had you been with me I would not have felt it so such.
Please do not be annoyed.
Perhaps no one has given you so much trouble.
I will write all these facts to my mother I will also write about our marriage.
28 4 63 Today is Sunday.
I cannot book a trunk call you the court.
Today I tried on the Phone number of Hazarimal but it was engaged, and latter on it cancelled.
My Pranam.
Yours Ritu.
Today I have taken injection and have come from Shanti Bhawan.
" portion of that letter indicates that the appellant was in any manner responsible for the steps taken by the deceased for causing miscarriage.
No other evidence has been relied upon either by the trial court or by the High Court in support of the finding that the appellant was guilty of the offence of abetting the deceased to cause miscarriage.
For the reasons mentioned above we are of the opinion that there is no legal basis for the conviction of the appellant.
The learned Counsel for the appellant challenged the conviction of the appellant on yet another ground.
As mentioned earlier he 'was charged and tried for the offence of abetting Mst.
Radha to cause abortion of the child in the womb of the deceased but curiously enough he was convicted for abetting the deceased to cause miscarriage.
Abetment as defined in section 107 of the I.P.C., can be by instigation, conspiracy or intentional aid.
If the abetment was that of Mst.
Radha, it could have been only by instigation or conspiracy but if it was an abetment of the deceased, it could either be by instigation or by conspiracy or by intentional aid Throughout the trial the accused was asked to defend himself against the charge on which he was tried.
At no stage he was.
notified that he would be tried for the offence of having abetted the deceased to cause miscarriage.
It is now well settled that the absence of charge or an error or omission in it is not fatal to a trial unless prejudice is caused see Willie (William) Slaney vs The State of Madhya Pradesh(1).
Therefore the essential question is whether there is any reasonable likelihood 693 of the accused having been prejudiced in view of the charge flamed against him.
From what has been stated above one can reasonably come to the conclusion that the accused was likely to have been prejudiced by the charge on the basis of which he was tried.
From the cross examination of the prosecution witnesses, it is seen that the principal attempt made on behalf of the appellant was to show that he had nothing to do with the co accused, Mst.
Radha.
He could not have been aware of the fact that he would be required to show that he did not in any manner abet the deceased to cause miscarriage.
The facts of this case come within the rule laid down by this Court in Faguna Kanta Nath vs The State of Assam(1).
The case of Gallu Sah vs The State of Bihar(2) relied by the High Court is distinguishable.
Therein Gallu Sah was a member of an unlawful assembly.
He was said to have abetted Budi to set fire to a house.
One of the members of the unlawful assembly had set fire to the house in question though it was not proved that Budi had set fire to the house.
Under those circumstances this Court held that the offence with which Gallu Sah was charged was made out.
As observed by Calcutta High Court in Umadasi Dasi vs Emperor(a) that as a general rule, a charge of abetment fails when the substantive offence is not established against the principal but there may be exceptions.
Gallu 's case was one such exception.
For the reasons mentioned above we allow the appeal and acquit the appellant.
He is on bail.
His bail bonds stand cancelled.
V.P.S. Appeal allowed.
(1) [1959] 2 Supp.
| To avoid the decision of this Court in A. B. Abdul Khadir vs The State of Kerala, , wherein rules framed for the issue of licences and payment of fee for storage of tobacco were 'held to be invalid, the appellant State promulgated Ordinance I of 1963 which was later replaced by Luxury Tax on Tobacco (Validation) Act 9 of 1964.
Consequently the appellant State made a demand on the respondent to repay the amount which had been refunded to the respondent in accordance with the aforesaid judgment.
Thereupon, the respondent filed a writ petition in the High Court.
The High Court relying upon the decision of this Court in Kalvani Stores vs State of Orissa, [1966] 1 S.C.R. 865, held that in the absence of any production of tobacco inside the appellant State it was not competent for the State Legislature to impose a tax on tobacco imported from outside the State and therefore, the provisions of the Act (9 of 1964) violated the guarantee contained in articles 301 and 304 of the Constitution.
HELD: The High Court had not correctly appreciated the import of the decision in Kalyani Stores ' case.
The decision was based on the assumption that the notifications therein enhancing duty on foreign liquor infringed the guarantee under article 301 and may be saved if it fell within the exceptions contained in Art 304 of the Constitution.
As no liquor was produced or manufactured within the State the protection of article 304 was not available.
This Court did not intend to lay down the proposition that the imposition of a duty or tax in every case would be tantamount per se to an infringement of article 301.
Only such restrictions or impediments which directly and immediately impede the free flow of trade, commerce and intercourse fall within the prohibition imposed by article 301.
A tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so.
Every case must be judged on its own facts and in its own setting of time and circumstance.
In the present case the High Court had not gone into the question whether the provisions of the Act and the notifications constituted such restrictions or impediments as directly and immediately hamper the free 701 flow of trade, commerce and intercourse, and, therefore, fell within the prohibition.
imposed under article 301 of the Constitution.
Unless the High Court first comes to the finding whether or not there is the infringement of the guarantee under article 301 of the Constitution the further question as to whether the statute is saved under article 304(b) does not arise and the principle laid down in Kalyani Stores ' case cannot be invoked.
This case, therefore must go back to the High Court.
[709 E 710 E] Atiabari Tea Ca., Ltd. vs The State of Assam, ; , Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan, [1963] 1 S.C.R. 491, Andhra Sugars Ltd. vs State of Andhra Pradesh; , and State o/Madras vs K. Nataraja Mudaliar; , , referred to.
|
Civil Appeals Nos.
819 823 of 1975.
From the Judgment and order dated 15 3 1975 of the Patna High Court in Civil Writ Nos. 1184 of 1974.
AND CIVIL APPEALS Nos. 824 827 and 1105 of 1975.
From the Judgment and order dated 2 1 1973 of the Patna High Court in Civil Writ P.C. Nos.
1239 to 1242 of 1971 and 1532/73 respectively.
Basudeo Prasad (In CAs.
819 827/75) for the Appellants (in all the appeals).
Balbhadra Prasad, A. G. Bihar (In Cas. 819 823), U. P. Singh for Respondents (In all the appeals) The Judgment of the Court was delivered by SHINGHAL, J.
, These ten appeals against two judgments of the High Court of Judicature at Patna raise some common questions of law.
They have been argued together, and we shall examine them in this common judgment.
Civil Appeals Nos 824 827 of 1975 arise out of a common judgment dated January 2, 1975 in a bunch of civil writ petitions; Civil Appeals Nos.
819 823 of 1975 arise out of a common judgment dated March 15, 1975 in another bunch of civil writ petitions; while Civil Appeal No. 1105 of 1975 is directed against the aforesaid judgment dated January 2, 1975 by which the civil writ petition giving rise to it was also disposed of by the High Court along with the other petitions.
Certificates of fitness have been granted for all the appeals.
There is no controversy in regard to some of the basic facts and they are quite sufficient for the disposal of the appeals.
36 A sale notice was published by the authorities concerned for the auction of licences to open country liquor shops in Singhbhum district with effect from April 1, 1966, including an outstill shop at Bhirbhania.
Appellant Ayodhya Prasad gave the highest bid which was knock ed down in his favour, and he deposited two months ' licence fee in advance at the rate of Rs. 3,650/ per month.
He applied on March 22, 1966 to the Kolhan Superintendent of Singhbhum to settle a piece of land for establishing an outstill shop at Bharbharia, but the application was rejected on September 27, 1966 because of the objection raised by some members of the District Consultative Committee.
The villagers of Bharbharia also opposed the opening of the outstill shop.
The shop could not therefore be established there.
`The appellant how ever obtained a piece of land in village Chittimitti and applied on July 30, 1966 for permission to open the outstill shop there.
This was allowed and the appellant claimed that he began to collect the necessary material but a mob forcibly removed the building and the distillation material.
He filed a report with the Police about the incident.
The approval for opening the outstill shop at Chittimitti was however withdrawn on October 6, 1966 and the appellant was asked to pay the monthly licence fee for the period April 1, 1966 to January, 1967.
He denied his liability to pay the fee and claimed a refund of the money which had been deposited by him.
His case was recommended by the Collector for remittance of the licence fee amounting to Rs. 43,800/ for the entire year 1966 67.
He also made an application to the Commissioner of Excise for refund of the deposit of Rs. 7,300/ and for payment of compensation for loss of anticipated profits and dam ages, but the application was rejected.
It appears that the appellant went on bidding at the bids for the subsequent three years, and laid similar claims for refund and damages, but to no avail.
He then filed the bunch of writ petitions referred to above for quashing the demand notices, but they have been dismissed as aforesaid by the High Court 's judgment dated January 2, 1975.
Civil Appeal No. 825 relates to the bid for 1966 67, Civil Appeal No. 824 relates to the bid for 1967 68, while Civil Appeals Nos. 826 and 827 relate to the bids for 1968 69 and 1969 70.
These may be said to be group 'A ' appeals.
Civil Appeals Nos.
819 823 of 1975 relate to the applications of appellants Thakur Prasad Sao and others for reduction of the licence fees for outstill liquor shops at Gua, Noamandi, Kiriburu, Andheri, Goiekara, Patajai and Dangusposi for 1974 75.
In these cases the licensees were T. P. Sao or his relations or employees.
They claimed that they incurred a loss of Rs. 55,874.79 at Gua, of Rs. 26,651.45 at Noamandi, of Rs. 39,389.53 at Kiriburu of Rs. 35,169.40 at Andheri, of Rs. 11,649.87 at Goekera, of Rs. 11,705.95 at Patajai and of Rs. 11,657.21 at Dengusposi.
The appellants claimed that there was rivalry and enmity with Bishwanath Prasad and his brother who made speculative bids at the auction, as a result of which the outstill shops were settled for uneconomic amounts.
Their grievance was that the Deputy Commissioner did not discharge his duty of refusing to allow the manifestly speculative bids although the percentage of increase in the licence fees ranged between 37 24 to 130 per cent when for other shops the increase was below 12 percent.
The appellants filed application under section 39 of the Bihar and Orissa Excise Act, 1915, hereinafter referred to as the Act, for reduction of the fees for the year 1974 75, but they were rejected by he Board of Revenue.
They then filed the aforesaid writ petitions in the High Court and have now filed the present appeals because the petitions have been dismissed by the High Court 's impugned judgment dated March 15, 1975.
These will be referred to as group 'B ' appeals.
As has been stated, the remaining Civil Appeal No. 1105 of 1975 is also directed against the High Court 's common judgment dated January 2, 1975.
It relates to the grant of a licence to the appellant for establishing outstill shops at Mahuadom, Barahi, Asnair, Aksi and Kabri, in Palamau district.
The appellant applied for a direction for the refund of Rs. 2,71,340/ which had already been realised from him, and for restraining the realisation of a further sum of Rs. 1,40,680/ on the ground that there was no quid pro quo for the fee, but without success.
The High Court has taken the view that the amounts in question were not due on account of fees, but were payable for leases of the exclusive privileges which had been granted to the appellant in respect of the outstills.
It is in these circumstances that these appeals have come up for consideration before us.
As has been stated, the controversy in these appeals relates to the grant of licences for establishing outstill shops which are also known as "jalti bhattis".
That system has been described in paragraph 253 of the Bihar and Orissa Excise Manual, Volume III, hereinafter refer red to as the Manual, as follows: "By this system a certain number of stills for the manufacture of country spirit are allowed within a certain area.
The holder of an outstill licence pays a certain sum per men sem for manufacturing country spirit in his outstill and selling it by retail on his premises.
No attempt is made to regulate the strengths or the prices at which spirit is manufactured or It has been stated in paragraphs 254 and 255 of the Manual that no .
definite area is fixed within which each outstill has the "monopoly of supply of country spirit", but their number is regulated according to rules, and five miles is taken roughly as the minimum distance of one outstill from another.
It has been argued on behalf of the appellants, that what was granted to them was not the exclusive privilege of manufacturing and selling country liquor in retail, in the areas for which the licences were granted, and that the High Court erred in holding that such an exclusive privilege had been granted under section 22 of the Act.
It has been urged that the licences in question fell within the purview of section 30 of the Act 38 We have described the essential features of the outstill system, and there can be no doubt that the holder of a licence under the system acquires the right to manufacture country spirit in his outstill and sell it by retail "in his premises" without any restriction on the strength or price at which the spirit is manufactured or sold.
Moreover he has the monopoly of manufacturing and supplying country liquor within his area.
The right is therefore clearly an exclusive privilege within the meaning of section 22(1) (d) of the Act and it is futile to contend that the licences in question were merely licences for the retail sale o f spirit for consumption on the vendor 's premises within the meaning of section 30 of the Act.
The High Court was therefore quite correct in taking that view.
It may be mentioned that the appellants have not produced their licences in support of the contention that exclusive privilege of the nature referred to above was not granted to them even though the licences were for establishing outstills in the area covered by them.
It is however not disputed that the licences were granted in Form 30 (Volume II, Part I, Bihar and Orissa, Excise Manual) on the condition that the appellants would pay to the government, in advance.
the monthly fee mentioned therein.
It is nobody 's case that the licences were cancelled or suspended under section 42 of the Act for any of the reasons mentioned in the section, or that the licences were withdrawn under section 43 so as to entitle the appellants to remission of the fee payable in respect of them or to payment of compensation in addition to such remission, or to refund of the fee paid in advance.
It is also not the case of the appellants that they surrendered their licences within the meaning of sub section (1) of section 44 so as to justify the remittance of the fee payable by them, or paid by them in advance.
In fact it has clearly been provided in sub section (2) of section 44 that the provisions of sub section (1) 'shall not apply in the case of a licence for the sale of any country liquor in the exercise of an exclusive privilege granted under section 22.
It is true that in its judgment under appeal (in Civil Appeals Nos. 824 827 of 1975) the High Court has observed that the petitioner before it was at liberty to surrender the license, but it appears that in taking that view it did not notice sub section (2) of section 44 even though it had held that what was granted was an exclusive privilege under section 22.
The licences of the appellants therefore remained in force for the periods for which they were granted and, by virtue of the express provisions of section 45, they could have no claim to compensation.
In such a situation, counsel for the appellants have placed considerable reliance on paragraph 121 of the Manual and have argued that the High Court erred in taking the view that the instructions contained in it had no statutory force and its benefit was not available to the appellants.
Reliance in this connection has been placed on Sukhdev Singh and others vs Bhagatram Sardar Singh Raghuvanshi and another(1), Laljee Dubey and others vs Union of India and others(2) Union of India vs K. P. Joseph and others(3).
(1) ; (2) (3) 39 Paragraph 121 of the Manual states, inter alia, that a person whose bid has been accepted by the presiding officer at the auction must pay the sum required on account of advance fee immediately.
It states further that the purchaser would be liable for any loss that may accrue to government in case it becomes necessary to resell the shops for a lower sum in consequence of his failure to pay the sum at the time of the sale.
Then there is the following subparagraph on which reliance has been placed by counsel for the appellants: "Deposits will be returned to a person to whom a licence may be subsequently refused because the Magistrate declines to grant him a certificate, or because he is unable to obtain suitable premises and satisfies the Collector that he has made bona fide endeavor to secure such or if a licence be refused for any other adequate reason.
" It would thus appear that the sub paragraph deals with the "deposits" made immediately on account of advance fees, the consequences of the failures to make such payment and the return of those "deposits" to the person to whom the licence may subsequently be refused because (1) the Magistrate declines to grant him a certificate or because he is unable to obtain suitable premises in spite of his bona fide endeavors or (ii) for any other adequate reason.
But it was not the case of the appellants that the licences were "subsequently refused" to them for any reason whatsoever.
So even if it were assumed, for the sake of argument, that the instructions contained in paragraph 121 were binding on the authorities concerned, that would not matter for purposes of the present controversy as it does not relate to refund of the deposits referred to in paragraph 121.
In this view of the matter, it is not necessary for us to examine here the larger question whether the instructions contained in the Manual were made under any provision of the law and created any rights in favour of persons whose bids were accepted at public auctions of the shops.
It may be mentioned that counsel for the appellants have not been able to refer to any other provision of the law under which the appellants could claim remission , of the price or the consideration for the exclusive privilege of manufacturing and selling country liquor.
It has however.
been argued that as appellant Ayodhya Prasad did not succeed in locating the outstill shop at Bharbharia in spite of his best efforts, and he was also not successful in locating it at Chittimitti, he was not liable to pay the fee.
It has been pointed that even the approval for locating the shop at Chitimitti was withdrawn by the Superintendent of Excise on October 6, 1966, and Ayodhya Prasad 's case for remitting the sum of Rs. 43,800/ was recommended by the Deputy Commissioner of Singhbhum on May 3, 1967 on the ground that he could not open the shop for reasons beyond his control.
It has therefore been urged that there was no lack of bona fides on the part of the appellant and it was a matter of no consequence that he did not surrender his licence.
It will be recalled that it was an incident of the outstill system that the holder of an outstill licence was allowed to manufacture country 4 390SCI/76 40 spirit within a "certain area" and he paid a certain sum of money per mensem for manufacturing country spirit in his outstill and "selling it by retail on his premises".
It was therefore permissible for appellant Ayodhya Prasad to locate the shop at Bharbharia or at some other suitable place within his area, with the permission of the Collector.
The notice which had been issued for the public auction is on the record and condition No. 5 thereof expressly states that the department would not be responsible for providing the place for the location of the outstill.
Moreover it was expressly stated that the outstill at Bharbharia would be settled purely as a temporary measure on condition that an undisputed site was made available for it.
There is therefore nothing wrong with the view taken by the High Court that the responsibility for finding a suitable site was of the appellant, and there is no justification for the argument that nothing was payable by him because he could not locate the shop in spite of his best efforts.
It may be that the Deputy Commissioner recommended his case for remission, but that I would not matter when the appellant was liable to pay the money under the law governing his licence.
The appellant in fact retained the 1 licence all through and continued to make the highest bids at the subsequent public auctions for the years 1967 68, 1968 69 and 1969 70 and thereby prevented others from undertaking the responsibility of establishing the outstill and paying the price admissible to the department.
As has been stated, the approval for opening the outstill shop at Chittimitti, was withdrawn on October 6, 1966, and the demand for the licence fee was made on January 9, 1967.
Even so, the appellant did not take any action to save himself from any such liability in the future and, on the other hand, went on making the highest bids in the subsequent years and incurring similar liability to pay the price even though he was not able to establish his outstill anywhere in any year.
It is therefore difficult to reject the contention in the affidavit of the respondents that there must have been some other reason for him to do so, particularly as the location of his shop was to be on the border of l the State.
It has also been contended that the High Court erred in holding that the State Government had the power to require the appellants to pay the amounts under demand as they represented consideration for the contracts.
It has been argued that this Court 's decision in Nashirvar etc.
vs State of Madhya Pradesh and others(1) and Har Shankar and others etc.
vs The Deputy Excise and Taxation Commissioner and others etc.(2) related to the Excise laws of other States and did not bear on the present controversy.
The argument is however futile for we have given our reasons for holding that what was granted to the appellants was the exclusive privilege of manufacturing and selling country liquor within the meaning of section 22(1) (d) of the Act, and it has been expressly provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "consideration" of the exclusive privilege under section 22.
The decisions of this Court in Nashirwar 's case and Har Shankar 's case have set any controversy in (1) ; (2) ; 41 this respect at rest, so that it is well settled that as the State has the exclusive right and privilege of manufacturing and selling liquor, it has the power to hold a public auction for the grant of such a right or privilege and to accept the payment of a sum therefor.
It was therefore permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of the exclusive privilege of manufacturing and selling liquor.
As has been stated, Group 'B ' appeals relate to the claim for reduction of the licence fees for the liquor shops concerned.
It has been argued by counsel for the appellants that as the Collector did not discharge his duty under the instructions contained in paragraph 130 read with paragraph 93 of the Regulations, the Board acted arbitrarily in refusing the order reduction of the amounts of the fees which were the subject matter of the demands under challenge.
It has been urged that the bids were highly speculative and should have been reduced.
It has been strenuously argued on behalf of the respondent State of Bihar that the instructions contained in the Regulations were not issued under any provision of the law and could not give rise to any right in favour of the appellants.
Reference in this connection has been made to M/s Raman and Raman Ltd. vs The State of Madras and others(1) and R. Abdulla Rowther vs The State Transport Appellate Tribunal, Madras and others(2).
It has been pointed out that there are three volumes of the Bihar and Orissa Excise Manual, 1919.
It has been stated in the preface to Volume I that it is complete in itself and contains the whole of the law and the rules which have the force of law "relating to excise opium." Volume II contains the "whole of the law and the rules which have the force of law relating to excisable articles other than opium.
" It has been stated in the preface to Volume III that it consists of the Board 's "instructions with regard to excisable articles other than opium" and that references have been made to the Government Rules and the Board 's Rules having the force of law.
There is however no such reference to any rule in regard to instructions Nos. 130 and 93.
But quite apart from the question whether these instructions were legally enforceable, we have examined the question whether they could justify the argument that the appellants were entitled to reduction of the amounts of the fees payable by them.
Instruction No. 93 mentions the circumstances when it would be advisable to accept bids other than the highest.
It states that it is not an absolute rule that the highest bids must, on every occasion, be accepted.
It states further that the presiding officer at an auction "may also refuse bids which he considers to be purely speculative or which are the outcome of private enmity", and that what is desired is not the highest fee obtainable, but a fee that can fairly be paid out of the profits of a shop without recourse to malpractices.
There is there fore nothing in the rule which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded from them.
Instruction No. 130 merely states that reduction of licence (1) [1959] Supp.
(2) S.C.R. 227.
(2) A.I.R. 1959 S.C. 896.
42 fees, during the currency of a licence, can be made by the Board under section 39 of the Act.
It does not therefore advance the case of the appellants for, under that section, the Board has been given that power, "if it thinks fit", to order a reduction of the amount of fees payable in respect of a licence, "during the unexpired portion of the grant" which is not the case of the appellants.
In fact all that has been argued on behalf of the appellants is that as the instructions contained in the note appended to paragraph 130 of the Regulations have not been complied with, their legal right to claim the benefit of the note has wrongly been denied to them.
The note reads as follows, "Note ordinarily it is not the policy of Government to allow reduction in excise settlements.
The licensees to a large extent, have only themselves to thank if they exceed in their bidding the figure which should return them a reasonable profit under normal conditions, and they are not therefore entitled to any reduction of fees as of right.
The observance of this principle is the more important because it must be remembered that each remission is likely to aggravate the evil and encourage speculative bidding in the hope that should the speculation turn out a failure, Government will not insist on full payment.
A remission should not be granted merely because working at a dead loss has . been actually proved.
Each case should be dealt with on its own merits.
Where, for example, it is proved that the Collector has not fulfilled his duty in refusing to allow manifestly speculative bids and has failed to stop the bidding when a figure has been reached which, under normal conditions, might be expected to return a reasonable rate of profit to the vendor, the question would be whether the action of the Collector was so flagrantly opposed to the principles enunciated from time to time by Government as to necessitate remedial action.
Such action should not take the form of any promise of resettlement with the existing licensees.
It can only take the form of a reduction in the amount of the existing licensees.
It should not be very difficult for an officer in a contract supply area to realise the stage at which bidding becomes purely speculative.
He knows the issues of spirit during the previous year and the cost to the vendor including duty, carriage, establishment charges and the like, and should thus be able to estimate the figure beyond which a prudent man would not bid.
If after warning the bidder, that this point has been reached, the latter still wishes to take the risk no case for remission can arise.
The case is, however, different where exceptional reasons which would not at the time be.
foreseen, operate adversely to the interest of the licensee but at the same time it is not the duty of Government to safe guard licensees from the effects of their own imprudence or ignorance.
" 43 It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees.
As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law.
Moreover, the question whether the circumstances mentioned in the note were at all in existence in the case of the appeals under consideration, was a question of fact which could not be tried in these proceedings.
The decision in Rohtas Industries Ltd. vs section D. Agarwal and another(1) to which our attention has been invited on behalf of the appellants, can be of no avail to them.
As has been stated, the writ petition which has given rise to Civil Appeal No. 1105 of 1975 raised the question whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same.
The High Court has rightly rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Court 's decisions in Nashirwar 's case (supra) and Har Shankar 's case (supra).
There is thus no force in all these appeals and they are hereby dismissed with costs.
It is however ordered that, as has been agreed by the Advocate General the authorities concerned would recover the amounts in question in instalments spreading over a period of three years in case of those appellants who are able to furnish security for payment within that period.
P.B.R. Appeals dismissed.
| Under the Bihar & Orissa Excise Act the holder of an outstill licence for country liquor pays a certain sum per mensem for manufacturing country spirit in his outstill and selling it by retail in his premises.
No definite area is fixed within which each outstill has the monopoly to supply country spirit but their number is regulated according to rules and five miles is taken as the minimum distance between one outstill and another.
The appellants in all the appeals were the holders of licences for the manufacturing and sale of country liquor.
In the first batch of cases the appellant could not open the outsill even after more than six months of its grant despite his best efforts.
The approval for opening the outstill was withdrawn and he was asked to pay the monthly licence fee according to the terms of licence.
The appellant 's claim for refund of the money deposited by him, together with compensation for loss of anticipated profits and damages, was rejected.
Despite this the appellant continued to bid for licences during the subsequent three years and claimed refund and damages, which claim was rejected by the authorities.
In the second batch of appeals the appellants claimed reduction of the licence fee for outstill liquor shops on the ground that they incurred losses because of the speculative bids at the auction should have been prevented by the authorities.
In the third batch of cases the appellants claimed refund of sums realised from them on the ground that there was no quid pro quo for the fees.
In all the cases the High Court dismissed their writ petitions.
On appeal it was contended that the High Court was wrong in holding that exclusive privilege had been granted under section 22 of the Bihar & Orissa Excise Act, 1915 but that the licences fell within the purview of section 30 of the Act.
Dismissing the appeals, ^ HELD: (1) It is futile to contend that the licences were merely licences for the retail sale of spirit for consumption on the vendor 's premises within the meaning of section 30 of the Act.
The essential feature of the outstill system is that the holder of a licence acquires the right to manufacture country spirit in his outstill and sell it by retail "in his premises" without any 'restriction on the strength or prices at which the spirit is manufactured or sold.
He has a monopoly of manufacturing and supplying country liquor within his area.
The right is, therefore, an exclusive privilege within the meaning of section 22(1)(d) of the Act.
[38A C] (2) The licences of the appellants remained in force for the purposes for which they were granted and by virtue of the express provisions of section 45 they could have no claim to compensation.
[38 G] (3) Even though the High Court has held that what was granted was an exclusive privilege under section 22, it did not notice section 44(2) while taking the view that the petitioner was at liberty to surrender the licence.
Section 44(2) clearly provides that sub section
(1) of that section shall not apply in the case of a licence for the sale of any country liquor in exercise of an exclusive privilege granted under section 22(c).
[38 F G] (4) There is nothing wrong in the view taken by the High Court that the responsibility for finding a suitable site was that of the appellant.
There is no 35 justification for the argument that nothing was payable by the appellant because he could not locate the shop in spite of his best efforts.
The appellants retained the licence all through and continued to make higher bids at the subsequent public auctions thereby preventing others from undertaking the responsibility of establishing the outstills.
[40 B D] (5) It was permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of exclusive privilege of manufacturing and selling liquor.
[41 A 13] Nashirwar etc.
vs State of Madhya Pradesh & Ors.
; and Har Shankar & ors.
vs The Deputy Excise & Taxation Commissioner & Ors. etc. ; explained.
(6) In the second group of appeals, there is nothing in the rules which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded from them.
[43 A B] (7) Id the third group of appeals the High Court was right in holding that the amounts in question were payable for the licence which had been granted for the exclusive privilege.
The argument that there should be refund of fees because there was no quid pro quo is no longer available to the appellants in view of this Court 's decision in Nashirwar 's case and Har Shankar 's case.
[43 C D]
|
Appeal No. 843 of 1966.
Appeal by special leave from the judgment and order dated February 25, 1965 of the Madhya Pradesh High Court in Misc.
petition No. 72 of 1965.
G. N. Dikshit, K. L. More and R. N. Dixit, for the appellant.
Niren De, Addl.
Solicitor General, R. Ganapathy layer and R. H. Dhebar and B. R. G. K. Achar, for respondents Nos.
1 4. section section Shukla, for respondent No. 5.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment and order dated February 25, 1965 of the Madhya Pradesh High Court at Jabalpur in Miscellaneous Petition No. 72 of 1965.
The High Court summarily dismissed the petition under article 226 of the Constitution praying for a writ of certiorari for quashing a notification issued in pursuance of sub sec.
(1) of section 10 of the in respect of the delimitation of certain Parliamentary and Assembly constituencies in the State of Madhya Pradesh.
The petition was rejected on the short ground that under article 329(a) of the Constitution the said notification could not be questioned in any court.
Article 329 which is relevant for our purpose reads: "Notwithstanding anything in this Constitution (a)the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies, made or purporting to be made under article 327 or article 328, shall not be called in question in any court;" Before us it was contended that the notification referred to is not law and secondly it was not made under article 327 of the Constitution.
The facts are shortly as follows: The petitioner is a resident of Ujjain and a citizen of India.
He had been a voter in all the previous general elections and still claims to be a voter in Daulatganj, Ward No. 5, in the Electoral Roll of Ujjain.
He claims 402 to have a right to contest the election to any Assembly or Parliamentary constituency in the State of Madhya Pradesh.
The impugned notification which was published in the Gazette of India Extraordinary on July 24, 1964 shows Ujjain as a Constituency ,reserved for the scheduled castes.
It was made in pursuance of sub section (1) to section 10 of the and recites that proposals of the Delimitation Commission for the delimitation of Parliamentary and Assembly constituencies in the State of Madhya Pradesh had been published on October 15, 1963 in the Gazette of India and in the official gazette of the State of Madhya Pradesh and that after considering all objections and suggestions the Commission determined that the territorial constituencies into which the State of Madhya Pradesh shall be divided for the purpose of elections to the House of the People and the extent of each such constituency shall be as shown in Table.
A. Respondent No. 1 to the petition was the Delimitation Com mission, respondent No. 2 was its Chairman and respondents Nos. 3 and 4 were its members.
The petition alleges many acts of omission and commission on the part of the Commission and its Chairman, but we are not here concerned with all that.
If we come to the conclusion that the High Court was not justified in rejecting the petition on the short ground noted above, we shall have to send the case back to the High Court for trial on merits.
According to the petitioner, Ujjain city has been from the inception of the Constitution of India a general constituency and by the fact of the city being converted into a reserved constituency his right to be a candidate for Parliament from this constituency has been taken away.
In order to appreciate the working of the Delimitation Com mission and the purpose which it serves reference must be made to the following Articles of the Constitution.
Article 82 provides that "Upon the completion of each census, the allocation of seats in the House of the People to the States and the division of each State into territorial constituencies shall be readjusted by such authority and in such manner as Parliament may by law determine: Provided that such readjustment shall not affect representation in the House of the People until the dissolution of the then existing House.
" This Article is a verbatim copy of clause (3) of article 81 of the Constitution before its amendment in 1956.
403 Article 327 of the Constitution provides that 'Subject to the provisions of this Constitution, Parliament may from time to time by law make provision with respect to all matters relating to, or in connection with, elections to either House of Parliament or to the House or either House of the Legislature of a State including the preparation of electoral rolls, the delimitation of consti tuencies and all other matters necessary for securing the due constitution of such House or Houses.
" It was argued before us that the , was not passed by Parliament under article 327, but under article 82 and as such courts of law are not precluded from entertaining the question as to the validity of a notification under the because of the opening words of article 329.
Article '82, however, merely envisages that upon the completion of each census the allocation of seats in the House of the People and the division of each State ' into territorial constituencies may have to be readjusted.
It is article 327 which enjoins upon Parliament to make provision by law from time to time with respect to all matters relating to or in connection with elections to either House of Parliament . delimitation of constituencies and all other matters necessary for securing the due constitution of such House or Houses.
The preamble to the shows that it is an Act to provide for the readjustment of the allocation of seats in the House of the People to the States, the total number of seats in the Legislative Assembly of each State, the division of each State into territorial constituencies for elections to the House of the People and Legislative Assemblies of the States and for matters connected therewith Article 82 only foreshadows that readjustment may be necessary upon completion of each census, but Art ' 327 gives power to Parliament to make elaborate provision for such readjustment including delimitation of constituencies and all other matters connected therewith as also elections to either House of Parliament.
Section 3 of the (hereinafter referred to the Act) enjoins upon the Central Government to constitute a Commission to be called the Delimitation Commission as soon as may be after the commencement of the Act.
Section 4 of the Act provides that it is the duty of the Commission to readjust on the basis of the latest census figures the allocation of seats in the House of the People to the several States. and the division of each State into territorial, constituencies for the purpose of elections to the House of the People.
Section 8 of the Act makes it obligatory on the Commission to , 'determine by order, on the basis of the latest census figures, and .having regard to the provisions of articles 81, 170, 330 and 332, the 404 number of seats in the House of the People to be allocated to each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State as also the total number of seats to be assigned to the Legislative Assembly of each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State.
The delimitation of the constituencies is provided for in section 9, sub section
(1) of the Act which reads: "The Commission shall, in the manner herein provided, then distribute the seats in the House of the People allocated to each State and the seats assigned to the Legislative Assembly of each State to single member territorial constituencies and delimit them on the basis of the latest census figures, having regard to the provisions of the Constitution and to the following provisions, namely: (a) all constituencies shall, as far as practicable, be geographically compact areas, and in delimiting them regard shall be had to physical features, existing boundaries of administrative units, facilities of communication and public convenience; (b) every assembly constituency shall be so delimited as to fall wholly within one parliamentary constituency; (c) constituencies in which seats are reserved for the Scheduled Castes shall be distributed in different parts of the State and located, as far as practicable, in those areas where the proportion of their population to the total is comparatively large; and (d) constituencies in which seats are reserved for the scheduled Tribes shall, as far as practicable, be located in areas where the proportion of their population to the total is the largest.
" Under sub s.(2) of the section the Commission shall publish its proposals for the delimitation of the constituencies together with the dissenting proposals, if any, of an associate member, specify a date on or after which the proposals will be further considered and consider all objections and suggestions which may have been received by it before the day so specified.
Thereafter its duty is by one or more orders to determine the delimitation of Parlia mentary constituencies and the delimitation of assembly constituencies of each State.
Publicity is to be given to the orders of the Commission under section 10(1) of the Act.
Sub section (1) prescribes that each of its orders made under section 8 or section 9 is to be published in the Gazette of India and the official gazettes of the States con 405 cerned.
Sub section (3) provides that as soon as may be after such publication every such order shall be laid before the House of the People and the Legislative Assemblies of the States concerned.
The legal effect of the orders is given in sub sections
(2) and (4) of ' section 10 of the Act.
Under sub section
(2) "upon publication in the Gazette of India, every such order shall have the force of law and shall not be called in question in any court".
Under sub section
(4) (omitting the irrelevant portion) the readjustment of representation of the several territorial constituencies in the House of the People or in the Legislative Assembly of a State and the delimitation of those constituencies provided for in any such order shall apply in relation to every election to the House or to the Assembly, as the case may be, held after the publication in the Gazette of India of that order and shall so apply in supersession of the provisions relating to such representation and delimitation contained in the Representation of the People Act, 1950, and the Delimitation of ' Parliamentary and Assembly Constituencies Order, 1961.
It will be noted from the above that it was the intention of the, legislature that every order under sections 8 and 9 after publication is to have the force of law ' and not to be made the subject matter of controversy in any court.
In other words, Parliament by enacting section 10(2) wanted to make it clear that orders passed under sections 8 and 9 were to be treated as having the binding force of law and not mere administrative directions.
This is further reinforced by sub s.of s.10 according to which the readjustment of representations of the several territorial constituencies in the House of the People and the delimitation of those constituencies provided for in any such order (i.e. under section 8 or section 9) was to apply in relation to every election to the House held after the publication of the order in the Gazette of India and these provisions contained in the order were to supersede all provisions relating to such representation and delimitation contained in the Representation of the People Act,, 1950 and the Delimitation of Parliamentary and Assembly Constituencies Order, 1961.
In effect, this means the complete effacement of all provisions of this nature which were in force before the passing of the orders under sections 8 and 9 and only such orders were to hold the field.
Therefore although the impugned notification was not a statute passed by Parliament, it was a law relating to the delimitation of constituencies or the allotment of seats to such constituencies made under article 327 of the Constitution.
Our attention was drawn to Bill No. 98 or 1962 for providing; for readjustment of allocation of seats in the House of the People to the States, the total number of seats in the Legislative Assembly of each State, the division of each State into territorial constituencies for elections to the House of the People and Legislative 406 Assemblies of the States and for matters connected therewith and the statement of objects and reasons therefor as appearing in the Gazette of India Extraordinary, Part II, Section 2 of the year 1962 which mentions articles 82 and 170(3) of the Constitution.
The said statement further shows that as the 1961 census, had been completed a readjustment of the several matters earlier mentioned was necessary inasmuch as there had been a change in the popula tion figures from the 1951 census.
This, however, does not mean that the was a law made under article 82.
Article 82, as already noted, merely envisaged that readjustment might be necessary after each census and that the same should be effected by Parliament as it may deem fit, but it is article 327 which casts a duty on Parliament specifically to make provision with respect to all matters relating to or in connection with elections to either House of Parliament etc.
the delimitation of constituencies and all other necessary matters for securing the due constitution of such House or Houses.
With regard to section 10 (2) of the Act it was argued by counsel for the appellant that the order under section 9 was to have the force of law, but such order was not itself a law.
To support this contention our attention was drawn to a judgment of the Supreme .,Court of Canada in His Majesty the King vs William Singer(1).
There sub section
(2) of section 3 of the War Measures Act of 1914 provided, that all orders and regulations made under this section shall have the force of law and shall be enforced in such manner and by such courts, officers and authorities as the Governor in Council may person be and may be varied, extended or revoked by any subsequent order or regulation.
By section 4 of the Act the Governor in Council was empowered to prescribe the penalties that may be imposed for violating the orders and regulations under this, Act and also to prescribe whether such penalties shall be imposed upon summary conviction or upon indictment.
Purporting to act under the provisions of the War Measures Act the Governor in Council made an order to the effect that no retail druggist shall sell or supply straight, Codeine, whether in powder, tablet or liquid form, or preparations containing any quantity of any of the narcotic drugs mentioned in Parts 1 and 11 of the Schedule to the Opium and Narcotic Drug Act, mixed with medicinal or other ingredients, except upon the written order or prescription therefor signed and dated by a physician, veterinary surgeon or dentist.
The order further provided that any person found in possession of Codeine or preparation containing narcotic drugs mentioned in Parts 1 and 11 of the Schedule to the Opium and Narcotic Drug Act mixed with other medicinal or other in gradients, save and except under the authority of a licence from the Minister of Pensions and National Health shall be liable to the penalties provided upon (1) [1941] Canada Law Reports, 111.
407 Summary conviction under the provisions of section 4 of the Opium, and Narcotic Drug Act.
The opinion and narcotic Drug Act which was a Dominion ' statute contained a schedule wherein narcotic drugs were enumerated, but which up to the date of the order in question did not contain Codeine.
Under the provisions of that order a charge was laid against the respondent, a retail,druggist, that he did without lawful.
excuse disobey an Act of the Parliament of Canada for which No. penalty or other mode of punishment was expressly provided,.
to wit; Paragraph two of regulations dated 11th day of September, 1939, of the War Measures Act, by wilfully selling Codeine, a narcotic drug mentioned in Part Two of the Schedule to the Opium and Narcotic Drug Act without first having had and ob tained a written order or prescription therefor signed and dated by a physician, contrary to sec.
164, Criminal Code of Canada.
Section 164 of the Criminal Code enacted specifically that the offence must consist in wilfully doing any act which was forbidden or omitting to do any act which was, required to be done by an Act of the Parliament of Canada.
In his judgment Rinfret, J. observed: (page 114): "It is an Act of the Parliament of Canada which the guilty person must have disobeyed without lawful excuse." His Lordship agreed with the Trial Judge and with the majority of the Court of Appeal that in the premises section 164 of the Criminal ' Code had no application and said: "Of course, the War Measures Act enacts that the orders and regulations made under it "shall have the force of law.
It cannot be otherwise.
They are made to be obeyed and,.
as a consequence, they must have the force of law.
But that is quite a different thing from saying that they will be deemed to be an Act of Parliament.
" Taschereau,J. put the matter rather tersely (see at p. 124): "An order in Council is passed by the Executive Council, and an Act of Parliament is enacted by the House of Commons and by the Senate of Canada.
Both are entirely different, and unless there is a provision in the law stating that the Orders in Council shall be considered as forming part of the law itself, or that any offence against the regulations shall be a violation of the Act, it cannot be said that the violation of an Order in Council is a violation of an Act of Parliament within the meaning of section 164 of the Criminal Code.
" The observations from the judgment of Taschereau, J. point out he difference between something which has the force of law as. 408 distinguished from an Act of Parliament itself.
The Order in ,Council in the Canadian case, although it had the force of law, was not a provision contained in an Act of Parliament and therefore although there was a violation of the Order in Council there was no violation of any section of an Act of the Parliament of the Dominion of Canada.
Counsel for the appellant also drew our attention to the judgment of this Court in Sangram Singh vs Election Tribunal, Kotah, Bhurey Lal Baya.(1) There the Court had to consider the effect of section 105 of the Representation of the People Act, 1951 (Act XLIII of 1951) which provided that "every Order of the Tribunal made under this Act shall be final and conclusive".
The contention there put forward was that this provision put an order of the Tribunal beyond question either by the High Court under article 226 of the Constitution or by the Supreme Court in appeal therefrom.
It Was further submitted that the intention of the Legislature was that the decisions of the Tribunals were to be final on all matters whether of fact or of law, are they could not be said to commit an error of law when acting within the ambit of their jurisdiction.
They decided what the law was.
This submission was turned ,down by this Court and it was observed after referring to Hari Vishnu vs Ahmed Ishaque(2) that"the Court laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it, except by the Constitution itself." In this case we are not faced with that difficulty because the ,Constitution itself Provides under article 329(a) that any law relating to the delimitation of constituencies etc.
made or purporting to be made under article 327 shall not be called in question in any court. 'Therefore an order under section 8 or 9 and published under section 10(1) would not be saved merely because of the use of the expression " shall not be called in question in any court".
But if by the publication of the order in the Gazette of India it is to be treated as law made under article 327, article 329 would prevent any investigation by any court of law.
In dismissing the petition under article 226 of the Constitution the High Court of Madhya Pradesh relied exclusively on the decision of this Court in N.P. Punnuswami vs Returning Officer, Namakkal Constituency and others(3) which proceeded on the basis of certain ,concessions made.
There the appellant was a person who had filed a nomination paper for election to the Madras Legislative Assembly from the Namakkal constituency which was rejected. 'The appellant thereupon moved the High Court under article 226 (1) [1955] 2 S.C.R. p. 1 at pp.
6 and 7.
(2) [1955] 1 S.C.R. 1104.
(3) ; 409 of the Constitution praying for a writ of certiorai to quash the order of the Returning Officer rejecting his nomination paper and to direct the said officer to include his name in the list of valid nominations to be published.
The High Court dismissed the application on the ground that it had no jurisdiction to interfere with the order of the Returning Officer by reason of article 329 (b) of the Constitution.
The Court pointed out (at p. 225): "A notable difference in the language used in articles 327 and 328 on the one hand, and article 329 on the other, is that while the first two articles begin with the words "subject to the provisions of this Constitution", the last article begins with the words "notwithstanding anything in this Constitution".
It was conceded at the Bar that the effect of this difference in language is that whereas any law made by Parliament under article 327, or by the State Legislatures under article 328, cannot exclude the jurisdiction of the High Court under article 226 of the Constitution, that jurisdiction is excluded in regard to matters provided for in article 329.
" Reference was also made by counsel to certain other concessions which appear at pp. 233 and 237 of the report.
It will be noted, however, that the decision in that case did not proceed on the concessions made.
The Court examined at some length the scheme of Part XV of the Constitution and the Representation of the People Act, 1951 which was passed by the Parliament under article 327 of the Constitution to make detailed provision in regard to all matters and all stages connected with elections to the various Legislatures in the country.
It was there argued that since the Representation of the People Act was enacted subject to the provisions of the Constitution, it could not bar the jurisdiction of the High Court to issue writs under article 226 of the Constitution.
This was turned down by the Court observing: "This argument, however, is completely shut out by reading the Act along with article 329(b).
It will be noticed that the language used in that Article and in section 80 of the Act is almost identical, with this difference only that the Article is preceded by the words "notwithstanding anything in this Constitution".
(p. 232) The Court went on to observe at p. 233: "It may be pointed out that article 329 (b) must be read as complimentary to lause (a) of that Article Clause (a) bars the jurisdiction of the courts with regard to such law as may be made under articles 327 and 328 relating to the delimitation of constituencies or the allot ment of seats to such constituencies.
If Part XV of the 410 constitution is a code by itself, i.e., it creates rights and provides for their enforcement by a special tribunal to the exclusion of all courts including the High Court, there can be no reason for assuming that the Constitution left one small part of the election process to be made the subject matter of contest before the High Courts and thereby upset the time schedule of the elections.
The more reasonable view seems to be that article 329 covers all "electoral matters".
An examination of sections 8 and 9 of the Act shows that the matters therein dealt with were not to be subject to the scrutiny of any court 'of law.
Section 8, which deals with the readjustment of the number of seats, shows that the Commission must proceed on the ' basis of the latest census figures and by order determine having regard to the provisions of articles 81, 170, 330 and 332, the number of seats in the House of the People to be allocated to each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State.
Similarly, it was the duty of the Commission under section 9 to distribute the seats in the House of the People allocated to each State and the seats assigned to the Legislative Assembly of each State to single member, territorial constituencies and delimit them on the basis of the latest census figures having regard to the provisions of the Constitution and to the factors enumerated in cls.
(a) to (d) of sub section
Sub section, (2) of section 9 shows that the work done under sub section
(1) was not to be final, but that the Commission (a) had to publish its proposals under sub section
(1) together with the dissenting proposals, if any, of an associate member, (b) to specify a date after which the proposals could be further considered by it, (c) to consider, all objections and suggestions which may have been received before the date so specified, and for the purpose of such consideration, to hold public sittings at such place or places as it thought fit ' It is only then that the Commission could by one or more order ' determine the delimitation of Parliamentary constituencies as also of Assembly constituencies of each State.
In our view, therefore, the objection to the delimitation of constituencies could only be entertained by the Commission before the date specified.
Once the orders made by the Commission under sections 8 and 9 were published in the Gazette of India and in the official gazettes of the States concerned, these matters could no longer be reagitated in a court of law.
There seems to be very good 'reason behind such a provision.
If the orders made under sections 8 and 9 were not to be treated as final, the effect would be that any voter, if he so wished, could hold up an election indefinitely by questioning the delimitation of the constituencies from court to court., Section 10(2) of the Act clearly demonstrates the intention of the ' Legislature that the orders under sections 8 and 9 published under 411 section 10 (1) were to be treated as law which was not to be questioned in any court.
It is true that an order under s.8 or 9 published under s.10(1) is not part of an Act of Parliament, but its effect is to be the same.
The situation here bears some comparison with what obtained in Harishankar Bagla and another vs The State of Madhya Pradesh.(1)There section 3 of the Essential Supplies (Temporary Powers) Act, 1946, provided that the Central Government, so far as it appeared to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, might by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
Under section 4 it was open to the Central Government by notified order to direct that the power to make orders under section 3 shall, in relation to Such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable also by such officer or authority subordinate to the Central Government or such State Government or such officer or authority subordinate to a State Government as may be specified in the direction".
Section 6 of the Act read as follows: "Any order made under section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act." Under powers conferred by section 3 the Central Government pro mulgated on September 10, 1948, Cotton Textiles (Control of Movement) Order, 1948.
Section 3 of the said order provided that no person shall transport or cause to be transported by rail, road, air, sea or inland navigation any cloth, yarn or apparel except under and in accordance with a general permit notified in the Gazette of India by the Textile Commissioner or a special transport permit issued by the Textile Commissioner.
The appellant Harishankar Bagla and his wife were arrested at Itarsi by the Railway Police for contravention of section 7 of the Essential Supplies (Temporary Powers) Act, 1946 read with cl.
(3) of the Cotton Textiles (Control of Movement) Order, 1948 having been found in possession of new cotton cloth weighing over six maunds which was being taken by them from Bombay to Kanpur without any permit.
The State of Madhya Pradesh contended before this Court that the judgment of the High Court that section 6 of the Act was unconstitutional was not justified.
This contention was upheld by this Court and it was observed: "By enacting section 6 Parliament itself has declared that an order made under section 3 shall have effect notwithstanding any (1) M15Sup CI/67 13 412 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 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.
" Similarly it may be said here that once the Delimitation Commission has made orders under sections 8 and 9 and they have been published under section 10(1), the orders are to have the same effect as if they were law made by Parliament itself.
Reference was also made by counsel for the respondent to the judgment of this Court in Kailash Nath and another vs State of U.P. and others.(1) There under section 4 of the U.P. Sales Tax Act the State Government was empowered either to exempt certain kinds of transactions from the payment of sales tax completely, or to allow a rebate of a portion of the tax payable.
In pursuance of that, the Uttar Pradesh Government issued a notification that with effect from December 1, 1949 the provisions of section 3 of the Act (relating to the levy of sales tax) shall not apply to the sales of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after December 1, 1949 with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn is actually exported and proof of such actual export is furnished.
It was held by this Court that "this notification having been made in accordance with the power conferred by the statute has statutory force and validity and, therefore, the exemption is as if it is contained in the parent Act itself.
" In Jayantilal Amrit Lal Shodhan vs F. N. Rana and others(2) the question for consideration by this Court was the effect of a notification of the President of India under article 258(1) of the Constitution.
The President of India by a notification dated July 24, 1959, under article 258(1) of the Constitution entrusted with the consent of the Government of Bombay to the Commissioners of Divisions in the State of Bombay the functions of the Central Government in relation to the acquisition of land for the purposes of the Union.
Two new States were constituted by the Bombay Reorganisation Act (XI of 1960) and the Baroda Division was allotted to the State of Gujarat.
In exercise of the powers entrusted by the notification issued by the President on July 24, 1959, the Commissioner of the Baroda Division notified under s, 4(1) of the Land Acquisition Act (1 of 1894) the appellant 's land as being needed for a public purpose, A.I.R. 1957 S.C. 790.
(2) [1964] 5 S.C.R. p. 294. 413 and authorised the Special Land Acquisition Officer, Ahmedabad, to perform the functions of the Collector under the Act.
The Special Acquisition Officer after considering the objections raised by the appellant submitted this report to the Commissioner who issued a declaration under section 6(1) of the Act.
The appellant then moved the High Court of Gujarat under articles 226 and 227 of the Constitution for a writ, but his petition was dismissed.
His case inter alia was that the President 's notification under article 258 (1) was ineffective after the partition since the consent of the Government of the newly formed State of Gujarat to the entrustment of functions to its officer had not been obtained as required by, Art.258 (1).
Article 258 (1) of the Constitution reads: "Notwithstanding anything in this Constitution the President may, with the consent of the Government of a State, entrust either conditionally or unconditionally to that Government or to its officers functions in relation to any matter to which the executive power of the Union extends".
One of the contentions put forward before this Court was that the power exercised by the President was executive in character and the functions which might be entrusted to a State Government under article 258(1) were executive and as such entrustment of such executive authority was not law within the meaning of section 87 of the Bombay Reorganisation Act which made provisions for maintaining the territorial extent of the laws even after the appointed day.
On this basis, it was argued that the Commissioners of the new State of Gujarat after May 1, 1960 were incompetent by virtue of the Presidential notification to exercise the functions of the Union under the Land Acquisition Act.
It was observed by the majority Judges of this Court at p. 308: "The question which must be considered is whether the notification issued by the President is law within the meaning of section 87 read with section 2 (d) of the Bombay Reorgani sation Act, 11 of 1960." After analysing the three stages of the constitutional process leading to the ultimate exercise of function of the Union Government the Court observed (at p. 309): "By article 53 the executive power of the Union is vested in the President and is exercisable by him either directly or through officers subordinate to him in accordance with the Constitution and the executive power of the Union by article 73 extends subject to the provisions of the Constitution: (a) to the matters with respect to which Parliament has power to make laws; and 414 (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreements: Provided that the executive power referred to in sub cl.
(a) shall not, save as expressly provided in the Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has power to make laws.
Prima facie, the executive power of the Union extends to all matters with respect to which Parliament has power to make laws and in respect of matters to which the power of the Parliament extends".
The Court then went on to consider the nature of the power exercised by the President under article 258(1).
It noted that by item 42 List III the subject of acquisition of property fell within the Concurrent List and the Union Parliament had power to legislate in respect of acquisition of property for the purposes of the Union and by article 73(1)(a) the executive power of the Union extended to the acquisition of property for the Union.
It was observed that "by article 298 of the Constitution the executive power of the Union extends to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purposes.
The expression "acquisition, holding and disposal of property" would, in our judgment, include com pulsory acquisition of property.
That is a provision in the Constitution which within the meaning of the proviso to article 73(1) expressly provides that the Parliament may acquire property for the Union and consequently executive power of the Union in relation to compulsory acquisition of property is saved thereby, power of the State to acquire land notwithstanding.
" Reference was made also by the majority of Judges to the case of Edward Mills Co. Ltd. vs State of Ajmer(1) where it was held that an order made under section 94(3) of the Government of India Act, 1935 was, notwithstanding the repeal of the Government of India Act, 1935, by article 395 of the Constitution, law in force.
Finally, it held by the majority of Judges (p. 315): "We see no distinction in principle between the notification which was issued by the Governor General in Edward Mills ' case, and the notification with which we are dealing in this case.
This is not to say that every order issued by an executive authority has the force of law.
If the order is purely administrative, or is not issued in exercise of any statutory authority it may not have the force of law.
But where a general order is issued even by an executive (1) [955] 415 authority which confers power exercisable under a statute, and which thereby in substance modifies or adds to the statute, such conferment of powers must be regarded as having the force of law.
" In this case it must be held that the order under sections 8 and 9 published under section 10 (1) of the were to make a complete set of rules which would govern the re adjustment of number of seats and the delimitation of constituencies.
In this case the powers given by the and the work of the Commission would be wholly nugatory unless the Commission as a result of its deliberations and public sittings were in a position to re adjust the number of seats in the House of the People or the total number of seats to be assigned to the Legislative Assembly with reservation for the Scheduled Castes and Scheduled Tribes and the delimitation of constituencies.
It was the will of Parliament that the Commission could by order publish its proposals which were to be given effect to in the subsequent election and as such its order as published in the notifica tion of the Gazette of India or the Gazette of the State was to be treated as law on the subject.
In the instant case the provision of section 10 (4) of the Act puts orders under sections 8 and 9 as published under section 10 (1) in the same street as a law made by Parliament itself which, as we have already said, could only be done under article 327, and consequently the objection that the notification was not to be treated as law cannot be given effect to.
In the result the appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
| The respondents were Elementary School teachers appointed under the Assam Basic Education Act, 1954.
The Act was repealed by the A, %am Elementary Education Act, 1962, which came into force on 5th October, 1962.
Under the 1962 Act a State Board was to be constituted, and in the place of the School Boards functioning under the 1954 Act, the Deputy Inspectors of Schools were made Assistant Secretaries of the State Board within their respective jurisdictions.
Section 34(2) provide,% that all the Elementary School teachers appointed under the 1954 Act would be taken over by the State Board and section 38 provides that the school teachers shall be deemed to have been employed by the State Board.
In November 1962, the State Advisory Board, which was cons tituted under the 1954 Act and which continued to function even after 5th October 1962 (because the State Board under the latter Act was not yet constituted) passed a resolution that all teachers who were not matriculates or who had not passed the Teachers ' test should be discharged with effect from 31st March 1963.
In December 1962, the Secretary of the Advisory Board communicated the resolution to the Assistant Secretaries and requested them to submit a statement, before 20th April 1963, showing the names of teachers, who were non matries or who had not passed the test and who were retained after 31st March 1963, stating the reasons for their retention.
Between April 1963 and September 1963, the Assistant Secretaries issued letters intimating the respondents that their services were terminated.
The respondents thereupon filed writ petitions in the High Court which were allowed.
In appeal to this Court.
HELD : (i) The Assistant Secretaries had no power to terminate the services of the respondents.
Under s.14(3)(iii) of the 1962 Act, the power of appointment of an elementary school teacher is in the Assistant Secretary though the power has to be exercised on the advice of the Committee constituted under section 16.
Even if the word "advice" is equated to "recommendation", the Committee only recommends and it is the Assistant Secretary who is the appointing authority.
Therefore, if be was the appointing authority he could dismiss those appointed by him with the aid of section 18 of the Assam General Clauses Act, 1915, under which, unless a different intention appears, the power to appoint includes the power to dismiss; and it cannot be said that a different intention appears from the fact that the appointment has to be made on the recommendation or advice of the Committee.
But the respondents, in fact had been appointed before the 1962 Act came into force and could not possibly have been appointed by the Assistance Secretaries, for there were no such authorities in the earlier enactment repealed by the 1962 Act.
Nor, can the appellant rely on section 500 55(2) of the 1962 Act, under which all appointments made under the 1954 Act shall be deemed to have been made under the 1962 Act, because,, the specific provisions contained in sections 34(2) and 38 lay down that the teachers would be taken over and deemed to have been employed by the State Board.
[506 E H; 507 B D; E H] (ii) The services of the respondents could have been terminated by the.
State Board, but the orders terminating the services in the present case were not those of the State Board but of the Assistant Secretaries and were therefore invalid.
The resolution of the State Advisory Board of November, 1962, and the letter of its Secretary, addressed to the Assistant Secretaries in December, 1962, were not orders terminating the services of any of the respondents because : (i) when the resolution was passed there was no list of teachers who were non matrics or who had not passed the Teachers ' test and legally, such a resolution could not be read as an order dismissing persons whose names were not even known to the authority passing the resolution; (ii) if it really amounted to an order of discharge it should have been communicated to the respondents for without such communication it was of no use; (iii) the services of not a single teacher were in fact terminated on 31st March 1963; (iv) the fact that the resolution was communicated to the Assistant Secretaries and not to any teacher shows that it merely laid down principles to be followed for the termination of services of certain teachers; (v) the letter permitted the Assistant Secretaries to retain, if necessary, teachers who were not matrics or who had not passed the test; and (vi) the letters terminating the services of the respondents were in fact issued after 31st March 1963.
[508 E H; 509 C, E, F] (iii) The resolution could not be taken to amount to a delegation to the Assistant Secretaries, by the State Board.
, of its authority to terminate the services of teachers after laying down principles for such termination.
The resolution ha , not a word to show that it was so delegating assuming that such a delegation was possible.
The fact that a copy of the resolution was addressed by the Secretary to the Assistant Secretaries could not mean that the authority was so delegated.
If delegation was possible, it could only be made by the State Board itself by a resolution and not by its Secretary.
[510 C E] (iv) It could not also be said that the Assistant Secretaries were only carrying out the instructions of the State Board contained in the letter of December 1962.
Either the services had to be terminated by the State Board itself, which was not done; or the services had to be terminated by the Assistant Secretaries to whom the authority was delegated (if such a ,delegation was possible), but that also was not done.
There was no third way in which the resolution of November 1962 could be implemented by the Assistant Secretaries unless they themselves bad the power to terminate the services; but in the instant case, they had no such authority.
15 1 0 F H]
|
eview Petition No. 16 of 1960.
519 Petition for Review of this court 's Judgment and order dated April 26, 1960, in Civil Appeal No. 64 of 1956.
A. V. Viswanatha Sastri, R. Ganapathy Iyer and Gopalkrishnan, for the petitioners.
K. N. Rajagopala Sastri, and P. D. Menon, for respondent.
November 23.
Das, J., delivered his own Judgment.
The Judgment of Kapur and Hidayatullah, JJ. was delivered by Hidayatullah, J. section K. DAS, J. I had taken a view different from that of my learned brethren when this appeal was heard along with Pringle Industries Ltd., Secunderabad vs The Commissioner of Income tax, Hyderabad (1), and that view was expressed in a very short judgment dated April 26, 1960.
Now, we have had the advantage of hearing a very full argument with regard to the facts of the appeal, and I for myself have had the further advantage and privilege of reading the judgment which my learned brother Hidayatullah, J., is proposing to deliver in this appeal.
I have very carefully considered the question again with reference to the facts relating thereto and, much to my regret, have come to the conclusion that I must adhere to the opinion which I expressed earlier.
My view is that the facts of this case are indistinguishable from the facts on which the decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax, C.P. and Berar(2) was rendered, and on the principles laid down by this court in Assam Bengal cement Co., Ltd. vs The Commissioner of Income tax, West Bengal (3), it must be held that the expenditure of Rs. 6111/ in this case was on revenue account and the respondent firm was entitled to the allowance which it claimed.
520 The short facts are these.
The respondent firm carried on a business in the purchase and sale of conch shells (called chanks).
It used to acquire the stock of conch shells (1)by purchase from the Fisheries purchase from the Fisheries Department of the Government of Madras and (3) by fishing for and gathering such shells from the sea.
It disposed of the stock so acquired at Calcutta, the different between the cost price and selling price less expenses being its profit made in business.
On November 9 1945 it took on lease from the Director of Industries and Commerce, Madras, the exclusive right.
liberty and authority to fish for, take and carry away "chank" shells in the sea off the coast line of the South Arcot District including the French Kuppama of Pondicherry.
The boundary of the area within which the right could be exercised was given in a schedule to the lease.
The lease was for a period of three years from July 1, 1944 to June 30 1947 on a consideration of an yearly rent of section 6111/ to be paid in advance.
Clause 3 of the lease contained the material terms there of and may be set out in full.
The lesser hereby convenants with the lesson as follows: (i) To pay the rent on the day and in manner aforesaid.
(ii) To deliver to the Assistant Director of Pearl and Chank Fisheries, Tuticorn all Velampuri shells that may be obtained by the lessee upon payment of their value as determined by the Assistant Director.
(iii) To collect chanks caught in nets and by means of diving as well.
In the process of such collection of shells not to fish chank shells less than 2/1/4 inches in diameter and if any chank shells less than 2/1/4 inches in 521 diameter be brought inadvertently to shore, to return at once alive to the sea all such undersized shells.
(iv) Not at any time hereafter to transfer or underlet or part with possession of this grant or the rights and privileges hereby granted or any part thereof without the written consent of the lessor.
(v) At the end or sooner determination of the term hereby created peaceably and quietly to yield to the lesson the rights and privileges hereby granted, and (vi) To report to the Assistant Director of Pearl and Chank Fisheries (South), Tuticorn the actual number of shells kept unsold in different stations after the expiry of the lease period.
For the assessment year 1946 47, the respondent firm submitted a return of its income to the Income tax Officer, Karaikudi Circle, showing its income from sale of chanks purchased from divers at Rs. 7194/ by sale of chanks purchased from Government Department at Rs. 23, 588/ and Rs. 2819/ by sale of chanks gathered by themselves (through divers) after deducting Rs. 6111/ being the rent paid to Government under the contract referred to above.
It sought to deduct Rs. 6111/ from its profits from business on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business under section 10(2)(xv) of the Income tax Act.
This claim was disallowed by the Income tax Officer and on appeal by the Appellate Assistant Commissioner.
On further appeal to the Appellate Tribunal the respondent firm contended that the 522 decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax(1)applied to this case inasmuch as the payment was to secure the stockin trade for its business.
The Appellate Tribunal was of the opinion that the Privy Council decision covered the case, but felt itself bound by the decision of the Full Bench of the Madras High Court in K. T. M. T. M. Abdul Kayum Hussain Sahib vs Commissioner of Income tax, Madras (2).
The Tribunal acceded to the demand for a reference to the High Court, and accordingly referred the following question to the High Court for its decision. "Whether on the facts and circumstances of the case the payment of the sum of Rs. 6111/ made by the assessee under the terms of the agreement entered into with the Director of Industries and Commerce, Madras on 9th November, 1945 was not an item of revenue expenditure incurred in the course of carrying on the business of the assessee and, therefore, allowable under the provisions of section 10 of the Indian Income tax Act?" The reference first came before a Division Bench and was then referred to a Full Bench.
By its judgment dated April 2, 1953 the Full Bench answered the question in favour of the respondent firm.
On a certificate of fitness granted by the High Court the Commissioner of Income tax, Madras, brought the present appeal to this Court.
In Assam Bengal Cement Co., Ltd. vs The Commissioner of Income tax (3), this Court referred to the decision in Benarsidas Jagannath.
In re.(4) and accepted the following broad principles for the purpose of discriminating between a capital and a revenue expenditure.
523 (1) The outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment [See Commissioners of Inland Revenue vs Granite City Steamship Company Ltd.(1)].
Such expenditure is regarded as on capital account, for it is incurred not in earning profits but in setting the profit earning machinery in motion.
In my opinion this test does not apply in the present case where no profit earning machinery was set in motion.
(2) Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade.
[See Atherton vs British Insulated and Helsby Cables Ltd. (2)].
In elucidation of this principle it has been laid down in several decisions that by "enduring" is meant "enduring in the way that fixed capital endures" and it does not connote a benefit that endures in the sense that for a good number of years it relieves the assessee of a revenue payment.
In Robert Addie & Sons Collieries Ltd. vs Commissioners of Inland Revenue (3) Lord Clyde formulated the same test in these words: "What is 'money wholly and exclusively laid out for the purposes of the trade ' in a question which must be determined upon the principles of ordinary commercial trading.
It is necessary accordingly to attend to the true nature of the expenditure, and to ask one 's self the question, is it a part of the Company 's working expenses? is it expenditure laid out as part of the process of profit earning? or, on the other hand, is it a capital outlay? is it expenditure necessary for the acquisition of property or of rights of a permanent character, 524 the possession of which is a condition of carryin on its trade at all?" This test was adverted to by the Privy Council in Tata Hydro Electric Agencies Ltd. vs Commissioner of Income tax(1).In my opinion the application of this test makes it at once clear that the sum of Rs. 6111/ which the respondent firm spent was expenditure laid out as part of the process of profit earning; it was not a capital outlay, that is, expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which was a condition of carrying on its trade.
Under the contract in question the respondent firm did not acquire any right to immovable property.
It acquired no right in the bed of the sea or in the sea.
The only right conferred on the respondent firm was the right to fish for, gather and carry away conch shells (in motion under the surface of the sea) of a specified type and size.
The respondent firm was under an obligation to return to the sea conch shells less than 2 1/2 inches in diameter.
The business of the respondent firm consisted in buying and selling conch shells.
No manufacturing process was involved in it.
Therefore, the stock in trade of the respondent firm was conch shells.
It secured this stock in trade in many different ways, by purchase from divers, by purchase from Government and private parties, and also by gathering conch shells under the contract in question.
In my opinion, the contract into which the respondent firm entered was merely for securing its stock in trade.
It is indeed true that in considering whether an item of expenditure is of a capital or a revenue nature, one must consider the nature of the concern, the ordinary course of business usually adopted in that concern, and the object with which the expense is incurred.
The true nature of the transaction must be collected from the entire 525 document with reference to all the relevant facts and circumstances.
Having regard to the nature of the respondent firm 's business and the course adopted by it for carrying it on, it appears to me to be rather far fetched to hold that by the contract in question the respondent firm acquired property or right of a permanent character, the possession of which was a condition of carrying on its trade.
To me it seems that the better view, in a business sense, is that the respondent firm merely acquired by means of the contract its stock in trade, rather than a source or enduring asset for producing the stock in trade.
It was argued before us, as it was argued in the High Court, that what was acquired in the present case was the means of obtaining the stock in trade for the business rather than the stock in trade itself.
I am unable to accept this argument as correct.
The contract entered into by the respondent firm was wholly and exclusively for the purpose of obtaining conch shells, which were its stock in trade.
As I have stated earlier, the contract granted no interest in the sea, sea bed, or sea water etc.
It was simply a contract giving the grantee the right to pick and carry away conch shells of a specified type and size which of course implied the right to appropriate them as its own property.
In my opinion, in a case of this nature no distinction can be drawn in a business sense between the right of picking and carrying away conch shells and the actual buying of them.
It is not unusual for businessmen to secure, by means of a contract, a supply of raw materials or of goods which form their stock in trade, extending over several years for the payment of a lump sum down.
Even if the conch shells were stored in a godown and the respondent firm was given a right to go and fetch them and so reduce them into its ownership, it could scarcely have been 526 suggested that the price paid was capital expenditure.
I may explain what I have in mind by giving a simple illustration.
Take the case of a fisher may who sells fish.
Fish is his stock in trade.
He man buy the fish he requires from other persons; or he may obtain the supply of fish he requires by catching the fish of a specified size and type in particular water over a short period under a contract entered into by him and take them away.
I do not think that in a business sense any distinction can be made between the two means of obtaining the stock in trade.
Both really amount to securing the stock in trade rather than acquiring an enduring asset or a permanent right for producing the stock in trade.
And a business man, like the fisher man in the illustration given above, would indeed be surprised to learn that buying of fish for his business is revenue expenditure whereas catching fish in particular water under a contract entered into by him for the purpose of obtaining his stock in trade on payment of a lump sum down, is capital expenditure.
(3) The test whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business does not arise in the present case and need not be considered.
No different principles were laid down by my learned brethren in their decision in Pringle Industries Ltd. vs Commissioner of Income tax(1) and so far as that case is concerned, their decision must hold the field.
The difficulty and difference of opinion that arise now relate to the application of those principles to the facts of the present case.
One is reminded in this case of what Lord Macmillan said in Tata Hydro Electric Agencies Ltd. vs Commissioner of Income tax(2) at page 209: 527 "Their Lordships recognise and the decided cases show how difficult it is to discriminate between expenditure which is and expenditure which is not, incurred solely for the purpose of earning profits or gains.
" Lord Greene (Master of the Rolls) expressed himself more strongly and adverting to the distinction between capital and income, said: "There have been many cases where this matter of capital or income has been debated.
There have been many cases which fall upon the borderline: indeed, in many cases it is almost true to say that the spin of a coin would decide the matter almost as satisfactorily as an attempt to find reasons." [Vide Commissioners of Inland Revenue vs British Salmson Aero Engines Ltd.(1)].
Perhaps, the case before us is not as bad as the cases which the Master of the Rolls had in mind when he made the above observations.
It is, however, a truism that each case must turn upon its own facts.
Nevertheless the decisions are useful as illustrations of some relevant general principles.
The nearest illustration that we can get is the decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax(2).
That decision was binding on the Indian Courts at the time when it was given and as I think that it is still good law and is indistinguishable from the present case, I offer no apology for referring to it in great detail.
The facts of that case were these.
The assessees there carried on a business at several places as manufacturers and vendors of country made cigarettes known as bidis.
These cigarettes were composed of tobacoo rolled in leaves of a tree known as tendu leaves, which were obtained by the assessees by entering into a number of 528 short term contracts with the Government and other owners of forests.
Under the contracts, in consideration of a certain sum payable by instalments, the assessees were granted the exclusive right to pick and carry away the tendu leaves from the forest area described.
The assesees were allowed to coppice small tendu plants a few months in advance to obtain good leaves and to pollard tendu trees a few months in advance to obtain better and bigger leaves.
The picking of the leaves however had to start at once or practically at once and to proceed continuously.
On these essential facts, the Privy Council held that the contracts were entered into by the assessees wholly and exclusively for the purpose of supplying themselves with one of the raw materials of their business, that they granted no interest in land, or in the trees or plants, that under them it was the tendu leaves and nothing but the tendu leaves that were acquired, that the right to pick the leaves or to go on to the land for the purpose was merely ancillary to the real purpose of the contracts and if not expressed would be implied by law in the sale of a growing crop, and that therefore the expenditure incurred in acquiring the raw material was in a business sense an expenditure on revenue account and not on capital, just as much as if the tendu leaves had been bought in a shop.
I can find no distinction which would make any difference between the facts of that case and the facts of the present case.
Let me compare the essential facts of these two cases and see whether there is any difference.
(1) Two of the contracts were taken as typical of the rest by the Privy Council.
One contract was for the period from September 5, 1939 to June 30, 1941 and the other was for the period from October 1, 1938 to June 30, 1941.
Thus one of the contracts was for a period of about two years and the other contract for a period of about three years.
529 In the case under our consideration the period of the contract is three years.
Indeed, there is no vital difference between the periods in the two cases.
(2) In the case before us the contract area is described in a schedule.
In the two contracts which were under consideration by the Privy Council the contract area was also indicated in a schedule.
The boundaries of the forests in which tendu leaves could be plucked were delimited by the schedule.
Same is the case with the contract before us.
The contract area in which conch shells of a specified type and size can be picked and gathered is described in a schedule.
Such description does not mean that the assessee gets any right other than the right to gather conch shells.
In the Privy Council case the assessees were granted no interest in land or in the trees or plants; it was the tendu leaves and nothing but the tendu leaves that were acquired.
In the case before us no interest was given in the sea bed or in the sea water or in any of the products thereof.
Conch shells of a specified type and size and nothing but such conch shells were acquired by the contract.
I do not think that the reference to the coast line off the South Arcot District makes any difference between the present case and the case on which the decision in Mohanlal Hargovind vs Commissioner of Income tax (1) was rendered.
If in the matter of plucking of tendu leaves the expenditure under the contract was, in a business sense, expenditure on revenue account, I fail to see why a similar expenditure for gathering conch shells in motion under the surface of the sea near the coast line should not, in a business sense, be considered as expenditure on revenue account.
This aspect of the case was emphasised by their Lordships in the following paragraph: 530 "It appears to their Lordships that there has been some misapprehension as to the true nature of these agreements and they wish to state at once what in their opinion is and what is not the effect of them.
They are merely examples of many similar contracts entered into by the appellants wholly and exclusively for the purpose of their business, that purpose being to supply themselves with one of the raw materials of that business.
The contracts grant no interest in land and no interest in the trees or plants themselves.
They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which of course, implies the right to a appropriate them as their own property.
" In the case under our consideration the only right granted to the respondent firm was to take and carry away conch shells of a specified type and size, which of course, implies the right to appropriate them as the respondent firm 's own property.
The right to go into the sea and cast nets etc.
was merely ancillary to the real purpose of the contract.
Nor do I think that the circumstance that the contracts conferred an exclusive privilege or right is a matter of any significance.
In Mohanlal Hargovind vs Commissioner of Income tax (1) the contracts were exclusive and their Lordships stated: "It is true that the rights under the contracts are exclusive but in such a case as this that is a matter which appears to their Lordships to be of no significance.
These observations are as apt in their application to the present case as they were in the case before their Lordships of the Privy Council.
(3) The Privy Council draw a distinction between cases relating to the purchase or leasing of 531 mines, quarries, deposits of brick earth, land with standing timber etc.
On one side and the case under its consideration on the other.
It referred to the decision in Alianza Co. vs Bell(1) and said: ". the present case resembles much more closely the case described and distinguished by Channell, J. at page 673 of the report in Alianza Co. vs Bell of the cost of material worked up in a manufactory.
That side the learned Judge, is a current expenditure and does not become `a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum down secures a supply of the raw material for a period extending over several years '.
" In Kauri Timber Co. Ltd. vs Commissioner of Taxes(2) the company 's business consisted in cutting and disposing of timber.
It acquired in some cases timber bearing lands, in other cases it purchased the standing timber.
The leases were for 99 years.
So far as the cases where the land was acquired were concerned there could have been no doubt that the expenditure made in acquiring it was capital expenditure.
In the case of the purchase of the standing timber what was acquired was an interest in land.
The purchasers bought the trees which they could allow to remain standing as long as they liked.
It was pointed out that so long as the timber at the option of the company remained upon the soil, it derived its sustenance and nutriment from it.
The additional growths became ipso jure the property of the company.
In these circumstances it was held that the expenditure was capital expenditure.
In the case before us some reliance was placed by the appellant on the term that shells less than 2 1/4 inches in diameter brought inadvertently to shore had to be returned at once alive to the sea.
532 The argument was that such shells might later grow in size by receiving sustenance and nutriment from sea water and could be later gathered by the respondent firm when they reached the size of 2 1/4 inches in diameter or more.
This, it was argued, brought the present case nearer the decision in Kauri Timber case (1).
I am unable to agree.
It is to be remembered that live shells move under the surface of the sea and they do not remain at the same place, as trees do.
A shell less than 2 1/4 inches in diameter returned alive to the sea may move away from the contract area and may never be gathered by the respondent firm.
In these circumstances the appellant is not entitled to call to his aid the test of "further vegetation" or "sustenance and nutriment" referred to in the Kauri Timber case (1).
From whatever point of view we may look at the case, it seems to me that the facts of the present case are indistinguishable from those of the case in Mohanlal Hargovind vs Commissioner of Income tax(2) In Mohanlal Hargovind 's case (2) the right was to pluck tendu leaves; in our case the right was to gather conch shells of specified type and size.
This distinction, it is obvious, makes no difference.
In the High Court it was contended on behalf of the appellant that Mohanlal Hargovind 's case (2) related to the acquisition of raw materials whereas the present case relates to the acquisition of "chanks" by a dealer who sells them without subjecting them to any manufacturing process, and this distinction, it was contended, made the decision in Mohanlal Hargovind 's case (2) inapplicable to the present case.
The High Court rejected this contention and in my opinion rightly.
I agree with the High Court that on principle and in a business sense, there is no distinction between acquiring raw materials for a manufacturing business and acquiring or purchasing goods by a dealer for the purpose of sale, particularly when there is no question of any excavation 533 etc., in order to win the goods and make such goods parts of the stock in trade, a point which weighed with the Court of Appeal in Stow Bardolph Cravel Co. Ltd. vs Poole (1) and with my learned brethren in Pingle Industries Ltd. V. Commissioner of Income tax (2).
No such point is present in this case.
I have been unable to find any other distinction between the two cases which would make a difference in the application of the principles for discriminating between capital expenditure and revenue expenditure.
To adopt again the language of Lord Green, I see no ground in principle or reason for differentiating the present case from the case in Mohanlal Hargovind vs Commissioner of Income tax (3).
On behalf of the respondent firm a further question was agitated, namely, whether an allowance for the cost of gathering the conch shells by nets etc., should not be given, even though the rent paid under the contract was not allowable, under section 10 (2) (xv) of the Income tax Act and a reference was made in this connection to the decision in Hood Barrs vs Commissioners of Inland Revenue (4).
I do not think that we are concerned with that matter in the present appeal.
The only question which arises for decision is the one referred to the High Court.
I have held that the High Court correctly answered the question which related to the payment of the sum of Rs. 6111/ only.
The question having been correctly answered by the High Court, the appeal fails and must be dismissed with cost.
HIDAYATULLAH, J.
This appeal was heard with Pingle Industries, Ltd., Secunderabad vs The Commissioner of Income tax (5), in which judgment was delivered by us on April 26 1960.
In accordance with the decision in Pingle Industries case (1), 534 this appeal was allowed.
Later, a review petition of (No. 16 of 1960) was filed on the ground that this appeal was not governed by the decision in Pingle Industries case (1), and that as it was not fully argued, it should be reheard.
It is unnecessary to go into the reasons why the rehearing was granted, except to say that there was perhaps a misunderstanding about the concessions made by counsel.
We were, therefore, satisfied that we should grant the rehearing, and have since heard full arguments in this appeal.
K. T. M. T. M. Abdul Kayoom and Hussain Sahib (respondent) is a registered firm, and carries on business in conch shells locally known as "chanks", which are found on the bed of the sea all along the coast line abutting on the South Arcot District.
The respondent took on lease from the Director of Industries and Commerce, Madras "the exclusive right, liberty and authority to take and carry away all chanks founnd in the sea" for a period of three years ending on June 30, 1947.
The consideration was Rs. 6, 111/ per year payable in advance.
For the year of assessment, 1946 47 (the year of account ending June 30, 1945) the respondent in showing its profits from business sought to deduct Rs. 6,111/ on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business under section 10 (2) (XV) of the Income tax Act.
This claim was disallowed by the Income tax Officer, and on appeal, by the Appellate Assistant Commissioner.
On further appeal to the Appellate Tribunal, the respondent contended that the ruling of the Privy Council in Mohanlal Hargovind 's case (2) applied to the case, inasmuch as the payment was to secure the stock in trade for its business.
The Appellate Tribunal, though it was of opinion that the Privy Council case applied, felt itself bound by the earlier Full Bench decision of the Madras High 535 Court in K.T.M.T.M. Abdul Kayoom Hussain Sahib vs Commissioner of Income tax, Madras (1) relating to this respondent, and dismissed the appeal.
The Tribunal, however, acceded to a demand for a case, and referred the following question to the High Court for its decision : "Whether on the facts and circumstances of the case the payment of the sum of Rs. 6,111 made by the assessee under the terms of the agreement entered into with the Director of Industries and Commerce, Madras, on 9th November 1945 was not an item of revenue expenditure incurred in the course of carrying on the business of the assessee and, "therefore, allowable under the provisions of section 10 of the Indian Income tax Act".
The reference went before a Divisional Bench, which referred the case for decision of a Full Bench.
The Full Bench held that the case was covered by the Privy Council case above referred to, observing: "In our opinion, the facts in the case before the Judicial Committee are indistinguishable from the facts of the present case.
In one case, the leaves had to be picked from trees by going upon the land, while in the other case the chanks had to be collected and gathered by dividing into the sea.
It is impossible to construe the documents in the present case as conferring any interest in that portion of the sea from which the exclusive right of winning the chanks was conferred upon the assessee.
" The High Court also did not see any difference between raw materials acquired for a manufacturing business and the acquisition of chanks in the present case, and held that the chanks were acquired as the stock in trade of the respondent and the transaction was tantamount to purchase of goods, 536 The High Court, however, certified the case as fit for appeal, and the Commissioner of Income tax has filed this appeal.
The material terms of the agreement in the case are as follows : "1.
The lessor hereby grants unto the lessees the full free and exclusive right, liberty and authority to fish or take and carry away all chank shells in the sea off the coast line of the South Arcot District including the French Kuppams of Pondicherry more particularly described in the schedule hereto to hold the premises to the lessees from the first day of July 1944 for a period of three years ending 30th June 1947 paying therefor the yearly rent of Rs. 6, 111 (rupees six thousand one hundred and eleven only) to be paid yearly in advance, the first payment to be made within fifteen days from the date of intimation of acceptance and the second and third payments to be made on or before the 15th June 1945 and 1946, respectively at the Government Treasury at Tuticorin or Madras.
x x x 3.
The lossee hereby covenants with the lessor as follows : x x x (ii) To deliver to the Assistant Director of Pearl and Chank Fisheries, Tuticorin all Velampuri shells that may be obtained by the lessees upon payment of their value as determined by the Assistant Director.
(iii) To collect Chanks in nets and by means of diving as well.
In the process of such collection of shell not to fish chank shells less than 2 1/4 inches in diameter if any chank shells less than 2 1/4 inches in diameter 537 be brought inadvertently to shore, to return at once alive to the sea all such undersized shells.
(iv) Not at any time hereafter to transfer or underlet or part with possession of this grant or the rights and privileges hereby granted or any part thereof without the written consent of the lessor.
x x x (vi) To report to the Assistant Director of Pearl and Chank Fisheries (South), Tuticorin the actual number of shells kept unsold in different stations after the expiry of the lease period.
" An analysis of the agreement shows that the respondent obtained an exclusive right to fish for "chanks" by the method of diving and nets and to appropriate them except those below 2 inches in diameter, which had to be returned alive to the sea and Velampuri shells which had to be sold compulsorily to Government.
The respondent had also to report to its lessors at the end of the term, the number of shells not sold.
The right was exclusive, but was not capable of being transferred or underlet, and it was for a fairly long period.
The coast line involved was also fairly long.
There is no doubt that the payment of Rs. 6,111/ was an expenditure wholly and exclusively for the purpose of the business of selling shells, just as the payment to the divers and other sundry expenses were.
But an expenditure for the purpose of the business may be of a capital nature, and if it is so, it cannot be claimed as a deduction.
The question is whether this payment was of a capital nature.
What is attributable to capital and what, to revenue has led to a long string of cases here and 538 in the English Courts.
The decisions of this Court reported in Assam Bengal Cement Co., Ltd. vs Commissioner of Income tax and Pingle Industries case (1) have considered all the leading cases, and have also indicated the tests, which are usually applied in such cases.
It is not necessary for us to cover the same ground again.
Further, none of the tests is either exhaustive or universal.
Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect.
In deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo * by matching the colour of one case against the colour of another.
To decide, therefore, on which side of the line a case falls, its broad resemblance to another case is not at all decisive.
What is decisive is the nature of the business, the nature of the expenditure, the nature of the light acquired, and their relation inter se, and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases.
A trader may spend money to acquire his raw materials, or his stock in trade, and the payment may often be on revenue account but not necessarily.
A person selling goods by retail may be said to be acquiring his stock in trade when he buys such goods from a wholesaler.
But the same cannot be said of another retailer who buys a monopoly right over a long period from a producer of those goods.
The amount, he pays to secure the monopoly, through a part of the expenditure to secure his stock in trade is not of the same character as the price he pays in the first illustration.
By that payment, he secures an enduring advantage and an asset which is a capital asset of his business.
In the same way, if a manufacturer buys his raw materials he makes a revenue expenditure, but when he acquires a source from which he would derive his 539 raw materials for the enduring benefit of his business, he spends on the capital side.
Thus, a manufacturer of wollen goods buys his wool buys his raw materials, but when he buys a sheep farm, he buys a capital asset.
There is then no difference between purchase of a factory and the purchase of the sheep farm, because both are capital asset of enduring nature.
The respondent in this case has tried to distinguish Pingle Industries case (1) and to bring its case within the ruling of the Privy Council in Mohanlal Hargovind 's case (2).
When the former case was argued, the attempt was to bring it also within the rule of the Privy Council, but now, the differences between the two cases are recognised and Pingle Industries case (1) is said to be entirely different.
In deciding the present appeal, it is hardly necessary to do more than analyses once again the facts and circumstances of these two cases to show why those two cases were differently decided, and the present case will then be easily disposed of, not on its similarity to another but on its own facts.
We shall begin with the Privy Council.
Mohanlal Hargovind and Co., was a firm of bidi manufacturers, which needs tendu leaves in which tobacco is wrapped to make bidis.
Tendu leaves were thus the raw material of the business.
Tendu leaves can be bought from dealers who sell tendu leaves in a large way.
Now, what did the firm do ? It took leaves of forests with a right to pick the leaves.
This right carried with it the right to coppice small tendu plants and to pollard the tendu trees.
There was, however, no right in the trees or the land and the right to go over the land was merely ancillary.
Looked at from the point of view of business, there was no more than a purchase of the leaves, and the leaves were needed as raw materials of the business.
In deciding the case, the Judicial Committee discounted the right to 540 coppice small tendu plants and to pollard the tendu trees as a very insignificant right of cultivation necessary to improve the quality of the leaves, but which right ranked no higher than the right to spray a fruit tree.
The right of entry upon the land was also considered ancillary to the main purpose of the contract, which was acquisition of tendu leaves and tendu leaves alone, and it was observed that even if this right of going on the land and plucking the leaves was not expressed in the contract, it would have been implied by law.
Their Lordships then observed that the High Court diverted its view from these points, and attached too much importance to cases decided upon quite different facts.
They then observed that "cases relating to the purchase or leasing of mines, quarries, deposits of brick earth, land with standing timber. " were of no assistance, and concluded: "If the tendu leaves had been stored in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure.
Their Lordships see no ground in principle or reason for differentiating the present case from that supposed." (p. 478) That case thus involved no right in land or trees; the licence to be on the land was merely an accessory right; the right of cultivation was insignificant.
The term was short, and the collection of leaves was seasonal.
Leaves once collected, the operation pro tempore was over till the fresh crop came.
There was thus no acquisition of an enduring asset in the way capital endures; it was more a purchase of crops of two or three successive years shewered on an agreement to ensure the supply of raw materials, 541 Contrast this with the facts of Pingle Industries case (1).
The business of the assessee there, was selling stone slabe called flag stones.
These stones were first won from the quarries and then dressed and shaped and then sold.
Now, what did the assessee do ? It took leases of stone quarries in a large number of villages for twelve years.
Primarily, this was done to obtain stones for its business.
It could have been a contract by which it would have been entitled to so many cubic feet of stones to be extracted in a particular period.
It took long term leases of vast areas in several villages to ensure supplies for a considerable time.
The leases were not limited by quantity, nor did they refer to any stones in particular.
It could take all or it could take none; but it could not have carried away all the stones, if the supply outran its efforts.
The stones were embedded in earth, layer upon layer, and had to be systematically extracted.
Till the stones at the top were removed, it could not remove those at the bottom, and there were still more layers further below.
In there circumstances, no specific quantity having been bought or sold either expressly or impliedly, the stones being immovable property or a part thereof and the contract being long teem contracts, Mohahlal Rargovind 's case (2) was held inapplicable, and it was held that the assessee in Pingle Industries case (1) had acquired an enduring asset and the expenditure was on capital account.
These cases between them show adequately the dividing line, which exists between capital expenditure and revenue expenditure.
To determine on which side of the line the particular expenditure falls, one may often put himself the question posed by Lord Clyde in Robert Addie and Sons Collieries Ltd. vs Commissioners Inland Revenue (3) 542 "It it part of the Company 's working expenses, is it expenditure laid out as part of the process of profit earning ? or, on the other hand, is it capital outlay, is it expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all?" The same question was again posed by the Judicial Committee in Tata Hydro Electric Agencies, Ltd. vs Commissioner of Income tax (1).
The answer to this question in each of the two case of Mohanlal Hargovind (2) and Pingle Industries (3) is entirely different.
The difference can be noticed easily, if we were to read here what Channell, J. said in Alianza Co. Ltd. vs Bell (4): "In the ordinary case, the cost of the material worked up in a manufactory is not a capital expenditure, it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum secures a supply of the raw material for a period extending over several years. .If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure.
But if it is like the working of a particular mine, or bed of brick earth and converting the stuff into a marketable commodity, then, the money paid for the prime cost of the stuff so dealt with is just as much capital the money sunk in machinery or buildings.
" The first part of the observation is applicable to Mohanlal Hargovind 's case (2) and the latter part, to Pingle Industries case (3).
What is said of a manufacturing concern is equally applicable to a non manufacturing business.
It is the quality of the payment taken with what is obtained, that is decisive of the character of the payment.
543 We may now pass on to the facts of the case before us.
The respondent carried on the business of selling chanks.
It obtained its supplies from divers, from whom it purchased the chanks, and having got them, perhaps cheap, it resold them at a profit.
This is one mode in which it carried on its business.
In this business, it was directly buying its stock in trade for resale.
The other method was to acquire exclusive right to fish for chanks by employing divers and nets.
The business then changed to something different.
The sale was now of the product of another business, in which divers and equipment were first employed to get the shells.
It thus took leases of extensive coastline with all the right to fish for chanks for some years.
The shells were not the subject of the bargain at all, as were the tendu leaves; but the bargain was about the right to fisht.
There can be no doubt that what it paid the divers when it bought chanks from them with the view of reselling them was expenditure laid out wholly and exclusively for the purpose of its business, which was not of a capital nature.
That business was buying goods and reselling them at a profit.
But a different kind of business was involved when it went in for fishing for chanks.
To be able to fish for chanks in reserved waters it had to obtain the right first.
It, therefore took lease of that right.
To Mohanlal Hargovind, the leaves were raw materials, and that firm preferred to buy a number of crops over years rather than buy them as it went along.
Hence the remark that the leaves were bought, as if they were in a shop.
Under the lease which the respondent obtained, it had a right to take only chanks of particular dimensions and shape, but it had to fish for them and obtain them first.
The rest of the chanks were not its property.
The smaller chanks had to be returned alive to the sea, and Velampuri chanks had to be compulsorily sold to the state.
Of Course, the smaller chanks put back into the sea 544 would grow, and if fished later, be its property to take, but till they grow, it had not claim.
The chanks were on the bed of the sea.
Their exact existence was not known, till the divers found them, or they got netted.
Chanks which were there one day might have been washed back into the deep sea, and might never be washed back into a place where they would be within reach.
Similarly, other chanks not there one day might come within reach on another day.
All these matters make the case entirely different from the case of a purchase from the divers.
In obtaining the lease, the respondent obtained a speculative right to fish for chanks which it hoped to obtain and which might be in large quantities or small, according to its luck.
The respondent changed the nature of its business to fishing for chanks instead of buying them.
To be able to fish, it had to arrange for an area to fish, and that arrangement had to be of some duration to be effective.
This is not a case of so much clay or so much salt petre or a dump of tailings or leaves on the trees in a forest.
The two modes in which the respondent did the business furnish adequate distinguishing characteristics.
Here is an agreement to reserve a source, where the respondent hoped to find shells which, when found, became its stock in trade but which, insitu, were no more the firm 's than a shell in the deepest part of the ocean beyond the reach of its divers and nets.
The expenses of fishing shells were its current expenses as also the expenses incurred over the purchase of shells from the divers.
But to say that the payment of lease money for reserving an exclusive right to fish for chanks was on a par with payments of the other character is to err.
It was possible to say of the former, as it was possible to say of the tendu leaves in Mohanlal Hargovind 's case (1), that the chanks were bought because the money paid was the price of the chanks.
But it would be a straining of the imagination to say that the amount paid 545 for reserving the coastline for future fishing was the price of chanks, with which the respondent did its business.
That amount was paid to obtain an enduring asset in the shape of an exclusive right to fish, and the payment was not related to the chanks, which it might or might not have brought to the surface in this speculative business.
The rights were not trasferable, but if they were and the firm had sold them, the gain, if any, would have been on the capital side and not a realising of the chanks as stock in trade, because none had been bought by the firm, and none would have been sold by it.
In our opinion, the decision of the High Court, with all due respect, was, therefore, erroneous, and the earlier decision of the Full Bench of the same High Court was right in the circumstances of the case.
In the result, the appeal is allowed; but there will be no order about cost.
BY COURT.
In accordance with the majority judgment of the Court, the appeal is allowed, but there will be no order about costs.
| The assessee firm carried on the business in purchase and sale of conch shells.
It obtained a lease for 3 years for gathering specified types of shells from the sea along the coastline abutting on the South Arcot District.
It sought to deduct the amount paid as lease money from its profits from business on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business.
under section 10(2)(xy) of the Income Tax Act.
^ Held, (per kapur and Hidayatullah, JJ., Das, J. dissenting) that the expenditure was capital expenditure and could not be deducted from the profits.
The business of the assessee was buying and selling shells but when it took the lease it went in for a new speculative business of fishing for shells.
The amount paid for reserving the vast coastline for future fishing was not price paid for obtaining the stock in trade i.e. shells with which assessee did his business.
The amount was paid to obtain an enduring asset in the shape of an exclusive right to fish and the payment was not related to the shells.
Mohanlal Hargovind vs Commissioner of Income tax, C. P. & Berar, , distinguished Pringle Industries Ltd., Secunderabad vs Commissioner of Income tax, Hyderabad, [1960] 3 section C. R. 681, applied.
Per Das, J. The expenditure was not capital expenditure and was deductible from the profits.
It was not an expenditure for the acquisition of property or of rights of a permanent character, the possession of which was necessary for carrying on of the assessee 's trade By this lease the assessee acquired its stocks in trade rather than a source or enduring asset for producing the stock in trade.
Mohanlal Hargovind vs Commissioner of Income tax, C. P. & Berar , applied.
Pringle Industries Ltd., Secunderabad vs Commissioner of Income tax, Hyderabad, , distinguished.
|
minal Appeal No.56 '61.
Appeal by special leave from the judgment and order dated August 16, 1960, of the Bombay High Court in Cr. A. No. 225 of 59.
B. B. Tawakley and A. G. Ratnaparkhi, for the appellants.
M. section K. Sastri and P. D. Menon, for the respondent.
July 24.
The judgment of the Court was delivered by SHAH, J.
With special leave, the two appellants Bhagwanbhai Dulabai Jadav and Haribhai Maganbhai Bhandare hereinafter referred to as accused Nos. 1 and 5 respectively have appealed against the order passed by the High Court of Judicature at Bombay setting aside the order of the Judicial Magistrate, First Class, Thana acquitting them and three others of offences punishable under sections 65(a), 66 (b), 81 and 83 of the Bombay Prohibition Act, 25 of 1949 hereinafter called the Act.
The case of the prosecution may briefly be stated: On August 25, 1957, a "wireless message" alerting the officers posted on "watch duty" at Kasheli Naka, District Thana that a motor car bearing No BMY 1068 belonging to the first appeal lant was carrying "contraband goods", was received.
This motor car reached,the Kasheli Naka at about 388 2 30 p.m. on August 28.
The first accused was then driving the car the second accused was sitting by his side and accused 3 to 5 were sitting in the rear seats.
Panchas were called by the Sub Inspector of police Deshpande from a village nearby and in their presence the vehicle was searched and from the luggage compartment (which was opened with the key found on search on the person of the 5th accused), 43 sealed bottles of foreign liquor and a large number of packets of tobacco were found.
A search list was prepared and the five occupants of the vehicle were arrested.
The vehicle and the articles found therein were attached.
The vehicle was handed over to the Central Excise Authorities together with the ignition key and the key of the luggage compartment for taking proceedings in respect of packets of tobacco which were attached.
A charge sheet was then filed in the Court of the Judicial Magistrate, First Class, Thana against the five accused charging them with offences punishable under so.
65 (a), 66 (b), 81 and 83 of the Act.
The accused pleaded not guilty to the charge: they stated that the case was "false and entirely got up", that no "liquor or other contreband" was found in the motor. car and ,,the whole plot was engineered by the enemies of the 1st accused".
They denied that the motor car was searched in their presence.
The fifth accused denied that the key of the luggage compartment was found on his person.
The trial Magistrate held that the brosecution evidence was insufficient to establish that the persons accused before him were acting in conspiracy or were abetting each other in transporting contraband articles in the car and acquitted them.
Against the order of aquittal, the State of Bombay appealed to the High Court of Bombay.
The High Court observed that the trial court treated the case as "a mathematical problem", and 389 examined the evidence giving undue importance to minor discrepanies.
In the view of the High Court the evidence established that in consequence of information received from police station Vapi, motor oar No. BMY 1068 was stopped at 2 30 p.m. on August 28, 1957, near Kasheli Naka, that at that time the 1st accused was driving the motor car which belonged to him, that accused No. 2 was sitting near him and accused Nos.
3 to 5 were sitting in the rear seats, that the key of the luggage compartment was found on the person of the 5th accused, that on opening that compartment in the presence of the Panchas, 43 bottles of foreign liquor and a large number of packets of tobacco were found, and that the evidence warranted the conviction of all the accused for offences punishable under as.
65(a), 66(b), 81 and 83 of the Bombay Prohibition Act.
The High Court accordingly allowed the appeal against accused Nos. 1, 2 and 5 of all the offences and directed each of them to undergo rigorous imprisonment for one year and pay a fine of Rs. 500/ for each of the offences; and in default of payment of fine to rigorous imprisonment for 3 months in respect of each offence, and directed that the substantive sentences do run concurrently.
The appeal against accused Nos. 3 and 4 was dismissed because they could not be served with the notice of appeal.
The High Court was undoubtedly dealing with an appeal against an order of a quittal but the Code of Criminal Procedure placed no special limitation upon the powers of the High Court in dealing with an appeal against an order of aquittal.
The High Court is entrusted with power to review evidence and to arrive at its own conclusion on the evidence.
There are certainly restrictions inherent in the exercise of the power, but those restrictions arise from the nature of the jurisdiction which the High Court exercises.
In a Criminal trial the burden 390 always lies on the prosecution to establish the case against the accused and the accused is presumed to be innocent of the offence charged till the contrary is established.
The burden lies upon the prosecution, and the presumption of innocence applies with equal, if not greater, force in an appeal to the High Court against an order of acquittal.
In applying the presumption of innocence the High Court is undoubtedly slow to disturb findings based on appreciation of oral evidence for the court which has the opportunity of seeing the witnesses is always in a better position to evaluate their evidence than the court which merely persued the record.
In the present case, the High Court in our judgment, was right in holding that the trial court ignored the broad features of the prosecution case, and restricted itself to a consideration of minor discrepancies.
The Magistrate meticulously juxtaposed the evidence of different witnesses on disputed points and discarded the evidence in its entirety when discrepancies were found.
That method was rightly criticised by the High Court as fallacious.
The Magistrate had to consider whether there was any reliable evidence on question which had to be established by the prosecution.
Undoubtedly, in considering whether the evidence was realiable he would be justified in directing his attention to other evidence which contradicted or was inconsistent with the evidence relied upon by the prosecution.
But to discard all evidence because there were discrepancies without any attempt at evaluation of the inherent quality of the evidence was unwarranted.
Sub Inspector Deshpande spoke about the wireless message received at the Kasheli Naka, about the arrival of the motor oar of the first accused at 2 30 in the afternoon of August 28, 1957, about the search of the car in the presence of the Panchas and the discovery of 43 'bottle of foreign 391 liquor and packets of tobacco in the luggage compartment of the motor car.
Nothing was elicited in the cross examination which threw any doubt upon the truth of the story, and no adequate reason was suggested why he should be willing falsely to involve the accused, in the commission of a serious offence by fabricating false evidence.
He was corroborated by the contents of the "Panchnama", which was a written record contemporaneously made about the search, and the evidence of the Panch witness Pandu Kamliya.
Deshpande was also partially supported by headconstable Chodabrey.
The latter witness deposed that the motor oar driven by the lot accused was stopped at Kaheli Naka and panchas were called, but according to him, search was made before the panchas arrived and the bottles were taken out of the luggage compartment and placed near the car.
We agree with the view of High Court that the evidence of Head Constable Codabrey though some what inconsistent with the evidence of Sub Inspector Deshpande and the panch witness, accorded with their story that the liquor bottles were in the motor oar when it was stopped near the Kasheli Naka on the day in question.
That evidence by itself is sufficient to establish that the accused possessed the bottles of foreign liquor.
It was urged, however, that under the law making of a search in the presence of independent witnesses of the locality called for that purpose was obligatory, and as according to the evidence of Head Constable Chodabrey and Panch witness Laxman Ganpat the search was held without complying with the formalities prescribed by section 103 of the Criminal Procedure Code, the panchnama about the search of the motor car, and the evidence of the finding of the articles therein must be discarded and the rest of the evidence was not sufficient to displace the presumption of innocence which 392 by the order of acquittal was reinforced.
We are unable to agree with this contention.
Section 117 of the Act provides, "Save as otherwise expressly provided in this Act, all investigations, arrests, detentions in custody and searches shall be made in accordance with the provisions of the Code of Criminal procedure, 1898: provided that no search shall be deemed to be illegal by reason only of the fact that witnesses for the search were not inhabitants of the locality in which the place searched is situated".
In view of that provision it is obligatory upon a police officer about to make a search to call upon two or more respectable inhabitants of the locality in which the place to be searched is situate to attend and witness the search.
But a motor car is not a place within the meaning of as. 102 and 103 of the Code of Criminal Procedure; nor is there anything in the Act by which a motor car would be so regarded for purposes of a search.
The provisions relating to searches contained in a. 103 of the Code of Criminal procedure have therefore no application and in making a search of a motor vehicle, it was not obligatory upon the police officer to comply with the requirements thereof.
This is not, however, to say that the practice which is generally followed by police officers when investigating offences under the Act to keep respectable persons present on the occasion of the search of a suspected person or of a vehicle may be discarded.
Even though the statute does not make it obligatory, the police officers wisely carry out the search, if it is possible for them to secure the presence of respectable witnesses, in their presence.
This is a healthy practice which leads to cleaner investigation and is a guarantee against the oft repeated charge against police officers of planting articles.
It was strenuously urged by counsel for the appellants that the High Court did not attach suffi 393 cient importance to a piece of evidence which strongly militated against the truth of the prosecution case.
This piece of evidence.
, it was contended, related to the ignition key and the luggage compartment key, produced at the trial.
As we have already observed, the motor car together with the ignition key and luggage compartment key which were attached were handed over to the Excise Authorities for investigating the case in respect of tobacco which was attached with liquor.
The motor car and the keys were produced by the Excise Authorities at the instance of the accused before the Magistrate.
An attempt was made to open the luggage compartment of the motor car by using one of the keys and the trial Magistrate recorded his observations in that behalf.
He has stated that the keys were produced by the Sub Inspector of Central Excise and "with the white key the look of the carrier was tried for thirty minutes.
Oil was allowed to be put.
Even then the lock was not opened.
The yellow key was ,,.hen tried on the petrol tank and was opened immediately.
" It appears, however, from the evidence of Inspector Jambekar that the " 'white key was the ignition key and the yellow was the key of the luggage compartment".
It is true that Head Constable Chodabrey say, that the " 'white key" was the key of the luggage compartment and with that key the first accused bad opened the luggage compartment.
But we fail to appreciate why no attempt was made by the Trial Magistrate to ascertain whether the yellow key could be used for opening the luggage compartment and whether the white key fitted the ignition switch.
In view of this infirmity it is difficult to hold that the story of the finding of the key and the attachment of liquor after opening the luggage compartment of the motor oar was untrue.
394 The case tried by the Trial Magistrate was simple.
Thers is no dispute that the police officers had attached 43 bottles of foreign liquor at the kasheli Naka on the day in question.
It was the case of the accused that these bottles of liquor were not in their possession and Sub Inspector Deshpand made a false panchnama showing that these bottles were found in the luggage compartment of the motor car belonging to the first accused.
The primary question which the trial Magistrate had to consider was about the credibi lity of the prosecution evidence in the light of the defence set up by the accused.
The bottles of foreign liquor attached by the police exceeded Rs.2000/. in value: the trial Magistrate had to consider whether it was reasonably possible that the police officers could procure the bottles to falsely involve the accused, or having attached them from some other person, allow that person to escape and plant them in the motor car of the accused and then make a false panchnama.
No. attempt appears to have been made to examine the evidence in the light of the defence set up or suggested.
It was urged that one Inspector Mane of police station Bhilad was an enemy of the 1st accused.
But that does not explain the conduct of Sub Inspector Deshpande.
It would indeed be difficult for Deshpande to secure this large quantity of foreign liquor, and even if it could be secured no rational ground if; suggested why Deshpande would keep it with him on the possible chance of the first accused arriving at the Kasheli Naka.
The High Court has on a consideration of the evidence of Sub Inspecter Deshpande, the Panch witness Pandu Kamaliya and Head Constable Chodabrey come to the conclusion that the accused Nos. 1, 2 and 5 were guilty of possessing liquor in contravention of the provisions of the Act, and in our view the High Court was right in so holding.
395 But the order of conviction passed by the High Court and the sentence imposed are not according to law.
Section 65 of the Act penalises a person who in contravention of the provisions of the Act, or of any rule, regulation or order made or of any licence, pass, permit or authorization there under (a) imports or exports any intoxicant (other than opium) or hemp, and the expression "import" is defined in section 2(20) as meaning "to bring into the State otherwise than across a customs frontier.
" There is no evidence on the record that the accused or any of them imported the bottles of foreign liquor into the State.
The circumstance that the bottles contained foreign liquor and the accused were residents of the former Portuguese territory of Daman or a locality near about, was not, in our judgment, sufficient to prove that the accused bad imported those bottles.
The High Court was there fore, in our judgment, in error in convicting the accused of the offence under section 65(a).
Again, there is no evidence, and the High Court has considered none, which establishes that two or more persons had agreed to commit or caused to commit any offence under the Act.
Section 83 of the Bombay Prohibition Act provides punishment for conspiracy to commit or cause to commit an offence under the Act.
But an inference of conspiracy cannot be made from the facts proved in this case, viz. that the five accused Were, found in a motorcar which contained in its luggage compartment a number of foreign liquor bottles and some of the accused were blood relations, Conviction for the offence under a. 83 is therefore not warranted by the evidence.
Again, if accused Nos. 1 and 5 are proved to have committed the substantive offence punishable under section 66 (b) of the Act it is difficult to appreciate how they can also be convicted of abetting the commission of that offence.
The offence under section 81 of the Act is therefore also not made out.
The appellants 396 were accordingly liable to be convicted only of the offence under a. 66(b) of the Act, and the maximum term of imprisonment for a first offence punishable under that section is rigorous imprisonment for six months and a fine of Rs. 1, 000/ .
We accordingly modify the order passed by the High Court and maintain the conviction of accused Nos. 1 and 5 under a. 66 (b) and set aside the order of conviction under as.
65 (a), 81 and 83 of the Act and the sentence passed in respect of those offences.
We also modify the sentence imposed by the High Court for the offence under a. 66 (b) of the Act, and direct that each appellant do suffer rigorous imprisonment for six months and pay a fine of Rs. 500/ , and in default of payment of fine do suffer rigorous imprisonment for one month and fifteen days.
Subject to that modification the appeal is dismissed.
| The second appellant was a manufacturer of cement and at the material time it had over a dozen factories in different parts of India none of which was in the State of Mysore.
The first appellant was its sales manager and had its head office in Bombay with a branch office at Bangalore in the State of Mysore ' Cement was a controlled article and every one wishing to buy cement.
had to get an authorisation from the appropriate Government authorities in a standard form which authorised the first appellant to sell cement in quantities mentioned therein and the cement had to be supplied from the factory therein mentioned.
The purchaser had to place an order with the first appellant.
stating the requirement, where the goods were to be sent and how they were to be sent.
In the present case, all the goods were sent against the authorisations from the various factories belonging to the second appellant which were all outside the State of Mysore and were received in the State of Mysore by the various 778 purchasers.
The Sales Tax Officer by his order dated March 31, 1958, took the view that though the property in the goods passed to the dealers and consumers outside the State, of Mysore, since the goods had actually been delivered in the State of Mysore as a direct result of such sales for purposes of consumption in the State, the sales must be deemed to have taken place in that State and, therefore, the sales effected by the first appellant as the sales manager of the second appellant, to customers in Mysore State amounted to intrastate sales and liable to tax under provisions of the Mysore Sales Tax Act, 1948.
The High Court held that as the actual delivery to the purchasers was within the State of Mysore, the cement loaded outside the State and despatched to the purchaser did not convert the sales into inter State sales but were intrastate Wes.
Held, that the sales which took place in the present case in which the movement of goods was from one State to another as a result of a convenant or incident of the contract of sale, were in the course of inter State trade or commerce and fell within Art ' 286(2) of the Constitution of India, Consequently, the imposition of sales tax on such sales was unconstitutional.
M/S. Mohan Lai Hargobind vs The State of Madhya Pradesh, ; , followed.
Endapuri Narasimhan & son vs The State of Orissa; , , Bengal Immunity Co. Ltd. vs The State of Bihar, M/s. Ram Narain & Sons vs Assistant Commissioner of Sales Tax, ; and Tata Iron and Steel Co. Ltd. Bombay vs section R Sarkar, [1961] 1 S.C.R. 379, relied on.
Rohtas Industries Ltd. vs The State of Bihar, [1961] 12 S.T.C. 615, distinguished.
|
Appeal No. 526/59.
Appeal by special leave from the judgement and order dated March 3, 1958, of the Patna High Court in Misc.
case No. 940 of 1956.
B. K. Khanna and P. D. Menon for the appellant.
P. K. Chatterjee, for the respondents.
April 26.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the judgment of the Patna High Court.
The brief facts necessary for present purposes are these.
There is a colliery in the district of Dhanbad known as Allabad colliery of which the respondents are the owners.
On February 5, 1955, there was an accident in the colliery as a result of which 52 p6rsons lost their lives.
In consequence, the Government of India ordered an inquiry into the disaster under section 24 of the , No. 35 of 1962, (hereinafter referred to as the Act).
The court of inquiry contained of Mr., Justice B. P. Jamuar and two persons were appointed to assist him as assessors.
The court of inquiry submitted its report on September 26, 1955, which was published on December 17, 1955.
A question was raised before the court of inquiry whether the management should be ordered to pay the expenses of the inquiry as provided by r. 22 of the Mines Rules, 1955, (hereinafter referred to as The Rules), which lays down that "if a court of 478 inquiry finds that the accident was due to any carelessness or negligence on the part of the management the court may direct the owners of the mine to pay all or any part of the expenses of the inquiry in such manner and within such time as the court may specify.
The court of inquiry found in its report that the accident was due to negligence on the part of the management and therefore ordered the owners to pay the expenses of the inquiry.
The amount of the expenses to be paid were however not quantified in the report of September 26, 1955.
On July 27,1956 the Chief Inspector of Mines requested Mr. Justice Jamuar that the amount of expenses should be specified and the manner in which it should be paid and the time within which the payment might be made, might be fixed.
Notices were issued to the parties concerned thereafter and on September 7, 1956, Mr. Justice Jamuar ordered the owners to pay Rs. 17,778/2/as expenses of the inquiry within two months of the date of the order.
Thereupon a petition was filed under article 226 of the Constitution by the respondents challenging the order of September 7, 1956.
It was conceded there in that r. 22 of the Rules conferred power on the court of inquiry to direct the owner to pay all or any part of the expenses of inquiry within such time as the court may specify.
But the order passed in this case was challenged on three grounds, firstly that the court of inquiry became functus officio after it had submitted its report on September 26, 1955 and therefore Mr. Justice Jamuar had no power left to pass the order of September 7, 1959.
It was also contended that if the order of September 7, 1956, be treated as a review of the order of September 26, 1956 it would still be void, as there was no power of review in the court of inquiry, Lastly.
it was urged that when the order of September 479 7, 1956, was passed, the assessors were not present and were not associated with the inquiry and therefore Mr. Justice Jamuar could not pass the order alone.
All these three contentions were accepted by the High Court and it allowed the writ petition adding that it was not interfering with the order relating to expenses made by Mr. Justice Jamuar in his report of September 26, 1955.
It is this order of the High Court, which is being challenged before us.
The main contention on behalf of the respondents is that as the court of inquiry became functus officio after the report of September 26, 1955, it was not open to Mr. Justice Jamuar to quantify the expenses by the order of September 7, 1956.
Before we deal with this main argument we should like to dispose of briefly the other two submissions made before the High Court which were also accepted by it.
The first of these contentions is that the order of September 7, 1957 is an order of, review and as there is no power of review granted to the court of inquiry.
Mr. Justice Jamuar had no power to pass that order.
It is enough to say that the order of September 7, 1956, cannot be called an order of review.
We have already pointed out that the order that the owners should pay the expenses of the inquiry was already incorporated in the report of September 26, 1955, though it was not quantified.
All that the order of September 7, 1956, has done is to quantify the amount of expenses.
Therefore, this order cannot be treated as a review or any variation of the order passed in the report of September 26, 1955.
It would have been a different matter if no order as to the payment of expenses had been made in the report of September 26, 1955.
In that case it may have been possible for the respondents to argue that the later order was an order reviewing the failure to am an order as to expenses in.
the report.
But 480 when the report itself contained the order for payment of expenses, the later order is merely a quantification of that order and would be on a par with what happens every day in courts which pass decrees with costs.
When giving judgment, courts do not quantify costs in the judgment.
This quan tification is done later in the office of the court and if there is any dispute about it the court settles that dispute and then includes the cost in the decree or final order.
What has happened in the present case is something similar and the order of Mr. Justice Jamuar dated September 7, 1956, cannot in ' the circumstances be called an order of review which he had no power to pass.
The contention therefore under this head must fail.
Turning now to the other contention, namely, that the order of September 7, 1956, was bad because the two assessors were not associated with Mr. Justice Jamuar when the order was passed, it is enough to say that under section 24 (1) the inquiry is held by a competent person appointed for the purpose and assessor are appointed to assist the person appointed to hold the inquiry.
Even so, the person who holds the inquiry is the person appointed to do so and the assessors need not in our opinion be associated with him in all orders which are in the nature of ministerial orders and quantification of expenses must be treated as an order of a ministerial nature.
It is not disputed that the assessors were associated with Mr. Justice Jamuar when the report of September 26, 1955, was made and it was ordered that the owners should pay the expenses of the inquiry.
That was in our opinion the order of the court of inquiry as to payment of expenses and in that the assessors were associated.
The later order wag mere quantification of that and it was in our opinion not necessary that the assessors should be associated at that stage also, for the 481 order of quantification is more or less of a ministerial nature and was made by the person who was appointed to hold the inquiry.
In the circumstances we are of opinion that the fact that the order of September 7, 1956, was passed only by Mr. Justice Jamuar and the assessors were not associated with him would not make it invalid for this was merely carrying out the order in the report of September 26, 1956 by which the owners were ordered to pay the expenses of the inquiry and in that order the assessors were associated.
The contention on this head also must therefore fail.
This brings us to the main contention raised on behalf of the respondents, namely, that the., court of inquiry became functus officio when the report was made on September 26, 1955, and thereafter it was not open to Mr. Justice Jamuar to pass any order quantifying the expenses.
Now it is not in dispute that there was no time fixed within which the report had to be made by the court of inquiry.
Therefore, it cannot be said that the period for which the court of inquiry was appointed came necessarily to an end on September 26, 1955, and so the court of inquiry became functus officio on that date.
If the court of inquiry when it submitted its report in this case on September 26, 1955 had ordered the owners to pay the expenses of the inquiry and had added further that expenses would be quantified later by the person holding the inquiry it could not possibly be argued that it was not open to the person appointed to hold the inquiry to quantify the expenses later.
But it is said that in this case though the court of inquiry ordered that the expenses should be paid by the owners it did not say in the report that the expenses to be paid would be quantified later by the person appointed to hold the inquiry.
That is undoubtedly so.
But we have to see what the order in the report of Septmber 26, 1955 by which the owners were 482 ordered to pay the expenses of the inquiry, necessarily implies.
It is obvious that the intention of the court of inquiry was that the owners should pay the expenses.
Generally it may Dot be possible to quantify the expenses incurred in the inquiry at that stage and a quantification of expenses would ordinarily take place after the report is submitted.
It seems to us therefore clear that when a court of inquiry orders that the owners shall pay the expenses such an order necessarily carries with it the implication that the person appointed to hold the inquiry would later quantify the expenses after necessary materials are put before him.
This is exactly what happened in this, case.
After the order of the court of inquiry that the owners should pay the expenses was known to the Chief Inspector of Mines, he applied that the expenses should be quantified and Mr. Justice Jamuar passed the order doing so.
The order therefore that was passed on September 7, 1956, was merely a consequential order to what the court of inquiry had decided on September 26, 1955 and in our view the earlier order of September 26, 1955, had necessarily implicit in it that the person appointed to hold the inquiry would quantify the expenses as soon as the materials for that purpose are placed before him.
It was not necessary therefore to say in so many words in the report of September 26, 1955, that the expenses would be quantified by the person appointed to hold the inquiry later on materials being placed before him.
If this were not to be implicit in the order that was passed on September 26, 1955, that order would be completely useless for it does not specify the amount which could be recovered as expenses.
We are therefore of opinion that when such an order is passed in a report of a court of inquiry it necessarily carries with it the implication that the person appointed to hold the inquiry would quantify the expenses later on materials being 483 placed before him, as otherwise such an order would be rendered completely nugatory.
Therefore, unless we find anything in section 24 which prevents such an order of quantification being passed later by the person appointed to hold the inquiry, we see no reason why such a quantification should not be made later.
We have also pointed out that the order appointing the court of inquiry in this case did not fix a date by which the report was to be made.
Therefore, in these circumstances we are of opinion that it was open to Mr. Justice Jamuar to quantify the expenses and that it was not necessary that at that stage the assessors should be associated with him.
We are therefore of opinion that it cannot be said that the person appointed to hold the inquiry was functus officio in this case and could not quantify the expenses in accordance with the direction contained in the report of September 26, 1955.
The appeal is hereby allowed and the order of the High Court is set aside.
The High Court has allowed no costs in its order; in the circumstances we think that the parties should bear their own costs of this Court.
Appeal allowed.
| A complaint was made by the appellant to the Railway Rates Tribunal against station, to station rates as being unreasonable on sugarcane imposed by the respondent Railway Co. by their rates circular No. 8 of 1953 with effect from October 1, 1953.
The Railway company in their answer pointed out that the rates imposed by the rates circular 8 of 1953 had long before the date of the complainant ceased to be in force and a new rate had come into operation from February 10, 1960.
Thereafter the complainant was allowed to amend the complaint.
The prayers were for a declaration that the rates charged were unreasonable, that a direction of refund of the excess collected or which may be collected after the date of the amendment of the complaint over the reasonable rates that may be fixed by the Tribunal and, lastly, for fixation of the rates.
The main contentions of the respondent were that the Tribunal had no jurisdiction to entertain the complaint as regards the reasonableness of rates prior to the institution of the complaint and that the Tribunal had no jurisdiction to grant refund.
The Indian Railways Act underwent several amendments and by the amendment in December 1957, section 41 was changed.
As a result of the change cl.
I of section 41 read thus: "Any com plaint that a railway administration (a) is contravening the provisions of section 28, or (b) is charging for the carriage of any commodity between two stations a rate which is unreasonable or is levying any other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter.
" 334 The Tribunal held that it had no jurisdiction to entertain or try the complaint as regards the rates and charges to prior to the institution of the complaint and it had no jurisdiction to grant any refund.
The appellants came up in appeal to the Supreme Court.
Held, that the words "is charging" in clause (b) and "is levying" in clause (c) of section 41 (1) of the Act must be construed to mean "is demanding a price at the present time for services to be rendered".
The Railway Rates Tribunal had no jurisdiction to entertain or try the complaint as regards the reasonableness or otherwise of rates and charges made prior to the institution of the complaint.
When the Tribunal had no jurisdiction to consider the reasonableness, or otherwise of any charges made prior to the institution of the complaint, it follows necessarily that it could have no occasion to order any refund.
For the question of refund could arise only after a decision that the charges made were more than what was reasonable.
Held, further, that neither expressly nor by necessary implication has the Railway Rates Tribunal been given any jurisdiction to make any order for refund.
, Southern Railway vs The Railway Rates Tribunal, A.I.R. 1955 (Madras) 676, referred to.
After a complaint is made the Tribunal shall hear and decide the complaint.
The complaint being that something is unreasonable all that the Tribunal has to decide is whether that thing is unreasonable or not.
A finding that it is unreasonable does not involve any consideration or decision of what would flow from the finding.
In otherwords, in making the complaint the complainant can ask only for a declaration that the rate or charge is unreasonable andit is only this declaratory relief which the Tribunal has been authorised to give.
There is no provision that the Tribunal can also give a consequential relief.
The only other thing which the Tribunal is authorised to do in connection with the complaint is to fix "such rate or charge as it considers reasonable.
" In the absence of any thing to indicate to the contrary it is reasonable to think that this fixation can only be prospective, that is, the Tribunal in making this order fixing the reasonable rate or, charge will mention a future date for this to come incoporation. 335
|
Appeal No. 135 of 1972.
Appeal by Special Leave from the Judgment and Order dated 12 8 71 of the Delhi High Court in F.A.O. No. 47 D of 1964.
Gobind Das and Girish Chandra, for the Appellant.
Bakshi Shiv Charan Singh and Harbans Singh, for the Respondents.
The Judgment of the Court was delivered by BHAGWATI, J.
, This appeal, by special leave, is direct ed against a judgment of the High Court of Delhi setting aside an award made by an arbitrator on the ground that he was not a validly appointed arbitrator and hence had no jurisdiction to arbitrate and make an award.
The facts giving rise to the appeal are few and may be briefly stated as follows.
The respondents a partnership firm entered into a contract with the appellant for the supply of 30,000 tons of East German sugar at the rate and as the terms and condi tions set out in a letter dated 3rd July, 1954 addressed by the Secretary to the Government of India, in the Ministry of Food & Agriculture to the respondents.
The Ministry of Food and Agriculture was concerned with the subject matter of this contract and hence clause (9) provided that "superin tendence and inspection of quality, weight and packing of sugar Shall be made by a reputable superintending agency to be approved by the Government of India, in the Ministry of Food & Agriculture" and clause (10) stipulated for delivery to be made to "authorities or parties nominated by the Ministry of Food and Agriculture".
There was provision for arbitration made in clause (17) and that clause also re ferred to the Ministry of Food and Agriculture.
It was in the following terms: "ARBITRATION: All questions, disputes or differences whatsoever which may at any time arise between the parties to the agreement touching the agreement or the subject matter thereof, arising out of or in relation thereto and whether as to construction or otherwise shall be referred to a single arbitrator for decision.
Such a single arbitrator shall be nominated by the Secretary to the Government of India in the Ministry of Food and Agriculture in his absolute discretion and the decision of such arbitrator shall be final and binding upon the parties.
The reference to the arbitrator shall be governed by the provisions of the Indian as amended from time to time and the rules made thereunder.
" It appears that disputes arose between the appellant and.
the respondents in regard to the fulfilment of this con tract.
The appellant made a claim for payment of Rs. 3,29,107 8 0 against the respondents by a letter dated 11th August, 1956 and threatened to recover it from the security furnished by the respondents through their bankers.
The respondents disputed the claim of the appellant and by their letter dated 23rd August, 1956 pointed out that it was not competent to the: appellant to recover the amount of the demand from the bankers of the 485 respondents without first.
establishing its claim by arbi tration or suit.
The respondents intimated to the appellant that they were prepared to go to arbitration and.
suggested that it would be better still, .if a special case for the opinion of the court were stated under section 90 of the Code of Civil Procedure.
The respondents also claimed to recover from the appellant under the contract diverse amounts aggregating to Rs. 6,05,689.
There was no response to this letter from the appellant and no steps were taken by the appellant to have the disputes referred to an arbitrator nominated by the Secretary in the Ministry of Food and Agriculture as provided in clause (17) of the Contract.
In the meantime, as a result of an order made by the President under clause (3) of Article 77 of the Constitution, the Ministry of Food and Agriculture was bifurcated into two separate Ministries, one of Food and the other of Agricul ture, with effect from 19th October, 1956 and sugar, the subject matter of the contract, came to be allotted to the Ministry of Food.
The respondents, by their letter dated 9th November, 1956, pointed out to the Secretary, Ministry of Food that by reason of this bifurcation, the Ministry of Food and Agriculture has ceased to exist and there was no Secretary in the Ministry of Food and Agriculture and the arbitration agreement contained in clause (17) of the con tract had, therefore, become a dead letter and was no longer enforceable and once again called upon the appellant to agree in stating a special case for the opinion of the court failing which the respondents would have to file a suit against the appellant.
This letter also did not evoke any response from the appellant and the disputes remained unre solved.
On 13th/l4th February, 1956 the appellant addressed a letter to the respondents stating that since the Ministry of Food and Agriculture was bifurcated into Ministry of Food and Ministry of Agriculture, it was necessary to amend clause (17) of the Contract so as to provide for arbitration by "the Secretary to the Ministry, Government of India administratively dealing with the subject of contract at the time of reference to arbitration, or if there is no Secre tary, the administrative head of such Ministry at the time of such reference" and proposed an amendment to that effect for the acceptance of the respondents.
The respondents, by their letter in reply dated 26th February, 1957, declined to accept the proposal for amendment of clause (17) of the contract and once again reiterated that the arbitration agreement contained in that clause was "dead and unenforce able".
However, within a short time thereafter, another order was issued by the President under clause (3) of Arti cle 77 of the Constitution integrating the Ministry of Food and the Ministry of Agriculture into one single Ministry of Food and Agriculture with effect from 23rd April, 1957.
This Ministry of Food and Agriculture had two departments, one of Food and the other of Agriculture, and there was a Secretary incharge each department.
It seems that the appellant requested the Secretary, Department of Food in the Ministry of Food and Agriculture to nominate an arbitration for adjudicating upon the disputes which had arisen between the appellant and the respondents in terms of clause (17) the Contract and the Secretary, Department of Food in the Ministry of Food and Agriculture, by a letter dated 27th February, 1958, nominated Shri A.V. Vishwanath Shastri, Advocate, to act as sole arbitrator to 486 adjudicate upon such disputes.
On the same day, the re spondents served a notice on the appellant under section 80 of the Code of Civil Procedure demanding payment of the amounts due to the respondents and stating that in case the appellant failed to meet these demands, the respondents would have to file a suit against the appellant.
Though respondents gave this notice under section 80 of the Code of Civil Procedure, they did not proceed to file a suit, but instead filed their statement of claim before the arbitrator and in the statement they claimed payment of an aggregate sum of Rs. 7,89,858/ from the appellant and also prayed for a declaration that the contract stood "final and properly performed" by the respondents.
The appellant filed its reply disputing the claim of the respondents.
The appellant also field a statement making its own claim for Rs. 3,29,107 8 0 against the respondents.
It was stated in paragraph 18 of the statement of claim of the appellant "that under Clause 17 of the contract the Secretary Food and Agriculture Ministry of the Government in his discretion has the right to nominate a sole Arbitrator and refer the dis pute to the Arbitrator and that has been duly done on 27th February,1958, and the parties have been duly notified under Secretary to the Government letter No. SIMP 3(4C) dated the 27th February, 1958".
The respondents filed their written statement denying the claim of the appellant and in para graph 18 of this written statement they averted "That para 18 of the Statement of Claim of the Government of India is not objected to".
The proceedings in connection with the claim of the respondents and the counter claim of the appel lant were carried on before the arbitrator and the respond ents participated in the arbitration proceedings without objection or protest against the jurisdiction of the arbi trator.
The arbitrator ultimately made an award against the respondents.
The appellant made an application before the Sub Judge, Delhi to pass a decree in terms of the award.
The respond ents resisted the application of the appellant and sought to set aside the award mainly on two grounds.
One ground was that Daljeet Singh, a partner of the respondents, had no power to bind the other partners by an arbitration agreement and hence clause (17) of the contract was not binding on the respondents, and the other was that the arbitrator was not validly appointed and he had, therefore, no jurisdiction to enter upon the reference and adjudicate upon the disputes between the parties.
Both these grounds were rejected by the learned Sub Judge and the award was made a rule of the court.
The respondents thereupon preferred an appeal to the High Court.
The same two grounds were also urged in the appeal.
Out of them, the first ground relating to lack of authority in Daljeet Singh to bind the respondents by clause (17) of the contract Was negatived by the High Court and it was held that clause being an integral part of the contract, the authority of Daljeet Singh to enter into the contract on behalf of the respondents extended also to clause (17) of the contract and in any event, the conduct of all the partners showed that Daljeet Singh had authority on behalf of the other partners to enter into the arbitration agreement contained in clause (17) of the contract.
The second ground, however, found favour with the High Court which held that in view of the bifurcation of the Ministry of Food and Agriculture into two separate Ministries, 487 one of Food and the other of Agriculture, by the Presiden tial Order, which came into effect from 19th October, 1956, the arbitration agreement in clause(17) of the contract became dead and unenforceable and nothing that happened thereafter could revive it and in any event, even after reintegration of the Ministry of Food and Agriculture into one single Ministry of Food and Agriculture, the arbitra tion agreement could not be given effect to since there were then two Secretaries in the Ministry of Food and Agriculture and clause (17) of the contract did not indicate as to which Secretary was to exercise the power of nomi nating the arbitrator, with the result that the arbitration agreement suffered from the fault of vagueness and uncer tainty.
The High Court accordingly allowed the appeal and set aside the award made by the Arbitrator.
Hence the present appeal by the appellant with special leave obtained from this Court.
The only question debated before us in this appeal was as to whether the appointment of the arbitrator by the Secretary, Department of Food in the Ministry of Food & Agriculture was a valid appointment.
Obviously, if the appointment was invalid, the arbitrator would have no juris diction to arbitrate upon the disputes between the parties and the award would be invalid.
But, an alternative argument was also advanced on behalf of the appellant to sustain the award and it was that the respondents not having raised any objection to the appointment of the arbitrator and participated in the arbitration proceedings without any demur or protest, it was not open to them, after the award was made, to challenge it on the ground of invalidity of appointment of the arbitrator.
The respondents, having taken the chance of obtaining the award in their favour, could not denounce the award when it went against them.
We will first examine whether the appointment of the arbitrator was valid, for, if it was, the second question, which raises the issue of waiver, would not arise.
Now, clause (17) of the contract provided that all disputes arising out of the contract shall be resolved by arbitration.
It embodied an arbitration agreement between the parties.
It also laid down the machinery for appoint ment of the arbitrator.
It provided that the arbitrator shall be nominated by the Secretary in the Ministry of Food & Agriculture in his absolute discretion.
There was un doubtedly a Ministry of Food & Agriculture at the time when the contract was made and there was one and only one Secre tary in that Ministry, so that at the date of the contract there could be no question as to who was the person autho rised to nominate the arbitrator, The same position contin ued to obtain also at the time when disputes arose between the parties.
But before an arbitrator could be nominated by the Secretary in the Ministry of Food & Agriculture to adjudicate upon these disputes, the Ministry of Food & Agriculture was bifurcated into two separate Ministries and it ceased to exist as Ministry of Food & Agriculture.
Then obviously there was no individual who fiIIed the description of "Secretary in the Ministry of Food & Agriculture" and, consequently the machinery for appointment of the arbitrator became unworkable.
If the matter had rested there, a ques tion could well have arisen whether, despite the break down of the machinery for nomination of an arbitrator, the arbi tration agreement in clause (17) 15 1104SCI/76 488 could still be enforced by the Court by appointing an arbi trator in a proceeding under section 20 of the .
But the position again changed and the Ministry of Food & Agriculture came into being as a result of integra tion of the Ministry of Food and the Ministry of Agricul ture, with this change, namely, that the new Ministry of Food & Agriculture had two departments, one of Food and the other of Agriculture and there was a Secretary incharge of each department.
There were thus, after integration, two Secretaries in the Ministry of Food & Agriculture and the argument of the respondents was and that argument found favour with the High Court that this event rendered the arbitration agreement vague and uncertain, inasmuch as it did not specify which of the two Secretaries was to nominate the arbitrator "in his absolute discretion".
Though this argument appears attractive at first sight, a little scruti ny will reveal that it is unsound.
It is based on a highly technical and doctrinaire approach and is opposed to plain commonsense.
it must be remembered that a contract is a commercial document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it.
It would not be right while inter preting a contract, entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents.
The meaning of such a contract must be gathered by adopting a commensense approach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation.
Here, at the time when the arbitrator came to be nominated and the reference was made, there was a Ministry of Food & Agriculture and there was a Secretary in that Ministry, but the only difficulty, according to the High Court, was that there were.
instead of one, two Secretaries and it could not be predicated as to which Secretary was intended to exercise the power of nominating an arbitrator.
We do not think this difficulty is at all real.
Let us consider, for a moment, why in clause (17), the power to nominate an arbitrator was conferred on the Secretary in the Ministry of Food & Agri culture and not on a Secretary in any other Ministry.
The reason obviously was that at the date of the contract the Secretary in the Ministry of Food & Agriculture was the Officer dealing with the subject matter of the contract.
If this object and reason of the provision of clause (17) is kept in mind, it will become immediately clear that the "Secretary in the Ministry of Food & Agriculture"authorised to nominate an arbitrator was the Secretary incharge of the Department of Food who was concerned with the subject matter of the contract.
The Secretary incharge of the Department of Food filled the description "Secretary in the Ministry of Food & Agriculture" 'yen in clause (17).
The respondents relied strongly on the use of the definite article 'the ' before the words "Secretary in the Ministry of Food & Agri culture" and urged that what the parties to the contract had in mind was not a Secretary in the Ministry of Food & Agri culture, but the Secretary in the Ministry of Food & Agri culture and that clearly postulated one definite Secretary in the Ministry of Food & Agriculture and not one of two Secretaries in that Ministry.
This is, in our opinion, a hyper technical argument which seeks to make a 489 fortress out of the dictionary and ignores the plain intend ment of the contract.
We fail to see why the Secretary in the Ministry of Food & Agriculture incharge of the Depart ment of Food could not be described as the Secretary.
He would be the Secretary in the Ministry of Food & Agriculture concerned with the subject matter of the contract and dearly and indubitably he would be the person intended by the parties to exercise the power of nominating the arbitra tor.
The parties to the contract obviously could not be expected to use the words "a Secretary in the Ministry of Food & Agriculture", because their intendment was not that any Secretary in the Ministry of Food & Agriculture should be entitled to exercise the power of nominating an arbitra tor, but it should only be the Secretary in the Ministry of Food & Agriculture concerned with the subject matter of the contract.
That is why the use of the definite article 'the '.
It is also significant to note that when the Secre tary in charge of the Department of Food in the Ministry of Food & Agriculture nominated the arbitrator, the respondents did not raise any objection to the appointment of the arbi trator and participated in the arbitration proceedings without any protest.
The respondents knew at that time that there were two Secretaries in the Ministry of Food and Agriculture and the appointment of the arbitrator was.
made by the Secretary in charge of the Department of Food and yet they acquiesced in the appointment of the arbitrator and took part in the proceedings.
This circumstance is also clearly indicative of the intendment of the parties that the Secretary in the Ministry of Food & Agriculture concerned with the subject matter of the contract should be the person entitled to nominate the arbitrator.
Or else the respondents would have objected to the appointment of the arbitrator and declined to participate in the arbitration proceedings or at any rate, participated under protest.
We are, therefore, of the view that the arbitrator was validly nominated by the Secretary in charge of the Department of Food in the Minis try of Food & Agriculture.
This view renders it unnecessary for us to consider whether by participating in the proceedings before the arbitrator without objection or protest and taking the chance of obtaining an award in their favour, the respond ents could be said to have waived the defect in the appointment of the arbitrator.
We accordingly allow the appeal, set aside the order of the High Court and while dismissing the application for setting aside the award, pass a decree in terms of the award.
Having regard to the peculiar facts and circum stances of the case, we make no order as to costs through out.
| Under s.5 of the , all property, including agricultural land situate in the States specified in the First Schedule to the Act, which passes on the death of the owner is subject to estate duty.
The State of Madras was added in the First Schedule with effect from 6th June, 1955.
The assessee claimed that large tracts of land, covered with wild and natural forest growths situate in the Malabar District of the Madras State, were agricultural lands and that they were not liable to estate duty because the former owners died before 6th June, 1955.
The High Court held that the property was agricultural land and not liable to estate duty, because, (1) the words 'agricultural land ' should be interpreted in their widest significance, so that.
in the absence of exceptional circumstances such as the land being entirely rocky or barren for other reasons, all forest lands in the State of Kerala in which the District of Malabar was since included, are agricultural lands in the sense that they can be prudently and profitably exploited for agricul tural purposes; and (2) although the burden rested upon an assessee to establish an exemption from liability to estate duty in respect of any part of his estate, yet, if he claimed immunity on the ground that the subject matter does not fall within the ambit of the taxing power of the legis lature imposing the duty, the Revenue had to establish that the subject matter involved is taxable.
Allowing the appeal to this Court, HELD: (1) The expression 'agricultural land ' has to be given a restricted meaning and not the wide meaning given by the High Court.
The question whether land is agricultural land has to be decided on evidence of actual or intended user for an agricultural purpose for which the land may have been prepared or set apart.
[352 F] Commissioner of Wealth tax, Andhra Pradesh vs Officer in Charge (Court of Wards) Paigah, [1977] 1 S.C.R. 146 followed.
(a) The land in the present case was covered by sponta neous or natural growth of forests.
It was not shown that the assessee or his predecessor in interest did anything to develop the forest in the sense that any particular trees were planted deliberately.
The exploitation of the forest lands was simply to give contracts for cutting trees.
It must, therefore, be treated prima facie as non agricultural land.
[353 E] (b) The decision in State of Kerala vs Gwalior Rayon Silk Manufacturing (Wvg) Co. Ltd. ; depended upon the special facts of that case and the provisions of the Kerala Private Forests (Vesting and Assessment) Act, 1971, interpreted therein.
This Court, in that case ex plained, why for certain special reasons and m an unusual context, certain land described as 'forest land ' was to he treated as 'agricultural '.
Forest land ordinarily means non arable, that is, non agricultural land.
[351 C & E] Rajah Anand Brahma Shah vs State of U.P. & Ors. ; followed.
347 (c) Assuring that the forest land subsequent to the levy of estate duty had been acquired by the State to be converted and used for agricultural purposes, there being no evidence or finding of such a character before the events which attracted the estate duty, it is an irrelevant circum stance of which the Court cannot take notice.
[351 G] (2) (a) The burden of establishing the exemption lay upon the assessel.
The High Court was not correct in placing the burden upon the Revenue when it was admitted that the land was forest land.
The reason given by the High Court, that a question of immunity of the subject matter from taxation by Parliament arose here, and that, therefore, the onus lay on the Department mixes up the questions of legis lative competence and of taxability.
Even if there could be such an onus, it was, sufficiently discharged in the present case by the admission of the assessee that the land was forest land covered with natural or wild growths.
[352 A C] (b) The assessee, was given due opportunity to lead evidence to show, that what was prima facie non agricultural land, was really agricultural land but he led no evidence to prove his intention to put the land to agricultural use or purpose.
On the other hand, he contended that the mere possibility of using such land for agricultural purposes in future was enough.
Therefore, he had not discharged his onus, and no case is made out for sending the case back to the Tribunal for any fresh decision.
[353 D F]
|
o. 189 of 1971.
Appeal under Section 116 A of the Representation of the People Act, 1951 from the judgment and order dated January 8, 1971 of the Madras High Court in Election Petition No. 1 of 1970.
V. P. Raman and Vineet Kumar, for the appellant.
Jagdish Swarup, Socilitor General of India, B. D. Sharma and section P. Nayar, for the Election Commission of India.
B. Sen and Sobhag Mal Jain, for the Supreme Court Bar Association.
The Judgment of the Court was delivered by Beg, J.
This is an appeal under Section 116 A of the Repre sentation of People Act, 1951.
The appellant 's election, held on 11 4 1970, to the Madras Legislative Council from the Madras District Graduates ' Constituency was set aside by a learned Judge of the Madras High Court who decided all the issues except one in favour of the appellant.
The only issue decided against the appellant, which is now before us, was framed as follows : "Whether the first Respondent was not qualified to stand for election to the Graduates Constituency on all or any of the grounds set out by the petitioner in paragraph 7 to 9 of the election Petition" ? Paragraphs 7 to 9 of the election petition against the appellant are lengthy, prolix, and argumentative.
The case and the contentions of the Respondent G. Panneerselvam, the petitioner before the High Court, which were accepted by the High Court, may be summarised as follows Firstly, the whole purpose of Article 171 of the Constitution was to confer a right of "functional representation" upon persons possessing certain educational or other qualifications so that the Appellant Narayanaswami, who had only passed the High School Leaving Examination and was not a Graduate, could not be elected 175 at all to the Legislative Council from the Graduates ' Constituency; secondly, it would be absurd and destructive of the very concept of representation of especially qualified persons that an individual who does not possess the essential or basic qualification of the electors should be a representative of those who are to be represented because of this special qualification of theirs; and, thirdly, the Constitution, being an organic instrument for the governance of the land, must be interpreted in a particularly broad and liberal manner so as to give effect to the underlying principles and purposes of the system of representation sought to be set up by it and not in such a way as to defeat them.
Hence, the educational qualification of the electors should be read into the system of represen tation set up by the Constitution for Legislative, Councils as a necessary qualification of candidates in such constituencies.
Authorities are certainly not wanting which indicate that Courts should interpret in a broad and generous spirit the document which contains the fundamental law of the land or the basic principles of its Government.
Nevertheless, the rule of "plain meaning or "literal" interpretation, described in Maxwell 's Interpretation of Statutes as "the primary rule", could not be altogether abandoned today in interpreting any document.
Indeed, we find Lord Evershed, M.R., saying: "The length and detail of modern legislation, has undoubtedly reinforced the claim of literal construction as the only safe rule".
(See : Maxwell on "Interpretation of Statutes" 12th Edition p. 28).
It may be that the great mass of modem legislation, a large part of which consists of statutory rules, makes some departure from the literal rule of interpretation more easily justifiable today than it was in the past, But, the object of interpretation and of "construction" (which may be broader than "interpretation") is to discover the intention of the law makers in every case (See: Crawford on "Statutory Construction" 1940 Ed. para 157, p. 240 242).
This object can, obviously, be best achieved by first looking at the language used in the relevant provisions.
Other methods of extracting the meaning can be resorted to only if the language used is contradictory, ambiguous, or leads really to absurd results.
This is an elementary and basic rule of interpretation as well as of construction processes which, from the point of view of principles applied, coalesce and converge towards the common purpose of both which is to get at the real sense and meaning, so far as it may be reasonably possible to do this, of what is found laid down.
The provisions whose meaning is under consideration have, therefore, to he examined before applying any method of construction at all.
To these provisions we may now turn.
Article 168 of our Constitution shows that the State Legis latures in nine States in India, including Madras, were to consist of two Houses : the Legislative Assembly and the Legislative, Coun 176 cil.
Article 170 lays down that the Legislative Assembly of each State "shall consist of members chosen by direct election from territorial constituencies in the State, in such a manner as the Parliament may by law determine".
After that, comes Article 171 which may be reproduced in toto here: "1.71(1) The total number of members in the Legislative Council of a State having such a Council shall not exceed one third of the total number of members in the Legislative Assembly of that State,: Provided that the total number of members in the Legislative Council of a State shall in no case be less than forty.
(2) Until Parliament by law otherwise provides, the composition of the Legislative Council of a State shall be as provided in clause (3).
(3) of the total number of members of the Legislative Council of a State (a) as nearly as may be, one third shall be elected by electorates consisting of members of municipalities, district boards and such other local authorities in the State as Parliament may by law specify; (b) as nearly as may be, one twelfth shalt be elected by electorates consisting of persons residing in the State who have been for at least three years graduates of any university in the territory of India or have been for at least three years in possession of qualifications prescribed by or under any law made by Parliament as equivalent to that of a graduate of any such university; (c) as nearly as may be.
one twelfth shall be, elected by electorates consisting of persons who have been for at least three years engaged in teaching in such educational institutions within the State, not lower in standard than that of a secondary school, as may be prescribed by or under any law made by Parliament; (d) as nearly as may be, one third shall be elected by the members of the Legislative Assembly of the State from amongst persons who are not members of the Assembly.
(e) the remainder shall be nominated by the Governor in accordance with the provisions of clause (5).
(4) The members to be elected under sub clauses(a), (b) and (c) of clause (3) shall be chosen in such territorial constituencies as may be prescribed by or under any law made by Parliament,, and the elections under 177 the said sub clauses and under sub clause (d) of the said clause shall be held in accordance with the system of pro portional representation by means of the single transferable vote.
(5) The members to be nominated by the Governor under sub clause (2) of clause (3) shall consist of persons having special knowledge or practical experience in respect of such matters as the following namely: Literature, Science, article cooperative movement and social service.
" The term "electorate", used in Article 171(3) (a)(b) & (c) has neither been defined by the Constitution nor in any enactment by Parliament.
2(1)(e) of the Representation of People Act 43 of 1951, however, says : " 'elector, ' in relation to a constituency means a person whose name is entered in the electoral roll of that constituency for the time being in force and who is not subject to any of the disqualifications mentioned in Sec.
16 of the Representation of the People Act, 1950".
The plain and ordinary meaning of the term " electorate" is confined to the body of persons who elect.
It does not contain, within its ambit, the extended notion of a body of persons electing representatives "from amongst themselves".
Thus, the use of the term "electorale" in Article 171(3) of our Constitution, could not, by itself, impose a limit upon the field of choice of members of the electorate by requiring that the person to be chosen must also be a member of the electorate.
The qualifications of the electors constituting the "electorate" and of those who can represent each " electorate", contemplated by the constitution and then supplemented by Parliament, are separately set out for each house.
We may glance at the provisions relating to Legislative Assemblies first.
Section 16 of the Representation of People Act 43 of 1950 lays down the qualifications of an elector negatively by prescribing who shall be disqualified for registration in an electoral roll.
A disqualified person is one who : (a) is not a citizen of India; or (b) is of unsound mind and stands so declared by a competent court; _or (c) is for the time being disqualified from voting under the provisions of any law relating to corrupt practices and other offences in connection with elections".
Section 19 lays down the two conditions for registration on the electoral roll of a constituency.
The person to be registered must not be less than 21 years of age on the qualifying date and must 178 be ordinarily resident in the constituency.
The persons so registered, whose names appear on the electoral roll, constitute the electorato for the legislative Assembly of each State.
Section 5 of the Representation of People Act, 43 of 1.951 enacts : "5.
Qualifications for membership of a Legislative Assembly: A person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of a State unless (a) in the case of a seat reserved for the Scheduled Castes or for the Scheduled Tribes of that State, he is a member of any of those castes or of those tribes, as the case may be, and is an elector for any Assembly consti tuency in that State; (b) in the case of a seat reserved for an autonomous district of Assam, other than a seat the constituency for which comprises the cantonment and municipality of Shillong, he is a member of a Scheduled Tribe of any autonomous district and is an elector for the Assembly constituency in which such seat or any other seat is reserved for that district; and (c) in the case of any other seat, he is an elector for any Assembly constituency in that State"; Coming to the Legislative Council, we find that the qualifications for the four "electorates" are indicated by article 171(3)(a)(b)(c) & (d).
And, the qualifications of candidates for seats in a Legislative Council are given in Section 6 of the Representation of People Act 43 of 1951 which lays down: "6.
Qualifications for membership of a Legislative Council. (1) A person shall not be qualified to be chosen to fill a seat in the Legislative Council of a State to be filled by election unless he is an elector for any Assembly con stituency in that State.
(2) A person shall not be qualified to be chosen to fill a seat in the Legislative Council of a State to be filled by nomination by the Governor unless he is ordinarily resident in the State".
A look at Article 171(2), set out above, indicates that the composition of the Legislative Council of a State was a matter to be also provided for by law made by Parliament.
It is evident that the constitution makers had directed their attention specifically towards the methods of election and composition of the legislature 179 of each State.
They themselves prescribed same qualifications to be possessed by members of each House of the Legislature.
Article 173 lays down : "173.
A person shall not be qualified to be chosen to fill a seat in the Legislature of a State unless he (a) is a citizen of India, and makes and subscribes before some person authorised in that behalf by the Election Commission an oath or affirmation according to the form set out for the purpose in the Third Schedule; (b) is, in the case of a seat in the Legislative Assembly, not less than twenty five years of age and, in the case of a seat in the Legislative Council, not less than thirty years of age; and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament".
An important and very noticeable difference between, quali fications prescribed by Parliament for the membership of a Legislative Assembly by Section 5 of the Representation of People Act of 1951 and those for the membership of a Legislative Council by Section 6 of that Act is that, so far as a member of the Legislative Assembly is concerned, he or she has to be an Elector in the Constituency from which he or she stands, but a member of a Legislative Council in a State is not, similarly, required to be a member of the electorate.
All that Parliament says, in Section 6 of the Representation of People Act, 1951, is that the, person to be chosen as a member of the Legislative Council has to be "an elector for any Assembly constituency" in the State to whose legislative Council he was to be chosen.
He has to be "ordinarily resident" in the State to qualify for nomination.
No other qualifications, apart from those found in Article 173 of the Constitution and Section 6 of the Representation of People Act of 1951, are to be found laid down anywhere.
But, an additional qualification was found, by the judgment under appeal before us, to exist by resort ' ing to a presumed legislative intent and then.
practically adding it to those expressly laid down.
It may be possible to look for legislative intention in materials outside the four corners of a statute where its language is really ambiguous or conflicting.
But, where no such difficulty arises, the mere fact that the intentions of the law makers, sought to be demonstrated by what was said by some of them or by those advising them when the Constitution was on the anvil, were really different from the result which clearly follows from language used in the Legislative provisions under consideration, could not authorise the use of such an exceptional mode of construction.
"It is well accepted", said Lord Morris (See: Davies Jankins & 180 Co. vs Davies) ', "that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law".
The judgment under appeal, after discussing the manner in which Article 171 of the Constitution was framed and the different views expressed about the nature of the Second Chambers to be set up by it in our States, says : "The system of functional, which is also called occupational representation, as distinguished from territorial representation, was borrowed from the Irish Constitution and that is the underlying principle in Article 171.
The opinion of political thinkers and statement on the wisdom of such representation may not be unanimous.
Whatever be the divergent views, the accomplished fact in the Constitution is that such a representation has been given recognition and it has to be implemented.
In making the Legislative Council as a representative body, the framers of the Constitution have not made it exclusively one of elected representatives according to their occupations.
It is intended to be a hetergenous and more broad based body consisting of persons of different walks of life, some elected and some nominated, each with the experience in his own field of activity".
The learned Judge concluded; "It is with these objects that clauses (a),, (b), and (c) of Article 171(3) have been conceived so that persons in those walks of life could make their contribution to the Legislative functions of the State.
Article 1.71 in fixing the composition of the Legislative Council as a functional chamber.
has also indirectly laid down certain qualifications and also disqualifications of members to be elected thereunder".
Whatever may have been the opinions of Constitution makers or of their advisers, whose views are cited in the judgment under appeal, it is not possible to.
say, on a perusal of Article 171 of the Constitution, that the Second Chambers set up in nine States in India were meant to incorporate the principle of what is known as "functional" or "vocational" representation which has been advocated by Guild Socialist and Syndicalist Schools of political thought.
, Some of the observations quoted above, in the judgment under appeal itself, militate with the conclusions reached there.
All that we can infer from our Constitutional provisions is that additional representation or weightage was given to persons possessing special type of knowledge and experience by enabling them to elect their special representatives also for Legislative Councils.
The concept of such representation does not carry with it, as a necessary consequence, the further notion that the representative must also possess the very qualifications of those he represents.
In the case of the Graduates ' constituency, it is provided in Article 171(3)(b) that the electors must have held their degrees (1) 1967 2 W.L.R. p. 11 39 @ 11 56.
181 for at least three years before they become qualified an electors.
Thus,. in laying down the test of competence of voters of such a constituency, more possession of degrees by them was not considered sufficient.
Moreover, graduates are not an occupational or vocational group but merely a body of persons with an educational qualification.
It would, therefore, not be correct to describe the additional representation sought to be given to them as an attempt to introduce the "functional" or "vocational" principle.
On the face of it, Article 171 appears to be designed only to give a right to choose their representatives to those who have certain types of presumably valuable knowledge and education.
If the presumption of their better competence to elect a suitable representative in there, as we think that there must be, it would be for the members of such a constituency themselves to decide whether a person who stands for election from their constituency possesses the right type of knowledge, experience, and wisdom which satisfy certain standards.
It may well be that the constitution makers, acting upon such a presumption, had intentionally left the educational qualifications of a candidate for election from the graduates constituency unspecified.
A test laid down by Blackburn J. in R. vs Cleworth(1), to determine what the correct presumption, arising from an omission in a statute should be, was whether what was omitted but sought to be brought within the legislative intention was "known" to the law makers, and could, therefore, be "supposed to have been omitted intentionally".
"It makes no difference", says Craies 'in "Statute Law"(2) "that the omission on the part of the legislature was a mere oversight, and that without doubt the Act would have been drawn otherwise had the attention of the legislature been directed to the oversight at the time the Act was under discussion".
In the case before us, it could not possibly be said that the question to be dealt with was not "known" to the, legislators.
It could not even be said that qualifications of the electors/ as well as of those to be elected were not matters to which the attention of the law makers, both in the Constituent Assembly and in Parliament, was not specially directed at all or that the omission must be by mere oversight.
The provisions discussed above demonstrate amply how legislative attention was paid to the qualifications, of the electors 'as well as of the elected in every case.
Hence, the correct presumption, in such a case, would be that the omission was deliberate.
A glance at the legislative history lying behind Article 171 also enables us to reach the conclusion that the omission by the Constitution makers or by Parliament to prescribe graduation as (1) [1864] 4 BSS 927, 934 (2) Crains on Statute Law 5th En.
182 must be deliberate.
Sections 60 and 61 of the Government of India Act, 1935, deal with composition of Provincial legislatures and of the two Chambers of such legislatures.
The Upper Chambers in the Provincial Legislatures were to be composed of members retiring every third year in accordance with provisions of the Fifth Schedule to the Act.
Rule 10 of this Schedule lays down: "In a Province in which any seats are to be filled by representatives of backward areas or backward tribes, representatives of commerce, industry, mining and planting, representatives of landholders, representatives of universities or representatives of labour, persons to fill those seats. . . shall be chosen in such manner as may be prescribed".
On 30th April, 1936, the Government of India (Provincial Legislative Assemblies) Order of 1936 was issued by His Majesty in Council.
It prescribed the qualifications of persons to be chosen from the "special constituencies" set up for representation in the Legislative Councils, A glance at the provisions relating to these qualifications, including those for the University seats, indicates that it was invariably expressly provided, where it was so intended, that a necessary qualification of a candidate for a seat was that he or she should be "entitled to vote for the choice of a member to fill it".
Hence, legislative history on the subject would also indicate.
that, whenever any qualification of the candidate was intended to be imposed, this was expressly done and not left to mere implications.
We think that the view contained in the Judgment under appeal, necessarily results in writing some words into or adding them to the relevant statutory provisions to the effect that the candidates from graduates ' constituencies of Legislative Councils must also possess the qualification of having graduated.
This contravenes the rule of "Plain meaning" or "literal" construction which must ordinarily prevail.
A logical corollary of that rule is that "a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made" (See: Craies on Statute Law 6th Edn.
p. 70).
An application of the rule necessarily involves that addition to or modification of words used in statutory provisions is not generally permissible (see e.g. Sri Ram Narain Medhi & Ors.
vs The State of Bombay(1), British India General Insurance Co. Ltd. vs Captain Itbar Singh & Ors.
(2), R. G. Jacob vs Union of India(3).
Courts may deppart from this rule only to avoid a patent absurdity (see e.g. State 'of Madhya Pradesh vs M/s. Azad Bharat Finance Co. & Anr.(4).
In Hira Devi vs District Board, Shahiahanpur(5), this Court observed (1) ; (2) (3) ; (4) A.T.R. (5) A.T.R. 365.
183 "No doubt it is the duty of the Court to try and harmonise the various provisions of an Act passed by the Legislature.
But it is certainly not the duty of the Court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act".
Cases in, which defects in statutory provisions may or may not be supplied by Courts have been indicated in well known works such as Sutherland 's "Statutory Construction" (3rd Edn.(Vol. 2) (Paragraph 4924 at pages 455 558) and in Crawford 's "Construction of statutes" (1940 Edn.).
Only one passage from the last mentioned work need be cited here: (p. 269) : "Where the statutes meaning is clear and explicit, words cannot be interpolated.
In the first place, in such a case, they are not needed.
If they should be interpolated, the statute would more than likely fail to express the legislative intent, as the thought intended to be conveyed might be altered by the addition of new words.
They should not be interpolated even though the remedy of the statute would thereby be advanced, or a more desirable or just result would occur.
Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute".
We think that the language as well as the legislative history of Articles 171 and 173 of the Constitution and Section 6 of the Representation of People Act, 1951, enable us to presume a deliberate omission of the qualification that the representative of the Graduates should also be a graduate.
In our opinion, no absurdity results if we presume such an intention.
We cannot infer, as the learned Judge of the Madras High Court had done, from the mere fact of such an omission and opinions about a supposed scheme "functional representation" underlying Article 171 of our Constitution, that the omission was either unintentional or that it led to absurd results.
We think that, by adding a deemed to be necessary or implied qualification of a representative of the Graduates which the Constitution makers, or, in any event, the Parliament, could have easily imposed, the learned Judge had really invaded the Legislative sphere.
The defect, if.
any, in the law could be removed only by law made by Parliament.
We conclude, after considering all the relevant constitutional and statutory provisions relating to the qualifications of a candidate for election from the Graduates ' constituency of the Legislative Council of the Madras State, that the appellant possesses all the qualifications laid down for such a candidate.
184 Therefore, we allow this appeal, set aside the Judgment and order of the Madras High Court, and dismiss the, Respondent 's election petition.
The appellant is entitled to his costs throughout.
V.P.S. Appeal allowed.
| Under the Punjab Rent Restriction Act, 1949 a landlord can evict a tenant only on the grounds and according to the procedure provided in section 13 of the Act.
Section 3 of the Act provides for exemption to be granted by Government from the operation of section 13.
By notification dated July 30, 1965 the Government of Punjab granted such ex emption in respect of building constructed during the year 1959 to 1963 for a period of 5 years from the date of their completion, on the .condition that during the aforsaid period of exemption suits for ejectment of tenants in respect of those, buildings "were or are" institutes in civil courts and decrees of ejectment "were or are" passed.
The respondent had let out to the appellant a building which was completed in 1960.
A suit for ejectment of the appellant was filed in 1963 and decree was obtained in 1969.
In proceeding for execution the question was whether the .decree, having been obtained more than 5 years after completion of the building, was exempt from operation of section 13.
The High Court in second appeal held in favour of the respondent.
In appeal to this Court by special leave, the appellant contended that the decree in the suit having been passed after 1 period of 5 years from the date of construction, exemption from restrictions placed by section 13 will not be available because not only the suit should be filed but the decree for eviction should be obtained within the said period of 5 years.
HELD : The filing of the suit within the period of exemption is the only condition that is necessary to satisfy one of the requirements of the exemption, the other requirement being the passing of the decree in respect of which no time has been prescribed.
If the degree, as contended by the appointment has to be obtained within the period of 5 years, there was no need to specify the at the suit had to be filed within that period because the exemption from the requirements of section 13 is only in respect of the decree and not the suit.
[928 F] The use of the words 'were or are ' in respect of decree ,is A will as suits supports the above interpretation.
The suit should have been filed or are her , after, to filed and likewise decrees of ejectment bid been passed or are hereafter to be passed.
Further, a suit may conceivably be filed on the last day of the expiry of the 5 years exemption.
If so it will be absurd to postulate that a decree would be given immediately thereafter, as that would be the result, if the contention that both the suit.and the decree should be passed within the period of exemption.
is accepted.
[927 H 928 E] 923 A statue must be interpreted in the light of its object.
The very purpose of the exemption of buildings ' from 'the operation of section 13 was to give landlords the light which as owners of buildings they had under the ordinary law, namely, to give them on lease at rents which they thought remunerative and to evict tenant 's during that period without any fetters imposed by the Act.
If no provision was made for exempting such decrees in respect of the exempted buildings the exemption granted will be illusory.[1926 H 927 E] Accordingly the appeal must fail.
|
N: Criminal Appeal No. 243 of 1979.
Appeal by Special Leave from the Judgment and Order dated 13 9 1978 of the Delhi High Court in Criminal Revision No. 271/78.
U. R. Lalit, R. Bana, M. N. Shroff and Miss A. Subhashini for the Appellant.
K.L. Arora, R. section Sodhi and H. C. Gulati for Respondent No. 1.
V. B. Ganatra, I. N. Shroff and H. section Parihar for Respondent No. 3.
The Judgment of the Court was delivered by SEN J.
In this appeal, by special leave, from the judgment of the Delhi High Court, two questions arise which are one of very general importance.
The first is, in a case where the manufacturer of an article of food is a company, which has nominated a person under sub so 1019 (2) of section 17 of the , as the person responsible, whether the sales manager at one of its branches can be prosecuted for an offence punishable under s.16 (1) (a) read with s.7 (i) of the Act, when the article of food sold at the branch is found to be adulterated within the meaning of s.2 (ia) of the Act.
The second is, whether after the introduction of the new s.17 by Act 34 of 1976, when an offence is committed by a company, which has nominated a person responsible under s.17 (2), it is not permissible to prosecute any other officer of the company not being nominated under subs.
(2), unless there is allegation that the offence had been committed 'with the consent or connivance of, or was attributable to, any neglect on the part of such officer.
Upon the first question the facts lie within the smallest possible compass.
On June 23, 1977 the Delhi Administration filed a complaint under s.7 (i) read with s.16 (1) (a) and s.17 against (1) M/s. Ahmed Oomar Bhoy, Ahmed Mills, Bombay, manufacturers of the well known 'postman ' brand or refined groundnut oil, (2) their distributors M/s. Gainda Mull Hem Raj, New Delhi, a partnership firm, and its managing Partner Mehar Chand Jain, (3) M/s. Amar Provision & General Store, Netaji Nagar Market, New Delhi and its owner Amrik Lal, the retailer, (4) Y. A. Khan, Manager Quality Control, Ahmed Mills appointed by the manufacturers as the person responsible under section 17(2) of the Act, and (5) the two Sales Managers, Delhi Branch of M/s. Ahmed Oomer Bhoy, manufacturers, I. K. Nangia and Y. P. Bhasin.
It was alleged that on August 31, 1976, S.D. Sharma, Food Inspector, New Delhi Municipal Committee lifted a sample of 'Postman ' brand refined groundnut oil from M/s. Amar Provision & General Store, which was sold/supplied to it by M/s. Gainda Mull Hem Raj on August 20, 1976, and the same by the Public Analyst by his report dated September 9, 1976 was found to be adulterated due to the presence of 'castor oil ' (Not an edible oil).
It was further alleged that this adulterated article of food was supplied/sold to M/s. Gainda Mull Hem Raj by M/s. Ahmed Oomer Bhoy on August 20, 1976 through its Sales Managers at Delhi, I. K. Nangia and Y. P. Bhasin.
The Metropolitan Magistrate, Delhi by his order dated April 1, 1978 found that there was a prima facie case against M/s. Ahmed Oomer Bhoy, the manufacturers of the 'Postman ' brand refined groundnut oil, their distributors at Delhi M/s. Gainda Mull Hem Raj and M/s. Amar Provision Store, the retailer, as well as against Y. A. Khan, the Quality Control Manager, Ahmed Mills, but declined to issue any 1020 process against the respondents I. K. Nangia and Y. P. Bhasin, the two Sales Managers of M/s. Ahmed Oomer Bhoy at Delhi observing that though they had effected the sale of the adulterated article of food 'they were not concerned with the manufacture of the article in question but had only effected the sale thereof '.
He accordingly, dismissed the complaint against them holding that their prosecution was misconceived.
The Delhi Administration moved the High Court in revision but it declined to interfere.
There can be no doubt that the order made by the learned Metropolitan Magistrate refusing to issue any process against the respondents is wholly unwarranted.
It cannot be said that there is no material for presuming that these respondents had not committed an offence and, therefore, it was not open to the learned Metropolitan Magistrate to come to the conclusion that there was no basis for proceeding against them.
The test as laid down by this Court in the State of Bihar vs Ramesh Singh is that at the initial stage, if there is a strong suspicion which leads the Court to think that there is a ground for presuming that the accused has committed an offence, then it is not open to the Court to say that there was no sufficient ground for proceeding against the accused.
In the instant case, the allegations in the complaint constitute a prima facie case against the respondents of having committed an offence under s.7 (i) read with s.16 (1) (a) of the Act.
In the complaint, the material allegations are as follows: "6.
That the adulterated article of food was supplied/ sold to M/s. Gainda Mull Hem Raj on 20 8 76 by M/s. Ahmed Oomer Bhoy through its sales managers at Delhi I. K. Nangia and Y. P. Bhasin.
That accused Y. A. Khan is the Quality Control Manager of accused No. 5 and accused I. K. Nangia and Y. P. Bhasin are the Sales Managers (Local Branch) of accused No. 5 and were incharge of and responsible to it for the conduct of its business at the time of commission of offences by accused No. 5.
" The words "were incharge of" and "responsible to it for the conduct of its business" are wide enough to include all the business activities of M/s. Ahmed Oomer Bhoy at Delhi.
It is a common ground that they have a Delhi Office at 2 A/3, Asaf Ali Road, New Delhi, and 1021 that the two respondents I.K. Nangia and Y. P. Bhasin are the Sales Managers.
The complaint makes a specific allegation that the respondents were incharge of and were responsible to their employers for the conduct of their business at Delhi.
section D. Sharma, Food Inspector, PW 1 has stated during the enquiry under section 202 of the Code of Criminal Procedure that the adulterated article of food in question was sold by them to the distributors M/s.
Gainda Mull Hem Raj vide bill No. 62 dated August 20, 1976.
Further, he goes on to, say, that they were incharge of and responsible to M/s. Ahmed Oomer Bhoy for the conduct of their business in Delhi at that time.
Now, the person actually effecting the sale of an adulterated article of food is directly liable under s.7 (i) of the Act, which reads: "7.
No person shall himself or by any person on his behalf manufacture for sale, or store, sell or distribute.
(i) any adulterated food;" The manufactures M/s, Ahmed Oomer Bhoy, Bombay became liable because they were directly selling the adulterated article through their branch office at Delhi.
The respondents I. K. Nangia and Y. P. Bhasin also became liable because of the words "by any person on his behalf" which include their agents and servants.
That appears to be the true construction of the section.
In view of this, the learned Metropolitan Magistrate could not have dismissed the complaint against the respondents.
It appears that M/s. Ahmed Oomer Bhoy, Bombay had appointed the accused Y. A. Khan, Manager Quality Control, Ahmed Mills to be the person responsible for the company under s.17 (2) on July 31, 1976.
It is argued on the strength of section 17 (1) (a) (i) that the respondents could not, therefore, be prosecuted for the offence committed by M/s. Ahmed Oomer Bhoy.
This contention, in our opinion, needs only to be stated to be rejected.
Not only does it involve attributing to the Legislature something which was never intended, but it conflicts with the ordinary canons of constructions.
The question turns upon a proper construction of the new section 17, introduced by Act 34 of 1976, which in so far as material reads: "17.
(i) Where an offence under this Act has been committed by a company (a) (i) the person, if any, who has been nominated under sub section (2) to be in charge of, and responsible to, the 1022 company for the conduct of the business of the company (hereafter in this section referred to as the person responsible), or (ii) where no person has been so nominated, every person who at the time the offence was committed was incharge of and was responsible to, the company for the conduct of the business of the company; and (b) the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.
(2) Any company may, by order in writing, authorise any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, along with the written consent of such director or manager for being so nominated.
Explanation.
Where a company has different establishments, or branches or different units in any establishment or branch, different persons may be nominated under this sub section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.
(3) x x x x x x x (4) Notwithstanding anything contained in the foregoing sub sections, where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is 1023 attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, [not being a person nominated under sub section (2)] such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
" On the plain meaning of the section, when an offence has been committed by a company, where there is no nomination under section 17 (2), every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, is deemed to be guilt of the offence and is liable to be proceeded against and punished.
Notwithstanding the nomination of a person under s.17 (2), any director, manager, secretary or other officer of the company [not being a person nominated under sub section
(2)] can also be vicariously made liable if it is proved that the offence has been committed "with the consent or connivance of, or is attributable to any neglect on the part of such person '.
It is, however, strenuously urged that the company having nominated the accused Y. A. Khan, Quality Control Manager, Ahmed Mills to be the person responsible under s.17 (2), he is the only person liable to be proceeded against throughout the country and the prosecution of the respondents is wholly misconceived.
Our attention has been drawn to the nomination form, and it says that he shall be responsible for the company.
We are afraid, there is no substance in this contention.
There is nothing in the document to show that the nomination is effective not only for the registered office of the company at Bombay but also for all its branches in different States.
Such a construction would, in our opinion, render the Explanation to section 17 (2) wholly illusory.
Where there is a large business organization with a widespread network of sales organisations throughout the country, it ought to nominate different persons for different places or face the consequences set forth in s.17 (1) (a) (ii).
The Explanation appended to s.17 (2) does, in terms, contemplate that where a company has different establishments or branches or different units in any establishment or branch, it may nominate different persons in relation to different establishments or branches or units and the person so nominated in relation to any establishment or branch or unit shall be deemed to be the person responsible in respect of such establishment or branch or unit.
The language of the Explanation shows a purpose and, therefore, a cons 1024 truction consistent with that purpose must reasonably be placed upon it.
We are clear that the Explanation to section 17(2), although in terms permissive, imposes duty upon such a company to nominate a person in relation to different establishments or branches or units.
There can be no doubt that this implies the performance of a public duty, as otherwise, the scheme underlying the section would be unworkable.
The case, in our opinion, comes with in the dictum of Lord Cairns in Julius vs Lord Bishop of Oxford: "There may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something, in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so.
" The Explanation lays down the mode in which the requirements of section 17 (2) should be complied with.
Normally, the word 'may ' implies what is optional, but for the reasons stated, it should in the context in which it appears, mean 'must '.
There is an element of compulsion.
It is power coupled with a duty.
In Maxwell on Interpretation of Statutes, 11th Edn.
at p. 231, the principle is stated thus: "Statutes which authorise persons to do acts For the benefit of others, or, as it is sometimes said, for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory.
In enacting that they "may" or "shall, if they think fit", or, "shall have power", or that "it shall be lawful" for them to do such acts, a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have to say the least a compulsory force, and so could seem to be modified by judicial exposition." (Emphasis supplied).
Though the company is not a body or authority, there is no reason why the same principle should not apply.
It is thus wrong to suggest 1025 that the Explanation is only an enabling provision, when its breach entails in the consequences indicated above.
It is not left to one 's choice, but the law makes it imperative.
Admittedly, M/s. Ahmed Oomer Bhoy had not at the material time nominated any person, in relation to their Delhi branch.
The matter is, therefore, squarely covered by section 17 (1) (a) (ii).
On the two questions formulated, the answer is self evident.
The individual liability of the sales manager is distinct and separate from the corporate liability of the manufacturer.
In case of a 'company prosecution ', the company along with its agent, that is, the person nominated under s.17 (2) as well as the sales manager can both be prosecuted under s.7 (i) read with s.16 (1) (a).
Notwithstanding the nomination of a person responsible under section 17(2), there can also be prosecution of any director, manager, secretary or other officer of the company under section 17(4).
But in such a case it is necessary for the prosecution to prove that the offence has been committed 'with the consent or connivance of, or is attributable to, any neglect on the part of such person '.
The result, therefore, is that the order of the Metropolitan Magistrate is set aside and he is directed to issue summons to the respondents and proceed with the trial according to law.
V.D.K. Appeal allowed.
| G and J were the sons of S son of M.
The plaintiff was the grandson of another son of M.
In a document purporting to have been executed by G it was stated that defendant No. 1 was his (G 's) adopted son and heir and that C (his younger brother J 's widow) and defendant No. 1 had rendered services to him, in recognition of which he bequeathed properties detailed in the will to C to be enjoyed by her during her life time and that on her death defendant No. 1 shall be their owner.
The plaintiff in his suit for partition claimed that the properties detailed in Schedule A to the plaint had been acquired by his great grandfather M, those in Schedule B were jointly acquired by G and J, both of whom constituted a joint Hindu family, and those in Schedule C which once belonged exclusively to J descended on his death to his widow C.
The plaintiff also challenged the adoption of defendant No. 1.
Defendant No. 1 on the other hand claimed that since he was the adopted son of G the properties bequeathed to him by G 's will were his exclusive properties.
He also claimed that the properties in Schedule C were purchased by J 's widow C with her stridhana, that by reason of her will he was entitled exclusively to those properties and that they never belonged to her late husband.
The trial court held that adoption had not been proved and that the motive for the execution of the will was not merely the recognition by the testator of his relationship through adoption with the devisee but mainly the existence of feelings of love and affection for him.
The first appellate court held that the recital in G 's will that defendant No. 1 was his adopted son was sufficient to prove the fact of adoption.
The High Court on the other hand was of the opinion that the recital in G 's will that defendant No. 1 was his adopted son was not sufficient to prove the adopted and that the reference to adoption had been made merely as a description of the devisee and not as a motivation for the execution of the will. ^ HELD: Defendant No. 1 had not been successful in establishing the alleged adoption.
(a) It is well established that evidence in support of an adoption must be sufficient to satisfy the very grave and serious onus that rests upon any person who seeks to displace the natural succession by alleging an adoption.
[1005 D E] (b) The burden of proof of adoption in this case lay heavily on defendant No. 1 which he has not discharged satisfactorily.
This is not a case in which the adoption had taken place a very long time the suit was filed.
It had in fact taken place within about a decade immediately preceding the suit when witnesses who were present at the ceremony and who had seen the giving and taking would normally have been available.
He did not explain why no such witness was forthcoming.
[1005 A B] (c) The relationship mentioned in the will that defendant No. 1 was his adopted son and heir was merely a description of the devisee as understood by the testator.
The will was executed not because that relationship was brought about by adoption but by reason of feelings of affection which the devisee had earned by his association with and the assistance rendered to the testator.
[1003 H 1004 A] 2.
There is no force in the contention of the plaintiff that the will executed by C must be held to be wholly inoperative in so far as properties detailed in Schedules A and B were concerned because one half of the properties mentioned in these schedules had vested in C under the will of G which itself declared that she would hold them merely as a life tenant and that thereafter they would devolve on defendant No. 1.
In devising the properties to defendant No. 1, C did no more than carry out the behest of her own testator, which behest was good in law.
[1004 A C]
|
minal Appeal No. 107 of 1965.
Appeal by special leave from the judgment and order, dated June 22, 1965 of the Bombay High Court in Criminal Applica tion No. 613 of 1965.
Niren De, Additional Solicitor General and B. R. G. K. Achar, for the appellant.
R. K. Garg, D. P. Singh, M. K. Ramamurthi and section C. Agar wala for respondent No. 1.
The Judgment of the Court was delivered by Subba Rao J.
Prabbakar Pandurang Sanzgiri, who has been detained by the Government of Maharashtra under section 30(1)(b) of the Defence of India Rules, 1962, in the Bombay District Prison in order to prevent him from acting in a manner pre judicial to the defence of India, public safety and maintenance$ of public order, has written, with the permission of the said Government, a book in Marathi under the title "Anucha Antarangaat" (Inside the Atom).
The learned Judges of the High Court, who had gone through the table of contents of the book.
expressed their opinion on the book thus : ". . we are satisfied that the manuscript book deals with the theory of elementary particles in in objective way.
The manuscript does not purport to be a research work but it purports to be a book written with a view to educate the people and disseminate knowledge regarding quantum theory.
" The book is, therefore, purely of scientific interest and it cannot possibly cause any prejudice to the defence of India, public safety or maintenance of public order.
In September, 1964, the detenu applied to the Government of Maharashtra seeking permission to send the manuscript out of the jail for publication; but the Government by its letter, dated March 27, 1965, rejected the request.
He again applied to the Superintendent, Arthur Road Prison, for permission to send the manuscript out and that too was rejected.
Thereafter, he filed a petition under article 226 of the Constitution in the High Court of Maharashtra at Bombay 704 for directing the State of Maharashtra to permit him to send out the manuscript of the book written by him for its eventual publication.
The Government of Maharashtra in the counter affidavit did not allege that the publication of the said book would be prejudicial to the objects of the Defence of India Act, but averred that the Government was not required by law to permit the detenu to publish books while in detention.
The High Court of Bombay held that the civil rights and liberties of a citizen were in no way curbed by the order of detention and that it was always open to the detenu to carry on his activities within the conditions governing his detention.
It further held that there were no rules prohibiting a detenu from sending a book outside the jail with a view to get it published.
In that view the High Court directed the Government to allow the manuscript book to be sent by the detenu to his wife for its eventual publication.
The State of Maharashtra has preferred the present appeal against the said order of the High Court.
The contentions of the learned Additional Solicitor General may be briefly stated thus : When a person is detained he loses his freedom; he is no longer a free man and, therefore, he can exercise only such privileges as are conferred on him by the order of detention.
The Bombay Conditions of Detention Order, 1951.
which regulates the terms of the first respondent 's detention, does not confer on him any privilege or right to write a book and send it out of the prison for publication.
In support of his contention he relies upon the observations of Das, J., as he then was, in A. K. Gopalan vs State of Madras(1) wherein the learned Judge has expressed the view, in the context of fundamental rights, that if a citizen loses the freedom of his person by reason of a lawful detention, he cannot claim the rights under article 19 of the Constitution as the rights enshrined in the said article are only the attributes of a free man.
Mr. Garg, learned counsel for the detenu, raised before us the following two points : (1) a restriction of the nature imposed by the Government on the detenu can only be made by an order issued by the appropriate Government under cls.
(f) and (h) of sub r.
(1) of r. 30 of the Defence of India Rules, 1962, hereinafter called the Rules, and that too in strict compliance with section 44 of the Defence of India Act, 1962, hereinafter called the Act, and that as the impugned restriction was neither made by such an order nor did it comply with section 44 of the Act, it was an illegal restriction on his personal liberty; and (2) neither the detention order nor the (1) ; , 291.
705 conditions of detention which governed the first respondent 's detention enabled the Government to prevent the said respondent from sending his manuscript book out of the prison for publication and, therefore, the order of the Government rejecting the said respondent 's request in that regard was illegal.
Article 358 of the Constitution suspends the provisions of article 19 of Part III of the Constitution during the period the proclamation of emergency is in operation; and the order passed by the President under article 3 5 9 suspended the enforcement, inter alia, of article 21 during the period of the said emergency.
But the President 's order was a conditional one.
In effect it said that the right to move the High Court or the Supreme Court remained suspended if such a person had been deprived of his personal liberty under the Defence of India Act, 1962, or any rule or order made thereunder.
If a person was de lived of his personal liberty not under the Act or a rule or order made thereunder but in contravention thereof, his right to move the said Courts in that regard would not be suspended.
The question, therefore.
in this case is whether the first respondent 's liberty has been restricted in terms of the Defence of India Rules whereunder he was detained.
If it was in contravention of the said Rules, he would have the right to approach the High Court under article 226 of the Constitution.
In exercise of the Dower conferred on the Central Government by section 3 of the Act, the Central Government made the Defence of India Rules.
Under section 30 of the Rules the Central Government or the State Government, if it is satisfied with respect to any person that in order to prevent him from acting in any manner prejudicial to the matters mentioned therein, it is necessary so to do, may make an order directing that he be detained.
Under subr.
4 thereof he shall be liable to be detained in such place and under such conditions as to maintenance, discipline and the punishment of the offence and the breaches of discipline as the Central Government or the State Government, as the case may be, may from time to time determine.
In exercise of the power con ferred under sub r.
(4) of r. 30 of the Rules, the Government of.
Maharashtra determined that the conditions as to maintenance, discipline and the punishment of offenses and breaches of discipline governing persons ordered to be detained in any place in the State of Maharashtra, shall be the same as those contained in the Bombay Conditions of Detention Order, 1951.
The Bombay Conditions of Detention Order, 1951, does not contain any condition as regards the writing of books by a detenu or sending them out of jail for publication.
Briefly stated, the scheme of the said p. C. and I./65 2 706 provisions is that a person can be detained if the appropriate Government is satisfied that in order to prevent him from doing the prejudicial acts mentioned in r. 30 of the Rules it is necessary to detain him in prison subject to the conditions imposed in the manner prescribed in sub r.
(4) of r. 30 of the Rules.
To put it in a negative form, no restrictions other than those prescribed under sub r.
(4) of r. 30 can be imposed on a detenu.
If the appropriate authority seeks to impose on a detenu a restriction not so prescribed, the said authority will be interfering with the personal liberty of the detenu in derogation of the law whereunder he is detained.
If that happens, the High Court, in terms of Art 226 of the Constitution, can issue an appropriate writ or direction to the authority concerned to act in accordance with law.
We have gone through the provisions of the Bombay Conditions of Detention Order, 195 1.
There is no provision in that Order dealing with the writing or publication of books by a detenu.
There is, therefore, no restriction on the detenu in respect of that activity.
Sub rule (iii) of r. 17 of the said Order reads "All letters to and from security prisoners shall be censored by the Commissioner or the Superintendent, a% the case may be.
If in the opinion of the Commissioner or the Superintendent, the dispatch or delivery of any letter is likely to be detrimental to the public interest or safety or the discipline of the place of detention, he shall either withhold such letter, or despatch or deliver it after deleting any objectionable portion therefrom.
In respect of the censoring of letters of security prisoners, the Commissioner or the Superintendent shall comply with any general or special instructions issued by Government.
" The Maharashtra Government has not relied upon this rule.
In deed, in the counter affidavit its case was not that it prohibited the sending of the book for publication under the said sub rule, but that it was not required by law to permit the detenu to publish books while in detention; nor was it its case before the High Court that the publication of this book was detrimental to public interest or safety or the discipline of the place of detention.
Prima facie the said sub rule applies only to letters to and from security priso ners and does not regulate the sending out of prison books for publication.
Indeed, the learned Additional Solicitor General does not rely upon this provision.
707 Let us now consider the validity of the argument of the learned Additional Solicitor General.
He relies upon the following observations of Das, J., as he then was, in A. K. Gopalan 's case(1), at p. 29 1.
"If a man 's person is free, it is then and then only that he can exercise a variety of other auxiliary rights, that is to say, he can, within certain limits, speak what he likes, assemble where he likes, form any associations or unions, move about freely as his 'own inclination may direct, ' reside and settle anywhere he likes and practise any profession or carry on any occupation, trade or business.
These are attributes of the freedom of the per son and are consequently attached to the person." ' Relying upon these observations it is argued that freedom to publish is only a component part of that of speech and expression and that in the light of the said observations, as the detenu ceased ' to be free in view of his detention, he cannot exercise his freedom to publish his book.
In other words, as he is no longer a free man, his right to publish his book, which is only an attribute of personal liberty, is lost.
The principle accepted by Das, J., as he then was, does not appear to be the basis of the conclusion arrived at by the other learned Judges who agreed with his conclusion.
Different reasons are given by the learned Judges fro arriving at the same conclusion.
As has been pointed out by this Court in the second Kochunni 's case(2) the views of the learned Judges may be broadly summarized under the following heads : (1) to invoke article 19(1) of the Constitution, a law shall be made directly infringing that right; (2) articles 21 and 22 constitute a self contained code; and (3) the freedoms in article 19 postulate a free man.
Therefore, it cannot be said that the said principle was accepted by all the learned Judges who took part in A. K. Gopalan 's case(").
The apart, there are five distinct lines of thought in the matter of reconciling article 21 with article 19, namely, (1) if one loses his freedom by detention, he loses all the other attributes of freedom enshrined in article 19; (2) personal liberty in article 21 is the residue of personal liberty after excluding the attributes of that liberty embodied in article 19; (3) the personal liberty included in article 21 is wide enough to include some or all of the freedoms mentioned in article 19, but they are two distinct fundamental rights a law to be valid shall not infringe both the rights; (4) the expression "law" in article 21 means a valid law and, therefore, even if a person 's liberty is deprived by law of detention, the said law (1) ; (2) 708 shall not infringe article 19; and (5) article 21 applies to procedural law, whereas article 19 to substantive law relating to personal liberty.
We do not propose to pursue the matter further or to express our opinion one way or other.
We have only mentioned the said views to show that the view expressed by Das, J., as he then was, in A. K. Gopalan 's case(1) is not the last word on the subject.
In this case, as we have said earlier, we are only concerned with the question whether the restriction imposed on the personal liberty of the first respondent is in terms of the relevant provisions of the Defence of India Rules.
Here, the first respondent 's liberty is restricted under the Defence of India Rule 's subject to conditions determined in the manner prescribed in Sub r.
(4) of r. 30 thereof.
We find it difficult to accept the argument that the Bombay Conditions of Detention Order, 1951, which lays down the conditions regulating the restrictions on the liberty of a detenu, conferred only certain privileges on the detenu.
If this argument were to be accepted, it would mean that the detenu could be starved to death, if there was no condition providing for giving food to the detenu.
In the matter of liberty of a subject such a construction shall not be given to the said rules and regulations, unless for compelling reasons.
We, therefore, hold that the said conditions regulating the restrictions on the personal liberty of a detenu arc not privileges conferred on him, but are the conditions subject to which his liberty can be restricted.
As there is no condition in the Bombay Conditions of Detention Order, 1951, prohibiting a detenu from writing a book or sending it for publication, the State of Maharashtra infringed the personal liberty of the first respondent in derogation of the law whereunder he is detained.
The appellant, therefore, acted contrary to law in refusing to send the manuscript book of the detenu out of the jail to his wife for eventual publication.
In the view we have taken, another argument advanced by Mr. Garg, namely, that the restriction can only be imposed by an order made under section 30 (f) or (h) of the Rules and that too in strict compliance with section 44 of the Act need not be considered.
That question may arise if and when an appropriate condition is imposed restricting the liberty of a detenu in the matter of sending his books for publication.
We do not express our view on this question one way or other.
In the result, the order passed by the High Court is correct.
The appeal fails and is dismissed.
Appeal dismissed.
| The appellants claimed title to the lands in dispute on the basis of section 4(1) of the Bengal Alluvion and Deluvion Regulation XI of 1825.
To establish their claim based upon the clause, the appellants had to prove that the lands were gained by gradual accession from the recess of the river and that the lands were accretions to plots in the possession of the appellants or their ancestors.
Since the survey records from 1892 to 1909 showed that appellants ' ancestors held some of the frontier plots, the High Court was asked to draw the inference that they held those plots during 1845 to 1863 when the lands in dispute accrcted.
The High Court refused to draw the inference.
In appeal to this Court, HELD : If a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and, in appropriate cases, backwards, may be drawn under section 114, Evidence Act.
But it was not safe to assume in the present case that a state of things during 1892 to 1909 existed during 1845 to 1863 since the interval of time was too Inng.
[760 H] Anangamanjari Chowdhrani vs Tripura Sundari Chowdhrani, (1887) L.R. 14 I.A. 101, 110, approved.
Observation contra in Manmath Nath Haldar, vs Girish Chandra Roy, , 770 and Hemendra Nath Roy Chowdhury vs Jnendra Prasanna Bhaduri, , 117, disapproved.
|
ition Nos. 4195 and 4445 of 1978, 8831, 8942 of 1981, 342 717, 803 804, 1005 1242, 6501 6746, 2860 3049, 3169 71, 3413 63, 7133 35 of 1982.
V.M. Turkunde and Naunit Lal for the petitioners in W.P. Nos.
4196/82, 6501 6746, 2860 3049, 342 717/82, and 8831/81.
S.S. Javali, B.P. Singh and Raniit Kumar for the petitioners in W.P. Nos.
4445/78, 8942, 1005 1242, 3413 3463 and 7133 35/82.
Sanjay Kaul and Ashok Panda for the petitioners in W.P. No. 3169/82.
L.N. Sinha, Attorney General and R.K. Garg for the respondent in W.P. Nos. 4195/82 and 4445/78.
Altaf Ahmed for the respondents in all other matters.
This challenge is met by the State of Jammu & Kashmir with the short answer that the impugned Act being a measure of agrarian reform, Article 31A of the Constitution precludes a challenge to its validity on the ground that it violates the provisions contained in Articles 14,19 and 31.
The petitioners are mostly small land holders owning agricultural lands in the State of Jammu & Kashmir.
The Government of Jammu & Kashmir introduced several land reforms in the State, beginning with Tenancy Act VII of 1948.
Jagirs and Muafis were abolished under that Act as a result of which, approximately 9()00 owners of agricultural lands lost their proprietary interest in about 4.5 lakh acres of land.
The State Legislature thereafter passed the Tenancy (Amendment) Act VII of 1948, the Tenancy (Amendment) Act of 1950, the Big Landed Estates Abolition Act of 1950, the Tenancy (Amendment) Arts of 1956, 1962 and 1965, the J & K Tenancy (Stay of Ejectment) Proceedings Act 1966, the Agrarian Reforms Act of 1972 and finally the impugned Act, 17 of 1976.
The last named Act received the assent of the Governor on August 21, 1976.
It was amended by the Amendment Act of 1978 which received the assent of the Governor on April 7, 1978.
We will presently explain in brief the nature of the provisions of the impugned Act but, before we do so, it will be useful to acquaint oneself with the various steps which the Government of Jammu & Kashmir took in the direction of land reforms, by passing the Acts to which we have referred earlier.
After abolishing the Jagirs and Muafis by the Tenancy Act of 1948, restrictions were placed on the right of the landlord to eject the tenant, by the Tenancy (Amendment) Act of 1948, The landlord was, however, given the right to resume the land from his tentant if he required it bona fide for personal cultivation subject to ceiling on his right of resumption.
The Big Landed Estates Abolitions Act of 1950 was quite a revolutionary piece of legislation in the context of those times.
A ceiling was placed by that Act on the holding of proper ties at 182 Kanals, which comes roughly to 23 acres.
The land in excess of the ceiling was expropriated without the payment of any compensation and the tiller of the soil became the owner of the excess land.
By subsequent legislations, tenants were given protec tion in the matter of rents, certain classes of non occupancy tenants came to be regarded as protected tenants and landlords were given 539 a further opportunity for making applications for the resumption of land.
Thousands of applications were filed by the landlords under the provisions of the Tenancy Amendment Act of 1965 for resumption of lands from tenants but, later, further proceeding in those applications were stayed.
The Janki Nath Wazir Committee pointed out anomalies in the various measures taken by the State Legislature by way of the land reforms and it made recommendations in order to remove the inequities from which the land reforms legislation undertaken by the State suffered.
The State Government constituted a Land Commission under the Chairmanship of the then Revenue Minister, Syed Mir Kasim, in 1963 to examine the Wazir Committee 's Report.
In 1967, the Sate Government appointed another Commission of Inquiry, with Shri P.B. Gajendragadkar, retired Chief Justice of the Supreme Court, as its Chairman.
The Gajendragadkar Commission made various recommendations by its Report dated December 1968.
It also pointed out the defects from which the Land Legislation in the Slate of Jammu & Kashmir suffered and suggested ways and means for removing them.
This long and empirical process ultimately culminated in the enactment of the Act of 1976 which is impugned in these proceedings.
It is impossible to accept the contention of Shri V.M. Tarkunde, who appears on be half of the petitioners, that by reason of certain provisions of the impugned Act which are not co related to agrarian welfare, the Act cannot be said to be a measure of agrarian reform.
The short title of the Act shows that it was passed in order to provide for transfer of lands to the tillers of the lands f or the purpose of better utilization of those lands Section 4 of the Act provides that all rights, titles and interests in lands, which were not cultivated personally in Kharif 1971, shall be deemed to have been extinguished and shall vest in the State, free from all encumbrances with effect from May i, 1973.
By section 5, all lands in excess of the ceiling area on September 1, 1971 vested in the State on May 1, 1973.
Section 7 provides for the resumption of lands by the ex landlords for bonafide personal cultivation, subject G to the conditions mentioned in section 7 (2).
Section 9 provides for payment of rent by the tillers of the soil to the State for lands which have vested in the State.
Section 11 provides for payment of the amount due on the outstanding mortgages on lands.
Section 11 provided that lands which vest in the State under the impugned Act shall be deemed to have been acquired by the State, for which payment shall be determined and made in accordance with the 540 provisions of Schedule III.
Section 13 lays down restrictions on the utilization of lands of which tillers become owners.
Section 14 prescribes for the optimum retainable area of the land, section 15 deals with the manner of disposal of surplus land, while section 17 imposes a prohibition on the transfer of lands.
Chapter III of the Act deals with the jurisdiction of several revenue officers and Tribunals appointed under the Act and lays down the procedure which they are required to follow.
Chapter IV contains supplemental provisions.
Chapter V provides for penalties for the infringement of the provisions of the Act, while Chapter VI provides for certain miscellaneous matters.
Schedule III defines 'compensation ' to mean the sum of money payable for land at the market value, while the word 'amount ' is defined to mean the sum of money payable in lieu of extinguishment of rights in land at rates other than the market rate.
The maximum amount payable for the extinguishment of the rights of the landlords is Rupees one thousand per kanal.
These and other cognate matters which are dealt with by the Act are essential steps in any well conceived scheme of agrarian reform.
It is urged by learned counsel led by Shri Tarkunde and by Shri Sanjay Kaul who appeared in person, that certain provisions of the impugned Act have no bearing upon agrarian reform and those provisions cannot have the protection of Article 31A. Section 7 of the Act is said to be one such provision.
It provides by sub section (1) for the resumption of lands for bona fide personal cultivation by ex landlords but by sub section (2) it imposes certain conditions on the right of resumption.
One of those conditions is that the applicant for resumption, other than a member of the Defence Forces, must, within six months of the commencement of the Act, take up normal residence in the village in which the land sought to be resumed is situated or in an adjoining village, for the purpose of cultivating the land personally.
The other provision of the Act on which special stress was laid by counsel for the petitioners is the one contained in clause (f) of section 7(2) which lays down certain criteria for determining the extent of land which may be resumed.
Stated briefly, where a person was entitled to rent in kind from the tiller during kharif 1971, the extent of land resumable by such person has to bear the same proportion to the total land comprised in the tenancy as the rent in kind bears to the total produce; and where a person was entitled to rent in cash during Kharif 1971, the extent of land resumable by him has to be regulated by the extent of rent in kind to which such rent in cash can be 541 commuted in accordance with the provisions of sub sections (3) and (8) of section 9.
We are unable to hold that these and connected provisions of the impugned Act show that the Act is not a measure of agrarian reform.
The question as to whether any particular Act is a measure of agrarian reform has to be decided by looking at the dominant purpose of that Act.
In Ranjit Singh vs State of Pnnjab(1), it was held on a review of authorities that a large and liberal meaning must be given to the several expressions like 'estate ', 'rights in an estate ' and extinguishment and modification ' of such rights which occur in Article 31A.
The decision in Kochuni(1) to which our attention was drawn by Shri Tarkunde, was treated in Ranjit Singh as a special case which cannot apply to cases where the general scheme of legislation is definitely agrarian reform and under its provisions, something ancillary thereto in the interests of rural economy has to be undertaken to give full effect to those reforms.
In our case the dominant purpose of the statute is to bring about a just and equitable redistribution of lands, which is achieved by making the tiller of the soil the owner of the land which he cultivates and by imposing a ceiling on the extent of the land which any person, whether land lord or tenant, can hold.
Considering the scheme and purpose of the Act, we cannot but hold that the Act is a measure of agrarian reform and is saved by Article 31A from the challenge under Articles 14, 19 or 31 of the Constitution.
Article 31 has been repealed by the 44th Amendment with effect from June 20, 1979 and for future purposes it ceases to have relevance.
Reduced to a constitutional premise, the argument of the petitioners is that the particular provisions of the Act are discriminatory and are therefore violative of Article 14; that those provisions impose unreasonable restrictions on their fundamental rights and are therefore violative of article 19.
This argument is not open to them by reason of article 31A.
It may be mentioned that The Constitution (Application to Jammu and Kashmir) order, 1954, which was passed by the President of India in exercise of his powers under article 370 of the Constitution, makes article 31A applicable to the State of Jammu and Kashmir with the modification that the proviso to clause (1) of that article stands deleted and for sub clause (a) of clause (2) the following sub clause is substituted: 542 "(a) "estate" shall mean land which is occupied or has been let for agricultural purposes or for purposes subservient to agriculture, or for pasture, and includes (i) sites of buildings and other structures on such land; (ii) trees standing on such land; (iii) forest land and wooded waste; (iv) area covered by or fields floating over water; (v) sites of jandars and gharats; (vi) any jagir, inam, muafi or mukarrari or other similar grant, but does not include (i) the site of any building in any town area or village abadi or any land appurtenant to any such building or site, (ii) any land which is occupied as the site of a town or village; or (iii) any land reserved for building purposes in a municipality or notified area or cantonment or town area or any area for which a town planning scheme is sanctioned.
" The grievance of the petitioners is that not only do certain provisions of the Act militate against agrarian reform, but those provisions will involve the State Government into payment of considerable 'amounts ' to land holders for the extinction and acquisition of their rights, which would be far greater than the amounts which the State Government would be liable to pay under Acts like the Urban Land (Ceiling and Regulation) Act, 1976.
Agricultural lands which are situated within the limits of municipalities and Town Area Committees are also comprehend within the scope of the Act and the apprehension of the petitioners is that, after the tillers become statutory purchasers of those lands, they will be free to dispose them of at urban prices which have escalated sky high.
Another facet of the same argument 543 is that no agrarian reform is involved in applying the impugned statute to lands situated in urban agglomerations.
These arguments are not relevant for deciding the question as to whether the dominant purpose of the Act is agrarian reform.
The payment of a larger compensation to land holders under a Land Reform Law than what would be payable under an Act like the Urban Ceiling Act does not lead to the conclusion that the former is not a measure of agrarian reform The extent and mode of payment of compensation for the extinction of a land holder 's right is a matter for the legislature to decide and the circumstance that the compensation or the amount fixed by the legislature in any given case is excessive, will not make the law any the less a measure of agrarian reform.
In the same manner, the circumstance that the impugned statute is made applicable to agricultural lands situated within the limits of Local Authorities will not affect its character as a measure of agrarian reform.
If any land situated in a developed area is used predominantly for the purpose of agriculture, it is open to the legislature to include that land in a scheme of agrarian reform so as to make the tiller of that land its owner.
The apprehension expressed by the petitioners that, after becoming statutory owners of agricultural lands situated in developed areas on payment of a paltry price, the tillers will part with those lands at a high price which lands in developed areas like urban areas fetch, is hypothetical though not unreal.
Not unreal, because the temptation to trade in immovable property is common to agriculturists and non agriculturists alike.
But the hypothetical possibility that the lands will be disposed of by to day 's tillers to morrow, cannot affect the basic position that the Act is conceived in the larger interest of agrarian reform.
Besides, section 13 which places restriction on utilisation of lands, section 17 which imposes restrictions to a limited extent on the transfer of such lands and section 14 which prescribes the optimum land which can be retained even by an erstwhile tenant are effective deterrents against profit oriented disposal of high priced lands.
Before parting with this case, we would like to observe that section 7(2) (b) of the Act creates an anomalous situation, especially in the context of the definition of 'personal cultivation ' in section 2(12) of the Act.
One of the conditions imposed by section 7(2) (b) on the right of a land holder to resume land is that, unless he is a member of the defence forces, he must take his residence in the 544 village in which the land is situated or in an adjoining village.
"Personal cultivation" is defined in section 2(12) to mean cultivation by any member of one 's family or by a khana nishin daughter or a khana damad or a parent of the person or by other relations like the son, brother or sister who are specified in the various clauses of section 2(12).
Under clause (g) of section 2(12), a land holder who is a minor, insane, physically disabled, incapacitated by old age or infirmity, a widow or a person in detention or in person can cultivate the land through a servant or hired labourer under the personal supervision of his or her guardian or agent.
If it is permissible to cultivate a land through another person as specified in clauses (b) to (g) of section 2(12), it is difficult to understand why residence in the village where the land is situated or in an adjoining village should be compulsory for all persons, even for minors, widows, insane persons and persons in detention.
The exception made by the legislature in favour of the members of defence forces ought to be extended to these other persons also, The exclusion of a constitutional challenge under Articles 14, 19 and 31 which is provided for by Article 31A does not justify in equity the irrational violation of these articles.
This Court did observe in Waman Rao(l) that: "It may happen that while existing inequalities are being removed, new inequalities may arise marginally and incidentally" but the legislature has to take care to see that even marginal and incidental inequalities are not created without rhyme or reason.
The Government of J & K would do well to give fresh consideration to the provisions contained in section 7 (2) and modify the provisions regarding residence in order that they may accord with reason and commonsense.
Article 31A does not frown upon reason and commonsense For these reasons, we uphold the constitutional validity of the Jammu and Kashmir Agrarian Reforms Act, 1976 and dismiss these petitions.
There will be no order as to costs.
| Respondent was an orthopaedic surgeon in the U.H.M. Hospital and was incharge of the Orthopaedic Department.
He was allotted an official residence within the campus of the hospital and as per the prevailing rules he was permitted consultation practice at his residence, He was found guilty of demanding and accepting illegal gratification from the father of a patient under his treatment at the hospital and was convicted for an offence under section 5(1) (d) of the Prevention of Corruption Act, 1947 and for an offence under section 161 of the Penal Code by the Special Judge, Kanpur.
Consequently he was sentenced to undergo to two years ' rigorous imprisonment and to pay a fine of Rs.5,000 (in default to undergo 4 months ' R.I.) The appeal preferred by the convict was allowed and the order of conviction and sentence was set aside by the High Court.
Hence the appeal by State, by special leave.
Allowing the appeal, restoring the finding of guilt, and order of conviction, but modifying the sentence, the Court, ^ HELD: (1) Only in exceptional cases and in the peculiar facts and circumstances of a case, the Supreme Court would be obliged, as in the instant case, to undertake upon itself the function of appreciation of evidence, which function properly falls within the sphere of the High Court in its capacity as the appellate Court.
Here, the High Court resorted to surmises and conjectures for which there was not the slightest basis.
The High Court failed to undertake the exercise of scrutinising, and making assessment of the evidence and failed to record a finding of fact in after considering the question of reliability and credibility of the witnesses and weighing the probabilities in the context of the circumstantial evidence.
[996 B E] 2:1.
By and large a citizen is somewhat reluctant, rather than anxious, to complain to the vigilance Department and to have a trap arranged even if 994 illegal gratification is demanded by a Government servant.
There are numerous reasons for the reluctance.
In the first place, he has to make a number of visits to the office of Vigilance Department and to wait on a number of officers.
He has to provide his own currency notes for arranging a trap.
He has to comply with several formalities.
He has to accompany the officers and participants of the raiding party.
All the while he has to remain away from his job, work, or avocation.
He has to sacrifice his time and effort whilst doing so.
Thereafter, he has to attend the court at the time of the trial from day to day.
He has to withstand the searching cross examination by the defence counsel as if he himself is guilty of some fault.
In the result, a citizen who has been harassed by a Government Officer, has to face the humiliation of being considered as a person who tried to falsely implicate a Government servant, not to speak of facing the wrath of the Government servants of the department concerned in his future dealings with the department.
No one would therefore be too keen or too anxious to face such an ordeal.
Ordinarily, it is only when a citizen feels oppressed by a feeling of being wronged and finds the situation to be beyond endurance, that he adopts the course of approaching the Vigilance Department for laying a trap.
His evidence cannot therefore be easily or lightly brushed aside.
[1001 E H; 1002 A B] 2:3.
Of course, it cannot be gain said that it does not mean that the court should be oblivious of the need for caution and circumspection bearing in mind that one can conceive of cases where an honest or strict Government official may be falsely implicated by a vindictive person to whose demand, for showing favours, or for according a special treatment by giving a go bye to the rules, the official refuses to yield.
[1002 B C] 3:1.
The evidence of a police officer cannot be brushed aside as that of an interested witness.
That he has an interest is true only to an extent a very limited extent.
He is interested in the success of the trap to ensure that a citizen, who complains of harassment by a Government Officer making a demand for illegal gratification, is protected and the role of his department in the protection of such citizens is vindicated.
Perhaps it can be contended that he is interested in the success of the trap so that his ego is satisfied or that he earns a feather in his cap.
At the same time it must be realised that it is not frequently that a police officer, himself being a Government Servant, would resort to perjury and concoct evidence in order to rope in an innocent Government servant.
In the event of the Government servant concerned refusing to accept the currency notes offered by the complainant, it would not be reasonable to expect the police officer to go to the length of concocting a false seizure memo for prosecuting and humiliating him merely in order to save the face of the complainant, thereby compromising his own conscience.
The court may therefore, depending on the circumstances of a case, feels safe in accepting the prosecution version on the basis of the oral evidence of the complainant and the police officers even if the trap witnesses turn hostile or are found not to be independent.
When therefore besides such evidence there is circumstantial evidence which is consistent with the guilt of the accused and not consistent with his innocence, there should be no difficulty in upholding the prosecution case.
The present appears to be a case of that nature.[1002 D H] 995 3:2.
In the instant case, taking an overall view of the evidence of PW 1, PW 2, PW 3 and the circumstantial evidence, it is not possible to believe that the raid proved abortive and yet everyone conspired together in order to falsely rope in the respondent.
[1009 F]
|
Civil Appeal No.951 of 1977.
From the Judgment and Order dated 29.7.1976 of the Madras High Court in S.A. No.89 of 1972.
A.T.M. Sampath and P.N.Ramalingam for the Appellant.
S.Balakrishnan and S.Prasad for the Respondent.
The Judgment of the Court was delivered by THOMMEN, J.
The appellant is the defendant in a suit insti 392 tuted by the respondent to set aside a transfer of property made by the guardian of a minor and for recovery of possession of the property.
The suit was decreed, and the decree was confirmed by the first appellate court as well as by the High Court.
The plaintiff respondent purchased the suit property from an ex minor within three years after the minor attained majority.
During his minority, the property was sold by his father as his natural guardian to a person from whom the present appellant purchased the property.
All the courts found that the guardian had not obtained the permission of the Court for the sale of the property, as required by section 8 of the Hindu Minority & Guardianship Act, 1956 ("the Guardianship Act") and that the sale of the property was not for legal necessity.
Dismissing the second appeal, the High Court held that the suit was rightly instituted by the respondent as a transferee from the ex minor within three years after the minor attained majority and that the contention of the defendant that the suit by a transferee from the ex minor was hit by section 6(e) of the was unsustainable.
The only question which arises in the present appeal, as it did before the High Court, is (to quote the words of the High Court) "Whether a transferee from a minor after he attained majority, can file a suit to set aside the alienation made by the minor 's guardian or the said right is one to be exercised only by the minor?".
The relevant facts are that the suit property belonged to one Veerammal.
She had a daughter by name Kaliammal.
Veerammal died shortly after she purchased the property in 1948.
She left behind her husband Kandayya and their duaghter Kaliammal.
Subsequently, Kandayya married a second time when his daughter Kaliammal was a minor.
She thereupon left her father 's house and resided with her maternal grand father who protected and maintained her.
During her minority, Kandayya sold the property on 29.10.1959 to Jainulavudeen.
On 25.4.1966, Jainulavudeen in turn sold the property to the defendant appellant.
Subsequently, on 26.5.1966 the plaintiff obtained a deed of sale of the suit property in his favour from Kaliammal who had by then attained majority.
The Plaintiff thereafter instituted the present suit (O.S. No. 491 of 1968) against the appellant to set aside the transfer of property made by Kandayya and for recovery of its possession.
393 The question is whether the respondent in his capacity as a transferee from the ex minor was competent to bring a suit to set aside the sale effected by the minor 's guardian.
It is no longer disputed that the suit was brought within three years after the minor attained majority.
Nor is it any longer contended that the father of the minor, as her natural guardian, had obtained the permission of the Court or that the sale effected by him was one for legal necessity.
These two vital points have been concurrently found against the appellant.
The only contention which Mr. Sampath, appearing for the appellant, is in a position to urge is as regards the question whether the suit is hit by section 6(e) of the T.P. Act.
Counsel says that all that the ex minor was in a position to transfer, was her mere right to sue to set aside the sale and recover possession of the property transferred by her father as her natural guardian.
The property itself had been transferred by the father prior to its sale by the ex minor.
The minor had, therefore, no property to sell, except a right to set aside the sale.
Accordingly, whatever transfer that was effected by the minor in favour of the plaintiff was nothing more than a mere right to sue and such transfer was invalid by reason of section 6(e) of the T.P. Act.
Mr. Balakrishnan, appearing for the respondent plaintiff, contends that the ex minor was fully competent to bring a suit to set aside the sale within a period of three years after attaining majority and any person claiming under her is equally competent to institute action for the same purpose.
He refers to the provisions of section 8(3) of the Guardianship Act.
He contends that a suit to set aside a sale is not for the enforcement of any personal right, but a right in property, and is, therefore, not hit by section 6(e) of the T.P. Act.
In any view, counsel says, section 8(3) of the Guardianship Act sepcifically allows such a suit to be brought by a person claiming under a minor and, therefore, such a statutory right specially granted by an enactment dealing with the protection of the minor cannot be defeated by the general provisions of an earlier enactment.
The two provisions, counsel says, can be read harmoniously so as to avoid an artificial conflict.
What the Guardianship Act intends to protect is the right of a person claiming under a minor to sue for setting aside the sale of property sold otherwise than as permitted by section 8 of the Act.
On the other hand, the T.P. Act only prohibits suits in the the nature of champerty and maintenance based on bare or naked right of litigation.
The general provision contained in section 6(e) of the T.P. Act does not derogate from the special protection of the minor 's interest and the interest of a person claiming under him, as afforded by the Guardianship Act, which is addressed to a specific problem, In any view, counsel says a sale by the guardian 394 otherwise than as permitted by section 8 is void and is, therefore, incapable of passing a title.
For all these reasons, Mr. Balakrishna submits that the suit was competent and was rightly decreed on the facts found and the appeal by the defendant has no merits.
As concurrently found by the courts below, the sale effected by the guardian during the minority of his daughter was not in compliance with the provisions of section 18(i) of the Guardianship Act.
The property was transferred by him without obtaining the previous permission of the Court and the transfer was not for the benefit of the minor.
Such a sale by the minor 's father who is his natural guardian is, unlike in the case of transfer by a de facto guardian (Section 11), not a void sale, but only a voidable sale.
Such a sale until set aside is sufficiently effective to pass title, but being a voidable sale, what the buyer has obtained is a defeasible title which is liable to be set aside at the instance of the person entitled to impeach it.
Section 8(3) of the Guardianship Act says: "Any disposal of immovable property by a natural guardian, in contravention of sub section (1) or sub section (2), is voidable at the instance of the minor or any person claiming under him." (emphasis supplied) The effect of this sub section is that any disposal of immovable property by a natural guardian otherwise than for the benefit of the minor or without obtaining the previous permission of the Court is voidable.
A person entitled to avoid such a sale is either the minor or any person claiming under him.
This means that either the minor, or his legal representative in the event of his death, or his successor in interest claiming under him by reason of transfer inter vivos, must bring action within the period prescribed for such a suit, i.e., three years from the date on which the minor died or attained majority, as the case may be.
In the present case, the suit was brought, as found by the courts below, within three years after the minor attained majority.
Mr. Sampath, however, contends that a person claiming under a minor, referred to in section 8(3), can only be a legal representative of a deceased minor and not a person succeeding to the interests of the minor by reason of transfer inter vivos.
He refers to the decisions in Jhaverbhai Hathibhai Patel vs Kabhai Bechar Patel & Ors, ; Mon Mohan Bhattacharjee & Ors.
vs Bidhu Bhusan Dutta & Ors., ; Palani Goundan & Anr.
vs Vanjiakkal & 395 Anr., ; Premprakash Surajmal vs Maharashtra Revenue Tribunal, Nagpur & Ors., AIR 1969 Bom.361 and Ghanshyam Dass vs Dr. Shiva Shankar Lal & Ors., [1980] All.
Law Journal 130 and other cases in which certain High Courts have taken the view that the right of the minor is a personal right and it cannot be transferred otherwise than by inheritence.
The "person claiming under him" mentioned under section 8(3) of the Guardianship Act, counsel says, can only be a representative and not a purchaser or transferee inter vivos.
He refers to Article 60 of the and submits that the provision refers only to a legal representative and not any other successor.
In Jhaverbhai Hathibhai Patel vs Kabhai Bechar Patel & Ors.
, , it was held: "what was assigned by the minor to the plaintiff in that suit was not the property in question but his right to sue for it, and if he could establish his allegation, to have the sale avoided, this I think was no more than a right of suit, and if I am correct such a transfer is forbidden by section 6, Cl.
(e), T.P. Act.
" Similar reasoning was adopted in the other decisions cited by Mr. Sampath on the point.
The rationale of these decisions is that the right to impeach a sale effected by the guradian is a personal right vested in the minor and it is not transferable inter vivos.
The expression "person claiming under him", according to this line of reasoning, must, therefore, be understood as a legal representative and not an assignee.
On the other hand, a Division Bench of the Madras High Court in P. Kamaraju vs C. Gunnayya & Ors., AIR 1924 Madras 322 held that the right of the minor was not a bare right to sue and it was an assignable right.
The High Court held: ".
.By selling the property to the plaintiff on the footing that the sale by the mother was not binding on him he has chosen to avoid it, and the result of it is that from his point of view he has got a complete title.
The title no doubt will only be effective if the Court ultimately finds that the sale by the mother is not binding on him.
But contingent on that event he has got a complete title and this title is not a bare right to sue and is, therfore, assignable. . " 396 In Palaniappa Goundan vs Nallappa Goundan & Ors., AIR 1951 Madras 817, Viswanatha Sastri, J. observed: "Where an ex minor transfers property unauthorisedly sold by his guardian during his minority he transfers not a mere right to use but his interest in the property, though a suit may be necessary to avoid the transfer by the guardian & recover possession of the property from his alienee.
Conversely, the liability of the transferee from the guardian is not a liability to pay damages for the unauthorised act of the guardian, but is a liability to restore the property to the rightful owner or his transferee".
Similar view was expressed in Karnam Nagabhushana Rao vs Karnam Gowramma & Ors., [1968] 2 Andhra Weekly Reporter 57.
These decisions on which reliance was placed by the Madras High Court in the impugned judgment are to the effect that the right of the minor is not a bare or naked right to sue but a right in property which is assignable.
In Halsbury 's Laws of England, 4th edn.
, Vol. 6, paragraphs 86 87 at pages 49 50, this is what is stated "A bare right of litigation, such as a mere right to damages for a wrongful act, is not assignable, on the principle that the law will not recognise any transaction savouring of maintenance or champerty.
By way of exception to the rule stated in the previous paragraph there is nothing unlawful in the purchase of property which the purchaser can only enjoy by defeating existing adverse claims, or in the assignment (for example by mortgage) of property, being the fruits of litigation.
In every case it is a question whether the purchaser 's real object was to acquire an interest in the property, or merely to acquire a right to bring an action, either alone or jointly with the vendor . ".
In the instant case, on the facts found, the transfer of the property made by the guardian was a voidable transaction and it was, therefore, open to the minor to challenge it and seek recovery of possession.
Such a right of the minor is a right or interest in property 397 which he himself or "any person claiming under him" may enforce by instituting a suit [Section 8(3) of the Guardianship Act].
"Any person claiming under him" must necessarily include a purchaser.
Section 8(3) confers a right of suit in the special circumstances postulated in that provision.
The object of the Act being the protection of the minor, the legislature has thought it fit to confer a right of suit in certain circumstances not only on the minor, but also on a person to whom the minor has transferred his rights.
The right transferred is an interest in property which is capable of enforcement at the instance of the transferee as it was at the instance of the ex minor prior to the transfer.
Such a provision, indeed specially for the protection of the interests of the minor, must be read in harmony and consistently with the general provisions contained in section 6 of the T.P. Act.
[See The J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs The State of Uttar Pradesh & Ors., ; , 194 and Ashoka Marketing Ltd. & Anr.
vs Punjab National Bank & Ors., [1990] 3 JT SC 417, 439].
The transfer made by the father during his son 's minority was voidable at the instance of his son who was the real owner, and any person purchasing such property from the natural guardian obtained only a defeasible title.
The minor retained a right in the property to defeat existing adverse claims, and such right is an assignable right.
We are in complete agreement with what has been stated on the point in Palaniappa Goundan vs Nallappa Goundan & Ors., AIR 1951 Madras 817 and in P. Kamaraju vs C. Gunnayya & Ors., AIR 1924 Madras 322.
We do not agree with the contrary view expressed on the point in Jhaverbhai Hathibhai Patel vs Kabhai Bechar Patel & Ors., ; Mon Mohan Battacharjee & Ors.
vs Bidhu Bhushan Dutta & Ors., and Palani Goundan & Anr.
vs Vanjiakkal & Anr., A construction which is unduly restrictive of the statutory provisions intended for the protection of the interest of the minor must be avoided.
This is all the more so in view of section 5(b) of the Guardianship Act which says.
Save as otherwise expressly provided in this Act (a) . . . . . . . . (b) any other law in force immediately before the com 398 mencement of this Act shall cease to have effect in so far as it is inconsistent with any of the provisions contained in this Act.
" For the reasons stated by us, we see no merit in the challenge against the judgment under appeal.
The appeal is accordingly dismissed.
We do no, however, make any order as to costs.
V.P.R. Appeal dismissed.
| The appellant purchased the suit property of the minor from a person, to whom the same was sold by the father, the natural guardian, whereas the respondent purchased the suit property from the minor within three years on his attaining majority.
The respondent plaintiff instituted a suit against the appellant defendant, to set aside the transfer of property made by the natural guardian and for recovery of possession of property.
The suit was decreed and the decree was confirmed by the appellate Court as well as by the High Court.
Dismissing the second appeal, the High Court held that the suit instituted bythe respondent as a transferee from the ex minor within three years after the minor attained majority was not hit by section 6(e) of the , against which the present appeal preferred by the appellant defendant.
The appellant contended that the suit was hit by section 6(e) of the , as all that the ex minor was in a position to transfer was the mere right to sue to set aside the sale and recover possession of the property transferred by the natural guardian; and 390 that a person claiming under a minor, referred to in section 8(3) of the Hindu Minority and Guardianship Act, 1956 can only be a legal representative of a deceased minor and not a person succeeding to the interest of the minor by reason of transfer inter vivos.
The contentions of the respondent were that the ex minor was competent to bring a suit to set aside the sale within a period of three years of his attaining majority and any person claiming under the minor was equally competent to institute action for the same purpose; that the suit to set aside a sale was not for the enforcement of any personal right, but a right in property and the suit was not hit by Section 6(e) of the T.P.Act; and that the provisions contained in Section 6 of the T.P. Act and Section 8 of the Guardianship Act were to be read together.
On the question, whether the respondent in his capacity as a transferee from the ex minor was competent to bring a suit to set aside the sale effected by the minor 's guardian, who had sold the property without obtaining the permission of the Court as required under Section 8 of the Hindu Minority and Guardianship Act 1956 and without any legal necessity.
Dismissing the appeal of the appellant defendant this Court, HELD: 1.
In the instant case, on the facts found, the transfer of the property made by the guardian was a voidable transaction and it was, therefore, open to the minor to challenge it and seek recovery of possession.
Such a right of the minor is a right or interest in property which he himself or "any person claiming under him" may enforce by instituting a suit (Section 8(3) of the Guardianship Act).
"Any person claiming under him" must necessarily include a purchaser.
[396G 397A] 2.
Section 8(3) confers a right of suit in the special circumstances postulated therein.
The object of the Act being the protection of the minor, the legislature has though it fit to confer a right of suit in certain circumstances not only on the minor, but also on a person to whom the minor has transferred his rights.[397A B] 3.
The right transferred is an interest in property which is capable of enforcement at the instance of the transferee as it was at the instance of the ex minor prior to the transfer.
Such a provision intended specially for the protection of the interests of the minor, must be read in harmony and consistently with the general provisions con 391 tained in section 6 of the T.P. Act.
[397B C].
A construction which is unduly restrictive of the statory provisions intended for the protections of the interests of the minor must be avoided.
[397F G] 5.
The transfer made by the father during his son 's minority was voidable at the instance of his son who was the real owner, and any person purchasing such property from the natural guardian obtained only a defeasible title.
The minor retained a right in the property to defeat existing adverse claims, and such right is an assignable right.
[397D E] The J.K.Cotton Spinning & Weaving Mills Co.Ltd.
vs The State of Uttar Pradesh & Ors., [1961] 3 S.C.R.185, 194 and Ashoka Marketing Ltd. & Anr.
vs Punjab National Bank & Ors., , 439, followed.
Palaniappa Goundan vs Nallappa Goundan & Ors., AIR 1951 Madras 817 and P.Kamaraju vs C.Gunnayya & Ors., AIR 1924 Madras 322, approved.
Jhaverbhai Hathibhai Patel vs Kabhai Bechar Patel & Ors., AIR 1933 Bom.42; Mon Mohan Battacharjee & Ors.
vs Bidhu Bhusan Dutta & Ors., and Palani Goundan & Anr.
vs Vanjiakkal & Anr., [1956] I.L.R. Mad.1062, over ruled.
Preprakash Surajmal vs Maharashtra Revenue Tribunal.
Nagpur &Ors., A.I.R. 1969 Bom.361; and Ghanshyam Dass vs Dr.
Shiva Shankar Lal & Ors., [1980] All Law Journal 130, referred to.
|
vil Appeal No. 1845 (N) of 1974.
From the Judgment and Decree dated 6/7.3.1974 of the Bombay High Court in First Appeal No. 586 of 1969.
133 S.K. Dholakia and H.S. Parihar for the Appellant.
A.K. Ganguli, A.M. Khanwilkar, A. Subba Rao, C.V. Subba Rao and A.S. Bhasme for the Respondents.
The appellant is a Limited Company registered under the Companies Act having its registered office situate at Ahmed nagar within the State of Maharashtra.
The appellant carries on business, inter alia, as manufacturers of Ayurvedic preparations including "Asavas", "Aristhas".
At all times material to this appeal, the appellant was manufacturing and selling an Ayurvedic product called "Ashvagandhaarist" which is a medicinal preparation containing self generated alcohol but not capable of being consumed as ordinary alcoholic beverage.
Under the provisions of the Medicinal and Toilet Prepara tions .
(Excise Duties) Act, 1955, hereinafter referred to as "the Act", which came into force on 1st April, 1957, excise duties were levied on medicinal and toilet prepara tions specified in the Schedule to the Act, hereinafter referred to as "the Schedule".
The Act, as originally stood in 1955, inter alia, contained two items in the Schedule respectively specifying "medicinal and toilet preparations containing alcohol which are prepared by distillation or to which alcohol has been added and which are capable of being consumed as ordinary "alcoholic beverage" and "medicinal and toilet preparations not otherwise specified containing alcohol", being the commodities excisable under the provi sions of the Act.
The said "Ashvagandhaarist" was treated and accepted by the Excise Authorities as being exempt from the payment of any excise duty upon the basis and the foot ing that the same was an Ayurvedic preparation containing self generated alcohol which was not capable of being con sumed as ordinary alcoholic beverage, and which fell under item 2(i) Of the Schedule in respect of which the rate of excise duty postulated in the Schedule was "Nil".
The Act was amended by the Amendment Act 19 of 1961.
The amendment, inter alia, introduced the concept of "patent and pro 134 prietary medicine" in the Schedule.
The amendment Act, however, by an Explanation, introduced in the Schedule the definition of the "patent and proprietary medicine" con tained in the Drugs Act, 1940.
Even after the introduction of the said amendment, the appellant 's aforesaid product continued to be treated as exempt from the liability to pay any excise duty on the self same ground, namely, that it was covered under item 2(i) of the Schedule which item 2(i) was renumbered as item 3(i) of the Schedule as amended by the Amendment Act of 1961.
By Section 18 of the Finance Act, 1962, the Act was further amended by substitution of an Explanation No. 1 to the Schedule of the Act.
By virtue of and under the said Explanation, a patent and proprietary medicine was defined as a medicinal preparation of the description and the type specified in the Explanation.
The Explanation which was brought in by the Finance Act was given retrospective effect from April 23, 1962.
In purported pursuance of the said Explanation and/or upon the basis thereof, a circular dated May 31, 1962 was issued by the then Director of Prohibition and Central Excise, Government of Maharashtra, Bombay which, inter alia, directed that the medicinal preparations containing self generated alcohol but not capable of being consumed as alcoholic beverage were to be treated as products falling under item 1 and not item 3 of the Schedule.
consequent thereupon, the respondents levied and recovered from the appellant diverse sums aggregating to Rs.2, 18,282.16 being the alleged amount of the excise duty payable in respect of the product "Ashvagandharist".
The amounts were paid by the appellant "under protest".
With a view to enforcing their rights in respect thereof and/or recovering the said amount illegally recovered by the respondents, on July 14, 1965, the appellant filed a suit, being Special Suit No. 23 of 1965 in the Court of Civil Judge, Senior Division, Ahmednagar.
On March 4, 1966, the respondent No. 4 filed its written statement and similarly on the 4th April, 1966 the respond ent Nos. 1 to 3 filed written statements.
In the written statements, filed on behalf of the respondents it was, inter alia, contended that the said product of the appellant was "the unrestricted ayurvedic preparations" manufactured by the plaintiff (appellant) labelled and marked by the 135 plaintiff (appellant) under their brand name and trade mark.
This, therefore, fell within the scope of patent or proprie tary medicine as given in Explanation 1 below the Schedule annexed to the Act, as inserted from April 23, 1962 by Finance Act (No. 2) 1962.
By his Judgment and Decree dated March 27, 1969, the learned Civil Judge was pleased to decree the appellant 's suit for Rs.2,22,582.07 together with future interest at 6 per cent per annum from the date of the suit till realisa tion.
Aggrieved by the Judgment and Order dated March 27, 1969, the respondents (being the defendants therein) pre ferred an appeal to the High Court of Judicature at Bombay, which was registered as First Appeal No. 586 of 1969.
The said appeal was heard by the High Court alongwith other appeals being First Appeals Nos.
136 of 1968 and 93 of 1970 as also suits being Suit Nos. 230 of 1965 and 319 of 1965.
The appeals and the suits were heard together having regard to the common questions of law involved therein.
By its judgment and decree the High Court was pleased to allow the said first appeal of the respondents, reversing the judgment and decree of the Trial Court and to dismiss the appellant 's special suit.
Hence this appeal by special leave.
Mr. S.K. Dholakia, the learned counsel for the appellant submits, inter alia, that the findings of the High Court are repugnant to the relevant provisions of the Act and/or the rules framed thereunder and/or the scheme, intendments and purposes thereof.
It is contended that the appellant 's product "Ashvagandhaarist" fell squarely within item 3(i) of the Schedule and as such wholly exempt from the payment of excise duty; that in view of the admitted position that until 1962 "Ashvagandhaarist" was exempt from the payment of excise duty as being a commodity falling under item No. 2(i) of the Schedule, simply by reason of the Explanation which was introduced in the Act by the Finance Act of 1962, as the explanation could never be considered to be or, in any event, in the scheme of the provision of the Act, was not a substantive provision of the Act and the explanation was not intended to and it did not seek to disturb the enumeration of the categories or the respective fields assigned to the various items of the schedule in existence prior thereto.
It is submitted that item 3 of the amended Schedule was a specific item and enumerated categories of Ayurvedic medici nal preparations covered thereby and that being so, all commodities answering description set out therein fell within the 136 ambit thereof and was excluded from the purview of the other items contained in the said schedule and that the express language of item 3(i), namely, of "Ayurvedic preparations containing self generated alcohol which were not capable of being consumed as ordinary alcoholic beverages" were exempt ed and that the appellant 's product "Ashvagandhaarist" was admittedly and obviously an Ayurvedic preparation containing self generated alcohol which was not capable of being con sumed as ordinary alcoholic beverage and as such it could not be made excisable on the ground that it fell within any other item of the schedule but it constituted residuary clause of the schedule in so far as the medicinal and toilet preparations containing alcohol were concerned.
Counsel further submits that the expression "not otherwise speci fied" occurring in item 3 of the schedule did not restrict the scope of the enumerated categories under item 3 but was merely a marginal note showing that the said item 3 was residuary item and comprised of three sub groups of commodi ties specified therein; and that item No. 1 was not a speci fied item.
Mr. Dholakia further submits that the interpreta tion that "ashvagandhaarist" fell within item No. 1 rendered the provisions of item No. 3 wholly nugatory inasmuch as if an Ayurvedic preparation containing self generated alcohol but incapable of being used as ordinary alcoholic beverage, is treated as failing under item 1 there would be no Ayurvedic medicine which would factually fail under item 3 of the schedule and that the Explanation newly introduced by the Finance Act, 1962 could not add to, amend or alter or vary the classification of the goods existing prior thereto as covered by the various items of the said schedule; nor could it otherwise nullify or add to, amend or alter or vary the substantive provisions of the schedule and it could not be considered to be a substantive provision of the Act nor could it be allowed to abrogate the substantive provisions of the Act.
In other words, the submission is that in view of the fact that the product of the appellant was exempt from payment of duty because the duty against item No. 3(i) in the amended Schedule of 1961 was mentioned to be 'nil ' the High Court ought to have held that the said legal and factual position could not be transformed to the detriment of the appellant by shifting the said commodity from the field covered by item 3(i) to that covered by item 1 of the Act merely on the basis of the Explanation which was intro duced by the Finance Act of 1962.
Counsel argues that this was more so because "ashvagandhaarist" was not a name within the contemplation of the explanation but was merely a de scriptive appellation of the medicine manufactured and sold by the appellant and it being a standard preparation accord ing to the Ayurvedic system could be manufactured by any one conversant with the said system, and it did 137 not have a brand name in the hands of the appellant and the High Court 's interpretation that a mere description is a name is inconsistent with the scheme of the definition of "patent and proprietary medicines" in the Explanation.
This was the reason, it is argued, why Asavas and Aristhas were expressly made non dutiable after 25.9.6,4.
by subsequent amendment by the Government.
Mr. A.K. Ganguli, learned counsel appearing for the respondents, demurring, submits that there can be no doubt that "Asavas" and "Aristhas" fall under item 1 of the sched ule to the Act as substituted by Finance Act 2 of 1962 and hence taxable at 10% ad valorem; and those being Ayurvedic preparations are specified preparations and they could never fail under item 3 or any part thereof which deals with medicinal preparations not otherwise specified containing alcohol.
Item 1, Mr. Ganguli submits, specifically describes that medicinal and toilet preparation which has alcoholic contents and which alcohol comes to be present in those medicines by use of one of the two methods described in that item.
First of such methods contemplates alcohol contents in the medicine which is prepared by distillation and the second method is addition of alcohol to the medicine.
The medicinal preparation which is prepared by distillation and which contains alcohol and other medicinal preparations to which alcohol is added fall in category I and such medicines would cover medicinal preparations belonging either to Allopathic or Ayurvedic system or I any other system of medicines.
For every system of medicines, counsel argues, item No. 1 is not general item but it is a specific item in the sense it covers only those medicines which are prepared by distillation and contain alcohol and others to which alcohol has been added.
According to counsel, such medicines belonging to any system whether indigenous or foreign are covered by item 1 and would be taxable as per that item and the disputed goods are undoubtedly medicinal preparations and they are also patent and proprietary medicines in view of the Explanation 1 and these Ayurvedic preparations are medicinal preparations being patent or proprietary medicines containing alcohol which are not capable of being consumed as alcoholic beverages and as such they squarely fall under item 1 of the Schedule, and the main Act and the Explanation is a self contained provision which eliminates the reference either to Drugs Act or to the Rules made under the Act; and one has to read only the provision of the Schedule as a whole including the Explanation, and their meaning being simple and plain, they must be given their full effect.
138 To appreciate the rival contentions we can appropriately refer to the provisions and the Schedule of the Act and the legislative changes thereof.
The Act was meant to provide for the levy and collection of duty of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp or other narcotic drug or narcotic.
The statement of objects and reasons as notified in Gazette of India of 16.9.1954, Part II, section 2, Ext., page 596 said that by virtue of entry 40 in List II in the Seventh Schedule to the Gov ernment of India Act, 1935, medicinal and toilet prepara tions containing alcohol, etc., were subjected to Provincial excise duties.
In order to secure uniformity the entry relating to excise duty on medicinal and toilet preparations containing alcohol, etc. were transferred under the Consti tution from the State list to the Union List.
The Act was intended to implement this provision in the Constitution and proposed uniform rates of excise duty and a uniform proce dure for the collection thereof.
The Act came in force on 1.4.57.
The Act in Section 2(a) defined "alcohol" to mean "ethyl alcohol of any strength and purity having the chemical composition C2H5OH"; and it defined "medicinal preparation" in Section 2(g) to include "all drugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals".
It did not define "drug".
The Drugs Act, 1940, as it was substituted by the Drugs (Amend ment) Act, 1955 (16.4.55) had defined "drug" in Section 2(b) to include "(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals other than medicines and substances exclusively used or prepared for use in accordance with the Ayurvedic or Unani systems of medicine; and (ii) such substances (other than food) intend ed to affect the structure or any function of the human body or intended to be used for the destruction of vermins or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette." (Emphasis supplied) Section 3(i) of the Act provides that "there shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India.
" The original Schedule to the Act in 1955 read: 139 THE SCHEDULE (See section 3) Item Description of dutiable Rate of No. goods.
Medicinal and toilet preparations, Rupees seven containing alcohol, which are prepared and annas eig which are prepared by distilation or ht per gallon to which alcohol has been added, and of strength which are capable of being consumed as of London ordinary alcoholic beverages.
proof spirit.
Medicinal and toilet preparations not otherwise specified containing alcohol (i) Ayurvedic preparations containing Nil self generated alcohol, which are not capable of being consumed as ordinary alcoholic beverages.
(ii) Ayurvedic preparations containing Rupees three self generated alcohol, which are per gallon.
capable of being consumed as ordinary alcoholic beverages.
(iii) All others.
Rupees five per gallon of the strength of London proof spirit 3.
Medical and toilet preparations, Nil not containing alcohol, but containing opium, Indian hemp, or other narcotic drug or narcotic.
It would thus be clear that medicinal and toilet prepara tions were classified into those which were capable of being consumed as ordinary alcoholic beverages and those which were not capable of being consumed as ordinary alcoholic beverages.
Again, medicinal and toilet preparations contain ing alcohol prepared by distillation or adding alcohol is differentiated from medicinal and toilet preparations 'not otherwise specified containing alcohol '.
Further, under this 'not 140 otherwise specified ' category Ayurvedic preparations have been classified into three groups, namely, Ayurvedic prepa rations containing self generated alcohol not capable of being consumed as ordinary alcoholic beverages, those capa ble of being consumed as ordinary alcoholic beverages; and others.
These three divisions were not drugs as defined in Drugs Act then.
The first category of Ayurvedic preparations had not been subjected to duty while the other two catego ries had been.
Admittedly, under the above Schedule the product of the appellant 'ashvagandhaarist ' was not dutiable which meant that it was included in item 2(i).
It would also be clear that 'Ayurvedic preparations containing self generated alcohol which were capable of being consumed as ordinary alcoholic beverages ' were dutiable at the rate of Rupees 3 per gallon and the third category of others was also dutia ble at the rate of Rupees 5 per gallon on the strength of London proof spirit.
Alcohol and self generated alcohol were treated differently.
The Schedule was amended by the Amending Act No. 19 of 1961 and the amended Schedule stood as follows: Item No. Description of dutiable goods Rate of duty 1.
Medicinal preparations, being patent Ten per cent or proprietary medicines, contain ad valorem.
ing alcohol and which are not capable of being consumed as ordinary alcoholic beverages.
Medicinal preparations, containing Rupees three alcohol, which are and eight prepared by distillation or to which five naye alcohol has been added, paise per and which are capable of being litre of consumed as ordinary alcoholic the streng beverages.
th of Londo n proof spi rit.
Medicinal preparations not otherwise specified containing alcohol (i) Ayurvedic preparations containing Nil self 'generated alcohol which are not capable of being consumed as ordinary alcoholic beverages.
141 (ii) Ayurvedic preparations, contain Thirty eight ing self generated alcohol, which naye paise per are capable of being consumed as litre.
ordinary alcoholic beverages.
(iii) All others.
Rupee one and ten naye paise per litre of the strength of London proof spirit.
Explanation I: "Patent or proprietary medicines" has the same meaning as in clause (h) of Section 3 of the Drugs Act, 1940 (23 of 1940).
The statement of objects and reasons of the Amendment Bill, as published in Gazette of India, 8.3.1961, Pt.
II, section 2, Ext., page 106, said: "Consequent on the decision to adopt metric units from the 1st April, 1961, in the sale of alcohol and collection of duty thereon, it is proposed to provide for the levy and collec tion of excise duty on medicinal and toilet preparations in terms of metric units. . . . . . . .
Under existing item 2(ii) of the Schedule to the Act, Ayurvedic preparations containing self generated alcohol which are capable of being consumed as ordinary alcohol ic beverages are subjected to duty at the rate of Rs.3 per gallon.
However, by virtue of the provision contained in section 19(2)(xix) of the Act, read with Rule 8 of the Medicinal and Toilet Preparations (Excise Duties) Rules 1956, the rate of duty with respect to such preparations has been reduced to Rs. 1.75 per gallon with effect from the 10th September, 1960, and it is this reduced rate that is, proposed to be expressed in terms of metric units in the Bill.
" It would thus be clear that the main purpose was the levy and collection of excise duty on medicinal and toilet preparations in terms of metric unit.
while there was refer ence to them existing item 2(ii) of the Schedule of the Act, namely, Ayurvedic preparations containing 142 self generated alcohol which were capable of being consumed as ordinary alcoholic beverages the duty whereof was reduced to Rs. 1.75 per gallon from Rs.3 per gallon, there was no mention that item No. 2(i) of the Schedule, namely, Ayurved ic preparations containing self generated alcohol which were not capable of being consumed as ordinary alcoholic bever ages was subjected to tax.
The statement of object and reasons was silent about item No. 2(i).
In the amended Schedule we find that item 1 for the first time mentioned medicinal preparations being patent or proprietary medicines, containing alcohol and which are not capable of being consumed as ordinary alcoholic beverages and the earlier item No. 1 has been re numbered as item No. 2 and the earlier item No. 2(i), (ii) and (iii) remained as they were as 3(i), 3(ii) and 3(iii).
As regards levy of duty item 2(i) of the old Schedule was kept duty free in item 3(i) of the Schedule.
Thus, there has been no fresh charging of duty on what was 2(i) and is now 3(i) under which catego ry the appellant 's product 'ashvagandhaarist ' was exempted from duty before the amendment of the Schedule.
There is, therefore, no doubt that item 1 & 2(i) remained mutually exclusive or in other words, they would not be overlapping.
Item 1 in the amended Schedule deals with medicinal prepara tions being patent or proprietary medicines and not medici nal preparations 'not otherwise specified. ' The Explanation I says that patent or proprietary medi cines has the same meaning as in clause (h) of Section 3 of the Drugs Act, 1940.
The High Court has found that re num bered definition 3(h) was earlier 3(d) and read as follows: "3(d) 'Patent or proprietary medicine ' means a drug which is a remedy or prescription pre pared for internal or external use of human beings or animals, and which is not for the time being recognised by the Permanent Commis sion on Biological Standardisation of the World Health Organisation or in the latest edition of the British Pharmacopoeia or the British Pharmaceutical Codex or any other Pharmacopoeia authorised in this behalf by the Central Government after consultation with the Board." Thus, patent or proprietary medicines meant a drug which was defined in the Drugs Act and not in the Act.
The High Court rightly held that Ayurvedic medicine was not a drug at all.
The definition of drug expressly excluded them.
So the definition of patent or proprietary medicine 143 was exclusive of Ayurvedic medicinal preparations, those being excluded from the definition of drug.
The definition of patent and proprietary medicines till then did not apply to Ayurvedic preparations.
This position continued indeed till the amendment of Drugs Act by the Drugs and Cosmetics (Amendment) Act, 1964.
Several amendments were effected by that Amendment Act of 1964.
Section 33A and Chapter IV A were inserted.
Section 33A said that Chapter IV was not to apply to Ayurvedic (including Siddha) or Unani drugs.
"Save as otherwise provided in this Act, nothing contained in this Chapter shall apply to Ayurvedic (including Siddha) or Unani drugs".
Chapter IVA made.provisions relating to Ayurvedic (including Siddha) and Unani drugs.
This shows that prior to this amendment of 1964 Ayurvedic preparations were expressly not drugs under the Drugs Act.
The Drugs and Cosmetics Act in the amendment First Schedule after the amendment Act of 1964 included Ayurvedic (including Siddha) and Unani system drugs prepared under Section 3(a) which contains the definition: "Ayurvedic (including Siddha) or Unani drugs includes all medicines intended for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings and animals, mentioned and process and manufac ture exclusively in accordance with the formula prescribed in the authoritative book on Ayurvedic (Siddha) Unani system of medicines specified in the first schedule.
" This defini tion was also inserted by Drugs and Cosmetics (Amendment) Act, 1964 (13 of 1964) Section 2(a)(i) with effect from 15.9.1964.
The same exclusion remained in the related Central Acts.
For example, the Drugs Control Act, 1950 (Act 26 of 1950) replaced the Drugs Control Ordinance, 1949 (6 of 1949) which was promulgated on 3.10.
1949 in order to ensure that cer tain essential imported drugs and medicines were sold in the reasonable price in the Chief Commissioner 's provinces.
Similar ordinances were issued by all the provinces.
The necessity for continuing price control of these essential drugs continued.
That was an Act to provide for the control of sale, supply and distribution of drugs.
Drug meant any drug as defined in clause (b) of Section 3 of Drugs Act, 1940, in respect of which a declaration had been made under Section 3 which defined drug.
It may be noted that Pharmaco poeia authorised for the purpose of Section 3(h) of the Drugs Act, 1940, were: The Indian Pharmacopoeia, the Pharma copoeia of the United States, the National formulary of the United States, the International Pharmacopoeia and the State Pharmacopoeia 144 of the Union of Soviet Socialist Republics, vide S.O. 701 Gazette of India, 1961, Pt.
II, section 3(ii), p. 725.
There was thus no Ayurvedic Pharmacopoeia prescribed for the purpose of that Act.
Pharmacopoeia is a book containing the list of drugs with directions for use.
The fact that no Ayurvedic Pharmacopoeia had been notified at the relevant time was because Ayurvedic preparations were not drugs for the pur pose of Drugs Act and, for that matter, of , at the relevant time.
It could be for this reason that in the original Schedule the expression medicinal and toilet preparations 'not otherwise specified ' was used and Ayurvedic prepara tions of different categories were put under item 2.
In the Schedule as amended by the 1962 Act, this expression contin ued in item 3, The same definition of 'drug ' also continued in the Drugs Act.
From the Explanation I of the Schedule of the Act as substituted by Act 5 of 1964 also it is clear that patent or proprietary medicine means any medicinal preparation which is not specified in a monograph in a Pharmacopoeia, Formu lary or other publications notified in this behalf by the Central Government in the Official Gazette.
To be a patent medicine one would be required to have a patent.
A patented article means an article in respect of which a patent is in force.
"Patent" means a patent granted under the Indian Patent and , and now the Patent Act, 1970.
A patent medicine will, therefore, mean medicine in respect of which a patent is in force.
"Proprie tary" means of a proprietor, that is, holding proprietary rights.
Patent means a grant of some privilege, property, or authority, made by the Government or sovereign of a country to one or more individuals.
A proprietor is one who has the legal right or exclusive title to anything.
It is synonymous with owner.
A person entitled to a trade mark or a design under the acts for the registration or patenting of trade mark or design is called a proprietor of the trade mark or design.
Under the , "trade mark" means: "(i) in relation to Chapter X (other than section 81), a registered trade mark or a mark used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark; and (ii) in relation to the other provisions of this Act, a mark used or proposed to be used in relation to goods for the 145 purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right, either as proprietor or as registered user, to use the mark whether with or without any indica tion of the identity of that person, and includes a certification trade mark registered as such under the provisions of Chap.
" As defined in section 2(a), registered proprietor in relation to a trade mark means a person for a time being entered in the register as proprietor of the trade mark.
A registered trade mark means a trade mark which is actually on the register.
By section 18 of the Finance (No. , the Schedule to the Act was further amended substituting the Explanation 1 by the following: "Explanation 1: "Patent or proprietary medi cines" means any medicinal preparation which bears either on itself or on its container or both a name which is not specified in a mono graph in a Pharmacopoeia, Formulary or other Publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the Trade and Merchandise Mark Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used m relation to that medicinal preparation for the purpose of indicating or so as to indicate a connection in the course of trade between as preparation and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person.
" This amendment of the Explanation came into force in June, 1962 with retrospective effect from 23rd April, 1962.
The Director of Prohibition and Excise, for Maharashtra State, Bombay, thereafter issued the circular dated 31.5.
1962 (Ext. 44).
It said that the patent or proprietary medicines as defined in clause (d) of section 3 of the Drugs Act of 1940 (23 of 1940) and falling under items No. 1 and No. 4 of the Act as substituted by the Amendment Act, 1961 were, prior to 23rd April, 1962, subject to levy of duty at 10 per cent ad 146 valorem by virtue of the Explanation I below the Schedule to the Act which has now been deleted from 23rd April, 1962.
According to new definition of 'Patent and Proprietary Medicines ' as given in the new Explanation as amended by Finance (No. medicinal preparations containing alcohol, opium, Indian hemp or other narcotic drugs or narcotic falling under item 3(i), 3(iii) and 3(v) of the said Schedule, were with effect from 23rd April, 1962 liable to duty not under the said items but under item No. 1 or item No. 4 of the said Schedule at 10 per cent ad valorem, if such preparations are "patent or proprietary medicines" as defined in the Explanation.
Excise duty on all 'patent or proprietary medicinal preparations ' (Alopathic, Ayurvedic, Unani and Homoeopathic preparations) containing alcohol, opium, Indian hemp or other narcotic drug or narcotic, which fall within the purview of the new definition of 'patent or proprietary medicines ' given in the Explanation, should therefore, be recovered at the rate of 10 per cent ad valo rem from the holders of the licences granted under the said Act and the rules thereunder in accordance with the instruc tions contained in their Circular No. DQ 64 31/61 dated 22nd July, 1961.
A note received from the Government of India, explaining the scope of the new definition of 'patent or proprietary medicines ' was also enclosed along with the circular.
It is in evidence in the instant case that two bottles containing Asavas were produced in the Court as Exhibit 42/1 and Exhibit 42/2.
Both the bottles contained the same kind of Asavas.
The ingredients of the two were the same and the preparation of the two was also the same.
When the Asavas were sold during the period beginning from June, 1962 to February, 1964, no excise duty was levied because on the label there was no trade mark of patent and proprietary right printed.
If the Asavas were sold in the bottle having a label with no trade mark as at Exhibit 42/1, no duty was recovered from the plaintiff.
These Asavas were supplied to Employees ' State Insurance as per their tender without the trade mark on the label to see that the plaintiffcompany were not taxed the excise duty which would have been charged had they put the patent mark on the label.
But in order to fight for blemish of cheating, the plaintiff thought it necessary to have the trade mark on such bottles without any difference.
As soon as the goods were sought to be sold in the above manner the excise duty was levied and was sought to be recovered from the plaintiff 's fund.
No excise duty was recovered after February, 1964 even though Asavas were sold with their trade mark.
It is also in evidence that there were two sub groups in the group of Asavas and Aris thas known as 'restricted ' and 'unrestricted '.
Restricted means preparations which 147 could be used as alcoholic beverages.
In this case the period from 26.7.62 to 29.2.64 is alone material inasmuch as by the Finance Act of 1964 with reference to item No. 1, the Ayurvedic and Unani medicines containing self generated alcohol and which were not capable of being consumed as ordinary alcoholic beverages were exempted from the levy of excise duty.
In other words, the position prior to Finance Act of 1962 was continued and thereafter the medicinal preparations, namely, Asavas and Aristhas ceased to be taxed from 1964.
It would be noted that the Explanation itself did not specifically mention "Allopathic, Ayurvedic, Unani and Homoeopathic preparations" as was done in the Director 's Circular.
On a comparison of the earlier Explanation and the substituted Explanation one would notice that earlier "patent and proprietary medicines" meant a drug.
In the substituted Explanation it means any medicinal preparation.
However, it can not be lost sight of that the words "medici nal preparation" as continued to be defined in section 2(g) of the Act "includes all drugs which are a remedy or prescrip tion prepared for internal or external use of human beings or animals and all substances intended to be used for or in treatment, mitigation or prevention of diseases in human beings or animals.
" We have already noticed that the Drugs Act continued to exclude Ayurvedic preparations till its amendment in 1964.
It has been stated that even after amend ment of the Schedule after 1961 amendment the appellant 's product was exempted from duty, till the Director 's Circular disturbed the position.
This brings us to the question of interpretation of the Act and the Schedule with the Explanation.
in view of the submission that the Explanation could not have rendered item 3(i) of the Schedule redundant.
Was there any change of intention of the Legislature in this regard? A Schedule in an Act of Parliament is a mere question of drafting.
It is the legislative intent that is material.
An Explanation to the Schedule amounts to an Explanation in the Act itself.
As we read in Halsbury 's Laws of England, Third Edition, Vol. 36, para 551: "To simplify the presentation of statutes, it is the practice for their subject matter to be divided, where appropriate, between sections and schedules, the former setting out matters of principle, and introducing the latter, and the latter containing all matters of detail.
This is purely a matter of arrangement, and a schedule is as much a part of the statute, and as much an enactment, as is the section by which it is introduced.
" The schedule may be used in construing provisions in the 148 body of the Act.
It is as much an act of Legislature as the Act itself and it must be read together with the Act for all purposes of construction.
Expressions in the Schedule cannot control or prevail against the express enactment and in case of any inconsistency between the schedule and the enactment the enactment is to prevail and if any part of the schedule cannot be made to correspond it must yield to the Act.
Lord Sterndale, in Inland Revenue Commissioners vs Gittus, said: "It seems to me there are two principles of rules of interpretation which ought to be applied to the combination of Act and Sched ule.
If the Act says that the Schedule is to be used for a certain purpose and the heading of the part of the Schedule in question shows that it is prima facie at any rate devoted to that purpose, then you must read the Act and the Schedule as though the Schedule were operating for the purpose, and if you can satisfy the language of the section without extending it beyond that purpose you ought to do it.
But if in spite of that you find in the language of the Schedule words and terms that go clearly outside that purpose, then you must give effect to them and you must not consider them as limited by the heading of that part of the Schedule or by the purpose mentioned in the Act for which the Schedule is prima facie to be used.
You cannot refuse to give effect to clear words simply because prima facie they seem to be limited by the heading of the Schedule and the definition of the purpose of the Schedule contained in the Act.
" The above observation was not disapproved in appeal However, the basic principle is that in case of a conflict between the body of the Act and the Schedule, the former prevails.
In the instant case we do not find any such conflict.
An Explanation, as was found in Bihta Marketing Union vs Bank of Bihar, ; , may only explain and may not expand or add to the scope of the original section.
In State of Bombay vs United Motors, ; ,it was found that an Explana tion could introduce, a finction or settle a matter of controversy.
Explanation may not be made to operate as "exception" or "proviso".
The construction of an Explana tion, as was held in Collector of Customs vs G. Dass & Co., AIR 1966 SC 1577, must depend upon its terms and no theory of its purpose can be entertained 149 unless it is to be inferred from the language used.
It was said in Burmah Shell Oil Ltd. vs Commercial Tax Officer, AIR 1961 SC 3 15: , that the explanation was meant to explain the Article and must be interpreted accord ing to its own tenor and it was an error to explain the Explanation with the aid of the Article to which it was annexed.
We have to remember what was held in Dattatraya Govind Mahajan vs State of Maharashtra, ; (928): ; , that mere description of a certain provision, such as "Explanation" is not decisive of its true meaning.
It is true that the orthodox function of an expla nation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it, but ultimately it is the intention of the legislature which is paramount and mere use of a label cannot control or deflect such intention.
State of Bombay vs United Motors, (supra) laid down that the inter pretation must obviously depend upon the words used therein, but this must be borne in mind that when the provision is capable of two interpretations, that should be adopted which fits the description.
An explanation is different in nature from a proviso for a proviso excepts, excludes or restricts while an explanation explains or clarifies.
Such explanation or clarification may be in respect of matters whose meaning is implicit and not explicit in the main section itself.
In Hiralal Ratanlal vs State of U.P., ; (225), it was ruled that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Expla nation.
In all these matters courts have to find out the true intention of the Legislature.
In D.G. Mahajan vs State of Maharashtra, (supra) xx this Court said that legislature has different ways of expressing itself and in the last analysis the words used alone are repository of legislative intent and that if necessary an Explanation must be con strued according to its plain language and 'not on any a priori consideration '.
Applying the above principles we do not find any differ ence between the Schedule and the Explanation I; the latter has not amended the Schedule by either deleting item 3(i) or by adding or including Ayurvedic preparations in item 1.
No change of legislative intent is indicated.
In the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 Section C Medicinal and Toilet preparations, Allopathic preparations, Homoeopathic preparations and Ayurvedic preparations are dealt with separately.
So far as Ayurvedic preparations are concerned, 150 Rule 64 dealing with types of preparations said: "Asavas and Aristhas are the principal types of Ayurvedic preparations in which alcoholic content is self generated and not added as such.
" Rule 65 on Pharmacopoeia for Ayurvedic prepara tions said: "Until a standard Ayurvedic pharmacopoeia has been evolved by the Central Government, the pharmacopoeias that are in vogue in the various States shall be recognised as standard Ayurvedic pharmacopoeias." Rule 66 classified the preparations containing self generated alcohol for purposes of levy of duty.
It said: "No duty shall be levied on Ayurvedic preparations containing self generated alcohol in which the alcohol content does not exceed 2 per cent.
Where the percentage of proof spirit is in excess of 2 per cent, duty will be leviable under item 2(ii) or 2(i) of the Schedule to Act the according as the preparations are capa ble of being consumed as ordinary alcoholic beverage or not." Thus Ayurvedic preparations containing self generated alcohol which are not capable of being used as alcoholic beverages fall under original 2(i) and now 3(i).
The above Rules, which have not been shown to have been amended clearly say that where the percentage of proof spirit is in excess of 2% the preparation would be dutiable under item 2 which became item No. 3 in the amended Sched ule.
This Rule is consistent with the Schedule but is wholly inconsistent with the Director 's circular.
Mr. Ganguli relies on ; Baidyanath Ayurved Bhawan Pvt. Ltd. vs The Excise Commis sioner of U.P., The question there was whether medicinal preparation containing tincture, spirit etc.
was dutiable.
The tincture and spirit in their turn contained alcohol.
It was contended that alcohol was not directly added but was component of the tincture or spirit.
It was, however conced ed that the preparations were medicinal preparations and that tincture was a component of that preparation and alco hol was a component of tincture.
Therefore, this Court held that it was difficult to see how it could be urged that the preparation did not contain alcohol.
All that the plain language of the provision required was that the preparation should contain alcohol.
The question whether Ayurvedic preparation was a drug to be included in the definition of medicinal preparation was not involved.
Whether self gener ated alcohol was to be treated differently was also not there.
In Mohanlal Maganlal Bhavsar vs Union of India.
it was held that before a medicinal preparation can fall under Item 151 1 of the Schedule three conditions are required to be satis fied: (A) the preparation must be a patent or proprietary medicine; (2) it must contain alcohol; and (3) it must not be capable of being consumed as an ordinary alcoholic bever age.
The fact that ointments and liniments were medicinal preparations containing alcohol in semi liquid form did not make any difference.
However it was not in dispute that the articles were medicinal preparations for the purposes of the Act and that they were patent and proprietary medicines.
In the instant case the question is whether Ayurvedic prepara tions, in view of the definition of medicinal preparations in the Act, could be regarded as drugs and could be dutiable under Item 3 and not Item 1.
In Commissioner of Sales Tax vs The Modi Sugar Mills Ltd.; , it was held that a taxing statute must be interpreted in the light of what is clearly expressed therein and nothing can be implied nor can provisions be imported into them so as to supply an assumed deficiency.
In Baidyanath Ayurved Bhawan (supra) this Court quoted the observation of Rowlatt, J. in Cape Brandy Syndi cate vs Commissioners of Inland Revenue, that "in a taxing Act one has to look at what is clearly said.
There is no room for any intendment.
There is no equity about a tax.
There is no presumption as to tax.
Nothing is to be read in, nothing is to be implied.
One can only look fairly at the language used.
" The question in the instant case, however, is whether the appellant 's product being an Ayurvedic preparation could be a drug for being included in the definition of medicinal preparation for the purpose of the Act.
This question was not raised in the above cases.
As Mr. Dholakia points out, the Circular would render item 3(i) of the Schedule wholly redundant.
It has been the consistent policy of legislature to exempt item 3(i) hither to 2(i), from duty.
The legislature has not in any way changed it.
The Explanation has not in any way altered the classification in the Schedule.
The substituted Explanation no doubt stressed on patents and trade marks.
But it has not expressly envisaged in item I, patented trade marked Ayurvedic preparations contrary to the classification in the Schedule.
Ex praecedentibus et consequentibus optima fit interpretatio.
The best interpretation is made from the context.
Injustum est nisi tota lege inspecta, de una aliqua ejus particula proposita judicare Vel respondere.
It is unjust to decide or respond as to any particular part of a law without examining the whole of the law.
Interpretare et concordare leges legibus, est optimus interpretendi modus.
To interpret and in such a way as to harmonize laws with laws, is the best mode of interpretation.
In the instant case the Director 's Circular is not in harmony with item 3(i) or with the classifi 152 cation of Ayurvedic preparations in separate item 3.
It would not be in conformity with definition of medicinal preparation ' in section 2(g) of the Act.
Jura eodern modo dislit uentur quo constitutuntur.
Laws are abrogated by the same means (authority) by which they are made.
The Director 's Circular is not shown to have been a piece of delegated legislation.
The Explanation on its tenor does not amend the Schedule.
No part of a Statute is to be taken as superfluous or redundant.
Every word in a Statute is to be given a meaning.
A construction which would leave without effect any part of the language of a statute will normally be rejected.
Every clause of a statute is to be construed with reference to the context and other clauses of the Act so as to make, as far as possible, a consistent enactment of the whole Statute.
The High Court accepted the submission that it provided a selfcontained definition of 'patent and proprietary medi cines ' for the purpose of the main Act and severed the connection between the provisions of the Drugs Act as was contemplated in earlier Explanation I, and consequently one need not look to the Drugs Act at all for its interpretation and the Schedule was thence to be interpreted as it existed along with that self containing definition in Explanation I.
In doing so, the position that "Patent and Proprietary medicines" means "any medicinal preparation" which very "Medicinal preparation" includes all drugs which are a remedy or prescription etc.
as defined in section 2(g) of the Act.
So a reference to the Drugs Act was still necessary.
No doubt this is an inclusive definition.
To enlarge its deno tation a specific provision to include Ayurvedic prepara tions containing selfgenerated alcohol which are not capable of being consumed as ordinary alcoholic beverages was neces sary.
That having not been done by the Explanation itself, it was not permissible to include it by the Circular.
The Explanation I could not have been in conflict with the provisions of the Act and the Circular could not have been in conflict with the Explanation, the Schedule, the Rules and the Act.
In the result, we set aside the judgment and decree of the High Court and restore those of the Civil Judge decree ing the suit.
We leave the parties to bear their own costs.
Y. Lal Appeal allowed.
| The appellant has filed a contempt petition against the Respondents, alleging that the directions dated 20.4.1988 of this Court, have not been complied with.
The Respondents were directed to reconsider the case of the appellant for promotion on the basis that his medical category continues to be S I from 1977, and that the medical category would be taken into account if the rules for promo tion so require; otherwise not.
It was also directed that the consideration of promotion would be completed within four weeks; (See 1988(3) SCR 646).
On behalf of the respondents, it was stated that the promotional entitlements of the petitioner had been fina lised as per the directions of the Court, after re examining the petitioner 's case for promotion within the specified time and since there was no failure to comply with the directions, no contempt had been committed.
It was also submitted that the petitioner 's medical categorisation has nothing to do with the refusal to promote him.
Disposing of the petition, HELD: 1.
The judgment of this Court did clearly proceed on the footing that the lower medical categorisation preju diced the petitioner in the matter of obtaining appropriate promotions.
For the first time, the respondents have taken the stand in the contempt proceeding that the lower categor isation has nothing to do with the refusal to accord promo tion to the petitioner.
The plea now advanced cannot there fore be accepted.
[377E F] 371 2.
The .defence services have their own peculiarities and special requirements.
The considerations which apply to other government servants in the matter of promotion cannot as a matter of course be applied to defence personnel of the petitioner 's category and rank.
Requisite experience, conse quent exposer and appropriate review are indispensable for according promotion, and the petitioner, therefore cannot be given promotions as claimed by him on the basis that his batch mates have earned such promotions.
Individual capacity and special qualities on the basis of assessment have to be found but in the case of the petitioner these are not avail able.
[377G H; 378A B] 3.1 As regards compensation, the petitioner advanced tail claims by contending that he has suffered physical and mental torture, loss of reputation and of social acceptance and financial loss.
What promotions the petitioner would otherwise have earned would be a matter of speculation and cannot be ascertained at this stage for lack of appropriate decisive criteria.
His grievance that he suffered in dignity and humiliation as a result of being looked down upon by his batch mates, friends and relatives, has perhaps been suffi ciently met by the appellate judgment which has declared that his lower medical categorisation was unjustified and the petitioner continued to be Shape I without break from 1977.
[368E G] 3.2 The defence personnel have peculiar incidence of service.
Life 's course does not run smoothly for everyone.
Some relevant factors to be considered for award of compen sation are the duration of time for which the petitioner was subjected to various medical checks and hospitalisation, and the consequent suffering which he underwent, the loss of promotional prospects and the fact that he would now be obliged to request to be released from service prematurely.
A total compensation of RS.4 lakhs would meet the ends of justice.
The petitioner would not be entitled to any other claim on these heads, but he would be entitled to all other service benefits which an officer of the Lt. Colonel 's rank would be entitled to hold.
[378G H; 379A B] Major K.D. Gupta vs Union of India, and Lt. Col. K.D. Gupta, vs Union of India, ; referred to.
This Court directed that the amount of Rs.4 lakhs be paid to the petitioner within 2 months and the petitioner may be released from the defence service in accordance with any decision that might be taken on his request for such release.
[379C D] 372
|
ivil Appeal No. 912 of 1989.
From the Judgment and Order dated 11.5.1988 of the Allahabad High Court in Misc.
W.P. No. 7886 of 1985.
Yogeshwar Prasad and Mrs. Shobha Dikshit for the Appellant.
758 Satish Chandra and Madan Lokur for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Special leave granted.
This appeal arises out of a suit filed by respondent (plaintiff) landlord in the Court of Judge, Small Causes, Gorakhpur, for eviction of the appellants (defendant) tenant from the house in question on the ground of failure to pay the rent and for realisation of arrears of rent and elec tricity charges amounting to Rs.2,560.60.
It was pleaded that the tenant was to pay a monthly rent of Rs.70 apart from Rs.3 per month as water and electricity charges and was in arrears since July, 1979 which he failed to pay.
The appellant contested the suit mainly on the ground that the rate of rent was not Rs.70 per month but it was only Rs.40 and besides that he was provided with furniture by the landlord for which he was paying Rs.30 per month.
His case further was that some time after the tenancy commenced, he returned the furniture.
The Judge, Small Causes Court, by his judgment dated 10th.
November, 1983, dismissed the suit holding that the rate of rent was Rs.40 per month and as such the appellant was not a defaulter.
The respondent filed a revision which was allowed by the Additional District Judge, Gorakhpur.
The Revisional Court held that the rate of rent was Rs.70 per month.
The appellant filed a writ petition against the revisional order before the Allahabed High Court.
The High Court allowed the writ petition, quashed the revisional order and remanded the case for deciding the revision peti tion afresh.
Thereafter, the Revisional Court again allowed the revision and set aside the judgment of the Trial Court and ordered ejectment.
The appellant again challenged the revisional order by way of a writ petition before the Alla habad High Court but the same was dismissed.
Hence this appeal.
The Trial Court primarily relied upon documents 39/C and 40/C produced by the defendants.
Document 39/C is a receipt by the plaintiff wherein details of Rs.73 are given.
It is clearly mentioned in the receipt that Rs.40 were towards house rent, Rs.30 towards furniture charges and Rs.3 water and electricity charges.
The plaintiff admitted the contents of receipt 39/C but he explained that Rs.30 towards furni ture charges were mentioned at the request of the defendant.
The plaintiff strongly relied upon the rent note 97/C where in monthly rent of the house was mentioned at Rs.70.
The Trial Court rejected the rent 759 note on the ground that the same was not signed by the defendant.
Basing its findings on the receipt 39/C, the Trial Court dismissed the suit.
The Revisional Court, on the other hand, found force in the contention of the plaintiff that the rent note 97/C was signed by the defendant.
It was held that the admission, if any, of the plaintiff in receipt 391C is contradicted by the rent note 97/C and as such cannot be taken into consideration.
The Revisional Court thus differed from the Trial Court and ordered ejectment.
Before us, the counsel for the appellant Shri Prasad contends that in the face of clear admission of the respond ent in the receipt 39/C the rent of the house was Rs.40 per month.
He further contents that the rent note, even if taken into consideration, has been explained by the receipts 39]C and 40/C.
According to him Rs.70 per month mentioned in the rent note has been explained in the receipts to be Rs.40 as house rent and Rs.30 for the furniture.
We find force in the contention of the learned counsel.
In the face of clear admission by the respondent in the two receipts the finding of the Revisional Court to the effect that the monthly rent was Rs.70 is erroneous.
Faced with this situation Shri Satish Chandra, learned counsel for the respondent invited our attention to Section 3(i) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (here inafter called 'the Act ') and contends that the tenancy was for a furnished building and as such failure to pay even Rs.30 in respect of furniture would attract the provisions of Section 20(2)(a) of the Act and the appellant is liable to be ejected.
Section 3(i) and Section 20(2)(a) of the Act are as under: "Section 3(i)"building", means a residential or nonresidential roofed structure and in cludes (i) any land (including any garden), garages and outhouses, appurtenant to such building; (ii) any furniture supplied by the landlord for use in such building; (iii) any fittings and fixtures affixed to such building for the more beneficial enjoyment thereof.
"Section 20(2)(a).
"that the tenant is in arrears of rent for not less than four months, and has failed to pay the same to the landlord within one month from the date of service upon him of a notice of demand." 760 Shri Satish Chandra contends that definition of building under Section 3(i) includes any furniture supplied by the landlord for use in such building and as such non payment of part of the rent meant for furniture would amount to arrears of rent and the appellant having failed to pay the same is liable to be ejected.
In other words, he contends that it was a furnished house which was let out to the appellant.
He also contends that tenancy being of a furnished house, the tenant could not under law unilaterally surrender part of the tenancy by returning the furniture.
There may be some force in the abstract proposition of law canvassed by Shri Satish Chandra on the basis of Sections 3(i) and 20(2)(a) of the Act, but there is no basis for him in the present case to advance the same.
It was never the case of the respondent at any stage that furnished house was given on rent to the appellant.
In the notice before filing the suit, and in the plaint it was specifically pleaded that rent of the house was Rs.70 per month and the tenant was in arrears.
In the written statement appellant took a clear stand that the rent of the house was only Rs.40 and Rs.30 was for furniture which, according to the appellant, he returned after the commencement of the tenancy.
The respondent filed a replica tion to the written statement of appellant.
In Clause 3 of the replication the respondent denied that either the rent was Rs.40 per month or Rs.30 was being charged for furni ture.
He stated that neither any such goods had been sup plied to the appellant by him nor the rent was agreed at Rs.40 per month.
It is thus obvious from the pleadings that at no stage the respondent pleaded that he had given furnished house on rent to the tenant.
Rather the supply of furniture was categorically denied.
In the face of clear pleadings on the record it is impermissible to raise the plea that the land lord rented a furnished house to the tenant.
It would be contrary to the pleadings.
That apart neither before the Trial Court nor before the Revisional Court and not even before the High Court this plea was raised.
Therefore, there is no force in the contention of Shri Satish Chandra and the same is rejected.
This Appeal is, therefore, allowed.
The judgments of the High Court and of the Revisional Court are set aside.
The judgment of the Trial Court is restored and the suit of respondent is dismissed.
There will be no order as to costs.
N.P.V. Appeal allowed.
| After attainment of Independence, the rulers of the erstwhile princely States of Rajasthan entered into a Cove nant with the Government of India for integrating their States into one.
Article 12 of the said Covenant provided for the private properties of the rulers of the Covenanting States, and clause (i) thereof prescribed that the ruler of each of the Covenanting States; shall be entitled to full ownership, use and enjoyment of all private properties.
The immovable properties of the rulers were divided into three categories, Category 'A ', 'B ' and 'C '.
The Maharaja of Jodhpur was one such ruler who integrat ed his State in the Union.
Category 'C ' of the Covenant listed the properties of the Maharaja as his absolute property over which he had full rights of disposal, and the property known as 'Umaid Bhavan Palace ' was included in this category.
The Maharaja who was the signatory to the Covenant died in 1952, and after his death he was succeeded by his son who was a minor at that time.
Because the successor was a minor an administrator was appointed for the purpose of adminis tration of the estate.
In 1964, the Rajasthan Legislative Assembly enacted the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963 which received the assent of the President on 6th April, 1964.
The Act was enacted to provide for the acquisi tion of the estates of land owners.
Section 7 thereof pro vided for the issuance of a Notification by the State Gov ernment appointing a date for the vesting in the State Government 849 of the estates of all land owners situated anywhere in the State.
Exercising powers under the aforesaid section, a Notification was issued on 11th August, 1964 by which the State Government appointed 1st September, 1964 as the date of vesting of all the estates of land owners.
The three petitioners in the writ petitions were parties who had purchased respective areas of land for price by registered sale deeds, two dated 4.11.71 and one dated 5.11.71 from the erstwhile ruler of Jodhpur state.
Notices under section 9A of the Act were issued on 19.11.1975 to these parties by the Collector stating that the transfers of the lands were null and void and they shall deliver possession before 28th September, 1975 or within 10 days of the receipt of the notice whichever is later to the Sub Divisional Officer.
This was followed by another notice on 8th December, 1975 by which possession of the lands were taken by affixing a notice as required by Rule 8 of the Rajasthan Land Reforms and Acquisition of Land Owners ' Estate Rules 1964.
The petitioners contended in the courts below that their land was not liable to acquisition under the Act and sought a direction that the orders and notices be quashed.
It was contended that in the definition of 'land ' as defined in section 2F, provide for properties which shall not be in cluded within the definition of 'land ' and as the property in the instant case was excluded from the definition of 'land ' the properties of the petitioners could not be ac quired under section 7 of the Land Reforms Act.
A Single Judge of the High Court on an examination of the list of Category 'C ' to the Covenant, and the material on the record came to the conclusion that the lands fell within the property included in the Schedule of private properties in Category 'C ' and therefore it being a private property included in the Inventory according to the Covenant the acquisition under the provision of the Act was bad.
It was further held that the transfer made by the ex ruler in favour of the petitioners was not bad.
The trustees of the Major Maharaja Hari Singh Benefit of Defence Service Personnel and Charitable Trust, the appel lants in one of the appeals also filed a Writ petition which came up before the High Court.
The High Court relying on its earlier decision allowed the petition and quashed the noti fication.
850 Letters Patent Appeals were filed by the State Govern ment and the Trust and the Division Bench disposed of all the appeals and came to a different conclusion than the Single Judge 's who decided the writ petitions.
The Division Bench held that the repeal of the Rajasthan Urban Property (Restrictions of Transfers) Act, 1973 by the Rajasthan Urban Property (Restrictions of Transfers) Repeal Act, 1978, the cloud that had been cast on the title of the purchases had been removed.
In the appeals to this Court, it was contended on behalf of the appellants that the Rajasthan Land Reforms and Acqui sition of Land Owners ' Estate Act, 1963 was brought into force in 1964 and that according to the definition of 'e state ', in section 2B it could refer to either land or right, title or interest in land held by a land owner, and 'land ' was defined in section 2F which was an inclusive definition, and that it first refers to land held for the purpose of agriculture and that the lands in the instant case, were not agricultural lands they do not fail within the ambit of the definition of 'land '.
It was also contended that the Division Bench could not come to a different con clusion than that which was reached by the Single Judge.
On behalf of the State, it was contended that the suit property fails within the boundary of the Umaid Bhavan Palace according to the site plan and that it could not be conclusively held that the properties were not agricultural lands.
Allowing the appeals, and setting aside the judgment passed by the Division Bench of the High Court, this Court, HELD: 1.
No action under the provisions of the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963 could be taken against the appellant and all notices or actions taken are thus quashed.
[864F G] 2.
It is clear that the lands in the instant case will not fall within the definition of 'land ' as described in sec.
2(g) and therefore it could not vest in the State not it would be acquired under the provisions of the Act and in that event these appellants are entitled to hold their lands and the question whether the lands are agricultural or not is not very material.
[858D E] 3.
Section 2B clearly talks of land or right, title or interest in land held by land owner and land is defined in Section 2F.
It is therefore 851 clear that if this property did not fail within the ambit of the definition of 'land ' it could not be said to be 'estate ' under Section 2B and therefore could not vest in the State under Section 7.
[861F] 4.
The lands were within the boundaries of the Umaid Bhavan Palace which is the private property in accordance with the inventory prepared and approved by Government of India, and therefore will not fail within the ambit of the definition of 'land ' as defined in Section 2F and thus will not fail within the ambit of the 'estate ' which could vest under the provisions of this Section.
[863D] 5.
Section 3(2) of the Rajasthan Urban Property (Re strictions of Transfers) Act, 1973 was enacted keeping in view the Rajasthan Urban Property Ceiling Act.
Section 3(2) did not provide that the transfer will be invalid but it only provided that in spite of the transfer the property will be deemed to be owned by such person thereby meaning the transferor so that when the Ceiling Act is brought into force the transferor may not take advantage of the transfer to defeat the provisions of the Ceiling Act.
[859C] 6.
In fact, after the Ceiling Act was brought into force a prohibition was again imposed on the transfer and admit tedly the transfers in the instant case are not after the Rajasthan Urban Property Ceiling Act 1972 which provided by section 5 that the transfers made after the commencement of the Act was null and void.
It could not, therefore, be said that the transfers in the instant case after August 16, 1971 were void.
[859G] (C.A. No. 1145/87 Naveen Grah Nirman Sahkari Samiti Ltd. vs State of Rajasthan was permitted to be withdrawn, as the appellants had chosen to come to this Court when in fact they were not parties in the judgment before the High Court.).
[864G H]
|
Civil Appeal Nos.4353 54 of 1983 etc.
From the Judgment and Order dated 7.3.1983 of the Orissa High Court in O.J.C. No. 1517 of 1978.
A.K. Ganguli, G. Ramaswamy, T.S. Krishnamurthy Iyer, Dr. 114 L.M. Singhvi, Shanti Bhushan, P. Chidambram, R.B. Datar, T.V. S.K. Iyer, V.A. Bobde B.Sen, M.S. Gujral, R.F. Narinan, P.H. Parekh Ms. Shalini, Soni, K.K. Lahiri, J.B.Dadachanji, S.Sukumaran, P.N.Gupta, R.K. Mehta, A.K.Panda, Sakes Kumar, Ashok Singh, Satish Agnihotri, D. Goburdhan, D.N. Mishra, Shri Narain, Abhey Sapra, Sandep Narain, Mrs. Kirti Misra, Harish N.Salve, S.R. Grover, K.J.John, M.P. Sharma, Ms. Deepa Dixit, Sanjay Parekh, Praveen Kumar, Darshan Singh, K.V. Srekumar, T.G.N.Nair, B.R.Agrawal, S.K. Bagga, Mrs. S.K.Bagga, Rameshwar Nath and A.M. Dittia for the appearing parties.
The Judgment of the Court was delivered by RANGANATHAN, J.
These are connected batches of Civil Appeals and Special Leave Petitions.
We grant special leave to appeal in all the petitions (condoning the delay in the filing of the unnumbered one referred to below) and proceed to dispose of all the appeals by this common judgment.
The details of the appeals and petition are, for sake of convenient reference, tabulated below: High Court Date of Civil Appeal/ Name of Judgment SLP Nos.
Appellant 1.
Orissa 17.4.1980 C.A.2053 2080/80 Tata Iron & Steel Co. Ltd. 7.3.1983 C.A.4353 4354/83 Orissa Cement Ltd. 22.12.1989 S.L.P. 1479/90 State of Orissa 22.12.1989 S.L.P. /90 Orient Paper & Industries Ltd. & Anr.
13.7.1990 S.L.P.11939/90 do 2.
Bihar 10.2.1986 C.A. 592/86 Tata Iron & Steel Co. Ltd. 3.
Madhya 28.3.1986 C.A. 1641 1662/86 State of M.P. Pradesh We shall discuss later the manner in which these appeals and petitions have arisen.
115 THE ISSUE The validity of the levy of a "cess", based on the royalty derived from mining lands, by the States of Bihar, Orissa and Madhya Pradesh is challenged in these petitions and appeals.
A seven Judge Bench of this Court in India Cement, struck down a similar levy under a Tamil Nadu Act as beyond the legislative competence of the State Legislature.
The assessees, in the matters now before us, claim that the issue here is directly and squarely governed by the above decision.
The State, on the other hand, claim that the nature and character of the levies imposed by them is totally different from that of the Tamil Nadu levy and that they are entirely within the scope of the States ' Legislative powers under the Constitution.
This is the issue to be decided in these matters.
As the impugned enactments of Bihar, Orissa and Madhya Pradesh mutually differ from one another in some respects, they will need separate consideration.
However, the basic issue being the same, all these matters have been heard together and it is found convenient to dispose of them all by this common judgment.
We may mention in passing that, initially, these matters were listed before a Bench of two Judges of this court.
It referred the matters on 17.8.1990 to the learned Chief Justice for the constitution of a larger Bench.
The matters have come up before us in pursuance of the directions of the Hon 'ble Chief Justice.
THE LEGISLATIVE ENTRIES It will be convenient, at the outset, to refer to the various entries of the Union and the State Lists in the Seventh Schedule to the constitution which have a bearing on the issues to be discussed.
These are: List I (Union List) Entry 52: Industries, the control of which by the Union declared by Parliament by law to be expedient in the public interest.
Entry 54: Regulation of mines and mineral development to the extent to which such regulation and development under the control of Union is declared by Parliament by law to be expedient in the public interest.
116 List II (State List) Entry 18: Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; improvement and agricultural land; colonization.
Entry 23: Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union.
Entry 45: Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues.
Entry 49: Taxes on lands and buildings.
Entry 50: Taxes on mineral rights subject to nay limitations imposed by Parliament by law relating to mineral development.
Entry 66: Fees in respect of any of the matters in this List, but not including fees taken in any court.
EARLIER HISTORY Before proceeding to consider the provisions of the enactments impugned, and the issues debated, before us, it is necessary to set out certain earlier controversies that led to India Cement.
Hingir Rampur Case As early as in 1960, this Court had to consider the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952 (Orissa Act XXVII of 1952).
section 3 of the Act empowered the State Government to constitute mining areas whenever it appeared to the Government that it was necessary and expedient to provide amenities 117 life communications, water supply and electricity for the better development of such areas or to provide for the welfare of the residents or workers in areas within which persons employed in a mine or a group of mines reside or work.
S.4 empowered the State Government to impose and collect a cess or fee on the minerals extracted the rate of which was not to exceed 5% of the valuation of the minerals at the pit 'smouth.
S.5 provided for the constitution of the Orissa Mining Areas Development Fund.
The proceeds of the cess recovered in pursuance of S.4 along with other subsidies from Government, local authorities and other public subscriptions were credited to the fund and the expenses for such collection debited thereto.
The fund has to be utilised to meet expenditure incurred in connection with such development measures as the State Government might draw up for the purposes above mentioned as well as for the purposes specified in clauses (a) to (e) of S.5(5).
The validity of this levy of cess was challenged by the petitioner coal company in the Hingir Rampur case as ultra vires the powers of the State Legislature because (a) the cess was not a fee but a duty of excise on coal which was a field covered by Entry 84 of List I in the Seventh Schedule and repugnant to the Local Mines Labour Welfare Fund Act, 1947 (Central Act XXXII of 1947); and (b) even if it was treated as a fee relatable to Entries 23 and 66 of List II in the Seventh Schedule, it was hit by Entry 54 of List I read with the Mines and Minerals (Development & Regulation) Act, (Central Act LIII of 1948) (`the MMRD Act ' for short) or by Entry 52 of List I read with the Industries (Development and Regulation) Act (`the IDR Act ' for short), 1951 (Central ACt LXV of 1951).
The first of the above arguments was based on the fact that the cess was fixed at a percentage of the valuation of the mineral concerned at pit 's mouth.
This argument was based on two considerations.
The first related to the form and the second to the extent of the levy.
Repelling the argument, it was held that the extent of levy of a fee would always depend upon the nature of the services intended to be rendered and the financial obligations incurred thereby and cannot by itself alter the character of the levy from a fee into the of a duty of excise except where the correlation between the levy and services is not genuine or real or where the levy is disproportionately higher than the requirements of the services intended to be rendered.
So far as the first consideration was concerned, it was observed that the method in which the fee is recovered is a matter of convenience and by itself it cannot fix upon the levy the character of a duty of excise.
Though the method in which an impost is levied may be relevant in determining its character its significance and effect cannot be exaggerated.
The court, therefore, came to the conclusion that the cess levied by the impugned act was 118 neither a tax nor a duty of excise but a fee.
The second argument turned on the impact of the MMRD Act on the State 's power to levy a fee under Entry 66 read with Entry 23 of List II as a consequence of the declaration contained in S.2 of the Central Act.
The Court agreed that a declaration by Parliament in terms of Entry 54 of List I operated as a limitation on the legislative competence of the State Legislature itself and observed: "if Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to the extent of such declaration the jurisdiction of the State Legislature is excluded.
In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act, the impugned Act would be ultra vires not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law." (underlining ours) However, the answer to the argument was easily found by the Court inasmuch as the declaration on the terms of Entry 54 of List I relied on for the coal company was founded on Act LIII of 1948 which was an Act of the Dominion Legislature and not an Act of Parliament.
However, the Court did not stop here.
It proceeded to review the provisions of Central ACt LIII of 1948 and concluded that, if this Act were held to contain the declaration referred to in Entry 23, there would be no difficulty in holding that the declaration covered the field of conservation and development of minerals, and that the said field was indistinguishable from the field covered by the impugned Act.
In coming to this conclusion the Court pointed out that the rule making powers conferred on the Central Government under Section 6(2) of the Act included the levy and collection of royalties, fees and taxes in respect of minerals, mines, quarried excavated or collected.
The circumstance that no rules had in fact been framed by the Central Government in regard to the levy and collection of any fees, it was held, would not make any difference, The Court observed: "What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the con 119 trol of the Union, and Entry 54 in List I requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest.
Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to the State Legislature to pass an Act in respect of the subject matter covered by the said declaration.
In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union.
In such a case the test must be whether the legislative declaration covers the field or not.
Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948.
" The Court then considered the argument based on Entry 52 of List I and the provisions of the IDR Act but came to the conclusion that the vires of the impugned Act could not be successfully challenged on this ground.
Wanchoo J., delivered a separate dissenting judgment.
He held that the levy was not a fee or a land cess but a duty of excise.
He pointed out (at p 579 80) how taxes could be turned into fees on the so called basis of quantification with the help of the device of creating a fund and attaching certain services to be rendered out of monies in the fund.
In this view, he did not consider the question how far the Central Acts of 1948 and 1951 impaired the State 's competence to levy the fees in question.
He negatived the State 's attempt to bring the levy in question (treating it as a tax) within the scope of Entry 50 of List II.
He was of opinion that the expressions "taxes on mineral rights" referred to taxes on the right to extract minerals and not taxes on the minerals actually extracted.
He held that the cess in the present case was not a tax on mineral rights but a tax on the minerals actually produced.
It was no different in pith and substance from a a tax on goods produced which comes under Item 84 of List I as duty of excise.
Tulloch case ; The same issue regarding the competence of the Orissa State Legislature to levy the very same cess came up for consideration again 120 in the Tulloch case.
The scenario had changed because the levy now challenged was in respect of the period July 1957 to March, 1958 by which time the MMRD Act, 1957 (Central Act (Central Act LIII of 1948).
The 1948 Act, which had earlier provided for the regulation of mines and oil fields and for the development of minerals, was now limited only to oil fields and the 1957 Act provided for the regulation of mines and mineral development.
S.2 of the 1957 Act, like the predecessor 1948 Act, contained the following declaration in terms of Entry 54 of List I.
It read: "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided".
but unlike the earlier one this was a declaration contained in an Act of Parliament which had the effect of impairing the legislative competence of the State under Entry 23 read with Entry 66 of the State List.
The hurdle which prevented the Supreme Court from considering the provisions of the 1948 Act as a bar to the levy of the cess was therefore out of the way.
The Court analysed in detail the provisions of the impugned State Act as well as the two Central Acts.
It referred to its conclusion in the Hingir Rampur case that the field covered by the impugned State Act was covered by the 1948 Act and observed that this fully applied to the State Act vis a vis the 1957 Act also, particularly as Ss.
18(1) and (2) of the 1957 Act were wider in scope and amplitude and conferred larger powers on the Central Government than the corresponding provisions of the 1948 Act.
Counsel for the State attempted to distinguish the ambit of the 1957 Act from that of the 1948 Act.
But the Court pointed out that the argument could not prevail.
section 13 of the 1957 Act contained an express provision for the levy of a fee.
section 25 though not as categorically as section 6 of the 1948 Act clearly implied a power to levy "rent, royalty, tax, fee and other sums" a nd, besides, section 18 of the Central Act of 1957 were wider in scope and amplitude and conferred larger powers on the Central Government than the corresponding provisions of the Act of 1948.
It was reiterated, referring to Hingir Rampur and distinguishing Ch.
Tika Ramji & Ors.
vs The State of Uttar Pradesh & Ors., ; that it was incorrect to think that, until rules were made under section 13 or steps taken under S.25 to collect fees etc., the Central Act would not cover the field.
The Court observed, further: 121 "But even if the matter was res integra the argument cannot be accepted.
Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of one legislature has superiority over the other then to the extent of the repugnancy the one supersedes the other.
But two enactments may be repugnant to each other even though obedience to each of them is possible without disobeying the other.
The test of two legislations containing contradictory, for if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactments of the other legislature whether passed before or after would be overborne on the ground of repugnance.
Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of the two statutes but by the mere existence of the two pieces of legislation.
In the present case, having regard to the terms of section 18(1) it appears clear to us that the intention of Parliament was to cover the entire field and thus to leave no scope for the argument that until rules were framed, there was no inconsistency and no supersession of the State Act".
Meeting the argument that the power to levy a fee was an independent head of legislative power under each of the three legislative lists and that the levy of tax undue the State Act could be traced to this entry, the Court pointed out the fallacy underlying the argument in the following words: "The materials words of the Entries are: "Fees in respect of any of the matters in this List".
It is, therefore, a prerequisite for the valid imposition of a fee that it is in respect of a "matter in the list".
If by reason of the declaration by Parliament the entire subject matter of "conservation and development of minerals" has been taken over, for being dealt with by Parliament, thus depriving the State of the power which it theretofore possessed, it would follow that the "matter" in the State List is, to the extent of the declaration, subtracted from the scope and ambit of Entry 23 of the State List.
There would, therefore, after the Central Act of 1957, be "no matter in the List" to which the fee 122 could be related in order to render it valid.
" The result was that Tulloch declared the levy of the cess to be invalid and it was held that, as and from 1.6.1958, the date on which the 1957 Act came into force, the Orissa Act should be deemed to be non existent for every purpose.
Murthy case We now come to the third important case on the topic, Murthy vs Collector of Chittoor, which seems to strike a somewhat different note although in both Tulloch and Murthy the judgments were delivered within a few month of each other by Rajagopala Ayyangar J. on behalf of 5 Judge Benches which were constituted differently.
The erstwhile Province of Madras (later State of Tamil Nadu) had been levying, since long, a cess on land revenue under the Madras District Boards Act (Madras Act XIV) of 1920.
Under S.78 of the Act, a cess was levied on the annual rent value of all occupied lands on whatever tenure held.
It was a tax at two annas in the rupee of the annual rent value of all lands ins the district.
The annual rent value of the land was to be calculated in the manner prescribed in S.79 of the Act.
The appellant held certain lands under a mining lease (for extraction of iron ore) from the Government which stipulated for the payment of a stipulated amount of dead rent, a royalty on the basis of every ton of ore mined as well as a surface rent per acre of the surface area occupied or used.
In the case of such lands, S.79(i) provided that "the lease amount, royalty or other sum payable to the Government for the lands" shall be taken to be the such lands, annual rent value.
The appellant was, therefore, called upon to pay a cess based on the royalty paid by him to the State Government (of Andhra Pradesh, which had succeeded to the State of Madras in respect of the territories in question) and it was the validity of this levy which was upheld by the High Court that came up for the consideration of this Court.
It was contended, on behalf of the appellant, relying on Hingir Rampur and Tulloch, that the provision imposing land cess quoad royalty must be held to be repealed by MMRD Act of 1948 or, in any event, by the MMRD Act, 1957 (Central Act LXVII of 1957) and that, after the date when these enactments came into force, the land cess that could be levied must be exclusive of royalty under a mining lease.
Distinguishing the decisions cited, this Court rejected the contention.
It observed: 123 "It will be seen that there is no resemblance, whatever, between the provision of the Orissa Act considered in the two decisions and the provision for the levy of the land cess under sections 78 and 79 of the Act with which we are concerned.
Sections 78 and 79 have nothing to do and are not concerned with the development of mines and minerals or their regulation.
The proceeds of the land cess are, under s.92 of the Act, to be credited to the District fund, into which, under the terms of the Finance Rules in section V to the Act, the land cess as well as several other taxes, fees and receipts are directed to be credited.
This fund is to be used under Ch.
VII of the Act with which s.112 starts "for everything necessary for or conducive to the safety, health, convenience or education of the inhabitants or the amenities of the local area concerned and everything incidental to the administration" and include in particular the several matters which are mentioned in those sections.
It will thus be seen that there is no connection between the regulation and development of mines and collection of land cess for which provision is made by ss.78 and 79 of the Act.
There is therefore no scope at all for the argument that there is anything in common between the Act and the Central Acts of 1948 and 1957 so as to require any detailed examination of these enactments for discovering whether there is any over lapping" A second contention raised before the Court was that, as the impugned land cess was payable only in the event of the lessee winning the mineral and not when no minerals were extracted, it was in effect a tax on the minerals won and, therefore, on mineral rights.
Rejecting this contention, the Court observed: "We are unable to accept this argument.
When a question arises as to the precise head of legislative power under which a taxing statue has been passed, the subject for enquiry is what in truth and substance is the nature of the tax.
No doubt, in a sense, but in a very remote sense, it has relationship to mining as also to the mineral won from the mine under a contract by which royally is payable on the quantity of mineral extracted.
But that does not stamp it as a tax on either the extraction of the mineral or on the mineral right.
It is unnecessary for the purpose of this case 124 to examine the question as to what exactly is a tax on mineral rights seeing that such a tax is not leviable by Parliament but only by the State and the sole limitation on the State 's power to levy the tax is that it must not interfere with a law made by Parliament as regards mineral development.
Our attention was not invited to the provision of any such law enacted by Parliament.
In the context of ss.78 and 79 and the scheme of those provisions it is clear that the land cess is in truth a "tax on land" within Entry 49 of the State List".
(emphasis added) The Court proceeded to explain why the land cess before it was nothing else except a land tax falling within Entry 49.
"Under section 78 of the Act the cess is levied on occupied land on whatever tenure held.
The basis of the levy is the "annual rent value" i.e., the value of the beneficial enjoyment of the property.
This being the basis of the Tax and disclosing its true nature, s.79 provides for the manner in which the "annual rent value" is determined i.e., what is the amount for which the land could reasonably be let, the benefit to the lessor representing the rateable value "or the annual rent value".
In the case of ryotwari lands it is the assessment which is payable to the Government that is taken as the rental value being the benefit that accrues to the Government.
Where the land is held under lease it is the lease amount that forms the basis.
Where land is held under a mining lease, that which the occupier is willing to pay is accordingly treated as the "annual rent value" of the property.
Such a rent value would, therefore, necessarily include not merely the surface rent, but the dead rent, as well as the royalty payable by the licensee, lessee or occupier for the user of the property.
The position then is that the rent which a tenant might be expected to pay for the property is, in the case of lease hold interests, treated as the statutory "annual rent value".
It is therefore not possible to accept the contention, that the fact that the lessee or licensee pays a royalty on the mineral won, which extended only to the mere use of the surface land, places it in a category different from other types where the lessee uses the surface of the land alone.
In each case the rent 125 which a lessee or licensee actually pays for the land being the test, it is manifest that the land cess is nothing else except a land tax.
" The judgment of the Supreme Court in the Murthy case (supra) held the field from 1964 to 1990.
Murthy followed: The above type of levy was not peculiar to the State of Tamil Nadu.
In fact, a cess on royalty was bound to be very remunerative to States having a wealth of mineral resources.
We are informed that similar cess is being levied in several States.
We have already referred to the cess levied in Orissa which came to be considered by this Court as early as 1961 and 1964 in the Hingir Rampur and Tulloch cases.
Further cases came up for consideration, on the same lines; in Bihar, Associated Cement Co. Ltd. vState of Bihar, and Tata Iron & Steel Co. vs State, (C.W.J.C. 30/1978 decided on 15.5.84 , the subject matter of C.A. 592/86 before us); in Orissa, Laxmi Narayan Agarwala vs State, A.I.R. 1983 Ori.
210; in Rajasthan, Bherulal vs State, A.I.R. 1965 Raj. 161; in Punjab, Sharma vs State, A.I.R, ; in Gujarat, Saurashtra Cement & Chemical Industries Ltd. vs Union, ; and Madhya Pradesh, Hiralal Rameshwar Prasad vs State, (m.P. 410/83 decided on 28.3.1986) and M.P. Lime Manufactures ' Association vs State of M.P., A.I.R. 1989 M.P. 264 F.B. and, except for the last two cases from Madhya Pradesh, the others upheld the levy of a cess which depended on royalties, following Murthy.
India Cement case The correctness of the above line of decisions came to be tested in India Cement Ltd. vs State.
The Government of Tamil Nadu and granted a mining lease on 19.7.1963 to the appellant for extraction of limestone and kankar for a period of twenty years.
The lease deed, which was in accordance with the Mineral Concession Rules, stipulated for the payment of royalty, dead rent and surface rent and also provided that the lessee was bound to pay all Central and State Government dues except land revenue.
At the time the lease was obtained, S.115(1) of the Madras Panchayats Act.
1958 provided for the levy, in each panchayat development block, of a local cess at the rate of 45 paise on every ruupee of land revenue payable to the Government in respect of any land for every fasli.
section 115(2) provided that the 126 local cess will be deemed to be public revenue and all the lands and buildings thereon shall be regarded as security therefore.
S 115(3) and (4) set out the various purposes for which the cess levied and collected under section 115 could be utilised.
S116 provided for the levy of a local cess surcharge.
The maximum amount of such surcharge was originally left to be prescribed by the Government and was in 1970 limited to Rs.1.50 on every rupee of land revenue and in 1972 to Rs.2.50 on every rupee of land revenue.
Apparently inspired by the decision in Murthy, the Tamil Nadu Panchayats (Amendment and Miscellaneous Provisions) Act (Tamil Nadu Act 18 of 1964) added, with full retrospective effect, the following Explanation to S.115(1): "Explanation: In this section and in Section 116, `land revenue ' means public revenue due on land and includes water cess payable to the government for water supplied or used for the irrigation of land, royalty, lease amount or other sums payable to the government in respect of land held direct from the government on lease or licence, but does not include any other cess or the surcharge payable under Section 116, provided that lands revenue remitted shall not be deemed to be land revenue payable for the purpose of this section".
The appellants ' challenge in the High Court to this levy which was consequent on the 1964 amendment was unsuccessful.
The High Court upheld it as a "tax on land" measured with reference to land revenue, royalty or lease or other amount as mentioned in the Explanation.
The challenge based on Entry 54 of List I read with Entry 23 of List II and the provisions of the MMRD Act, 1957 was also repelled, applying the decision in Murthy.
The appeal to this Court was referred to a Bench of seven Judges who came to the conclusion that Murthy dity of the levy of the cess.
It may be necessary to refer, in greater detail, to some passages in the judgment later but it will be convenient,.
for the present, to summarise the salient conclusions of the Court.
These were: 1.
The levy could not be supported under: (a) Entry 45 of List II: as it is not a tax on land revenue, an expression which has a well defined connotation.
`Land revenue ' is separate and distinct from `royalty.
The Explanation to S.115(1) itself proceeds on the basis that royalty cannot be land revenue 127 properly so called or conventionally so known.
(b) Entry 49 of List II: as it is not a tax on land.
A tax on land can only be levied on tax as a unit, must be imposed directly on land and must bear a definite relationship to it.
There is a clear distinction between a tax directly on land and a tax on income arising from land.
The cess is not a tax directly on land as a unit but only a tax on royalty which is indirectly connected with land.
In the words of Oza.
J. it is a tax not only on land but on labour and capital as well.
It could have been treated as a tax on land if it had been confined to `surface rent ' instead of `royalty.
(c) Entry 50 of List II: as a tax on royalty as it is not a tax on mineral rights and so is outside the purview of Entry 50.
Even otherwise, Entry 50 is subject to the provisions of List I and is, therefore, subject to the declaration contained in, and the purview of, the MMRD Act 1957.
Even if the cess is regarded as a fee, the State 's competence to levy the same can, if at all, only be justified with reference to Entry 23 and Entry 50 of List II but this recourse is not available as the field is already covered by Central Legislation referable to Entry 54 of List I. 3.
Murthy was not rightly decided.
The view of the Rajasthan, Punjab, Gujarat and Orissa decisions was overruled.
In the view taken by the Court, i.e. Madhya Pradesh ruling was not examined n detail, particularly as it was said to be pending in appeal before the Supreme Court.
In issue before us now are the levies of cesses based on royalty from lands containing minerals by the States of Orissa, Bihar and Madhya Pradesh.
Since the relevant statutes vary in detail and the parties concerned have also taken different stands, emphasising different aspects, the arguments have to be considered and dealt with separately, We may, however, mention that the appeals before us include those in the cases of Laxmi Narayan Agarwalla (Orissa).
land Harilal Rameshwar Prasad (Madhya Pradesh) noticed earlier.
THE VARIOUS ENACTMENTS ORISSA The invalidation in 1961 of Orissa Act XXVII of 1952 in Hingir Rampur apparently rendered it necessary for the State to bring in fresh 128 legislation.
The Orissa enactment with which we are now concerned is the Orissa Cess Act (Orissa Act IIof 1962) as amended by Act 42 of 1976.
According to the Statement of Objects and Reasons accompanying the bill, the primary objective of the legislation is to condense and simplify the existing law on the subject by consolidating the different enactments, customs and usages relating to the levy of cess in the State, to cure defects and deficiencies therein and to introduce uniformity in the levy of cess throughout the State.
The Act proposed to adopt a uniform rate of 25 paise in the rupee of the annual rental value and distribute the entire gross collection among the zilla parishads, panchayat samithis (referred to as `samithis ' in the Act) and grama panchayats in the ratio 5:8:12 respectively thus providing them with enhanced revenues to enable them to discharge their statutory responsibilities more efficiently by taking up development works and providing better amenities to the people of the State.
Its principal provisions are as follows: (i) Under Section 4, from and after the commencement of the Act, all lands (other than lands which were not liable to payment of rent or revenue before 1.4.77 and lands which were subject to a tax on land holdings sunder a 1950 Municipal Act) are made liable to the payment of cess (in addition to any land revenue, tax, cess rate or fee otherwise payable in respect thereof) determined and payable "as herein provided".
A 1976 amendment makes it clear that `lands held for carrying on mining operations" ar not exempt from the cess.
(ii) The "rate of cess, assessment [and] fixation of cess year" are dealt with by S.5 which originally read thus: "5.(1) The cess shall be assessed on the annual value of all lands on whatever tenure held calculated in the manner hereinafter appearing.
(2) The rate per year at which such cess shall be levied shall be twenty five percentum of the annual value of the land.
(3) x x x" Sub section(2) was amended by Act 13 of 1970 by substituting of 50% in place of 25% but a 1982 amendment inserted S.5A to provide that for a period 1.4.1977 to 31.3.1980, the cess would be levied at 25% of the annual value in respect of lands held for carrying on mining 129 operations.
section 5 was again amended by Act 15 of 1988 w.e.f. 26.10.1988 to read thus: "(2) The rate at which such cess shall be levied shall be.
a) in case of lands held for carrying on mining operations in relation to any mineral, on such percentum of the annual value of the said lands as specified against that mineral in Schedule II; and b) in case of other lands fifty percentum of the annual value.
Clause (a) was again amended by Act 17 of 1989 to read thus: "(a) in the case of land held for carrying on mining operations in relation to any mineral, such percentum of the annual value as the State Government may, by notification, specify from time to time in relation to such mineral".
It will thus be seen that, in place of a fixed rate, an elasticity was provided for, initially, by requiring the rates to be specified in the Schedule differently for different minerals.
Schedule II prescribed the percentage which the cess was to bear to the annual value; the percentages varied from 650% in the case of sand, to 300% in the case of coal, 200% in respect of certain minerals such as iron ore, limestone, manganese ore (except those meant for export or cement manufacture), 150% in the case of certain other minerals and 100% in respect of the rest.
Further elasticity was provided for in 1989 by leaving it to the Government to vary the rates by a simple notification.
In consequence of this amendment, Schedule has been omitted and a notification has been issued prescribing the percentage of the royalty or the dead rent (as the case may be) that is to be levied as the cess in respect of various items of specified minerals.
The rates specified are 650%, 400%, 300%, 200% and 150%.
In respect of all minerals not specified in the notification, the rate of cess is to be 100% of the royalty or dead rent.
(iii) S.6 specifies the person by whom the cess is payable.
In so far as is material for our present purposes, it directs that the cess is payable "(c) by a person for the lands he holds for carrying on mining operations and shall be paid by him to the Government".
This clause was inserted in S.6 simultaneously with the amendment of S.5 by Act 42 of 1976.
130 (iv) "Annual value" is defined in S.7 thus: "7.
Annual Value (1) The annual value of lands held by a raiyat shall be the rent payable by such raiyat to the land lord immediately under whom he holds the land: x x x x x x (2) In the case of lands held as an estate the annual value shall be the aggregate of (a) the amount which the intermediary is entitled to receive on account of revenue or rent less the amount payable by such intermediary as revenue to the intermediary immediately superior to him or to the Government, as the case may be; and (b) the rent, if any, payable held for carrying on mining operations, the annual value shall be the royalty or, as the case may be, the dead rent payable by the person carrying or mining operations(s) to the Government.
" The Explanation to the section defines "dead rent" and "royalty" in terms of their definitions in the MMRD Act,1957.
It also states the "royalty" would include "any payments made or likely to be make to the Government for the right of raising minerals from the land which shall be calculated on every tone of such minerals despatched from the land at the same rate as prescribed under the said Act or such other rate as may be fixed by the Government but not exceeding the amount which would have been otherwise payable as royalty under the said Act".
Act 17 of 1989 also amended S.7(3) to red thus: "(3) In the case of lands held for carrying on mining operations, the annual value shall be the royalty or, as the case may be, the dead rent payable by the person carrying on mining operations(s) to the Government or the pit 's mouth value wherever it has determined".
This was apparently intended to regulate the cess on coal in respect of which the pit 's mouth value had been determined.
So a notification 131 dated 14.8.89 was issued to provide that the cess in respect of coal bearing lands would be 30% of the pit 's mouth value of the said mineral.
(v) Sections 8 to 9B provide for the assessment of the cess in respect of various cases.
S.9B, inserted by the 1976 amendment, provided: "9B Assessment of cess on lands held for mining operations: (1) The cess payable in respect of lands held for carrying on mining operations shall be assessed in the prescribed manner.
(2) Nothing contained in Sections 8,9 and 9A shall apply in relation to the assessment of cess in respect of the aforesaid lands: The prescribed manner of such assessment had been already set out in the Orissa Cess Rules, 1963.
Rule 6A, inserted in 1977, deals with this but it is unnecessary for us to consider the details except to mention that it is assessed and collected, along with the amount of royalty or dead rent, by the Mining Officer concerned.
(vi) S.10 also needs to be referred to.
It originally read thus: "10.
Application of proceeds of the cess: (1) Notwithstanding anything contained in any other law the amount collected as cess shall be credited to the Consolidated Fund of the State and shall be utilised in the following manner, namely: (a) amounts collected in respect of lands within the local limits of any Municipality or Notified Area constituted under the Orissa.
Municipal Act, 1950 shall be paid to the concerned Municipal Council or Notified Area Council, as the case may be; and (b) amounts other than those referred to in clause (a) shall be distributed in the prescribed manner among the Grama Panchayats, Samitis and Parishads in the ratio of twelve is to eight is to five.
132 Explanation In this section "Grama Panchayat" mean a Grama panchayat constituted under the Orissa Grama Panchayats Act, 1948 and "Samiti" and "Parishad" respectively mean the Samiti and Parishad constituted under the Orissa Panchayat Samiti and Zila Parishad Act, 1964 and "Samiti" means a panchayat samiti constituted under the Orissa Panchayat Samitis Act 1959.
Orissa Act 13 of 1970 substituted the following section for the above: "10 Application of proceeds of the cess.
(1) Notwithstanding anything contained in any other law, the amount collected as cess shall be credited to the Consolidated Fund of the State and shell be utilised for the following purposes, namely: (a) primary education; (b) contribution to Grama Panchayats; and (c) contribution to Samitis.
Explanation In this section"Grama Panchayat" means & Grama Panchayat constituted under the Orissa Panchayat Samitis Act, 1959.
(2) The proportion in which the amount collected as cess is to be allotted for the said purpose shall be as may be prescribed.
As substituted by Act 42 of 1976, it reads: "10.
Application of proceeds of the cess: (1) Notwithstanding anything contained in any other law, all amounts collected as cess shall be credited fifty percentum of those which represent cess collected in respect of lands, other than lands held by carrying on mining operations, shall be utilised for the following purposes, namely: (a) primary education; (b) contribution to Grama Panchayats: and (c) contribution to Samitis.
(2) The allotment of amounts to be utilised for the pur 133 poses mentioned in clause (a) , (b) and (c) of sub section(1) shall be made in such proportion as may be prescribed" BIHAR We shall now turn to the relevant provisions of the Bihar Act.
Bihar is governed in this respect by the provisions of the Bengal Cess Act (Act IX of 1880).
It is sufficient to refer to the provisions of Sections 4 to 6,9 and to certain notifications.
(i) A definition of `royalty ' was introduced in S.4 of the Act by an ordinance of 1975.
It was amended by the Bihar Finance Act, 1981 and then by the Bihar Finance Act, 1982.
The definition as amended, w.e.f.
1.4.1982, by the latter reads as follows: "royalty for the purpose of this Act in respect of mines and quarries means payment (which includes dead rent) made or likely to be made to the owner of mines and minerals for the right of working the same on the quantity or value of such produce by a lessee if the land had been under a lease granted under MMRD Act, 1957, and rules made thereunder and includes any amount which Government may demand from the appropriation of mines and minerals belonging to the Government and any amount that may be paid as or in lieu of royalty for the right of working mines and quarries in areas held or acquired under any Act or agreement".
At the end of the section it added the following `interpretation clause ': "Valuation of mineral bearing land" means with reference to assessment of local cess in any year on land held for working mines and quarries the value at pit 's mouth of all the mineral extracted form the land in that year and the Explanation, which defines the value at pit 's mouth of a mineral; (ii) S.5 provided that, from and after the commencement of this Act, in any district or part of a district, all immovable property situate therein except otherwise in Section2 provided shall be liable to the payment of a local cess.
134 (iii) Section 6, again, is a much amended section, As substituted by Ordinance No.209 of 1975 dated 2.12.75, it read: "6.
Cess has to be assessed: The local cess shall be assessed on the annual value of lands and until provision to the contrary is made by the Parliament on the royalty of mines and quarries, sale value of the other immovable properties including forest produce and annual net profits from tramways and railways as contained respectively as prescribed in this Act and the rate at which the local cess shall be levied for each other shall be (a) in the case of royalty, the rate will be determined by the government from time to time but it will not exceed the amount of royalty; (b) in the case such annual net profits, fifteen paise on each rupee of such profits; (c) in the case of annual value of lands, twenty paise per rupee of the annual value; and (d) in the case of sale value of immovable properties including first produce, the rate will not exceed 10% and the State Government may, by notification, prescribe from time to time the commodities on the sale of which cess would be levied along with the rate at which it would be levied".
It was amended by a series of Bihar Cess (Amendment) ordinances between 1975 and 1982 .
It was further amended by the Finance Act, 1982 (w.e.f. 1.4.82), the Finance Act, 1984, the Finance Act, 1985 (w.e.f. 1.8.1985) and the Bihar Cess (Amendment) Ordinance, 1985, After the last of these amendments, the section stood thus: "S.6.
Cess how to be assessed: The local cess shall be assessed on the annual value of the lands and, until provision to the contrary is made by the Parliament, on the royalty of mines and quarries or on value of mineral bearing land as the case may be, sale value of other immovable properties including forest produce and annual net profits from tramways and railways ascertained respectively as prescribed in the Act and the rate at which the local cess 135 shall be levied for each year shall be (a) in the case of royalty, the rate will be determined by the Government from time to time but it will not exceed five times the amount of royalty, provided that the local cess payable in any one year shall not be less than the amount arrived at by multiplying the dead rent with the rate of cess determined undo clause (a); (aa) in the case of value of mineral bearing land, where the local cess payable in any year in respect of any mineral bearing land as assessed in clause (a) is less than 30 per cent of the value of mineral bearing land in that year, then, notwithstanding anything hereinbefore contained, the State Government may assess the local cess at such percentage of the value of the mineral bearing land, not exceeding [of] 30 per cent, as may be notified in the Official Gazette from time to time although the cess so assessed may exceed five times the amounts of royalty; (b) in the case of annual net profit, fifteen paise on each rupee of such profits; (c) in the case of annual value of land, twenty five paise per rupee of the annual value; and (d) in the case of sale value of immovable properties including first produce, the rate will not exceed 30 per cent and the State Government may , be notification prescribe from time to time the commodities on the sale of which cess would be levied along with the rates at which it would be levied".
The Bihar Cess (Amendment) Ordinance, 1987 (replaced by Act 3 of 1988) substituted 40% for 30% in clause (aa).
(iv) S.9 of the Act deals with the application of the proceeds of cess.
It has been amended from time to time, inter alia in 1976, 1977, 1978, 1979, 1980, 1981 and 1982.
After all these amendments, the section stood thus: "9.
Application of the proceeds of cess: The proceeds of local cess and all sums levied or recovered as interest or 136 otherwise shall in each district be paid in the district fund (i) at such rate as may, from time to time, be determined by the State Government in the case of local cess on annual value of land; and (ii) at such rate as may, from time to time, be determined by the State Government, subject to a maximum of twenty per cent in case of local cess on royalty of mines and quarries, or value of mineral bearing land, sale value of other immovable properties, forest produce and annual net profit from tramways and railways and the remaining amount shall be deposited in the consolidated fund of the State for the construction and maintenance of other works of public utility; xxx xxx xxx xxx xxx Provided further that out of the remaining amount not less than ten percent of the amount of the local cess collected under clause (a) or clause (aa) of Section 6 shall be spent for purposes relating to mineral development ' '.
(v) In exercise of the powers conferred by section 6 above, the State Government issued a notification on 20.11.80 determining the rate of cess on the amount of royalty of all minerals of the State at 100% w.e.f. 1.2.1980.
Our attention has also been drawn to, and some print made of, a notification dated 20.4.85 by which the State Government, modifying the earlier notification of 1.10.1981, determined the rate of cess ``on the amount of royalty of iron ore which is extracted from manually operated iron ore mines ' ' at 100% w.e.f. 1.10.84 which was followed up by a notification dated 20.11.85 enhancing the rate at 300% on the amount of royalty of iron ore w.e.f.21.6.85 in respect of mines other than those in which the ore is extracted manually.
Other notifications were also issued determining the rate of cess in respect of other minerals as indicated below : Date of Effective Mineral Rate Notification Date 20.11.85 21.6.85 Bauxite Ore, sand 500% for stowing 20.11.85 21.6.85 Copper Ore and 300% uranium 20.11.85 21.6.85 Lime stone and kynite 200% 20.11.85 21.6.85 Coal 30% of pit 's mouth value or 500% on the amount of royalty whichever is greater 137 Madhya Pradesh: In Madhya Pradesh, two statutes have to be considered: The first is the Madhya Pradesh Upkar Adhiniyam, 1981 (Act 1 of 1982).
It provides for the levy of an energy development cess (Part I), an urban development cess (Part II), a cess on transfer of vacant land (Part III), and a cess on storage of coal (Part IV).
The Act provided that the cesses levied under Parts I and IV should first be credited to the Consolidated Fund of the State but subsequently withdrawn and credited to a separate Electrical Development Fund [Ss.3(2)] and Coal bearing Area Development Fund [section 12(1)] and that the amounts to the credit of the funds as well as the cesses collected under Parts II and III should be utilised for special purposes connected respectively with energy development [S.3(3)] development of coal bearing areas [S.12(2)] urban development [section 7(2)] and rural development [section 9(5)].
Act 21 of 1987 changed Part IV into a part dealing with ``cess on land held in connection with mineral rights ' ' with full retrospective effect.
Part IV, as now substituted, deals only with ``land situate in the State and held under a mining lease for undertaking mining operations in relation to major mineral including operations for raising, winning or extracting coal ' '.
Section 11 and 12 read thus: ``Section 11: There shall be levied and collected a cess on land held in connection with mineral rights at such rate as may be notified by the State Government per ton of major mineral raised and the rate of cess prevailing in respect of coal during the period commencing from the date of commencement of the Principal Act and ending on the date of commencement of the Madhya Pradesh Upkar (Sanshodhan) Adhiniyam, 1987, shall be deemed to be the rate of cess notified under this sub section in respect of coal: Provided the subject to the limitation mentioned above the State Government may, by notification, increase or 138 reduce the rate of cess at an interval of not less than one year, where the rate is increased it shall not be in excess of fifty per cent of the rate for the time being in force; Provided further that every notification under the above proviso shall be laid on the table of the Legislative Assembly and the provisions of Section 24 A of the Madhya Pradesh General Clauses Act, 1957 (No. 3 of 1958) shall apply thereto as they apply to rule.
(2) The rate of cess to be notified for the first time in exercise of the powers conferred by Sub section (1) shall be effective from the [first of] April, 1987.
(3) The cess levied under sub section (1) shall, subject to and in accordance with the rules made in this behalf, be assessed and collected by such agencies and in such manner as may be prescribed.
(4) The agencies prescribed under sub section (3) shall for the purpose of assessment, collection and recovery of cess and all matters connected therewith, exercise such of the powers conferred upon the authorities specified in section 3 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959) for the purpose aforesaid in respect of sales tax under said Act and the rules made thereunder, as may be prescribed as if such agencies were the authorities specified in the section 3 and the cess on land held in connection with mineral rights were the tax levied under the said Act.
Section 12 : The proceeds of the cess on land held in connection with the mineral rights may be utilised by the State Government for the general development of the mineral bearing areas. ' ' Section 12 has, however been omitted by an Amending Act of 1989, again, with full retrospective effect i.e. from 1.10.1982.
It appears, however, that there was in force in Madhya Pradesh w.e.f. 1.11.1982 another statute levying mineral development cess.
It was the M.P. Karadhan Adhiniyam, 1982 (Act 15 of 1982) as amended by M.P. Acts 1983 and 13 of 1985 which was challenged before the 139 M.P. High Court in Hiralal Rameshwar Prasad vs State and other connected cases.
The Madhya Pradesh Karadhan Adhiniyam, 1982, was enacted by State Legislature ``to provide for levy of school building cess, forest development cess and mineral areas development cess and matters incidental thereto ' '.
Part II of the Act deals with the school building cess.
Section 5 therein requires the holder of every holding of six hectares and above to pay the school building cess as provided therein.
The proceeds of the school building cess are required by S.4 to be credited to a separate Fund supplemented by a State contribution equal to 50% thereof and utilised for construction and furnishing of primary school buildings in non urban areas.
Part III of the Act deals with the forest development cess.
Section 7 imposes forest development cess on every sale or supply for forest produce by the Forest Department.
The proceeds thereof are to be credited to a separate Fund and utilised for social forestry, afforestation, reforestation, forest rehabilitation and other purposes connected with forest development.
Then comes Part IV dealing with the mineral areas development cess, the provisions of which are relevant for the purpose of these appeals and it is the charging provision therefor contained in Section 9 which has been attacked as constitutionally invalid.
The Section read thus: ``9. Levy of mineral areas development cess on land under mining lease ' '.
(1) There shall be levied and collected on the land held under a mining lease for undertaking mining operation a mineral areas development cess at the rate of twenty five percent of the rental value thereof.
(2) For the purpose of sub section (1), rental value shall be equal to the royalty or dead rent, as the case may be, whichever is higher.
(3) The mineral areas development cess shall be payable by person to whom the mining lease is granted.
(4) The mineral areas development cess shall, subject to and in accordance with the rules made in this behalf, be collected by such agencies and in such manner as may be prescribed and shall be applied towards development of mineral bearing areas ' '.
140 The 1983 amendment substituted the following sub section (1) in Section 9: ``(1) There shall be levied and collected on the land held under a mining lease for undertaking minor operations for a major mineral, a mineral areas development cess at the rate of one hundred percentum o the rental value thereof ' '.
The 1985 amendment substituted the following sub section in place of the above w.e.f.
1.8.1985: ``(1) There shall be levied and collected (a) on the land held under mining lease for undertaking mining operations for a major mineral other than coal a mineral areas development cess at the rate of one hundred percentum of the rental value thereof; (b) on the land held under mining lease for undertaking mining operations for coal, a mineral area development cess at the rate of the hundred twenty five percentum of the rental value thereof ' '.
and also made a provision for payment of interest on arrears of cess.
Rules have been framed under this Act called ``The Madhya Pradesh Mineral Areas Development Cess Rules, 1982 ' '.
Rule 3 provided for the collection of the cess every month along with the royalty or dividend.
Rule 10 thereof is alone relevant for the purpose of these partitions and read as under: ``10.
Application of cess: The State Government shall decide from time to time the manner in which the amount collected from cess shall be utilized for the development of mining lease areas ' '.
In 1985, an amendment substituted the words ``mineral bearing ' ' for the words ``mining lease ' ' in this rule.
It will be seen that, unlike the cesses referred to in Part I and III, the Act did not provide for the creation of a separate Fund for the mineral areas development cess.
The manner of utilisation thereof was also left to the discretion of the State Government though it had to be spent for development of mineral bearing areas.
141 THE CONTENTIONS ORISSA In the historical and statutory context set out above, the attempt of Sri T.S. Krishnamurthy Iyer, learned counsel for the State of Orissa to save the impugned legislation of the State is two fold.
First, he points out that in India Cement the statute, by Ss. 115 and 116, imposed a cess and surcharge on `land revenue ' and the explanation to section 115 defined `land revenue ' to mean `royalties '.
In other words that was a clear case of direct cess or Tax on royalties.
Here, on the other hand, s.5 makes it clear that what the legislature has provided for is a tax assessed on the annual value of all lands, on whatever tenure held, calculated at a percentage of the annual value of the land.
section 7, which defines `annual value ', provides for different measures for determining the annual value in respect of lands held under different kinds of tenures; and, in the case of lands held for mining operations, the measure of such annual value is the royalty or dead rent paid to the Government.
On a proper construction of the statute, he submits, the cess levied is a cess or tax on land and the `royalty ' is only taken as a measure for determining the quantum of tax.
He contends that India Cement only forbids a cess or tax on royalty as such and not a cess or tax on land, which may be measured by reference to the royalty derived from it.
He presses in aid of his argument the well marked distinction between the subject matter of a tax and its measure outlined, amongst others, in Ralla Ram 's case [1948] F.C.R.207 at pp.
218, 224 and Bombay Tyre International v Union, [1984] 1 S.C.C.487 at pp.
481 4.
This argument, Sri Iyer contended, is based on the statutory language used in the Orissa Cess Act, 1962 and should prevail independently of the correctness or otherwise of Murthy, Secondly, he submitted that `royalty ' is not a tax and the cess on royalty is also not a tax but only a fee.
This view is supported, he said, by the limitations imposed in the statute on the modes of its utilisation.
Being a fee, the State Legislature 's competence to impose it has to be determined with reference to Entry 23 read with Entry 66 of the State List.
So doing, the validity of the levy has to be upheld as, in counsel 's submission, the declaration contained in, and the provisions of, the MMRD Act, 1957 do not, in any way whittle down or impair this competence.
Basically, it will seen, two questions arise (1) Can the cess be considered as ``land revenue ' ' under Entry 45 or as a ``tax on land ' ' under Entry 49 or as a ``tax 142 on mineral rights ' ' under Entry 50 of the State List? (2) If the answer to question (1) is in the negative, can the cess be considered to be a fee pertaining to the field covered by Entry 23 of the State List or has the State been denuded of the legislative competence under this Entry because of Parliament having enacted the MMRD Act, 1957? Taking up the first question, the attempt to bring the levy under Entry 45 of the State List proceeds in two steps.
First, land revenue is the sovereign 's share of the proceeds of the land belonging to the sovereign and is represented, in the case of land containing minerals, by the payment of royalty to the Government.
Second, the cess, being an accretion to royalty, partakes of the same character.
This argument, however, must fail in view of the categorical observations of the Supreme Court in india Cement, (vide paras 20 and 21) as to the connection of the expression `land revenues '.
At least, in India Cement, the statute sought to include royalty within the meaning of `land revenue ' but there is no such provision in the Orissa Act and, this being so, royalty or the tax thereon cannot be equated to land revenue.
The cess here cannot be, therefore, brought under Entry 45.
Turning next to Entry 50, though Murthy left open the question how far a levy of this nature can be considered to be a tax on mineral rights (vide page 676), India Cement has chosen to approve the contrary view of Wanchoo J. in his dissenting judgment in Hingir Rampur (para 30).
Actually, it appears that the observations of Wanchoo J. have not been fully examined.
The learned Judge held that the tax in the case before him was not a tax on mineral rights because it was levied on the value of the minerals extracted.
If his observations in this context are read as a whole, it would seem that he also was of opinion that a tax on royalty would be a tax on mineral rights, for he observed (at pp.
582 3): `The next contention on behalf of the State of Orissa is that if the cess is not justified as a fee, it is a tax under item 50 of List II of the Seventy Schedule.
Item 50 provides for taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development.
This raises a question as to what are taxes on mineral rights.
Obviously, taxes on mineral rights must be different from taxes on goods produced in the nature of duties of excise.
If 143 taxes on mineral rights also include taxes on minerals produced, there would be no difference between taxes on mineral rights and duties of excise under item 84 of List I. A comparison of List I and II of the Seventh Schedule shows that the same tax is not put in both the Lists.
There fore, taxes on minerals rights must be different from duties of excise which are taxes on minerals produced.
The difference can be understood if one sees that before minerals are extracted and become liable to duties of excise somebody has got to work the mines.
The usual method of working them is for the owner of the mine to grant mining leases to those who have got the capital to work the mines.
There should therefore be no difficulty in holding that taxes on mineral rights are taxes on the right to extract minerals and not taxes on the minerals actually extracted.
Thus tax on mineral rights would be confined, for example, to taxes on leases of mineral rights and on premium or royalty for that.
Taxes on such premium and royalty would be taxes on mineral rights while taxes on the minerals actually extracted would be duties of excise.
It is said that there may be cases where the owner himself extracts minerals and does not give any right of extraction to somebody else and that in such cases in the absence of mining leases or sub leases there would be no way of leaving tax on mineral rights.
It is enough to say that these cases also, rare though they are, present no difficulty.
Take the case of taxes on annual value of buildings.
Where there is a lease of the building, the annual value is determined by the lease money; but there are many cases where owners themselves live in buildings.
In such cases also taxes on buildings are levied on the annual value worked out according to certain rules.
There would be no difficulty where an owner himself works the mine to value the mineral rights on the same principles on which leases of mineral rights are made and then to tax the royalty which, for example, the owner might have got if instead of working the mine himself he had leased it out to somebody else.
there can be no doubt therefore that taxes on mineral rights are taxes of this nature and not taxes on minerals actually produced.
Therefore the present cess is not a tax on mineral rights; it is a tax on the minerals actually produced.
Therefore the present cess is not a tax on mineral rights; it is a tax on the minerals actually produced and can be no different in pith and substance from a 144 tax on goods produced which comes under Item 84 of List I, as duty of excise.
The present levy therefore under section 4 of the Act cannot be justified as a tax on mineral rights.
However, the conclusion of India Cement is clear that a tax on royalties cannot be a tax on minerals and we are bound thereby.
This apart, we shall also advert, while discussing the second question, to another hurdle in the way of the State 's attempt to have recourse to Entry 50, which has also been touched upon by India Cement.
Can, then, the cess be described as a tax on land ' '? The Status considered in India Cement, as Sri Iyer correctly points out, was differently worded.
It purported to levy a cess on land revenue and `royalty ' was brought within the definition of that expression.
It was therefore, a case where they levy had no reference to land at all but only to the income from the land, in the case of Government lands, got by way of land revenue or otherwise.
Here the Statute is different.
The objective of the Cess Act as set out earlier, is to levy a cess on all land.
Indeed, originally the idea was to levy a uniform cess at 25% of the annual value of all land which was subsequently raised to 50%.
It is argued that the tax here is, therefore, a tax on land and it is immaterial that this tax is quantified with reference to the income yielded by the land.
A tax on land may be levied, inter alia with reference to its capital value or with reference to its annual value.
One realistic measure of such capital or annual value will be the income that the land will yield just as, for property tax purposes, the annual value is based on the amount for which the property can reasonably let from year to year.
The income from the land may be more or less due to a variety of reasons.
In the case of agricultural lands, it may depend on the fertility of the soil, the sources of irrigation available, the nature of crops grown and other such factors.
Likewise, where the land is one containing minerals, naturally the value (whether annual or capital value) will be more if it contains richer minerals and can be legitimately measured by reference to the royalties paid in respect thereof.
the mere fact, it is argued, that the annual value is measured with reference to the royalty, dead rent or pit 's mouth value of the mineral does not mean that it ceases to have the character of a tax on land.
In this context, Sri Iyer places strong reliance on the decision of a Constitution Bench of this Court in Ajay Kumar Mukherjea vs Local Board of Barpeta, [1965]3 S.C.R. 47.
There a local Board was authorised to ``grant. a license for the use of any land as a market and impose an annual tax thereon ' '.
The Court held, examining the Scheme and the language of the provision in question, that the tax imposed was a tax 145 on land under Entry 49.
The Court indicated the following approach to the issue before it: ``The first question which falls for consideration therefore is whether the impost in the present case is a tax on land within the meaning of Entry 49 of List II of the Seventh Schedule to the Constitution.
It is well settled that the entries in the three legislative lists have to be interpreted interpreted in their widest amplitude and therefore if a tax can reasonably be held to be a tax on land it will come within Entry 49.
Further it is equally well settled that tax on land may be based on the annual value of the land and would still be a tax on land and would not be beyond the competence of the State legislature on the ground that it is a tax on income: see Ralla Ram vs The Province of East Punjab, [1948] F.C.R.207.
it follows therefore that the use to which the land is put can be taken into account in imposing a tax on it within the meaning of entry 49 of List II, for the annual value of land which can certainly be taken into account in imposing a tax for the purpose of this entry would necessarily depend upon the use to which the land it put.
It is in the light of this settled proposition that we have to examine the scheme of section 62 of the Act which imposes a tax under challenge. ' ' On the other hand, it is contended for the respondents that, whatever may have been the original intention, the true and real impact of the cess is only on the royalties.
It is said that, at any rate, after the amendments of 1976, when lands held for mining operations were segregated for levy of separate and steep rates of cess based on royalty, the ostensible appearance of levying a tax on all land with reference to annual value has disappeared and a direct, undisguised tax on royalties from mining lands has taken its place.
it is urged that, for deciding whether the tax is really a tax on land as in Murthy or whether it is really a tax on royalties which has been struck down in India Cement, it is not the form or the statutory machinery that matters; one has to look at the real substance and true impact of the levy.
If this is done, it is said, there can be no doubt that the cess impugned here suffers from the same vice that vitiated the levy in India Cement.
The decision of this Court in Buxa Dooars Tea Co. vs State, was referred to by Sri G.Ramaswamy, learned 146 counsel for Orient Paper Mills, in support of this contention.
In that case, this Court was concerned with a cess levied annually.
Initially section 4(2) of the relevant statute levied the cess: ``(a) in respect of lands, at the rate of six paise on each rupee of development value thereof; (b) in respect of coal mines, at the rate of fifty paise on each tonne of coal on the annual dispatches therefrom; (c) in respect of mines other than coal mines and quarries, at the rate of six paise on each rupee of annual net profits thereof ' '.
With effect from 1.4.1981, clause (a) above was amended and clause (aa) inserted to provide for the levy of cess ``(a) in respect of land other than a tea estate, at the rate of six paise on each rupee of development value thereof; (aa) in respect of a tea estate at such rate, not exceeding rupees six on each kilogram of tea on the dispatches from such tea estate of tea grown therein, as the State Government may, by notification in the Official Gazette, fix in this behalf: Provided that in calculating the dispatches of tea for the purpose of levy of rural employment cess, such dispatches for sale made at such tea auction centres as may be recognised by the State Government by notification in the Official Gazette shall be excluded: Provided further that the State Government may fix different rates on dispatches of different kinds of tea ' '.
Sub section (4) was added in Section 4 to enable the State Government, if it considers necessary so to do, by notification in the Official Gazette, to exempt such categories of dispatches or such percentage of despatches from liability to pay the whole or any part of the rural employment cess or reduce the rate of rural employment cess payable thereon, under clause (aa) of sub section (2), on such terms and conditions as may be specified in the notification.
With effect from 1.10.1982, the first proviso to clause (aa) was omitted.
It was contended 147 for the tea estate, inter alia that the above levy violated the provisions of Article 301 of the Constitution and was also beyond the legislative competence of the State Government.
Upholding these contentions, the Court observed: ``The question then is whether the impugned levy impedes the free flow of trade and commerce throughout the territory of India and, if it does, whether it falls within the exception carved out in article 304(b).
If the levy imposes a cess in respect of tea estate, it may will be said that even though the free flow of trade is impeded in its Government throughout the territory of India, it is in consequence of an indirect or remote effect of the levy and that it cannot be said that article 301 is contravened.
The contention of the petitioners is, however, that it is ostensibly only in respect of tea estate but in fact it is a levy on despatches of tea.
If that contention is sound, there can be no doubt that it constitutes a violation of article 301 unless the legislation is brought within the scope of article 304(b).
To determine whether the levy is in respect of tea estates or is a levy on despatches of tea, the substance of the legislation must be ascertained from the relevant provisions of the statute.
It cannot be disputed that the subject of the levy, the nature of which defines the quality of the levy, must not be confused with the measure of liability, that is to say, the quantum of the tax.
There is a plenitude of case law supporting that principle, among the cases, being Union of India vs Bombay Tyre International, [1984] 1 S.C.R.347.
But what is the position here?. .
Now, for determining the true nature of the legislation, whether it is a legislation in respect of tea estate and therefore of land, or in respect of despatches of tea, we must, as we have said take all relevant provisions into account and ascertain the essential substance of it.
It seems to us that although the impugned provisions speak of a levy of cess in respect of tea estates, what is contemplated is a levy on despatches of tea instead.
The entire structure of the levy points to that conclusion.
If the levy is regarded as one in respect of tea estates and the measure of the liability is defined in terms of the weight of tea dispatched, there must be a nexus between the two indicating relationship between the levy, on the tea estate and the criteria for determining the 148 measure of liability.
If there is no nexus at all it can conceivably be inferred that the levy is not what it purports to be.
The statutory provisions for measuring the liability on account of the levy throws light on the general character of the tax as observed by the Privy Council in Re: A Reference under the Government of Ireland Act, 1920 and Section 3 of the Finance Act (Northern Ireland), 1934 [1963] 2 A.E.R. III.
In R.R. Engineering Co. vs Zilla Parishad, Barielly, ; this Court observed that the method of determining the rate of levy would be relevant in considering the character of the levy.
All these cases were referred to in Bombay Tyer International Ltd.; , where in the discussion on this point at page 367 this Court said: Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy ' '.
Applying the above tests to the case before it, the Court reached the conclusion that, in substance the impugned levy was a levy in respect of despatches of tea and not in respect of tea estates.
It was then pointed out that the question of legislative competence also turned on this issue: ``If this impugned legislation were to be regarded as a levy in respect of the estates, it would be referable to entry 49 in List II of the Seventh Schedule of the Constitution which speaks ``taxes on lands and buildings ' '.
But if the legislation is in substance legislation in respect of despatches of tea, legislative authority must be found for it with reference to some other entry ' ' Pointing out that no such entry in List II or III had been brought o its notice and further that, under S.2 of the Tea Ct, 1953, control over the tea industry has been assumed by Parliament within the meaning of Entry 54 of List I, the Court upheld the challenge to the competence of the State legislature to levy the impugned cess.
it is submitted that, likewise, here the levy is one in substance on royalties and not one on land.
There is force in the contention urged by Sri T.S.K. Iyer that there is a difference in principle between a tax on royalties derived 149 from land and a tax on land measured by reference to the income derived therefrom.
That a tax on building does not cease to be such merely because it is quantified on the basis of the income it fetches is nowhere better illustrated than by the form of the levy upheld in Ralla Ram, followed by Bhagwan Dass Jain; , which illustrates the converse situation.
Mukherjea (supra) also supports this line of reasoning.
But here the levy is not measured by the income derived by the assessee from the land, as is the case with lands other than mineral lands.
The measure of the levy is the royalty paid, in respect of the land, by the assessee to his lessor which is quite a different thing.
Moreover, interesting as the argument is, we are constrained to observe that it is only a reiteration of the ratio in Murthy which has been upset in India Cement.
We may point out that this is of significance because, unlike in India Cement, the statute considered in Murthy, as the one here, only purported to levy a cess on the annual value of all land.
India Cement draws a ``clear distinction between tax on land and tax on income arising from land ' '.
The former must be one directly imposed on land, levied on land as a unit and bearing a direct relationship to it.
In para 23 of the judgment, the Court has categorically stated that a tax on royalty cannot be said to be a tax directly on land as a unit.
Sri Iyer contended that all the observations and propositions in India Cement stem from the basic conclusion of the Court that the cess levied there was a cess on royalty in view of the Explanation to section 115.
He also submitted that the statue under consideration in India Cement did not provide for any cess in the case of land which did not yield any royalty; in other words, the Act did not use dead rent as a basis on which land was to be valued.
He drew attention to the observations of Oza, J.In para 42 of India Cement that if the Explanation to section 115 had used the words `surface rent ' in place of `royalty ' the position would have been different and that, if a cess on such `surface rent ' or `dead rent ' is charged, it could be justified as a tax on land falling within the purview of Entry 49, Here, however, the position is different and so, he urged, the nature of the levy is also different.
We may have considered these points as furnishing some ground to distinguish the present levy from that in india Cement but for the Court 's specific disapproval of Murthy.
We are unable to accept the plea of Sri Iyer that, in spite of Murthy, he can support the validity of the levy, as the statute considered in Murthy contained exactly the same features as are here emphasised by Shri Iyer and the validity of such Levy cannot be upheld after India Cement.
As to the second contention based on the observations in the judgment of Oza J., we may point out here the 150 levy is not one confined to dead rent or surface rent as suggested by Oza J. but one on royalty which even according to Oza J. cannot be described as a tax on land.
Sri Iyer contended that unless the case of the assessees is that the statute is a piece of colourable legislation, it is not possible to construe the levy on mineral lands differently.
He pointed out that section 4 of the Orissa Cess Act, 1962 levies a cess on all land and that, if Sc.
7(1) and (2) measuring the cess by reference to the income of other categories of land are valid, there is no reason why S.7(3) alone should be treated differently and objected to as imposing a tax on royalties particularly when the levy also extends to dead rent.
The answer to this contention appears to be that the plea of the assessee need not go to the extent of saying that the levy is a colourable piece of legislation.
it is sufficient to restrict oneself to the issue of a proper determination of the pith and substance of the legislation.
There is no doubt an apparent anomaly in considering section 7(1) and (2) as levying a tax on land but construing section 7(3) as imposing a tax on royalties and this anomaly has been noticed in India Cement (vide para 42).
But the question is, what is it that is really being taxed by the Legislature? So far as mineral bearing lands are concerned, is the impact of the tax on the land or on royalties? The change in the scheme of taxation under S.7 in 1976; the importance and magnitude of the revenue by way of royalties received by the State; the charge of the cess as a percentage and, indeed, as multiples of the amount of royalty; and the mode and collection of the cess amount along with the royalties and as part thereof are circumstances which go to show that the legislation in this regard is with respect to royalty rather than with respect to land.
Sri Iyer had invited our attention to the decision of this Court in R.R. Engineering Co. v Zila Parishad, ; which upheld the validity of a `circumstances and property tax ' levied by a Zila Parishad.
The High Court had held this levy could not be traced to any entry other than the residuary Entry 97 of List I. This Court, on appeal, pointed out the distinction between a tax of this type and a tax on income.
It held that the tax was a composite one referable to Entry 49 (tax on lands and buildings), Entry 58 (taxes on animals and boats) and Entry 60 (tax as on professions, trades, callings and employments) of List II.
While holding, therefore, that the ceiling of Rs.250 per annum referred to in Entry 60 would not be applicable to the tax, the Court uttered a ``word of caution ' '.
151 ``The fact that one of the components of the impugned tax, namely, the component of `circumstances ' is referable to other entries in addition to Entry 60, shall not be construed as conferring an unlimited charter on the local authorities to impose disproportionately excessive levies on the assessees who are subject to their jurisdiction.
An excessive levy on circumstances will tend to blue the distinction between a tax on income and a tax on circumstances.
income will then cease to be a mere measure or yardstick of the tax and will become the very subject matter of the tax.
Restraint in this behalf will be a prudent prescription for the local authorities to follow ' '.
While Sri Iyer sought to use this decision in support of his contention that a tax on property can be legitimately measured on the basis of the income therefrom, we think the observations extracted above are very apposite here.
The manner in which the levy, initially introduced a uniform cess on all land, was slowly converted, qua mining lands, into a levy computed at multiples of the royalty amounts paid by the lesses thereof seem to bear out the contention that it is being availed of as a tax on the royalties rather than one on the annual value of the land containing the minerals.
In the words of Chandrachud J. (as he then was) one can legitimately conclude that royalty has ceased to be a mere measure or yardstick of the tax and has become the very subject matter thereof.
For the reasons discussed above, we repel the contention of the State seeking to justify the levy under Entry 45, 49 and 50 of List II of the Seventh Schedule.
There has been considerable discussion before us as to whether `royalty ' itself is a tax or not.
The controversy before us centres round the discussion contained in paras 31 to 34 of the India Cement judgement.
Counsel for the assessees respondents invite attention to the opening sentence of para 34 which runs: ``In the aforesaid view of the matter, we are of the opinion that royalty is a tax ' ' and argue that this clinches the issue.
On the other hand, Sri Iyer submits that this purported conclusion does not follow from the earlier discussion and is also inconsistent with what follows.
He points out that though there is a reference in para 27 to the conclusion of Venkataramiah J. in a judgement of the Mysore High Court that royalty under S.9 of the MMRD Act is really a tax, and a reference in para 31 to the Rajasthan, Punjab, Gujarat and Orissa decisions to the effect that royalty is not a 152 tax, there is no discussion, criticism or approval of any of the decision on this point and that, therefore, the first sentence of para 34, relied upon for the respondents, is non sequitir.
He submits that, perhaps, there is a typographical error in the first sentence of para 34 and that the sentence should really read thus: ``In the aforesaid view of the matter, we are of opinion that cess is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature. . ' ' He also points out that the last sentence of para 34 reads thus: ``Royalty on mineral right is not a tax on land but a payment for the use of land ' '.
He submits, therefore, that this issue has not been decided in India Cement.
He submits that, before we express any opinion on this issue, we should consider the matter afresh and places before us extracts from various lexicons and dictionaries to show that a royalty is nothing more than the rent or lease amount paid to a lessor in consideration for the grant of a lease to exploit minerals.
Reference may also be made to the discussion in this respect in paras 35 40 of Trivedi & Sons vs State of Gujarat, [1986] Supp.
S.C.C. 20.
It is therefore, neither a fee nor a tax but merely a price paid for the use of mineral bearing land.
We do not think that it is necessary for us to express an opinion either way on this controversy for, it seems to us, it is immaterial for the purposes of the present case.
If royalty itself were to be regarded as a tax, it can perhaps be described properly as a tax on mineral rights and has to conform to the requirements of section 50 which are discussed later.
We are, however, here concerned with the validity of the levy of not royalty but of cess.
If the cess is taken as a tax, then, unless it can be described as land revenue or a tax on land or a tax on mining rights, it cannot be upheld under Entry 45, 49 or 50.
On the contrary, if it is treated to Entry 23, a proposition the effect of which will be considered later.
the question whether royalty is a tax or not does not assist us much in furnishing an answer to the two questions posed in the present case and set out earlier.
We shall, therefore, leave this question to rest here.
This takes us to the second question posed by us initially and this 153 turns on the effect of M.M.R.D. Act, 1957 and the declaration contained in S.2 thereof which has been extracted earlier.
This will arise if we treat the levy as a tax falling under Entry 50 of List II or, alternatively, as a fee though it may not affect the State 's competence if it can be attributed to Entry 49 of List II.
To take up Entry 50 first, a perusal of entry 50 world show that the competence of the State Legislature with respect thereto is circumscribed by ``any limitations imposed by Parliament by law relating to mineral development ' '.
The M.M.R.D Act, 1957, is there can be no doubt about this a law of Parliament relating to mineral development.
S.9 of the said Act empowers the Central Government to fix, alter, enhance or reduce the rates of royalty payable in respect of minerals removed from the land or consumed by the lessee.
Sub section (3) of Section 9 in terms states that the royalties payable under the Second Schedule to the Act shall not be enhanced more than once during a period of three years.
India Cement has held that this is a clear bar on the State legislature taxing royalty so as, in effect, to amend the Second Schedule to the Central Act and that if the cess is taken as a tax falling under Entry 50 it will be ultra vires in view of the provisions of the Central Act.
It is possible, then, to treat the levy as a fee which the State legislature is competent to legislate for under Entry 66 of the State List? Sri Iyer contends for this position particularly on the strength of S.10 of the Orissa Cess Act, 1962.
There is one great difficulty in accepting this solution to the State 's problem.
S.10 as it stands now earmarks the purposes of utilisation of only fifty percent of the proceeds of the cess and that, too, is limited to the cess collected in respect of ``lands other than lands held for carrying on mining operations ' '.
In other words, the levy cannot be correlated to any services rendered or to be rendered by the State to the class of persons from whom the levy is collected.
Whether royalty is a tax or not, the cess is only a tax and cannot be properly described as a fee.
This consideration apart, even assuming it is a fee, the State legislature can impose a fee only in respect of any of the matters in the State List.
The entry in the State List that is relied upon for this purpose is Entry 23.
But Entry 23, it will be seen, is ``subject to the provisions of List I with respect to regulation and development ' ' of mines and minerals under the control of the Union.
Under Entry 54 of List I, regulation of mines and mineral development is in the field of Parliamentary legislation ``to the extent to which such regulation and 154 development under the control of the Union is declared by Parliament by law to be expedient in the public interest ' '.
Such a declaration is contained in section 2 of the M.M.R.D. Act, 1957, which has been set out earlier.
It, therefore, follow that any State legislation to the extent it encroaches on the field covered by the M.M.R.D. Act, 1957, will be ultra vires.
The assessees contend, in this case, that the legislation in question is beyond the purview of the State legislature by reason of the enactment of the M.M.R.D. Act.
It would appear, prima facie that the contention has to be upheld on the basis of the trilogy of decisions referred to at the outset viz. Hingir Rampur, Tulloch and India Cement.
They seem to provide a complete answer to this question.
The argument is, however, discussed at some length, because it has been put forward, mutatis mutandis, in support of the levy of cess by the other State as well.
Before dealing with the contentions of the counsel for the State in this behalf, a reference may be made to a difference in wording between Entry 52 and Entry 54 of List I. The languages of Entry 52 read with Entry 24 would suggest that, once it is declared by Parliament by law that the control of a particular industry by the Union is expedient in the public interest, the State legislatures completely lose all competence to legislate with respect to such an industry in any respect whatever, indian Tobacoo Co. Ltd. vs Union [1985] Supp. 1 S.C.R. 145.
But, even here, there are judicial decisions holding that such declaration does not divest the State legislature of the competence to make laws the pith and substance of which fall within the entries in List II, (see for e.g. Kannan Dewan Hills Co. vs State of Kerala; , and Ishwari Khetan Sugar Mills Ltd. vs State of U.P., ; to which reference will also be made later, merely on the ground that it has some effect on such industry.
Compared to that of Entry 52, the language of Entry 54 is very guarded.
It deprives the States of legislative competence only to the extent to which the law of Parliament considers the control of Union to be expedient in the matter of regulation of mines and mineral development.
Emphasising this difference, learned counsel for the State of Orissa submits that the intent, purpose and scope of the M.M.R.D. Act is totally different and does not cross the field covered by the impugned Act.
It is a law to provide for the proper exploitation and development of minerals and regulates the persons to whom, the manner in which and procedure according to which licenses for prospecting or leases for minerals should be granted.
The enactment is concerned with the need for a proper exploitation of minerals from lands.
The impugned Act, on the other hand, concentrates on the need 155 for development of mineral areas as such and provides for the collection of cess to cater to these needs.
The scope of the subject matter of legislation under the two Acts are entirely different and the M.M.R.D. Act cannot be considered to exclude State legislation of the nature presently under consideration.
Before considering the above contention, it will be useful to refer to certain earlier decisions of this Court which have a bearing on this issue.
State of West Bengal vs Union, [1964] 1 S.C.R. 371 concerned the validity of an Act of Parliament proposing to acquire certain coal bearing areas in the State qua certain areas vested in the State itself.
While upholding the general right of Parliament to legislate for the acquisition of even property vested in a State, the Court pointed out that this could be done only if there is some provision in the Central Act, expressly or necessarily implying that the property of the State is to be acquired by the Union.
However, the Court held, when the requisite declaration under Entry 54 is made, the power to legislate for regulation and development of mines and minerals under the control of the Union, would, by necessary implication, include the power to acquire mines and minerals.
Baijnath Kedia vs State of Bihar, ; was a case arising out of a 1964 amendment to the Bihar Land Reforms Act, 1950.
By section 10 of the 1950 Act, all the rights of former landlords or lessors under mining leases granted by them in their "estates" came to be vested in the State; but the terms and conditions of those leases were made binding upon the State Government.
Under a second proviso to this provision and a sub rule added by virtue of the 1964 amendment, additional demands were made to lessees, the validity of which was challenged successfully before this Court.
The Court, applying Hingir Rampur and Tulloch held that the whose whole of the legislative field in respect of minor minerals was covered by Parliamentary legislation and Entry 23 of List II was to the extent cut down by Entry 54 of List I.
The old leases could not be modified except by a legislative enactment by Parliament on the lines of S.16 of the M.M.R.D. Act, 1957.
In State of Haryana vs Chanan Mal, ; the State Government had declared saltpetre as a minor mineral and auctioned saltpetre mines in the State under the M.M.R.D. Act, 1957 read with the Punjab Minor Minerals Concession Rules, 1964.
In a writ petition filed by one of the owners, the High Court held, unless the mineral deposits were specifically mentioned in the wajib ul arz of the village 156 as having vested in the State, their ownership would continue to remain vested in the former proprietors according to the record of rights.
To meet this difficulty and the difficulties that had been created by haphazard leases created by the erstwhile proprietors, the State legislature passed the Haryana Minerals (Vesting of Rights) Act, 1973 and issued notifications thereunder again acquiring the rights to the saltpetre in the lands putting up certain saltpetre bearing lands to auction.
The High Court upheld the challenge to the validity of the notifications holding that, in view of the declaration contained in S.2 of the M.M.R.D. Act, the field covered by the impugned Act was already fully occupied by Central legislation and that, therefore, the State Act was void and imperative on grounds of repugnancy.
This Court, however, reversed the High Court 's decision.
It held that though the stated objects and reasons of the State Act showed that the acquisition was to be made to protect the mineral potentialities of the land and to ensure their proper development and exploitation on scientific lines and this did not materially differ from that which could be said to lie behind the Central Act the character of the State Act had to be judged by the substance and effect of its provisions and not merely by the purpose given in the Statement of Objects and Reasons.
Analysing the provisions of the Central Act, the Court pointed out that, subject to the overall supervision of the Central Government, the State Government had a sphere of its own powers and could take legally specified actions under the Central Act and rules.
In particular S.16(1)(b) of the Central Act showed that Parliament itself contemplated State legislation for vesting of lands containing minerals deposits in the State Government, a feature that could be explained only on the assumption that Parliament did not intend to touch upon the power of State legislatures under Entry 18 of List II read with Entry 42 of List III.S.17 also showed that there was no intention to interfere with vesting of lands in the States by the provisions of the Central Act.
The decision of Hingir Rampur, Tulloch and Baijnath Kedia were distinguished.
In Chanana Mal (Supra), the respondents relied upon certain observation in Hingir Rampur and State of West Bengal vs Union, (supra).
The Court, however, distinguished them saying: "In the two cases discussed above no provision of the Central Act 67 of 1957 was under consideration by this Court.
Moreover, power to acquire for purposes of development and regulation has not been exercised by Act 67 of 1957.
The existence of power of Parliament to legislate on this topic as an incident of exercise of legislative power on another subject is one thing.
Its actual exercise is another.
157 It is difficult to see how the field of acquisition could become occupied by a Central Act in the same way as it had been in the West Bengal 's case (supra) even before Parliament legislate to acquire land ina State.
At least untill Parliament has so legislated as it was shown to have done by the statute considered by this Court in the case from West Bengal, the field is free for State legislation falling under the express provisions of entry 42 of List III".
Tulloch and Baijnath Kedia were also considered no longer applicable as Ss.16 and 17 of the M.M.R.D. Act, 1957 had been amended to get over the need for a parliamentary legislation pointed out in Baijnath Kedia.
A similar question whether the State legislature was competent to acquire certain sugar undertakings, when the sugar industry had become a "declared: industry under the provisions of Entry 52 of List I read with S.2 of the I.D.R. Act, arose for consideration of Ishwari Khetan Sugar Mills (P) Ltd. vs State of U.P.,[1980] 3.
S.C.R. 331.
Answering this question in the affirmative, the Court observed : "The argument that the State legislature lacked competence to enact the impugned legislation is without force.
Legislative power of the State under Entry 24, List II is eroded only to the extent control is assumed by the Union pursuant to a declaration made by the Parliament in respect of a declared industry as spelt out by the legislative enactment and the field occupied by such enactment is measure of erosion.
Subject to such erosion, on the remainder the State legislature will have power to legislate in respect of a declared industry without in any way trenching upon the occupied field.
State legislature, which is otherwise competent to deal with industry under Entry 24, List II, can deal with that industry in exercise of other powers enabling it to legislate under different heads set out in Lists II and III and this power cannot be denied to the State.
The contention that the impugned Act is in violation of section 20 of the Central Act had no merit.
The impugned legislation was no enacted for taking over the management or control of nay industrial undertaken by the State undertakings.
If an attempt was made to take over the manage 158 ment or control of any industrial undertaking in a declared industry the bar of section 20 would inhibit exercise of such executive power.
The inhibition of section 20 is on the executive power which if as a sequel to an acquisition of an industrial undertaking the management or control of the industrial undertaking stands transferred to the acquiring authority section 20 is not attracted.
It does not preclude or forbid a State legislature exercising legislative power under an entry other than Entry 24 of List II and if in exercise of that legislative power the consequential transfer of management or control over the industry or undertaking follows as an incident of acquisition such taking over of management or control pursuant to an exercise of legislative power is not within the inhibition of section 20:.
The decisions in the above two case were, again, applied in Western Coalfields Ltd. vs Special Area Development Authority, ; Here the question was whether the enactment of the Coal Mines Nationalisation Act, 1973 and the M.M.R.D. Act 1957 precluded the State legislature from providing for the levy of a property tax by the Special Area Development Authority, constituted under a 1973 Act of the State legislature, in respect of lands and buildings used for the purposes of and covered by coal mines.
The plea on behalf of the appellant coalfields was that the State Act was invalid (a) as it encroached on the field vested in the Centre by reason of the declaration of S.2 of M.M.R.D. Act and (b) as it impeded the powers and functions of the union under the Coal Mines Nationalosation Act 1973 which had been enacted by Parliament "for acquisition of coal mines with a view to reorganising and restructuring such coal mines so to ensure the rational, coordinated and scientific development and utilisation of coal resources as best to subserve the common good".
Rejecting this contention the Court held : " Apart from the fact that there is no data before us showing that the property tax constitutes an impediment in the achievement of the goals of the Coal Mines Nationalisation Act, the provisions of the M.P. Act of 1973, under which Special Areas and Special Area Development Authorities are constituted afford an effective answer to the Attorney General 's contention.
Entry 23 of List II relates to "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union".
Entry 54 of List I 159 relates to "Regulation of mines and mineral development to the extent to which such regulation and development under control of the Union is declared by Parliament by law to be expedient in the public interest".
It is true that on account of declaration contained in S.2 of the Mines and Minerals (Development & Regulation) Act.
1957, the legislative field covered by Entry 23 of List II will pass on to Parliament by virtue of Entry 54, List I.
But in order to judge whether, on that account, the State legislature loses its competence to pass the Act of 1973, it is necessary to have regard to the object and purpose of that Act and to the relevant provisions thereof, under which Special Area development Authorities are given the power to tax lands and buildings within their jurisdiction.
We have set out the objects of the Act at the commencement of this judgement, one of which is to provide for the development and administration of Special Areas through Special Area Development Authorities.
Section 64 of the Act of 1973, which provides for the constitution of the special areas, lays down by sub section (4) that: Notwithstanding anything contained in the Madhya Pradesh Municipal Corporation Act, 1956, the Madhya Pradesh Panchayats Act, 1962 the Municipal Corporation, Municipal Council, Notified Area Committee or a Panchayat, as the case may be shall, in relation to the special area and as from the date of the Special Area Development Authority undertakes the function under clause (v) of clause (vi) of Section 68 ceases to exercise the powers and perform the function and duties which the Special Area Development Authority is competent to exercise and perform under the Act of 1973.
Section 68 defines the function of the Special Area Development Authority, one of which as prescribed by clause (v), is to provide the municipal services as specified in sections 123 and 124 of the Madhya Pradesh Municipalities Act, 1961.
Section 69, which defines the powers of the authority, shows that those powers are conferred, inter alia for the purpose of municipal adminstration.
Surely, the functions, powers and duties of Municipalities do not become an occupied filed by reason of the declaration contained in section 2 of the mines and Minerals (Development & Regulation) Act, 1957.
Though, therefore, on account of that declaration, the legislative field covered by Entry 23, List II may pass 160 on to the Parliament by virtue of Entry 54, List I, the competence of the State Government to enact laws for municipal adminstration will remain unaffected by our declaration.
Entry 5 of List II related to "Local Government, that is to say, the constitution and powers of municipal corporation and other local authorities for the purpose of local self Government".
It is in pursuance of this power that the State legislature enacted the Act of 1973.
The power to impose tax on lands and buildings is derived by the State Legislature from Entry 49 of List II: " Taxes on lands and buildings".
The power of the municipalities to levy tax on lands and buildings has been conferred by the State Legislature on the Sspecial Area Development Authorities.
Those authorities have the power to levy that tax in order effectively to discharge the municipal functions which are passed on them.
Entry 54 of List I does not contemplate the taking over of municipal functions.
" The Court pointed out that Murthy provided a complete answer to the above contention.
Chanan Mal and Ishwari Khetan, were referred to and Baijnath Kedia distinguished.
The decision of the Madhya Pradesh High Court in Central Coalfields vs State of M.P., A.I.R. 1986 M.P. 33 also arose out of similar facts: The question for consideration was whether the functions, powers and duties of Municipalities and Special Area Development Authority (SADA) become an occupied field by virtue of S.2 of the MMRD Act, 1957 and the powers vested in them to regulate construction activities relating to mining areas was ultra vires.
It was found that SADA had become the local authority to discharge the functions of a municipal adminstration under a State Act and that the regulation of construction activities was one of the aspects of municipal adminstration and management.
In this situation, the question posed was answered in the negative following Ishwari Khetan, Western Coalfields and Chanan Mal.
Placing considerable reliance on the decisions in Chanan Mal, Ishwari Khetan and Western Coalfields, Sri Iyer contended that the State legislation in the present case is not vitiated by reason of M.M.R.D. Act, 1957.
He also pointed out that India Cement also dies not consider in detail the reasoning in Hingir Rampur and Tulloch but only reefers to certain observations in the dissenting judgement of Wanchoo J ( as His Lordship then was) in the former case and urged.
161 that the entire matter requires careful consideration.
He submitted that Tulloch and Western Coalfields represent two lines of cases which need reconciliation and that this task has not been attempted at all in India Cement.
On the other hand, learned counsel for the respondents submitted that the authority of the Constitution Bench in Western Coalfields which endorsed Murthy should be considered weak after India Cement which has overruled Murthy.
The present case, it is submitted, is closer to Baijnath Kedia.
It is submitted that the principles of Tulloch have been referred to with approval in a number of cases [ Karunanidhi, 1979 3SCR 254 at 277] Hind Stone; , at 746m I.T.C., at 168 and are too well settled to need any reconsideration.
It is clear from a perusal of the decisions referred to above that the answer to the question before us depends on a proper understanding of the scope of M.M.R.D. Act 1957, and an assessment of the encroachment made by the impugned State legislation into the field covered by it.
Each of the cases referred to above turned on such an appreciation of the respective spheres of the two legislations.
As pointed out in Ishwari Khetan, the mere declaration of a law of Parliament that it is expedient for an industry of the regulation and development of mines and minerals to be under the control of the Union under Entry 52 or entry 54 does not denude the State legislatures of their legislative powers with respect to the fields covered by the several entries in List II or List III.
Particularly, in the case of a declaration under Entry 54, this Legislature Power is extended to the extent control is assumed by the Union pursuant to such declaration as spelt out by the legislative enactment which makes the declaration.
The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration.
While the legislation in Hingir Rampur and Tulloch was found to fall within the pale of the prohibition, those in Chanan Mal, Ishwari Khetan and Western Coalfields were general in nature and traceable to specific entries in the State List and did not encroach on the field of the Central enactment except by way of incidental impact.
The Central Act, considered in Chanan Mal, seemed to envisage and indeed permit State legislation of the nature in question.
To turn to the respective spheres of the two legislations we are here concerned with, the Central Act (M.M.R.D. Act, 1957) demarcates the sphere of Union control in the matter of mines and mineral development.
While concerning itself generally with the requirements 162 regarding grants of licenses and leases for prospecting and exploitation of minerals, it contains certain provisions which are of direct relevance to the issue before us.
S.9, which deals with the topic of royalties and specifies not only the quantum by also the limitations on the enhancement thereof, has already been noticed.
S.9A enacts a like provision in respect of dead rent.
Reference may also be made to S.13 and S.18, which to the extent relevant, are extracted here.
Power of Central Government to make rules in respect of minerals (1) The Central Government may, by notification in the Official Gazette, make rules for regulating the grant of prospecting licenses and mining leases in respect of minerals and for purposes connected therewith.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely : (i) the fixing and collection of fees for prospecting licenses or mining leases, surface rent, security deposit, fines, other fees or charges and the time within which and the manner in which the dead rent or royalty shall be payable;* XXX XXX XXX XXX XXX (m) the construction, maintenance and use of roads, power transmission lines, tramways, railways, aerial rope ways, pipe lines and the making of passages for water for mining purposes on any land comprised in the mining lease; XXX XXX XXX XXX XXX (qq) The manner in which rehabilitation of flora and other vegetation such as trees and the like destroyed by reason of any prospecting a mining operation shall be made in the ______________________________________________________________ *Substituted by Act 37 of 1986 for the original clause (i) which read: (i) the fixing and collection of dead rent, fines, fees or other charges and their collection of royalties in respect of (i) prospecting licenses, (ii) mining leases, (iii) minerals, mines, quarried, excavated or collected".
163 same area or in any other area selected by the Central Government (whether by way of reimbursement of the cost of rehabilitation or otherwise) by the person holding the prospecting license or mining lease"* S.18, which originally laid a duty on the Central Government to take all such steps as may be necessary "for the conservation and development of minerals in India" has been amended by Act 37 of 1986 to cover steps "for the conservation and systematic development of minerals in India and for the protection of environment by preventing or controlling any pollution which may be caused by prospecting or mining operations" and the scope of the rule making power under S.18(2) has likewise been enlarged.
S.25(1) read thus: "25(1) Any rent, royalty, tax fee or other sum due to the Government under this Act or the rules made thereunder or under the terms and conditions of any prospecting licence or mining lease may, on a certificate of such effect as may be specified by the State Government in this behalf by general or special order, be recovered in the same manner as an arrear of land revenue".
and sub section (2) provides, further, that all such "rent, royalty, tax, fee" etc.
shall be a first charge of the assets of the holder of the prospecting licence or mining lease as the case may be.
If one looks at the above provisions and bears in mind that, in assessing the field covered by the Act of Parliament in question, one should be guided (as laid down in Hingir Rampur and Tulloch) not merely by the actual provisions of the Central Act or the rules made thereunder but should also take into account matters and aspects which can legitimately be brought within the scope of the said statute, the conclusion seems irresistible, particularly in view of Hingir Rampur and Tulloch, that the State Act has trespassed into the field covered by the Central Act.
The nature of the incursion made into the fields of the Central Act in the other cases were different.
The present legislation, traceable to the legislative power under Entry 23 or Entry 50 of the State List which stands impaired by the Parliamentary declaration under Entry 54, can hardly be equated to the law for land acquisition or municipal administration which were considered in the cases cited and which are traceable to different specific entries in List II or List III.
___________________________________________________________ *Newly inserted by Act 37 of 1986 164 Sri Iyer contended that the object and purposes of the Orissa Act and its provisions were quite distinct and different from the object and purposes of the Central Act with the result that the two enactments could validly coexist since they do not cover the same field.
It was argued that the impugned Act was concerned with the raising of funds to enable panchayats and Samitis to discharge their responsibilities of local administration and take steps for proper development of areas (including mining areas) under their jurisdiction whereas the Central Act was concerned not with any social purpose but merely with the development of mineral resources of the country and as such the State legislation in this regard may also be treated as referable to Entry No.5 of the State List as the statute in Western Coalfields (supra).
As to the reliance on Entry 5 of List II, it is plainly to tenuous.
As pointed out by Sri Bobde, there is a difference between the `object ' of the ACt and its `subject.
The object of the levy of the fees may be to strengthen the finances of local bodies but the Act has noting to do with municipal or local administration.
In this context, it may be pointed out that while S.10 of the Orissa Act, as originally enacted, provided for a distribution of the cess collected among local bodies, an amendment of 1970 restricted the utilisation of the cess partly for primary education and partly for the above purpose.
Even this was amended in 1976 whereafter there has been no restriction regarding the cess collected in respect of mining areas which form part of the consolidated fund of the State.
The levy has, therefore, ceased to be capable of being described as a fee.
Even if its purpose is only to levy a fee, the fee can be described only as one with respect of `land ' (Entry 18) if considered generally or with respect to mines and minerals development (Entry23) if restricted to the nature of the issue before us.
We shall discuss the relevance of Entry 18 later but, so far as Entry 23 is concerned, the State 's legislative competence is subject to the field covered by the Central Act.
Turning therefore to the distinction sought to be made between the respective areas of operation of the two Acts the answer to this contention is provided by Hingir Rampur.
The Constitution Bench first set out the scheme of the impugned Act thus : "The scheme of this Act thus clearly shows that it has been passed for the purpose of development of mining areas in the State.
The basis for the operation of the Act is the constitution of a mining area, and it is in regard to mining areas thus constituted that the provision of the Act come 165 into play.
It is not difficult to appreciate the intention of the State Legislature evidenced by this Act.
Orissa is an under developed State in the Union of India though it has a lot of mineral wealth of great potential value.
Unfortunately its mineral wealth is located generally in areas sparsely populated with bad communication.
Inevitably the exploitation of the minerals is handicapped by lack of communications, and the difficulty experienced in keeping the labour force sufficiently healthy and in congenial surroundings.
The mineral development of the State, thereof, requires that provision should be made for improving the communications by constructing good roads and by providing means of transport such as tramways, supply of water and electricity would also help.
It would also be necessary to provide for amenities of sanitation and education to the labour force in order to attract workmen to the area.
Before the Act wa passed it appears that the mine owners tried to put up small length roads and tramways for their own individual purpose, but that obviously could not be as effective as roads constructed by the State and tramway service provided by it.
It is on a consideration of these facts that the State Legislature decided to take an active part in a systematic development of its mineral areas which would held the mine owners in moving their minerals quickly through the shortest route and would attract labour to assist the excavation of the minerals.
Thus there can be no doubt that the primary and the principal object of the Act is to develop the mineral areas in the State and to assist more efficient and extended exploitation of its mineral wealth".
A little later, at pare 559, the provisions of Central Act LIII of 1948 which were less far reaching that those of 1957 ACt as can be seen from the observations at page 476 of Tulloch were analysed and the Court concluded : "Amongst the matters covered by S.6(2) is the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected.
It is true that no rules have in fact been framed by the Central Government in regard to the levy and collection of any fees; but, in our opinion, that would not make any difference.
If it is held that this Act contains the declaration referred to in Entry 166 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act.
What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List 1 with respect of regulation and development under the control of the Union, the Entry 54 in List 1 requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest.
Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to State Legislature to pass an Act in respect of the subject matter covered by the said declaration.
In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union.
In such a case the test must be whether the legislative declaration covers the field or not.
Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948".
The following observations in Tulloch are also apposite in this context: " On the other hand, Mr. Setalvad learned counsel for the respondent urged that the Central ACt covered the entire field of mineral development, that being the "extent" to which Parliament had declared by law and it was expedient that the Union should assume control.
In this connection he relied most strongly on the terms of s.18(1) which laid a duty upon the Central Government "to take all such steps as may be necessary for the conservation and development of minerals in India and " for that propose the Central Government may, by notification, make such rules as it deems fit".
If the entire field of mineral development was taken over, that would include the provision of amenities to workmen employed in the mines which was necessary in order to stimulate or maintain the working of mines.
The test which he suggested was whether, if under the power 167 conferred by s.18(1) of the Central Act, the Central Government has made rules providing for the amenities for which provision was made by the Orissa Act and if the Central Government had imposed a fee to defray the expenses of the provision of these amenities, would such rules be held to be ultra vires of the Central Government, and this particularly when taken in conjunction with the matters for which rules could be made under s.13 to which reference has already been made.
We consider there is considerable force in this submission of learned counsel for the respondent, and thus would require very detailed and careful scrutiny.
We are, however, relieved from this task of detailed examination and discussion of this matter because we consider that it is concluded by a decision of the Court in the Hingir Rampur Coal Co. Ltd & Ors.
vs The State of Orissa & Ors., [1961] 2.S.C.R. 537 The above argument was accepted by the Court, vide page 476, Reference may also be made here to the recent decision of this Court in Bharat Coking Coal vs State of Bihar, ; The question whether the State of Bihar had the authority to grant a lease for lifting coal slurry coming out of the appellants washeries and getting deposited on the river bed or other lands was answered in the negative the court came to the conclusion that the "slurry" was a "mineral" and that its regulation was within the exclusive jurisdiction of Parliament.
The Court, in coming to the conclusion, held that no rules had been framed under S.18(1) or 18(2) (k) disposal or discharge of waste, slime or tailing arising from any mining or metallurgical operations carried out but held that this was immaterial in view of the principles laid down in Hingir Rampur, Tulloch and Baijnath Kedia.
These observations establish on the one hand that the distinction sought to be made between mineral development and mineral area development is not a real one as the two types of development are inextricably and integrally interconnected and, on the other, that, fees of the nature we are concerned with squarely fall with the scope of the provisions of Central Act.
The object of S.9 of the Central Act cannot be ignored.
The terms of S.13 of the Central Act extracted earlier empower the Union to frame rules in regard to matters concerning roads and environment.
S.18(1) empowers the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India and for protection of environment.
These, in the very nature of things, cannot mean such amenities only in the mines but take in also the areas leading to and all 168 around the mines.
The development of mineral areas is implicit in them.
S.25 implicitly authorises the levy of rent, royalty, taxes and fees under the Act and the rules.
The scope of the powers thus conferred is very wide.
Read as a whole, the purpose of the Union control envisaged by Entry 45 and the M.M.R.D. Act 1957, is to provide for proper development of mines and mineral areas and also to bring about a uniformity all over the country in regard to the minerals specified in Schedule I in the matter of royalties and, consequently prices.
Sri Bobde, who appears for certain Central Government undertakings, points out that the prices of their exports are fixed and cannot be escalated with the enhancement of the royalties and that, if different royalties were to be charged in different States, their working would become impossible.
There appears to be force in this submission.
As pointed out in India Cement, the Central Act bars an enhancement of the royalty directly or indirectly, except by the Union and in the manner specified by the 1957 Act, and this is exactly what the impugned Act does.
We have, therefore, come to the conclusion that the validity of the impugned Act cannot be upheld by reference to Entry 23 or Entry 50 of List II.
An attempt was made to rest the legislation of Entry 18 of List II viz. `land '.
This attempt cannot succeed for the reasons whichever have set out to negative the plea that it falls under Entry 49.
A similar pleas in Baijnath was rejected by Hidayatullah C.J. in the following words : "Mr. L.N. Sinha argued that the topic of legislation concerns land and therefore falls under entry 18 of the State List and he drew our attention to other provisions on the subject of mines in the Land Reforms Act as originally passed.
The abolition of the rights of intermediaries to the mines and vesting these rights as lessors in the State Government was a topic connected with land and land tenures.
But after the mining leases stood between the State Government and the lessees, any attempt to regulate those mining leases will fall not in entry 18 but in entry 23 even though the regulation incidentally touches land.
The pith and substance of the amendment to s.10 of the Reforms Act falls within entry 23 although it incidentally touches land and not vice versa.
Therefore this amendment was subject to the overriding power of Parliament as declared in Act 67 of 1957 in S.15.
Entry 18 of the State List, therefore, is no help".
169 It will be seen that, if the levy in question cannot be described as a tax on land, it cannot be described as fee with regard to land either.
For the reasons above mentioned, we hold that the levy of cess under S.5 to 7 of the Orissa Cess Act, 1962 is beyond the competence of the State Legislature.
Bihar: The relevant provisions of the Bihar statutes have been set out earlier.
While S.5 only lays down that all immovable property shall be liable to a local cess and S.6 provides for the levy to be based on the annual value of lands and sale value of other immovable properties, the latter section specifically enacts that the cess will be on royalty from mines and quarries and on the annual net profit the railways and tramways.
The further amendments of S.6 have not changed this basic position.
Though the section refers also to the value of the mineral bearing land, that furnishes only the maximum upto which the cess, based on royalty, could go.
In other words, the cess is levied directly on royalties from mines and quarries.
The case is, therefore, indistinguishable from India Cement.
The notifications place the matter beyond all doubt.
The levy is a percentage or multiple of the royalty depending upon the kind of mineral and in the case of iron ore the method of extraction and nature of the process employed.
There are no clear indications in the stature that the amounts are collected by way of fee and not tax.
The provisions of S.9 extracted earlier would indicate that only a small percentage goes to the district fund and the remaining forms parts of the consolidated fund of the State "for the construction and maintenance of other works of public utility".
However, the proviso does require at least ten percent to be spent for purposes relating to mineral development.
We shall, therefore assume that the levy can be treated, in part, as a fee and, in part, as a tax.
But even this does not advance the case of the respondents for the reasons already discussed.
Shri Chidambaram submits that, in the original counter affidavit filed on behalf of the State, no case was sought to be made out that it was a tax on land, the case was that it was a "tax on mineral rights".
He urged that, this being out of question because of India Cement (para 23 and 30) a belated attempt is made to bring it under Entry 49.
we do not need to discuss the contentions here in detail because this is a clearer case of levy on royalty than in Orissa; and, for the reasons we have outlines in our discussion in regard to the Orissa Acts, this levy 170 has also to be declared invalid.
Shri Chidambaram also contended that the State cannot seek sustain the levy by relying of article 277 of the Constitution , in view of the fact that the cess is being levied since 1880.
Article 277 is in these terms : "Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by an municipality or other authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law".
We think, as rightly contended by Sri Chidambaram that a reliance on article 277 will be misplaced for three reasons : (a) The levy that is challenged is under S.6, as amended in 1975, i.e. a post constitution levy; (b) S.6 on its own language, is operative only "until provision to the contrary is made by the Parliament" and, as we have held that the field is covered by the M.M.R.D. Act, is supersedes the effect of S.6 re:mineral lands; and (c) Article 277 only saves taxes, duties, and cesses mentioned therein if they continue to be applied for the same purposes and until Parliament by law provides to the contrary and with the enactment of the M.M.R.D. Act, 1957, they cease to be valid.
In this context, the following observations of this Court in Ramakrishna Ramanath vs Janpad Sabha,[1962] Supp 3 SCR 70 quoted in Town Municipal Committee vs Ramachandra, ; at 959 are quire apposite : "Dealing next with the import of the words `may continue to be levied ' the same was summarized in these terms: (1) The tax must be one which was lawfully levied by a local authority for the purpose of a local area, 171 (2) the identity of the body that collects the tax, the area for whose benefit the tax is to be utilised and the purposes for which the utilization is to take place continue to be the same, and (3) the rate of the tax is not enhanced not its incidence in any manner altered, so that it continues to be the same tax".
It is obvious that if these tests were applied the attempt to sustain the tax on the basis of article 277 cannot succeed.
Indeed, no such attempt was made before us.
We, therefore, hold that the levy of cess has to be struck down.
It has also been brought to our notice that a Bench of two Judges of this Court has already allowed an appeal by an assessee from a judgement of the Patna High Court to the contrary viz. CA No.1521 of 1990.
It has been brought to our notice also that the Patna High Court has recently invalidated the levy of the cess in Central Coalfields Ltd. vs State, (CWJC 2085/89 and connected cases) in a judgement dated 6.11.90, following India Cement.
Madhya Pradesh : We now turn to the provisions of Madhya Pradesh Act 15 of 1982.
We are concerned only with Part IV which levies a cess not on land in general which could be referred to Entry 18 or Entry 49 but only on land held in connection with mineral rights which, in the State, are principally in regard to coal and limestone.
Under S.9 the proceeds are to utilised only towards the general development of mineral bearing areas.
Although there is no provision for the constitution of a separate fund for this purpose as is found in relation to the cesses levied under Part II or Part III of the Act this considerations alone does not preclude the levy from being considered as a fee:vide Srinivasa Traders V. STate [1983] 3.SCR 843 at 873.
The clear ear marking of the levy for purposes connected with development of mineral areas was considered by the High Court, in our view rightly, sufficient to treat it as a fee.
However, the High Court pointed out, such fee would be referable to item 23 and, hence, out of bounds for the State Legislature, after the enactment of M.M.R.D. Act, 1957.
For the reasons which have already been discussed in relation to the Orissa Statute, we uphold this conclusion.
172 The other statute viz. the Madhya Pradesh Upkar Adhiniyam (Act 1 of 1982) came up for consideration of a Full Bench of the Madhya Pradesh High Court in M.P. Lime Manufacturer 's Association vs State, (and connected cases) in AIR 1989 M.P. 264.
The Full Bench held that, in view of s.12 of the Act having been deleted by the 1989 amendment, the levy under s.11 of the Act ceased to be a fee and become a tax.
It held further that the levy was not covered by Entry 49 or Entry 50 of List II and was, therefore, ultra vires.
It observed : "It is significant to note that cess is not imposed on all land and that it is not dependent either on the extent of the land held in connection with mineral rights or on the value thereof.
The subject matter of tax, therefore, is major mineral raised from the land held in connection with mineral right.
If no minerals are raised, tax is not livable.
The tax is not dependent on the extent of the land held in connection with mineral rights.
It is not case where all land is liable to payment of cess, that the liability is assessed on the basis of the value of the land and that the measure of the tax in so far as land held under a mining lease is concerned, is the value of the minerals produced.
Under the impugned Act, value of the land or of the minerals produced does not play any part in the levy of cess.
The quantity of major minerals produced from the land determines the liability to pay tax.
In these circumstances, the impugned levy cannot be held to be a tax on land which is covered by Entry 49 of the State List.
After distinguishing Ajay Kumar Mukherjea vs Local Board, ; and referring to Union vs Bombay International Ltd. AIR 1984 SC 420 the Courted concluded : " The character of impost in the instant case is that though in form it appears to be a tax on land, in substance, it is a tax on minerals produced therefrom.
The subject matter of tax is, therefore, not covered by Entry 49 of the State List." As for Entry 50, after referring Hingir Rampur, the Court observed : "Now from a perusal of S.11 of the Act, it would be clear that in the instant case by the charging section, tax is not imposed on the mineral rights of every holder of mining 173 lease.
The tax is levied on minerals produced in land held under mining lease.
In these circumstances, the tax levied by the Act cannot be held to be a tax covered by Entry 50 of List II of the Seventh Schedule to the Constitution.
In our opinion, therefore, it has not been shown that the State Legislature is competent to levy the impugned cess.
" This conclusion is obviously correct in the light of our earlier discussion.
The court, however, expressed an opinion, in paras 10 to 12 of the judgment, that in case the levy could be treated as a tax imposable under Entry 49 or 50 of List II in the Second Schedule to the Constitution, such power "has not been taken away by the provision of the MMRD Act".
We think, as already pointed out by us that though the MMRD Act, 1957, unlike s.6(2) of the 1948 Act does not contain a specific provision for the levy of taxes, s.25 of the former does indicate the existence of such power.
The above observations of the High Court, therefore, in our view, do not attach sufficient importance to s.25 of the MMRD Act and the field covered thereby.
This aspect, however, is not of significance in view of the conclusion that the tax is not referable to Entry 49 or Entry 50.
We may add that a Bench of this Court has already dismissed the State 's petition for leave to appeal from the judgment of the Full Bench (S.L.P. 10052/89, 12696/84 etc.
disposed of on 5.2.90) in limine as squarely covered by India Cement.
It is brought to our notice that the Madhya Pradesh High Court, after India Cement, has reaffirment its conclusions in Hiralal and M.P. Lime Manufacturers ' Association in Ankur Textiles and Another vs South Eastern Coalfields, (M.P. No. 1547 of 1990) in the light of India Cement.
THE REFUND ISSUE Having thus concluded that the levy of cess under the Orissa, Bihar and Madhya Pradesh enactments is invalid,, it becomes necessary to consider the logical consequences of such a conclusion.
Prima facia it would seem that the levy should be considered bad since its inception and that all cess levied under the impugned provisions should be directed to be refunded to the assessees, particularly in view of Article 265 of the Constitution.
For the States, however, reliance is placed on the following observations in para 35 of the judgement in India Cement to contend to the contrary.
Towards the conclusion of his judgement, Sabyasachi Mukherjee, C.J. dealt with this issue thus : 174 "Mr. Krishnamurthy Iyer, however, submitted that, in any event, the decision in H.R.S. Murthy case was the decision of the Constitution Bench of this Court.
Cess has been realised on that basis for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension of Service Scheme to which our attention was drawn.
Mr. Krishnamurthy Iyer further submitted that the Directive Principles of State Policy embodied in the Constitution enjoined that the States should take steps to organise village panchayats and endow them with power and authority as may be necessary to enable them to function as units of self government and as the amounts have been realised on that basis, it at all, we should declare the said cess on reality to be ultra vires prospective, In other words, the amounts that have been collected by virtue of the said provision,s should not be declared to be illegal retrospectively and the State made liable to refund the same.
We see good deal of substance in this submission.
After all, there was a decision of this Court in H.R.S. Murthy case and amounts have been collected on the basis that the said decision was the correct position.
We are, therefore, of the opinion that we will be justified in declaring the levy of the said cess to be ultra vires the power of the State Legislature prospectively only".
Relying on the above, observations, it is submitted for the States that they should not be directed to refund a cess which they have been levying for several years in the past on the basis of the law declared by the Supreme Court in Murthy.
Certain other circumstances have also been brought to our notice in this connection : (i) Several States have preceded on the basis that they are entitled to levy a cess of the nature in question.
In addition to the States referred to earlier in the judgement, Rajashtan and Andhra Pradesh have also similar statues.
(ii) The levy accounts for a substantial part of the States finances particularly in States which are rich in minerals.
For e.g. State of Madhya Pradesh accounts for a good percentage of this country 's mineral resource.
It produces 26.53% of the country 's production in limestone.
36% in dolomite, 28.14% in coal, 21.5% in iron ore, 13% in bauxite, 21.38% in Manganese ore, 175 14.43% in rock phosphate, 33% in copper ore and so on.
The amounts of cess run to several crores.
A direction to refund the cess collected thus far will result in crying halt to all developmental activities initiated and put through and cause irreparable loss to the State.
(iii) As pointed out (for e.g. in pars 5 to 8 in CMP Nos. 31187 to 31196 of 1984 in CA Nos. 1640 to 1643,1645,1649, 1654, 1655,1659, and 1662 of 1986) the impact of the cess has already been passed on by the assessees which are leading industries that can easily bear the brunt of the same to their customers.
A refund granted to them will only result in their unjust enrichment and this should be safeguarded against applying the principles in U.P. State Electricity Board, Lucknow & Ors.
vs City Board, Mussoorie & Ors., ; at page 824 and State of Madhya Pradesh vs Vyankatlal & Anr., ; at page 568.
The above request was vehemently opposed by the assessees counsel.
Presenting their case on this issue, Sri Nariman (appear for the appellants in C.A. 4353 4 of 1983 and C.A. 2053 80 of 1980) contended that we should ignore the dicta in para 35 of India Cement as per incuriam.
He submitted, first, that the Court there has acted on the assumption that a doctrine of prospective overruling had been enunciated in Golaknath; , Analysing the various judgments delivered in that case, he submitted that, while Subba Rao C.J. and four other judges (pp 805 813) approved of the applicability of this doctrine in India, five other judges spoke against it (pp 890, 897, 899 922, 921 and 952) and the eleventh judge was neutral (p.408).
He therefore, submitted that the judges who decided Golaknath were equally divided on the issue and so there is no reason disdained of the Court binding on us.
Second, he submitted that the doctrine of prospective overruling was evolved by the Supreme Court of the United States in the absence of any constitutional provision militating against it, vide sunburst (at page 366) and Linkletter; , (at page 604 8).
In India, however, the application of the doctrine, particularly in the context of an issue regarding the validity of a tax levy, would run counter to specific provisions contained Articles 246 and 265 of the Constitution.
Where the Court finds that a legislation is beyond the competence of the concerned legislature, it stands uprooted altogether because Articles 246 and 265 say so.
There is no scope for, and no room for the exercise of any discretion by, the Court to say that, there articles of the Constitution notwithstanding, they 176 would treat the legislation to be valid for a certain period or for certain purposes.
Third, he submitted that the above objection cannot be "circumvented" by a resort to Article 142.
Sri Nariman referred us in this context to the observations in the following decisions of this Court: Re: Article 246 Pesikaka at pp652,654,656 Chamarbaugwala at p. 940 Sundararamier & Co ; at pp 1468 1474 West Ramnad at p.764 M.L. Jain 1963 Supp 1SCR 912 at pp 530 41 Re: Article 265 Moopil Nayar at p. 89 Balaji at p. 996 Chottachan 1962 Supp.
2 SCR 1 at pp.
29 30 Bakshi Singh at p. 233 Re: Article 142 Garg 1963 Suppl.
1 SCR at pp.
896 8 It is submitted , relying on Mahabir Kishore Ors.
vs State of Madhya Pradesh, [1989] 4 SCC 1 that a refund is the automatic and inevitable consequence of the declaration of invalidity and should be granted proved a suit within a period of limitation or a writ for declaration and consequential relief is filed.
Supplementing the above arguments, Sri G. Ramaswamy appearing for some of the assessees, contended that there can be no question of the Court exercising any discretion under Article 142 so as to destroy a fundamental right of the assessees.
Learned counsel also submitted that considerations of hardship of the States, in case they are called upon to refund huge amounts, can be no relevant consideration at all.
He urged, that in some at least of the cases here, there is no averment, much less evidence, of any irreparable hardship that is likely to result if a refund is ordered.
He also pointed out that in the 177 converse situation where a retrospective levy is held to be valid, assessees have been held entitled to no relief from payment of back duty on grounds of hardship: vide Chhotabhai Jethabhai Patel & Co.v.
Union of India [1962] 2 Supp.
at Pp12,13 and urged that there cannot be a different rule for the State.
Sri B. Sen submitted that the ruling in Murthy could not be invoked to seek prospective invalidation as, at least so far as Orissa was concerned, as the decision in Tulloch had clearly defined the limitations of the State 's power to make such levies.
In addition to the above general arguments, reliance had also been placed by the assessees on certain specific interim orders passed in these cases and it has been contended that these orders should be given effect to, or at least taken into account, in deciding the issue of the final relief to be granted.
It is therefore necessary to refer to these orders : (i) In C.A. Nos.
4353 4 of 1983, there is no interim order staying recovery of the cess at all except of the arrears for the period from 1.1.1983 to 31.3.1983 and even this was made subject to the furnishing of a bank guarantee by the assessee.
(ii) In C.A. 2053 80 of 1980 there was initially (on 2/2/1981) an order of stay of recovery of cess on the furnishing of bank guarantees.
But this was later substituted by an order of 25.3.1983 by which the amounts of cess were to be deposited in the High Court every quarter and then withdrawn by the State but this was on the undertaking buy the State 's Advocate General to refund the amount "if deposited, in the event the appeal succeeds".
This continued till 30.1.90 when the Counsel of the State of Orissa undertook, in view of the decision in India Cement, that the levy of the cess for the quarter ending December, 1989 onwards will not be enforced until further orders.
Presumably, therefore, there has been no collection for cess in Orissa since that period.
(iii) The position in the Orissa case of Orient Paper & Industries Ltd. is somewhat different.
It is pointed out that when the levy of cess first came into force w.e.f.
1.4.1977, the Western Coalfields Ltd. who supplied coal to the assessees had challenged the levy of cess by a writ petition and obtained an interim injunction order but eventually withdrew the writ petition.
But simultaneously, the said company wrote to the assessee that the amounts of cess (which were collected from the assessee) would be kept in a suspense account and that, after a deci 178 sion is rendered by a court of law, it will be decided whether they should be deposited with the State against cess or be refunded to the assessees.
It was made clear that, in case the levy of cess is held invalid, "there will be no hitch in refunding the amount".
This arrangement went on between 1977 and 1982.
On 21.9.1982, the assessee filed a writ petition challenging the levy as it was enahanced from 25% to 100% from 1.4.80.
An interim stay was granted by the High Court restricted to be enhanced demand but even this was vacated by the High Court on 13.5.1983 in view of the decision in Lakshmi Narain Agarwala vs State AIR 1983 Orissa 210 that the levy was valid.
Finally, the High Court by its judgement dated 22.12.1989 followed India Cement and allowed the writ but directed that the collections so far made shall be allowed to be retained by the State as was directed by the Supreme Court in the case of India Cement (supra).
This judgement is the subject matter of SLP 1479 of 1990 by the State.
The assessee thereupon file a review petition in regard to the above direction contending ; (a) that a High Court had no jurisdiction to declare provision to the unconstitutional only "prospectively"; (b) that the cess in the case had been collected only by Western Coalfields Ltd. and had not been deposited in the State coffers; and (c) that the principle of `unjust enrichment ' should equally apply to the State which should not be permitted to enrich itself by the levy of an illegal exaction.
The application for review was dismissed by the High Court on 13.7.90.
Thereupon the assessee has preferred the unnumbered SLP on 1990 and SLP 11939 on 1990 respectively against the original judgement dated 22.12.1989 and the order on the review petition dated 13.7.1990.
It is contended that the High Court, having regard to the circumstances set out earlier, should have directed a refund of the cess.
collected.
IT is stated that, subsequently, Western Coalfields have paid over the amounts of cess to the Government [vide orders of this Court referred to in sub para (v) below].
It is also submitted that the averments by the State now made that the amounts collected have been utilized by the State on objects enumerated in Part IV of the Constitution are the result of an afterthought and are being put forward to defeat the rightful entitlement of the assessee to the refund.
(iv) In the Bihar case, there was an interim order on 10.2.1986 to the following effect: 179 "On the stay application there will be no stay of recovery of cess but in case appellants succeed in appeal in this Court, the excess amount so recovered will bepaid to the appellants with interest at the rate of 12% from the date of recovery" This was modified on 30.1.90 in view of the judgement in India Cement which had been delivered by this time, and it was directed that the State of Bihar should not also enforce any demand for cess for the quarters ending December, 1989 and thereafter until further orders.
Presumably, therefore, there has been no levy of cess in Bihar from the last quarter of 1989 onwards.
Counsel for the assessees from Bihar Sri Chidambaram and Sri Shanti Bhushan stated that they seek compliance with the order dated 10.2.86 and would not insist on refund of cess collected earlier to that date.
(v) Turning to the Madhya Pradesh matters, the position is this, The High Court, by its judgement dated 28.3.1986 held the levy to be invalid.
In C.A. 1640 to 1662 of 1986, the initial order passed on 2.5.1986 was this : " There will be stay of refund of the cess already collected pending disposal of the appeals.
Learned counsel for the State states that, in the event of the appeals being dismissed the State is prepared to pay interest at 12% per annum.
There will, however, be no stay of operation of the judgement.
" As a result of the order, there should have been no collection of cess by the State subsequent to the date of the judgement and only issue could have been regarding the refund of the cess already collected from 1982 to 28.3.1986.
However, the Western Coalfields Ltd. approached the Court with an application in one of the appeals (viz. C.A. 1649/86) praying that, pending disposal of the appeals, it should be permitted to collect the amount of cess and deposit the same in a separate account in the Bank vis a vis each of its customers.
This application was ordered on 1.8.86.
When this order was passed, the State Government moved an application praying that, instead of the monies being kept in deposit in bank account by Western Coalfields Ltd., it will be conducive to public interest if the State is permitted to utilise the moneys "in mineral areas development programs" and that the State would abide by such 180 terms as the Court may impose at the time of final decision.
It was, therefore, prayed that the Western Coal fields should be directed to deposit the amounts collected by it to the State Government.
The Court found this request reasonable and passed the following order on 15.10.86 : "The order dated 1.8.86 passed in the above appeal is modified as follows : The amount deposited by the Western Coalfields Ltd. in a separate account in the Bank in accordance with the directions issued by this Court on 1.8.1986 shall be paid to the State Government of Madhya Pradesh.
In the event, of the State Government failing in this appeal, the amount received by the Madhya Pradesh Government under this order shall be refunded by that Government within three months from the date of the judgement to the Western Coalfields Ltd. with interest at 12% per annum to disburse in favour of those who had paid it, subject to such directions which this court may give in its judgement.
The amount received by the Madhya Pradesh State Government shall be spent in accordance with the provisions contained in the impugned Act." Fresh applications were filed by the State in a number of the other appeals seeking similar direction as in C.A. 1649/86 but the request does not show that any such order were passed in appeal other than C.A. 1649/86.
However, it seems that, in the case of coal, the cess is being collected by Western Coalfields Ltd. and other like public sector organisation (which are subsidiaries of Coal India Ltd.) from all their customers and passed on to the State not only in Madhya Pradesh but also in Orissa (as indicated in sub para (iii) above), apparently on the understanding that it should be refunded by the concerned State Government with interest in case the levy is ultimately held invalid.
Sri Bobde, appearing for the Western Coalfields , made it clear that this company would abide by the direction of this Court, in so far as the amounts of cess collected by it remain with it or are directed to be refunded by the State Government to it.
We have given our earned consideration to these contentions and were are of opinion that the ruling in India Cement concludes the issue.
There the Court was specifically called upon to consider an argument that, even if the statutory levy should be found invalid, the 181 Court may not give directions to refund amounts already collected and the argument found favour with the bench of seven judges.
We are bound by their decision in this regard.
It is difficult to accept the plea that, in giving these directions, the Court overlooked the provisions of Article 246 and 265 of the Constitution.
The Court was fully aware of the position that the effect of the legislation is question being found beyond the competence of the State legislature was to render it void ab initio and the collections made thereunder without the authority of law.
Yet the Court considered that a direction to refund all the cesses collected since 1964 would work hardship and injustice.
The directions, now impugned, were given in the interest of equity and justice after due consideration and we cannot take a contrary view.
In our view, we need enter into a discussion of the principles of prospective validation enunciated by at lease some of the Judges in Golaknath (supra) as the direction in India Cement can be supported on another well settled principle applicable in the area of the writ jurisdiction of Courts.
We are inclined to accept the view under on behalf of the state that a finding regarding the invalidity of a levy need not automatically result in a direction for refund of all collections thereof made earlier.
The declaration regarding the invalidity of a provision and the determination of the relief that should be granted in consequence thereof are two different things and, in the latter sphere, the Court has, and must be held to have, certain amount of discretion.
It is a well settled proportion that it is open to the Court to grant , could or restrict the relief in a inner most appropriate to the situation before it is insuch a way as to advance the interests of justice.
It will be appreciated that it is not always possible in all situations to give a logical and complete effect to a finding.
Many situations of this arise in actual practice .
For instance , there are cases where a comes to the conclusion that the termination of the services of an employee is invalid, yet in refrains from giving him benefits of "reinstatement" (i.e. continuity in service) on "back wages".
In such cases, the direction of the Court does not result in a person being denied the benefits that should flow to him as a logical consequence of a declaration inhis favour.
It may be said that, in such a case, the Court 's direction does not violate any fundamental right as happens in a case like this were an "illegal" exaction is sought to be retained by the State.
But even in the latter type of cases relief has not been considered automatic.
One of the commonest issue that arose in the context of the situation we are concerned with is where a person affected by an illegal exaction files an application for refund under the provisions of the relevant statute of files a suit to recover the taxes as 182 paid under a mistake of law.
In such a case, the Court can grant relief only to extent permissible under the relevant rules of limitation.
Even if he files an application for refund or a suit for recovery of the taxes paid for several years, the relief will be limited only to the period in regard to which the application for refund or a suit for recovery of the taxes paid for several years, the relief will be limited only to the period in regard to which the application or suit is not barred by limitation.
If even this instance is sought to be distinguished as a case where the Court 's hands are tied by limitations inherent in the form of forum in which the relief is sought, let us consider a very case where a petitioner seeks relief against an illegal exaction in a writ petition filed under Article 226.
In this situation, the question has often arisen whether the petitioner 's prayer for refund of taxes collected over an indefinite period of years should be granted once the levy is found to be illegal.
To answer the question in the affirmative would result in discrimination between persons based on their choice on the forum for relief, a classification which, prima facie is too fragile to be considered a relevant criterion for the resulting discrimination.
This is one of the reasons why there has been an understandable hesitation on the part of Courts in answering the above question in the affirmative.
The above aspect of the matter has been considered in several decisions of this Court.
In State of Madhya Pradesh vs Bhailal Bhai & ORs.
, ; the respondents who were dealers in tobacco in the State of Madhya Bharat filed a writ petition under Article 226 of the Constitution for the issue of writ of mandamus directing the refund of sales tax collected from them on the ground that the impugned tax was violative of Article 301 (a) of the Constitution and that they had paid the same under a mistake of law.
It was contended on behalf of the State that even if the provision violated the fundamental rights, the High Court should not exercise its discretionary power of issuing a writ of mandamus directing refund since there was unreasonable delay in filing the petition.
This contention of the State was rejected by the High Court but on further appeal this Court tool a different view.
While agreeing that the Courts have the power, for the purposes of enforcement of fundamental rights and statutory rights, to give a consequential relief by ordering repayment of any money realised by the government without authority of law, the Court said: "At the same time we cannot lose sight of the fact that the special remedy provided under Article 226 is not intended to supersede completely the modes of obtained relief by an action in a civil court or to deny defends legitimately open in such actions.
It has been made clear more than once that the power to give relief under Article 226 is a discretionary 183 power.
This is specially true in the case of power to issue writs in the nature of mandamus.
Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party in seeking the special remedy and what excuse there is for it.
Another matter which can be rightly taken into consideration is the nature of the facts and law that may have to be decided as regarded the availability of consequential relief.
Thus, where, as in these cases, a person comes to the Court for relief under Article 226 on the allegations that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, if it the Court, finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, it is still not bound to exercise its discretion directing repayment.
Whether repayment should be ordered in the exercise of this discretion will depend in each case of its own facts and circumstances.
It is not easy nor is it desirable to lay down any rules of universal application it may however be stated as a general rule that if there has been unreasonable delay, the Court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus.
" The Court further pointed out that the delay may be considered unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the court to hold that it is unreasonable.
The relief given by the High Court was modified on this basis.
In Tilokchand Mothichand vs Munshi the petitioners had collected sales tax from their customers and paid it over to the State.
The Sales Tax Authorities directed a refund but on the condition that the amounts should be passed on to the customers.
Since the petitioner did not comply with the condition, the sales tax officer forfeited the sum under S.21(4) of the Bombay Sales Tax Act, 1953.
A writ petition was filed by the petitioner contending that S.21(4) infringed Articles 19[10(f)] and 365 of the Constitution and hence, they were not liable to repay the amount.
This was dismissed on the ground that they had defrauded their customers and, therefore, not entitled to any relief even if there was a violation of fundamental rights.
An appeal to a Division Bench was also dismissed.
Subsequently, when coercive proceedings were taken for recovering the amounts as arrears of land revenue, the petitioners paid the amounts 184 in 1959 60.
Much later, there was a decision of this Court striking down the corresponding provision of the Bombay Sales Tax Act 1946 as ultra vires.
The petitioners thereupon filed a writ petition under Article 32 of the Constitution claiming a refund of the amounts paid by them in consequence of the recovery proceedings.
It was held by four of the five learned Judges of this Court that the writ petition should be dismissed on the ground of laches.
Chief Justice Hidayatullah held that though Article 32 gives the right to move the Court by appropriate proceedings for enforcement of fundamental rights and State cannot place any hindrance in the way of an aggrieved person, once the matter reached this court, the extent or manner of interference was for the Court to decide.
The learned Chief Justice pointed out that this Court had put itself in restraint in the matter of petitions under Article 32.
For example, if a party had already moved High Court under Article 226, this court would refuse to interfere.
Similarly, in inquiring into belated and stale claims, this Court should take note of evidence of neglect of the petitioner 's own rights for a long time or of the rights of innocent parties which might have merged by reason of the delay.
It was possible for this Court to lay down any specific period as the ultimate limit of action and the case will have to be considered on its own facts.
On the facts of the case before it, the majority found that the petitioner had by his own conduct abandoned his litigation years ago and could not be permitted to resume it several years later merely because some other person had got the statue declared unconstitutional.
While Hidayatullah C.J. was of the view that the Court should not, on the facts of the case apply for analogy of the article in the Limitation Act in cases of mistake of law give relief, Bachawat and Mitter JJ.
felt that even for a writ petition the limitation period fixed for a suit would be a reasonable standard for measuring delay.
Sikri J and Hegde J. dissented.
Sikri J. was of the view that on the facts of the case there was no delay but that the period under the Limitation Act should not be applied to such cases and that a period of one year should be taken as a period beyond which the claim would be considered a stale claim unless the delay is explained.
" Such a practice" the learned Judge observed, "would not destroy the guarantee under Article 32 because the article nowhere lays down that a petition however late, should be entertained.
Only Hegde J. was emphatic that laches or limitation should be no ground to deny relief.
The learned Judge observed (for brevity, we quote from head note): "Since the right given to the petitioners under Article 32 is itself a fundamental right and does not depend on the discretionary powers of this Court, as in the case of Article 185 226, it is inappropriate to equate the duty imposed on this Court to the powers of Chancery Court in England or the equitable jurisdiction of Courts in the United States.
The facts that the petitioner have no equity in their favour is an irrelevant circumstance in deciding the nature of the right available to an aggrieved party under Article 32.
This Court is charged by the Constitution with the special responsibility of protecting and enforcing the fundamental rights, and hence laches on the part of an aggrieved party cannot deprive him of his right to get relief under Article 32.
In fact, law reports do not show a single instance of this Court refusing to grant relief on the grounds of delay.
If this Court could refuse relief on the ground of delay , the power of the Court under Article 32 would be discretionary power and the right would cease to be a fundamental right.
The provisions contained in the Limitation Act do not apply to proceedings under Articles 226 and 32 and if these provisions of the Limitation Act are brought in indirectly to control the remedies conferred by the Constitution, it would be a case of Parliament indirectly abridging the fundamental rights which this court, in Golaknath 's case.
[1967]2 S.C.R. 752 held that Parliament cannot do.
The fear that forgotten claims and discarded right against Government may be sought to be enforced after the lapse of a number of years if fundamental rights are held to be enforceable without any time limit, is an exaggerated one, for , after all, a petitioner can only enforce an existing right.
" The above principles have been applied in several subsequent cases: Ramchandra Shankar Deodhar vs State of Maharastara, ; ; Shri Vallabh Glass works Ltd. vs union of India ; ; State of M.P. vs Nandlal Jaiswal, ; ; D. Cawasji & Co. vs State of Mysore, ; and Salonah Tea Co. Ltd. vs Superintendent of Taxes.[1988] 1 SCC 401.
The above cases no doubt only list situations where directions for refund have been refused, or considered to be liable to be refused, on grounds of unreasonable delay or laches on the part of the petitioners in approaching the Court in the interests of justice and equity.
The importance of these cases, however, lies not in the grounds on which refund has been held declinable but because they lay down unequivocally that the grant of refund is not an automatic consequence of a 186 declaration of illegality.
Once the principle that the Court has a discretion to grant or decline refund is recognised, the ground on which such discretion should be exercised is a matter of consideration for the Court having regard to all the circumstances of the case.
It is possible that a direction for refund may be opposed by the State on grounds other than laches or limitation.
To give an instance, in recent years the question has often arisen whether a refund could be refused on the ground that the person who seeks the refund has already passed on the burden of the illegal tax to others and that to grant a refund to him would result in his "unjust enrichment".
Some decisions have suggested a solution of neither granting a refund nor permitting the State to retain the illegal exaction.
This issue has been referred to a larger Bench of this Court and its is not necessary for us to enter into that question here.
so far as the present cases are concerned, it is sufficient to point out that all the decided cases unmistakably show that, even where the levy of taxes is fount to be unconstitutional, the Court is not obliged to grant an order of refund.
It is entitled to refuse the prayer for good and valid reasons.
Laches and undue delay or intervention of third party rights would clearly be one of those reasons.
Unjust enrichment of the refundee may or may not be another.
But we see no reason why the vital interests of the State, taken note of by the learned judges in India Cement should not be a relevant criterion for deciding that a refund should not be granted.
We are, therefore, unable to agree with the learned counsel for the petitioners that any different criterion should be adopted and that the direction in paragraph 35 of India Cement should not be followed in those cases.
For the reasons discussed above, we are of opinion that, though the levy of the cess was unconstitutional, there shall be no direction to refund the assessees of any amounts of cess collected until the date on which the levy in question has been declared unconstitutional.
This in regard to the Bihar cases, will be the date of this judgement.
In respect of Orissa, the relevant date will be 22.12.1989 on which date, the High Court, following India Cement declared the levy by the State Legislature unconstitutional.
In respect of Madhya Pradesh, the relevant date will be the date of the judgement in Hiralal Ramswarup and connected cases (viz. M.P. 410/83 decided on 28.3.1986) in respect of the levy under State Act 15 th 1982.
Though there are the dates of the Judgement of the appropriate High Court, which may not constitute a declaration of law within the scope of Article 141 of the constitution, it cannot be gainsaid that the State cannot, on any grounds of equity, be permitted to retain the cess collected on and after the date of the High Court 's judgement.
187 Another point that was raised, was that in many of these cases the State or a Coal field Companies had given an undertaking that incase the levy is held to be invalid by this Court, they would refund the amount collection with interest.
It is submitted that the condition imposed, or undertakings given, to this effect and recorded at the time of passing interim orders in the various cases should be given implemented.
The interim undertakings or directions cannot be understood in such a manner as to conflict with out final decision on the writ petitions set out above.
But we agree that, to the extend refunds of amounts of cess collected after the relevant dates are permissible on the basis indicated by us, the State should refund those amounts to the assessees directly or to the Coalfields from whom they were collected, with interest at the rate directed by this Court or mentioned in the undertaking from the date of the relevant judgment to the actual date of repayment.
The Coalfields, when hey get th refunds, should pass on the same to their customers, the assessees.
The appeals are disposed of accordingly.
There will be no order as to costs.
T.N.A. Appeals disposed of.
| The States of Orissa, Bihar and Madhya Pradesh levied a cess which was based on the royalty derived from mining lands.
The cess was levied by these States under their respective statutes viz. Orissa Cess Act, 1962, Bengal Cess Act, 1880 (as applicable to the State of Bihar), Madhya Pradesh Upkar Adhiniyam 1981 and Madhya Pradesh Karadhan Adhiniyam, 1982.
The assesses challenged the constitutional validity of the cess by filing various petitions in the High Courts of Orissa declared the cess unconstitutional on the ground that it was beyond the legislative competence of the State Legislatures, but rejected the prayer of the assessees for a direction to the State to grant refund of the cess collected from the assessees.
Against the decision of the Orissa High Court the assessees have filed appeal in this Court whereas the State of Orissa has filed a cross appeal.
The High Court of Madhya Pradesh also declared the levy of cess unconstitutional on the ground that it was beyond the legislative competence of the State legislature.
Against the decision of the Madhya Pradesh High Court the State of Madhya Pradesh has filed an appeal in this Court.
On the other hand the High Court of Patna dismissed the writ petition of the assessee.
Against the decision of the Patna High Court the assessee has filed an appeal in this court.
In appeal to this court, it was contended on behalf of the State of Orissa; that (i) the levy of cess being referable to Entries 45, 49 and 50 of the State List of the Seventh Schedule of the Constitution the impugned legislation was within the legislative competence of the State legislature; (ii) the limitations imposed in the statute on the modes of utilisation of cess supports a view that the cess is fee on which the State legislature is competent to legislate under Entry 23 read with Entry 66 of the State List; (iii) since the impugned Act was concerned with the raising of funds to enable panchayats and Samithis to discharge their responsibilities of local administration and take steps for proper development of the area under their jurisdiction, the impugned legislation was referable to Entry 5 of State List; and (iv) the enactment of the Central Legislation viz. has not denuded the State legislation of its competence to enact the impugned legislation since the scope and subject matter of the two legislations are entirely different and the impugned State Legislation does not encroach upon the field covered by the Central Legislation i.e. 1957 Act.
107 On behalf of the assessees it was contended inter alia that (i) all the State levies were ultra vires for the reasons given by this Court in the India Cement case; (ii) the State cannot seek to sustain the levy under the Bengal Cess Act 1880 by relying on Article 277 of the Constitution; and (iii) the levy being unconstitutional the Court should direct the States to refund the cess collected from the assessees because (a) a refund is the automatic and inevitable consequence of the declaration of invalidity of tax and (b) the States have given undertakings before this Court that they would refund the amount collected in case the levy is declared invalid by this Court.
Disposing of the appeals, this Court, HELD: 1.
The levy of cess under sections 5 to 7 of the Orissa Cess Act, 1962 is beyond the competence of the State Legislature.
[169B] 1.1.
A royalty or the tax thereon cannot be equated to land revenue.
Therefore the cess cannot be brought under Entry 45 of List II.
[142D] India Cement & Ors.
vs State of Tamil Nadu & Ors., , followed.
1.2 A tax on royalties cannot be a tax on minerals and is outside the purview of Entry 50 of List II.
Even otherwise, the competence of the State Legislature under the said Entry is circumscribed by "any limitations imposed by Parliament by law relating to mineral development".
The is a law of Parliament relating to mineral development and Section 9 of the said Act empowers the Central Government to fix, alter, enhance or reduce the rates of royalty payable in respect of minerals removed from the land or consumed by the lessee, Sub Section (3) of Section 9 in terms States that the royalties payable under the Second Schedule to that Act shall not be enhanced more than once during a period of three years.
This is a clear bar on the State legislature taxing royalty so as, in effect, to amend the Second Schedule to the Central Act.
This is exactly what the impugned Act does.
Therefore the validity of the impugned Act cannot be upheld by reference to Entry 50 of List II.
And if the cess is taken as a tax falling under Entry 50 it will be ultra vires in view of the provisions of the Central ACt.
[144B, 153B D, 168D] India Cement & Ors.
vs State of Tamil Nadu & Ors.
, [1990] 1 S.C.C.12, followed.
108 Hingir Rampur Coal Co. Ltd. & Ors.
vs State of Orissa & Ors.
, [1961] 2 S.C.R.537, Justice Wanchoo 's dissent explained.
1.3 There is a difference in principle between a tax on royalties derived from land and a tax on land measured by reference to the income derived therefrom.
A tax on buildings does not cease to be such merely because it is quantified on the basis of the income it fetches.
But in the impugned legislation the levy is not measured by the income derived by the assessee from the land, as is the case with lands other than mineral lands.
The measure of the levy is the royalty paid, in respect of the land, by the assessee to his lessor which is quite a different thing.
The impugned statute only purports to levy a cess on the annual value of all land.
There is a clear distinction between tax on land and tax on income arising from land.
The former must be one directly imposed on land, levied on land as a unit and bearing a direct relationship to it.
A tax on royalty cannot be said to be a tax directly on land as a unit.
Hence the cess is outside the purview of Entry 49 List II.
[148H, 149A D] Ajay Kumar Mukherjea vs Local Board of Barpeta, [1965] 3 Ss.
C.R. 47; Ralla Ram vs The province of East Punjab, [1948] F.C.R.207; Buxa Dooars Tea Co. vs State, [1989] 3 S.C.R.211; Bhagwan Dass Jain vs Union of India, ; and R.R. Emgomeeromg Co. vs Zila Parishad, ; , referred to.
Union of India vs Bomnbay Tyre International, [1984] 1 S.C.R.347; Re: A reference under the Government of Ireland Act, 1920 and Section 3 of the Finance Act (Northern Ireland), 1934, (1963) 2 All E.R.III, cited.
If the levy in question cannot be described as a tax on land, it cannot be described as fee with regard to land either.
[169A] 2.1 Section 10 of the Orissa Cess Act, 1962 earmarks the purposes of utilisation of only fifty per cent of the proceeds of the cess and that, too, is limited to the cess collected in respect of "lands other than lands held for carrying on mining operations".
Therefore the levy cannot be correlated to any services rendered or to be rendered by the State to the class of persons from whom the levy is collected.
Accordingly the levy cannot be treated as a fee which the State legislature is competent to legislate for under entry 66 of the State List.
[153E F] 2.2 Even assuming that the levy is a fee, the State legislature can impose a fee only in respect of any of the matters in the State List.
The 109 entry relied upon for this purpose i.e. Entry 23 is itself "subject to the provisions of List I with respect to regulation and development" of mines and minerals under the control of the Union.
Under Entry 54 of List I, regulation of mines and mineral development is in the field of parliamentary legislation "to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest".
Such a declaration is contained in Section 2 of the .
The validity of the impugned Act cannot be upheld by reference to Entry 23 List II.
[153G H, 154A, 168D] 3.
There is a difference between the 'object ' of the Act and its 'subject '.
The object of the levy may be to strengthen the finances of local bodies but the Act has nothing to do with municipal or local administration.
Accordingly State 's reliance on Entry 5 of List II is plainly too tenuous.
[164D] 4.
The answer to the question whether the State Legislature was denuded of its competence to enact the impugned legislation because of the Parliament having enacted the depends on a proper understanding of the scope of the Act and an assessment of the encroachment made by the impugned State legislation into the field covered by it.
[161D] 4.1 The mere declaration of a law of Parliament that it is expedient for an industry or the regulation and development of miners and minerals to be under the control of the Union under Entry 52 or entry 54 of List I does not denude the State legislatures of their legislative powers with respect to the fields covered by the several entries in List II or List III.
Particularly, in the case of a declaration under Entry 54, this legislative power is eroded only to the extent control is assumed by the Union pursuance to such declaration as spelt out by the legislative enactment which makes the declaration.
The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration.
[161E F] 4.2 In assessing the field covered by the Act of Parliament in question, one should be guided not merely by the actual provisions of the Central Act or the rules made thereunder but should also take into account matters and aspect which can legitimately be brought within the scope of the said statute.
Viewed in this light and in the Light of the provisions of the Bihar Cess Act the conclusion seems irresistible that the State Act has trespassed into the field covered by the Central Act 110 viz. Mines and Minerals (Regulation and Development)Act, 1957.[163F] 4.3 The impugned legislation which stands impaired by the Parliamentary declaration under Entry 54, can hardly be equated to the law for land acquistion or municipal adminstration which are traceable to different specific entries in List II or List III [163G H] Hingir Rampur Coal Co. Ltd. & Ors.
vs State of Orissa & Ors.
; ; State of Orissa vs M.A. Tulloch & Co., ; and Indian Cement & Ors vs State of Tamil Nadu & Ors., [1990]1 S.C.C. 12 followed.
State of Haryana vs Chanan Mal, ; ; Ishwari Khatan Sugar Mills (P) Ltd vs State of U.P. ; and Western Coalfields Ltd. vs Special Area Development Authority.
, [1982] 2 S.C.R.1,distinguished.
Indian tobacco Co. Ltd. vs Union, [1985] Supp. 1 S.C.R. 145; State of West Bengal vs Union [1964] 1.
S.C.R. 371; Central Coalfields vs State of M.P., A.I.R. (1986) M.P.33; M. Karunanidhi vs Union of India, ; ; State of Tamil Nadu vs Hind Stone etc.
; , ; I.T.C. vs State of Karnataka, ; Bharat Coking Coal vs State of Bihar, ; ; Kannan Dewan Hills Co. vs State of Kerala, [1973] 1.
S.C.R. 356; Baijnath Kedia vs State of Bihar ; ; H.R.S. Murthy vs Collection of Chittoor & Ors.
[1964] 6 S.C.R.; Ch.
Tika Ramji & Ors.
vs State of U.P.,[1956] S.C.R. 393; Laxmi Narayan Agarwala vs State, A.I.R. 919830 Ori.210; Bherulal vs State, A.I.R. (1965) Raj. 161; Sharma vs State A.I.R. (1969) P&H 79 and Saurashtra Cement & Chemical Industries Ltd. vs Union , referred to.
Trivedi & Sons vs State of Gujarat.
[1986] Suppl.
S.C.C. 20, cited.
Section 6 of the Bengal Cess Act, 1880 specifically enacts that the cess will be on royalty from mines and quarries and on the annual net profit of railways and tramways.
The further amendments to Section 6 have not changed this basic position.
Though the Section referees also to the value of the mineral bearing land, that furnishes only the maximum upto which the cess, based on royalty, could go.
Therefore, the cess is levied directly on royalties from mines and quarries.
The different notifications issued by the State of Bihar under section 6 111 of the Act determining the rate of cess on the amount of rayalty of all minerals of the State place the matter beyond all doubt.
The levy is a percentage or multiple of the royalty depending upon the kind of mineral and in the case of iron ore the method of extraction and nature of the process employed.
There are no clear indications in the statute that the amounts are collected by way of fee and not tax.
Section 9 indicates that only a small percentage goes to the district fund and the remaining forms part of the consolidated fund of the State " for the constrution and maintenance of other works of public utility".
However, the proviso does require at least ten percent to be spent for purposes relating to mineral development.
Even the assumption that the levy can be treated, in part, as a fee and, in part, as a tax will not advance the case of the respondents.
Therefore, the levy of cess sunder the Bengal Cess Act, 1880 is declared invalid.
[169C F,H,170A] Indian Cement & Ors.
vs State of Tamil Nadu & Ors., followed.
Central Coalfields Ltd. vs State (CWJC 2085/89 decided on 6.11.90 by Patna High Court, referred to.
5.1 The attempt to sustain the tax under the Bengal Cess Act 1880 on the basis of Article 277 cannot also succeed.[171C] Ramkrishna Ramanath vs Janpad Sabha, [1962]Suppl.
3.S.C.R. 70; Town Municipal Committee vs Ramachandra ; , referred to.
The levy of cess under section 11 of the Madhya Pradesh Upkar Adhiniyam, 1981 is not covered by Entry 49 or Entry 50 of List II and is therefore, ultra vires.
, [172B] M.P. Lime Manufacturers ' Association vs State, A.I.R. (1989) M.P. 264 referred to.
6.1 Under Section 9 of Madhya Pradesh Karadhan Adhiniyam, 1982 the proceeds of the cess are to be utilised only towards the general development of mineral bearing areas.
Although there is no provision for the constitution of a separate fund for this purpose as is found in relation to the cesses levied under Part II or Part III of the Act yet this consideration alone does not preclude the levy from being considered as a fee.
The clear ear marking of the levy for purposes connected with development of mineral areas was rightly considered by 112 the High Court, as sufficient to treat it as a fee.
The High Court was also right in holding that such a fee would be referable to item 23 but out of bounds for the State Legislature, after the enactment of the .
[171F H] Srinivasa Traders vs State, ; , referred to.
The grant of refund is not an automatic consequence of a declaration of illegality i.e. where the levy of taxes is found to be unconstitutional, the Court is not obliged to grant an order of refund.
Therefore a finding regarding the invalidity of a levy need not automatically result in direction for a refund of all collections thereof made made earlier.
The declaration regarding the invalidity of a provision and the determination of the relief that should be granted in consequence thereof are two deferent things and, in the latter sphere, the Court has, and must be held to have, a certain amount of discretion.
Once the principle that the Court has a discretion to grant or decline refund is recognised, the ground on which such discretion should be exercised is a matter of consideration for the Court having regard to all the circumstances of the case.
The Court can grant, would or restrict the relief in a manner most appropriate to the situation before it is such a way as to advance the interests of justice.
The Court is entitled to refuse the prayer for good and valid reasons.
Laches or undue delay or intervention of third party rights would clearly be one of those reasons.
Unjust enrichment of the refundee may or may not be another.
Also there is no reason why the vital interest of the State should not be a relevant criterion for deciding that a refund should not be granted.
[185H, 186A C, D & E 181D E] 7.1 In the instant case though the levy of the cess is unconstitutional, yet there shall be no direction to refund to the assessees of any amounts of cess collected until the date on which the levy in question has been declared unconstitutional.
This, in regard to the Bihar cases, will be the date of this judgment i.e. 4.4.1991.
In respect of Orissa and Madhya Pradesh cases the relevant date will be the date on which the concerned High Court has declared the levy unconstitutional i.e.22.12.1989 in case of Orissa and 28.3.1986 in case of Madhya Pradesh.
The dates of the judgments of the appropriate High Court, may not constitute a declaration of law within the scope of Article 141 of the Constitution, but it cannot be gainsaid that the State cannot, on any ground of equity, be permitted to retain the cess collected on and after the date of the High Court 's judgment.
Accordingly the State should refund the amounts of cess collected after the relevant dates to assesses directly or in the Coalfields from whom they were collected, with 113 interest at the rate directed by this Court or mentioned in the undertaking from the date of the relevant judgment to the actual date of repayment.
The Coalfields, when they get the refunds, should pass on the same to their customers, the assessees.
[186F G, 187B C] India Cement & Ors.
State of Tamil Nadu & Ors, [1990] 1 S.C.C.12, followed.
Linkletter, 14 L Ed.
(2d) 601; Sunburst.
77 L.Ed.310; Mahabir Kishore & Ors.
vs Stte of Madhya Pradesh, [1989] 4 S.C.C. 1; Chhotabhai Jethabhai Patel & Co. vs Union of India, ; ; State of Madhya Pradesh vs Bhailal Bhai & Ors., ; ; Tilok Chand Motichand vs Munshi, [1969] 2 S.C.R> 824; Ramchandra Shankar Deodhar vs State of Maharashtra, ; ; Shri Vallabh Glass Works Ltd. vs Union of India, [1984] 3 S.C.R> 180; State of M.P. vs Nandlal Jaiswal, [1986] 4 S.C.C.566 ' D. Cawasji & Co. vs State of Mysore, [1975] 2 S.C.R.511; Salonah Tea Co. Ltd. vs Superintendent of Taxes, ; and Lakshmi Narain Agarwala vs State, A.I.R. (1983_ Orissa 210, referred to.
Behram Khursheed Pesikaka vs State of Bombay, [1955] 1 S.C.R.613; R.M.D. Chamarbaugwala vs Union of India, ; ; M.P.V. Sundararamier & Co. vs State of Andhra Pradesh & Anr.
, ; ; West Ramnad Electric Distribution Co. vs State of Madras, ; ; M.L.Jain vs State of U.P., [1963] suppl. ; K.T. Moopil Nayar vs State of Kerala & Anr., [1961] 3 S.C.R.77; Balaji vs I.T.O. Special Investigation Circle, ; ; Raja Jagannath Bakshi Singh vs State of U.P., ; ; Prem Chand Garg vs Excise Commissioner, U.P. Allahabad, [1963] Suppl.
1 S.C.R. 885 and I.C. Golaknath & Ors.v.
State of Punjab & Ors.
,[1967] 2 S.C.R. 762, cited.
The undertaking given by the parties or interim directions given by the Court cannot be understood in such a manner as to conflict with the Court 's final decision.
|
vil Appeal No 10 (N) of 1981.
From the Judgment and Order dated 22nd March, 1978 of the Karnataka High Court in Writ Appeal No. 520 of 1975.
R.B. Datar, K.R. Nagaraja and R.S. Hegde for the Appellant.
M. Veerappa for the Respondent.
The Judgment of the Court was delivered by RAY, J.
This appeal by special leave is against the judgment and order dated 22nd March, 1978 made in Writ Appeal No. 520 of 1975 dismissing the appeal and confirming the judgment and order made in Writ Petition No. 3073 of 1974 on 18.7.1985.
The appellant who was a chartered accountant was ap pointed as a non official member of the Sales Tax Appellate Tribunal, in the State of Karnataka by an order (No. RD 80 SXE 1958) dated 16th July, 1958 for a period of two years from 17th July 1958 under subsection (2) of Section 4 of the Mysore Sales Tax Act, 1957 (Mysore Act No. 25 of 1957).
By an order No. RD 17 SXT 58 dated 12th December, 1958 issued by the Government it has been mentioned that the appellant as member of Sales Tax Tribunal shall be eligible for Tra vells Allowance under the Mysore Civil Service (Classifica tion, Control and Appeals) Rules 1958 as a government serv ant in respect of tours undertaken by him in connection with his official duty on the basis of his salary Rs. 1,000 per month.
Thereafter the appointment was continued from time to time, the last of the period during which the appointment was continued, was by a notification No. FD dated 8th November 1971 by which his period of service was extend ed for a period of two months with effect from 9.12.1971.
This notification was issued in exercise of powers conferred by clause (b) of sub rule 1 of Rule 64 of the Mysore Sales Tax Rule, 1957.
The respondent by a letter dated 8.2.1972 intimated him that he had been granted 52 days earned leave as terminal leave from 9th February, 1972.
The appellant made representations to the respondent that he was entitled to superannuation pension, and same be granted to him.
The Government turned down his request on the ground that he was not eligible for such pension.
The appellant, then, moved a writ petition No. 3073 210 of 1974 before the High Court, Karnataka stating that he was granted leave on several occasions in accordance with the Mysore Civil Service Rules and the Accountant General had treated him as a gazetted officer in the service of the State Government and as such as a Government servant he may be granted superannuation pension under the Mysore Civil Service Rules.
The learned Single Judge held that Rule 64 of the Karnataka Sales Tax Rules, 1957 was applicable to this case and under the said Rules he was not eligible to claim superannuation pension.
It was further held that even under the Mysore Civil Service Rules he would not be entitled to claim such a pension.
The writ petition was dismissed.
The learned Judge, of course, held that the appellant would be entitled to gratuity in terms of Rule 64 and so directed the Government to examine the case of the appellant for grant of gratuity under the rule and pass appropriate orders in that regard expeditiously.
The appellant feeling aggrieved preferred Writ Appeal No. 520 of 1975 which was dismissed by the High Court and the judgment pronounced in the writ petition was upheld.
It is against this judgment and order, this appeal on special leave has been filed.
The main plank of the argument of the counsel for the appellant is that the appellant as a member of the Sales Tax Tribunal was a government servant and as such like other government servants he is entitled to the grant of superan nuation pension in accordance with Mysore Civil Service Rules.
Several Rules have been referred to in support of his submission that he was retired from service after reaching the age of superannuation.
He further submitted that the appointment of appellant was not a contract appointment and so the Mysore Civil Service Rules are applicable to the appellant for payment of superannuation pension.
It is not disputed that the appellant was appointed as a nonofficial member of the Karnataka Sales Tax Appellate Tribunal under sub section (2) of Section 4 of the Mysore Sales ' Tax Act, 1957.
This is evident from the notification dated 16.7.1958 issued by the Government appointing the appellant as a member of Sales Tax Tribunal as well as from Order No. RD 17 SXT 58 dated 12th December 1958.
The ap pointment was continued from time to time and the last extension was given by Order No. FD dated 8th November, 1971 made under clause (b) of sub rule (1) of Rule 64 of the Mysore Sales Tax 211 Rules, 1957.
It is relevant to notice in this connection that Rules 63 and 64 were introduced by a notification No. FD dated 10/13th January, 1964.
Sub rule (6) of Rule 64 is quoted below: "The non official member shall not be eligible for any pension, gratuity or other remuneration.
" By further notification No. FD 614 dated 7th April, 1971, a new Sub rule (6) was substituted which was to the following effect: "(6) The non official member shall be eligible for gratuity equivalent to one month 's pay for each completed year of service including interruption or interruptions, if any, the total duration of which does not exceed 180 days but shall not be eligible for any pension or other remuneration .
" Thus the appellant was appointed as a non official member in the Karnataka Sales Tax Appellate Tribunal under sub section (2) of Section 4 of Karnataka Sales Tax Act, 1957 and the last extension of the period of his service was given by Government under clause (b) of sub rule (1) of Rule 64 of the Mysore Sales Tax Rules, 1957.
The terms and condi tions of his service will be governed by the Mysore Sales Tax Rules and not by the provisions of Mysore Civil Services Rules and it cannot be contended by the appellant that Rule 64(6) of.the said Mysore Sales Tax Rule, 1957 was not ap plicable to him.
So the appellant is not eligible for super annuation pension after his relinquishment of the post of non official member of Sales Tax Tribunal on expiry of the period of his service.
It has been further urged that Rule 64(6) of Mysore Sales Tax Rules was inserted in 1964 and sub rule (6) of Rule 64 was substituted on 7th April, 1971.
This rule not being in existence at the time the appellant was appointed as a member of the said Tribunal, the same cannot be made applicable to the appellant and thereby he could not be deprived of the benefit of superannuation pension as provid ed in Mysore Civil Service Rules.
This contention is per se without any substance in as much as before the retirement of the appellant from service due to expiry of his period of service the said provisions of sub rule (6) of rule 64 of Mysore Sales Tax Rules was substituted in place of original sub rule 6 of Rule 64 and as such this rule applies to the appellant and he is not entitled to get any superannuation pension.
The High Court has tightly held that according to Rule 64(6) the appellant could not claim pensionary benefit.
212 The appellant next submitted that he became a Government servant on being appointed as a non official member of the Sales Tax Appellate Tribunal and he was paid traveling allowance according to Mysore Civil Service Rules, 1957 and so he is entitled to pension as provided in the said Rules.
As stated hereinbefore that the appellant was appointed as a Member of the said Tribunal by the respondent State under Section 4(2) of the Sales Tax Act and though initially appointed for a period of two years in 1958, his service was extended periodically till February, 1972 under clause (b) of sub rule (1) of Rule 64 of the Mysore Sales Tax Rules, 1957 by the Government of Mysore.
Therefore, the foremost question is whether in such circumstances the Mysore Civil Service Rules apply to him.
It is apropos to refer in this connection sub rule (2) of Rule 2 of Mysore Civil Service Rules, which specially provided that the said Rules shall not apply to persons for whose appointment and other mat ters, special provisions are made by or under any law for the time being in force or in any contract in regard to the matters covered by such law or such contract.
This Rule clearly says that in cases where special provisions have been made by or under any law for the time being in force, the Mysore Service Rules will not apply.
In the instant case, Rule 64(6) of the Mysore Sales Tax Rules, 1957 clearly says that the non official member of the Sales Tax Tribunal will become ineligible for any pension, and as such provi sions relating to pension as provided in Mysore Civil Serv ice Rules, 1957 will not apply.
Furthermore, Rule 283 of the said Rues states that a superannuation pension is granted to a Government Servant who is compelled by Rule to retire at a particular age.
Rule 95 provides that the date of compulsory retirement of a Government servant is the date on which he attains the age of 55 years.
It further provides that the Government servant may be retained upto 60 years of age with the sanction of Government.
He must not be retained after the age of 60 years.
There is no rule under which a non official member is to retire on attaining a particular age.
The appellant was appointed as a member of the Tribunal for a period of two years initially and thereafter his tenure was extended periodically and he left the service as non official member of the Tribunal after he crossed the age of 61 years.
There was no specific order that the appellant was due to retire at the age of 55 years.
There is no rule for a non official member to retire at a particular age.
Moreover by order No FD dated January 28, 1970 the Govern ment sanctioned certain terms and conditions of his appoint ment.
the condition Nos. 2 and 5 are as hereunder: "(2) The terms of appointment shall be one year with effect from 9th December, 1969.
213 . . . . . (5) He is permitted to take up the audit of accounts of any person, institution, firm or body of persons without preju dice to his official duties as a Member of the Tribunal and the person, institution, firm or body of persons concerned is not and is not likely to be liable to Sales Tax, Agricul tural Income Tax or Entertainment Tax.
" The appointment of the appellant is periodical and not upto a maximum age nor it is a whole time service but a part time one and the appellant was permitted to take up audit of any person, firm, institution etc.
on certain restrictions.
A Government servant has to render whole time service.
Therefore, considering all these aspects it has been found by the High Court that the Mysore Civil Service Rules, 1957 do not apply to the appellant and as such he is not eligible for superannuation pension.
We do not find any infirmity in the judgment of the High Court which is unex ceptionable We, therefore, uphold the judgment of the High Court, dismiss the appeal without any order as to costs.
N.P.V. Appeal dismissed.
| The appellant challenged before the High Court the order of detention passed against him under Section 3(1) of the Prevention of Illicit Traffic in Narcotic Drugs and Psycho tropic Substances Act, 1989, on various grounds including delay in disposal of his representation.
An affidavit was filed by a Deputy Superintendent of Police, on behalf of the respondents stating that the representation was placed before the Assistant Secretary on 19.6.1989, a report was called for from the District Magistrate, the comments, which were received by the State Government on 1.7.1989, were placed before the Assistant Secretary on 3.7.1989 who, in turn, submitted to the higher authorities with his note on 9.7.1989 and the representation was rejected on 11.7.1989.
The High Court dismissed the Writ Petition holding that there was no undue lethargy or indifference.
In the appeal, by special leave, on behalf of the dete nu, it was contended that the detenu 's representation was not decided within a reasonable time and hence the extraor dinary delay of 27 days was fatal to the detention.
A reply was filed by the same Deputy Superintendent of Police, as Officer Incharge of the case, who filed the affidavit before the High Court, stating that there was no delay in the consideration of the representation.
832 Subsequently, on the direction of the Court, an addi tional affidavit sworn by the Commissioner and Secretary (Home Department) stating that there was no inordinate delay in considering the representation and it was rejected after careful consideration, was filed.
Allowing the appeal, this Court, HELD: 1.
There is no explanation for the delay from 3rd to 9th July, 1989 i.e. for 7 days, for the Assistant Secre tary to merely put up a note on the basis of comments of the District Magistrate.
The additional affidavit sworn to by the Commissioner and Secretary does not whisper any explana tion as to why such a delay of 7 days had occurred at the hands of the Assistant Secretary.
The order of detention is, therefore, a breach of constitutional obligation as en shrined under Article 22(5) of the Constitution of India.
[841F G; 842F] Rama Dhondu Borade vs V.K. Saraf, Commissioner of Police Smt.
Shalini Soni vs Union of India, ; , referred to.
2.1 A counter affidavit should normally be filed by the detaining authority himself, but this is not a rigid or inflexible rule and, in the absence of any allegations of mala fide or abuse of powers of personal bias attributed to the detaining authority, it may be sworn by a responsible officer who personally dealt with or processed the case or by an officer duly authorised under the Rules of Business of the Government concerned.
However, the practice of allowing a police officer who has not dealt with the case any point of time at any level and who in the very nature of the case could not have any personal knowledge of the proceedings, to swear the counter and reply affidavits on behalf of the appropriate authorities should be highly deprecated and condemned and the counter and reply affidavits sworn by such officer merit nothing but rejection.
[836H; 837A B; 836F G] The State of Bombay vs Purushottam Jog Naik, ; ; Ran]it Dam vs State of West Bengal, ; Shaik Hanifv.
State of West Bengal; , ; J.N. Roy vs State of West Bengal, ; Bhut Nath Mete vs State of West Bengal, ; at page 658; Asgar Ali vs District Magistrate Burdwan & Ors., Suru Mallick vs State of West Bengal, [1975] 833 4 SCC 470; Gulab Mehra vs State of U.P. & Ors., [19881 ] SCR 126; State of Gujarat vs Sunil Fulchand Shah & Anr., ; and Madan Lal Anand vs Union of India, , referred to.
|
Appeal No. 294 of 1955.
Appeal by special leave from the Judgment and Order dated the 7th September, 1955, of the Nagpur High Court, in Civil Revision No. 833 of 1954.
B.B. Tawakley, (K. P. Gupta, with him for the appellant.
R. section Dabir and R. A. Govind, for respondent No. 1. 1955.
December 2.
The Judgment of the Court was delivered by BOSE J.
The appellant was a candidate for the office of President of the Municipal Committee of Damoh.
The respondents (seven of them) were also candidates.
The nominations were made on forms supplied by the Municipal Committee but it turned out that the forms were old ones that had not been brought up to date.
Under the old rules candidates were required to give their caste, but on 23 7 1949 this was changed and instead of caste their occupation had to be entered.
The only person who kept himself abreast of the law was the first respondent.
He struck out the word "caste" in the printed form and wrote in "occupation" instead and then gave his occupation, as the new rule required, and not his 1031 caste.
All the other candidates, including the appellant, filled in their forms as they stood and entered their caste and not their occupation.
The first respondent raised an objection before the Supervising Officer and contended that all the other nominations were s; invalid and claimed that he should be elected as his was the only valid nomination paper.
The objection was overruled and the election proceeded.
The appellant secured the highest number of votes and was declared to be elected.
The first respondent thereupon filed the election petition out of which this appeal arises.
He failed in the trial Court.
The learned Judge held that the defect was not substantial and so held that it was curable.
This was reversed by the High Court on revision.
The learned High Court Judges referred to a decision of this Court in Rattan Anmol Singh vs Atma Ram(1) and held that any failure to comply with any of the provisions set out in the various rules is fatal and that in such cases the nomination paper must be rejected.
We do not think that is right and we deprecate this tendency towards technicality; it is the substance that counts and must take precedence over mere form.
Some rules are vital and go to the root of the matter: they cannot be broken; others are only directory and a breach of them can be overlooked provided there is substantial compliance with the rules read as whole and provided no prejudice ensues; and when the legislature does not itself state which is which judges must determine the matter and, exercising a nice discrimination, sort out one class from the other along broad based, commonsense lines.
This principle was enunciated by Viscount Maugham in Punjab Co operative Bank Ltd., Amritsar vs Incometax Officer, Lahore(2) and was quoted by the learned High Court judges ' "It is a well settled general rule that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially".
(1) ; (2) [1940] L.R. 07 I.A. 464, 476, 1032 But apart from that, this is to be found in the Act itself.
The learned High Court Judges were of opinion that the directions here about the occupation were mandatory.
That, we think, is wrong.
The present matter is governed by section 18 of the Central Provinces and Berar Municipalities Act (II) of 1922.
Among other things, the section empowers the State Government to "make rules under this Act regulating the mode. . of election of presidents. ." and section 175(1) directs that "all rules for which provision is made in this Act shall be made by the State Government and shall be consistent with this Act", Now one of the provisions of the Act, the one that directly concerns us, is set out in section 23: "Anything done or any proceeding taken under this Act shall not be questioned on account of any defect or irregularity not affecting the merits of the case".
The rules have therefore to be construed in the light of that provision.
Rule 9 (1)(i) states that " each candidate shall. .deliver to the Supervising Officer a nomination paper completed in the form appended and subscribed by the candidate himself as assenting to the nomination and by two duly qualified electors as proposer and seconder".
The amended form requires the candidate to give, among other things, his name, father 's name, age, address and occupation; and rule 9(1)(iii) directs that the Supervising Officer "shall examine the nomination papers and shall decide all objections which may be made to any nomination and may either on such objection or on his own motion, after such summary enquiry, if any, as he thinks necessary, refuse any nomination on any of the following grounds: * * * * 1o33 (C) that there has been any failure to comply with any of the provisions of clause (i). . " It was contended that the word "may" which we have underlined above has the force of "shall" in that context because clause (a) of the rule reads "(a) that the candidate is ineligible for election under section 14 or section 15 of the Act".
It was argued that if the candidate 's ineligibility under those sections is established, then the Supervising Officer has no option but to refuse the nomination and it was said that if that is the force of the word "may" in a case under clause (a) it cannot be given a different meaning when clause (c) is attracted.
We need not stop to consider whether this argument would be valid if section 23 had not been there because the rules cannot travel beyond the Act and must be read subject to its provisions.
Reading rule 9(1) (iii) (c) in the light of section 23, all that we have to see is whether an omission to set out a candidate 's occupation can be said to affect "the merits of the case".
We are clear it does not.
Take the case of a man who has no occupation.
What difference would it make whether be entered the word "nil" there, or struck out the word "occupation" or placed a line against it, or just left it blank? How is the case any different, so far as the merits are concerned, when a man who has a occupation does not disclose it or misnames it, especially as a man 's occupation is not one of the qualifications for the office of President.
We are clear that this part of the form is only directory and is part of the description of the candidate;, it does not go to the root of the matter so long as there is enough material in the paper to enable him to be identified beyond doubt.
It was also argued that there was a reason for requiring the occupation to be stated, namely, because section 15(k) of the Act disqualified any person who "holds any office of profit" under the Committee.
But disclosure of a candidate 's occupation would not necessarily reveal this because the occupation need only be stated in general terms such as "service" or 1034 "agriculture" and need not be particularised; also, in any 'event, section 15 sets out other grounds of dis qualification which are not required to be shown in the form.
As regards our earlier decision.
That was a case in which the law required the satisfaction of a particular official at a particular time about the identity of an illiterate candidate.
That, we held, was the substance and said in effect that if the law states that A must be satisfied about a particular matter, A 's satisfaction cannot be replaced by that of B; still less can it be dispensed with altogether.
The law we were dealing with there also required that the satisfaction should be endorsed on the nomination paper.
That we indicated was mere form and said at page 488 "If the Returning Officer had omitted the attestation because of some slip on his part and it could be proved that he was satisfied at the proper time, the matter might be different because the element of his satisfaction at the proper time, which is of the substance, would be there, and the omission formally to record the satisfaction could probably, in a case like that, be regarded as an unsubstantial technicality".
A number of English cases were cited before us but it will be idle to examine them because we are concerned with the terms of section 23 of our Act and we can derive no assistance from decisions that deal with other laws made in other countries to deal with situations that do not necessarily arise in India.
The appeal succeeds and is allowed with costs here and in the High Court.
The order of the High Court is set aside and that of the Civil Judge restored.
| By section 68 D(2) of the , "The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter, it they so desire, approve or modify the scheme".
The appellant 's objections to the draft scheme in question were heard by the Legal Remembrance, appointed by the State Government to hear such objections, under r. 7(6) of the Rajasthan State Transport Services (Development) Rules, 1960, framed under section 68 1 of the Act.
The appellant applied to the said Officer for permission to give evidence in order that he could show that the entire scheme ought to be rejected.
His applications were rejected by the Officer holding that the Rules did not provide for recording of evidence and that according to a decision of the Rajasthan High Court, dated November 9, 1960, section 68 D(2) of the Act did not empower him to cancel the draft scheme in its entirety.
He, therefore, heard the arguments addressed on behalf of the appellant and approved the scheme.
After moving unsuccessfully the Rajasthan High Court, the appellant appealed to this Court by special leave, Held, that the Officer was in error on both the points.
Section 68 D(2) of the Act clearly implies that the authority which has to approve or modify the scheme, has also the power, if it thinks proper, to disapprove the scheme altogether.
The words " may approve" in the section, properly construed, must also include "may not approve".
The use of the word "shall" in r. 7(6) of the Rules instead of the word "may", which is otherwise similar in its terms to section 68 D(2) of the Act,.can make no difference.
In hearing objections under section 68 D(2) of the Act, the State Government or its Officers act as a quasi judicial tribunal and regard being to the nature of the objections and the purpose of the hearing thereunder, there can be no doubt that production of evidence, both oral and documentary, is clearly contemplated by the section.
979 Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation, [1959] Supp. 1 S.C.R. 319, referred to.
Bat that does not mean that the parties can produce any amount of evidence merely to prolong the proceeding.
It is for the State Government or the Officer to decide whether the evidence sought to be adduced is necessary and relevant to the enquiry and, if so, they will have all the powers that a court has of controlling the giving and recording of such evidence.
Where a draft scheme is disapproved under section 68 D(2) and thus stands rejected, any fresh scheme that may have to be framed, must be framed according to the procedure prescribed by Ch.
IVA of the Act.
|
N: Criminal Appeal No. 440 of 1974.
314 Appeal by Special leave from the Judgment and Order dated the 17th September, 1974 of the Patna High Court in Crl.
Appeal No. 579 of 1969.
Davendra N. Goburdhan & D. Goburdhan for the Appellant.
S.N. Jha for the Respondent The Judgment of the Court was delivered by VENKATARAMIAH, J.
This appeal by special leave is filed against the judgment dated September 17, 1974 passed in Criminal Appeal No. 579 of 1969 on the file of the High Court of Patna confirming the conviction of the appellant of the offence punishable under section 376 of the Indian Penal Code and the sentence of rigorous imprisonment for five years imposed on him on December 20,1969 in Sessions Trial No. 107 of 1968 on the file of the Assistant Sessions Judge at Purnea in the State of Bihar.
The appellant was committed to face the trial for an offence punishable under section 376 of the Indian Penal Code by the order of the Munsiff Magistrate, 1st Class, Purnea on the basis of a complaint filed by the complainant Barki Devi (P.W. 3) before the Sub Divisional Officer, Sadar, Purnea on August 9,1968 who took cognizance of the Offence and transferred the case to the file of the aforesaid Magistrate.
The allegations made in the complaint are briefly these: That on August 1, 1968 at about 5.00 P.M, the complainant, who was a married woman of about 25 years, was engaged in the work of uprooting of the paddy seedlings on her field situated on the southern side of her house in Dhumra Badh situated in Mouza Dhamdaha, Police Station Dhamdaha, District Purnea.
There was a canal to the east of the field and there were no houses nearby.
When she was working on her field the appellant came near her and started cutting jokes and suggested that she should have sexual intercourse with him.
On the complainant protesting at his suggestion, the appellant suddenly caught hold of her, threw her down on the ground, removed her clothes and committed rape on her.
On hearing her cry for help, some persons arrived at the place.
The appellant immediately ran away.
Thereafter the complainant went to her house and narrated the incident to her husband, Jitrai (P.W. 4).
The complainant and her husband then went to the local Mukhiya who asked them to file 315 a complaint in the Court.
Then they went to the police thana to give information about the crime but the police officer declined to record the information as the appellant was an influential person.
Then the complainant went to the court on August 8, 1968 to lodge a complaint but as the time for lodging complaint was over by the time the complaint was drafted, she filed it on August 9, 1968 in the court.
The complaint contained the names of some witnesses.
At the trial the complainant was examined as P.W. 3.
She belongs to the Santhal tribe.
In her evidence she described the incident as disclosed in her complaint.
She stated that the appellant forcibly had sexual intercourse with her against her will.
She stated that on hearing her cry, Sheikh Lafid (P.W. I) came there and on seeing him, the appellant ran away.
She also stated that she narrated the incident to Juman Nadaf (P.W. 2), Chanda Kisku and Makbool who also came there and that she showed the stains of semen on her clothes and also the trampling marks on the ground to them.
She also stated that she narrated the incident before her husband and the Mukhiya of the village.
She further stated that when she and her husband went to the police station, they were threatened and driven away by the police officer there.
She also told about her going to Purnea and lodging the complaint.
Sheikh Lafid (P.W. 1) corroborated the evidence of the complainant by deposing that when he reached the scene of occurrence he saw the appellant lying on top of the body of the complainant.
Juman Nadaf (P.W. 2) stated that when he went near the scene of occurrence he saw the appellant fleeing away from there.
He stated that the complainant had narrated before him the details of the crime committed by the appellant.
Jitrai (P.W. 4) the husband of the complainant stated that in the evening of the day of occurrence the complainant told him about the manner in which she had been ravished by the appellant and also gave evidence about his going to the Mukhiya and to the police station and what happened there as narrated by the complainant.
Rama Kant Thakur (P.W. 5) was the lawyer who drafted the complaint.
He has stated that the complaint had been prepared under the instructions of the complainant.
The trial court on a consideration of the material before it found that the appellant was guilty of rape and accordingly convicted the appellant of the offence punishable under section 376 of the Indian Penal Code and imposed on him a sentence of rigorous imprisonment for five years.
The High Court dismissed 316 the appeal filed by the appellant.
This appeal by special leave is filed against the judgment of the High Court.
When the appeal was heard by this Court on March 6, 1980, it was ordered that the trial court should record the evidence of the Mukhiya, Makbool and Chanda Kisku and to submit the record to this Court.
The evidence of the Mukhiya and of Makbool was accordingly recorded and has been submitted to this Court.
Chanda Kisku is reported to be dead.
The other two witnesses have not supported the prosecution case.
It is apparent that these two witnesses who had been mentioned as witnesses in the complaint itself were not willing to support the prosecution even at the time of the trial as otherwise they would have been examined.
It is not quite strange that some witnesses do turn hostile but that by itself would not prevent a court from finding an accused guilty if there is otherwise acceptable evidence in support of the prosecution.
In the instant case, both the trial court and the High Court have believed evidence of the prosecutrix and the evidence of the other prosecution witnesses who had been examined at the trial.
The point for consideration in this case is whether the approach adopted by the High Court and the trial court to the case is correct and whether the material is sufficient to warrant the conviction recorded by them.
In the case before us the complainant has given her version of the incident in her deposition and the High Court and the trial court have not found it to be unreliable.
The case of the appellant, however, was that on account of a land dispute between one Mohamed Halim and Mohamed Naiyeem on the one hand and himself on the other which ultimately had ended in his favour this false case had been got filed by them through the complainant and her husband Jitrai who were working as servants under them.
The non examination of the Mukhiya and the police officer who had declined to record the information alleged to have been given by the complainant and her husband is stated to be fatal to the prosecution.
It is further stated that in the absence of a medical examination report given by a doctor after examining the person of the complainant immediately after the occurrence it was not possible to conclude whether the complainant had been raped.
The trial court has negatived the contentions of the appellant.
The trial court held that it had not been established that the complainant and her husband were under the thumb of Mohamed Halim and 317 Mohamed Naiyeem.
The husband of the complainant owned some lands and the complainant and her husband were also working as labourers.
The trial court was of opinion that the complainant had not given a false complaint in order to oblige Mohamed Halim and Mohamed Naiyeem.
It further held that the proceeding relating to land filed by Mohamed Halim and Mohamed Naiyeem was one instituted in the year 1964 nearly four years before the incident and that there was no immediate provocation for them to engineer the filing of a false case against the appellant.
The High Court has concurred with the conclusions of the trial court.
As regards the non examination at the trial of the Mukhiya who is now examined pursuant to the order of this Court it is to be observed that it has turned out to be inconsequential.
The Mukhiya has now stated that the complainant and her husband had not gone to him to complain about the incident.
He does not give any version about the incident.
It has to be borne in mind that he was examined nearly twelve years after the incident.
It is significant that his name figured in the complaint as a witness.
The complainant could not have taken the risk of including his name if he had not been actually contacted by her.
The complainant and her husband have stated in their depositions that they had gone to him on the date of occurrence.
He was cited as a witness to show that immediately after the occurrence the complainant had made a statement regarding the crime before him which would be corroborating evidence.
An interval of twelve years is a sufficiently long period and particularly for persons of easy conscience to make half hearted statements in courts.
In the circumstances it is difficult to hold that the evidence of the other witnesses before the court is in any way affected by the evidence of the Mukhiya.
The same criticism applies to the evidence of Makbool who is the other witness examined in the year 1980 along with the Mukhiya.
Makbool 's evidence is that he did not go near the scene of occurrence on the date on which it is alleged to have taken place.
As regards the non examination of the policeman who declined to record the information said to have been given by the complainant, it has to be stated that it would be asking the complainant to do something which would be almost impossible to perform.
How many police officers who have in fact not performed their duty would come before court as witnesses and admit that they had failed to discharge their duty ? The court may safely presume that notwithstanding the allegation of the complainant being true she would not have even able to secure the evidence of such a negligent police official.
The fact remains the complainant has referred to 318 this in her complaint on the very next day and she and her husband ran a grave risk in making such an allegation of dereliction of duty against the police in the complaint.
Nothing however turns on the non examination of the said police official in this case.
In so far as non production of a medical examination report and the clothes which contained semen, the trial courts has observed that the complainant being a woman who had given birth to four children it was likely that there would not have been any injuries on her private parts.
The complainant and her husband being persons belonging to a backward community like the Santhal tribe living in a remote area could not be expected to know that they should rush to a doctor.
In fact the complainant has deposed that she had taken bath and washed her clothes after the incident.
The absence of any injuries on the person of the complainant may not by itself discredit the statement of the complainant.
Merely because the complainant was a helpless victim who was by force prevented from offering serious physical resistance she cannot be disbelieved.
In this situation the non production of a medical report would not be of much consequence if the other evidence on record is believable.
It is, however, nobody 's case that there was such a report and it had been withheld.
A reading of the deposition of the complainant shows that it has a ring of truth around it.
Section 133 of the Indian Evidence Act says that an accomplice shall be a competent witness against an accused person and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.
But the rule of practice is that it is prudent to look for corroboration of the evidence of an accomplice by other independent evidence.
This rule of practice is based on human experience and is incorporated in illustration (b) to section 114 of the Indian Evidence Act which says that an accomplice is unworthy of credit unless he is corroborated in material particulars.
Even though a victim of rape cannot be treated as an accomplice, on account of a long line of judicial decision rendered in our country over a number of years, the evidence of the victim in a rape case is treated almost like the evidence of an accomplice requiring corroboration.
(Vide Rameshwar vs The State of Rajasthan,(1) Gurucharan Singh vs State of Haryana(2) and Kishan Lal vs State of Haryana).(3) It is accepted by the Indian courts 319 that the rule of corroboration in such cases ought to be as enunciated by Lord Reading C.J. in King vs Baskerville.(4) Where the case is tried with the aid of a jury as in England it is necessary that a Judge should draw the attention of the jury to the above rule of practice regarding corroboration wherever such corroboration is needed.
But where a case is tried by a judge alone, as it is now being done in India, there must be an indication in the course of the judgment that the judge had this rule in his mind when he prepared the judgment and if in a given case the judge finds that there is no need for such corroboration he should give reasons for dispensing with the necessity for such corroboration.
But if a conviction is based on the evidence of a prosecutrix without any corroboration it will not be illegal on that sole ground.
In the case of a grown up and married woman it is always safe to insist on such corroboration.
Wherever corroboration is necessary it should be from an independent source but it is not necessary that every part of the evidence of the victim should be confirmed in very detail by independent evidence.
Such corroboration can be sought from either direct evidence or circumstantial evidence or from both.
The trial court has in the case before us found that the evidence of the complainant had been corroborated in material particulars by the evidence of Sheikh Lafid (P.W. 1), Juman Nadaf (P.W. 2) and Jitrai (P.W. 4) the husband of the complainant.
The High Court also has acted on the evidence of these witnesses.
Sheikh Lafid (P.W. 1) has stated that he saw the appellant on the body of the complainant and that the complainant had also told him about the crime.
Juman Nadaf (P.W. 2) has stated that when he heard the cry of the complainant at the time of occurrence, he saw the appellant fleeing away from that place.
The trial court and the High Court have not found any good ground to discard their testimony.
Jitrai (P.W. 4) has told the court that the complainant had mentioned to him all the details of the incident within a short while after it took place.
Rama Kant Thakur (P.W 5.), the lawyer who drafted the complaint has stated that he had prepared the complaint which contains all the particulars of the offence under the instructions of the complainant.
Apart from the evidence of Sheikh Lafid (P.W. 1) and Juman Nadaf (P.W. 2) about what they saw, the statement made by the complainant to her husband immediately after the incident is admissible under section 157 of the Indian Evidence Act and has a corroborative value.
After considering carefully the entire material 320 before us including the evidence of the witnesses examined pursuant to the order made by this Court earlier in the light of the submissions made at the Bar we are of the view that the judgment of the High Court does not call for any interference under Article 136 of the Constitution.
The appeal therefore, fails and it is dismissed.
The appellant who is on bail is directed to surrender and to undergo the remaining part of the sentence imposed on him.
H.L.C. Appeal dismissed.
| The appellant was convicted under section 376, I.P.C., for raping a tribal woman mainly on the evidence of the victim who was the complainant, her husband and two other witnesses, one of whom had deposed that he had seen the appellant on the body of the victim while the other had stated that he had seen the appellant fleeing away from the scene of occurrence.
The High Court dismissed the appeal and confirmed the conviction.
The appellant submitted that the local Mukhiya to whom the complainant and her husband were alleged to have gone to complain about the incident immediately after its occurrence, the police officer who was alleged to have refused to record the complaint and also two other witnesses mentioned in the complaint had not been examined by the prosecution and this, together with the absence of a medical examination report given by a doctor after examining the person of the complainant immediately after the occurrence, was fatal to the prosecution case.
The Mukhiya and one of the two other witnesses mentioned in the complaint who had not been examined earlier were examined pursuant to the orders made by the Court and they did not support the prosecution case.
Dismissing the appeal, ^ HELD: Even though a victim of rape cannot be treated as an accomplice, on account of a long line of judicial decisions the evidence of the victim in a rape case is treated almost like the evidence of an accomplice requiring corroboration.
Section 133 of the Evidence Act says that an accomplice shall be a competent witness against an accused person and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.
But the rule of practice is that it is prudent to look for corroboration of the evidence of an accomplice by other independent evidence.
This rule is based on human experience and is incorporated in illustration (b) to section 114 of the Act.
There must be an indication in the course of the judgment that the judge had this rule in his mind when he prepared the judgment 313 and if in a given case the judge finds that there is no need for such corroboration he should give reasons for dispensing with the necessity for such corroboration.
But if a conviction is based on the evidence of a prosecutrix without any corroboration it will not be illegal on that sole ground.
In the case of a grown up and married woman it is always safe to insist on such corroboration.
Wherever corroboration is necessary it should be from an independent source but is not necessary that every part of the evidence of the victim should be confirmed in every detail by independent evidence.
Such corroboration can be sought from either direct evidence or circumstantial evidence or from both.
[318 E H; 319 A D] Rameshwar vs State of Rajasthan, ; ; Gurucharan Singh vs State of Haryana, ; Kishan Lal vs State of Haryana, ; ; King vs Baskerville , referred to.
In the instant case a reading of the deposition of the complainant shows that it has a ring of truth around it.
Her evidence has been corroborated in material particulars by the evidence of her husband and the other two witnesses.
The statement made by the complainant to her husband immediately after the incident is admissible under section 157 of the Act and has a corroborative value.
[319 F H] The Mukhiya has not given any version about the incident but has merely stated that the complainant and her husband had not gone to him to complain.
It is significant that his name figured in the complainant as a witness.
The complainant could not have taken the risk of including his name if he had not been actually contacted by her.
He was cited as a witness to show that immediately after the occurrence the complainant had made a statement regarding the crime before him which would be corroborating evidence.
It has to be borne in mind that he was examined nearly 12 years after the incident and it is a sufficiently long period and particularly for persons of easy conscience to make half hearted statements in courts.
In the circumstances it is difficult to hold that the evidence of the other witnesses before the court is in any way affected by the evidence of the Mukhiya.
The same criticism applies to the evidence of the other witness examined along with the Mukhiya.
The non examination of the police officer who declined to record the information said to have been given by the complainant is found to be not fatal to the prosecution.
[317 C H] The complainant and her husband being persons belonging to backward community like the Santhal tribe living in a remote area could not be expected to know that they should rush to a doctor.
The absence of any injuries on the person of the complainant may not by itself discredit the statement of the complainant.
Merely because the complainant was a helpless victim who was by force prevented from offering serious physical resistance she cannot be disbelieved.
[318 B D]
|
Appeal No. 936 of 1963, Appeal from the judgment and order dated May 31, 1963, of the Punjab High Court in First Appeal from Order No. 2/3 of 1963.
Purshotham Trikamdas, Rajinder Nath Mittal , R. B. Datar, V. Kumar.
B. P. Singh and Naunit Lal, for the appellant.
G.S. Pathak, Bawa Shiv Charan Singh, Hardev Singh, Rajendra Dhawan, Anand Prakash and Y. Kumar, for respondent No. 1. 752 February 12, 1964.
The Judgment of the Court was, delivered by: SHAH, J.
At the general elections held in February 1962 five candidates contested the election to the House of the People from the Jhajjar parliamentary constituency.
On February 27, 1962 the appellant Jagdev Singh Sidhanti was declared elected.
Pratap Singh Daulta who was one of the candidates at the election then filed a petition with the Election Commission praying, inter alia, that the election of the appellant be declared void on the ground that the appellant Sidhanti his agents, and other persons with his consent,.
had committed certain corrupt practices in connection with the election.
Daulta stated that the appellant Sidhanti was set up as a candidate to contest the election by the Harding Lok Samiti, that the appellant and six other persons Piare Lal Bhajnik, Ch.
Badlu Ram, Pt.
Budh Dev, Prof. Sher Singh, Mahashe Bharat Singh and Achilles Bhagwan Dev who were leaders and active workers of the Gurukul Section of the Arya Samaj had organised a political movement called "the Hindi agitation" in 1957 the real object of which was to promote feelings of enmity and hatred between the Sikh and the Hindu communities in the State of Punjab " on the ground of religion and language" to promote their prospects in the general elections to be held in 1962.
and for that purpose they held meetings in the Hariana region of the Punjab and appealed to the electorate to vote for Sidhanti 'on the ground of his religion and language".
and used a religious symbol a flag called "Om Dhwaj" in, all these meetings, that the appellant himself made similar appeals to the electorate and appealed to them to refrain from voting for Daulta who was a sitting member of the House of the, People from the constituency stating that he Daulta was an enemy of the Arya Samaj and of the Hindi language, that during the election campaign fifteen meetings were held between December 10, 1961 and February 18, 1962 and at all these meetings appeals were made to the electorate on the ground of religion and language of Sidhanti, and attempts were made to, promote feelings of enmity and hatred between Sikhs 'and Hindus of the Punjab.
Allegations about undue influence on the voters in the exercise of their free electoral right were also made in the petition, and details of these 753 alleged corrupt practices were furnished in the schedule annexed to the petition.
Sidhanti denied that the six persons who were named as his agents and supporters ever acted as his agents in his elec tion campaign and submitted that they were merely interested in the success of the candidates set up by the Hariana Lok Samiti and acted throughout "on their own and not as his agents".
He also submitted that the Hariana Lok Samiti had no connection with the Arya Samaj, it being a political organization started by Prof. Sher Singh who was an impor tant political leader in the Hariana region.
Sidhanti admitted, that he had participated in the meetings to canvass votes, but claimed that he was not responsible for convening the meetings or for the speeches made by others in those meetings, that the Om flag was not a religious symbol and denied that it was used on any occasion by him or his agents or the six persons named by Daulta in his petition, except Bhagwan Dev who was accustomed "throughout his career" to carry a pennant with "Om" and his own name inscribed thereon on his motor vehicle, but carrying of such a flag or pennant on Bhagwan Dev 's vehicle during the election was not with his (Sidhanti 's) consent and that it did not amount to commission of a corrupt practice as defined in the Act, that the residents of Hariana area were mainly Hindi speaking, but the Government of Punjab had made Punjabi language in Gurmukhi script a compulsory subject at various levels of school education and this gave rise to a wide spread agitation against the policy of the Government, that to resist the implementation of the policy and the programme of the Government in the administrative, economic and developmental spheres and to mitigate the hardships of the residents of the Hariana region and to secure redress of their grievances the Hariana Lok Samiti was formed.
, and an appeal to the electorate to secure a reversal of the policies and programme of the Government was not.
it was submitted, an appeal on the ground of language or religion and did not amount to a corrupt practice within the meaning of section 123 of the Representation of the People Act, 1951.
The Tribunal held, inter alia, that the "Om flag" was not a "religious symbol" of the Arya Samaj, that no satisfactory proof was adduced that Om flag had been used as a 134 159 S.C. 48 754 symbol of Arya Samaj or that an appeal to secure votes with the aid of the flag was made to the electorate by Sidhanti or by any one else with his consent, that there was no satisfactory evidence to establish that appeals were made to the electorate to vote for Sidhanti or to refrain from voting for the other candidates on the ground of religion or language, and that the applicant Daulta failed to prove that an appeal on the ground of caste, community or religion or language had been made to the electorate to further the prospects of Sidhanti or to prejudicially affect the election of the other candidates.
On these and findings recorded on other issues not material in this appeal, the petition filed by Daulta was dismissed by the Election Tribunal.
Daulta prefered an appeal against that order to the High Court of Judicature for Punjab.
The High Court held that the word "Om" is a religious symbol of the Hindus in general and of the Hindus belonging to the section known as Arya Samaj in particular and that the flag bearing the inscription "Om" is a religious symbol, that "Om Dhwaj" was flown during the election campaign on the election offices of the Hariana Lok Samiti especially at Sampla and Rohtak, that the Samiti office was used by Sidhanti for his election campaign, that Hariana Lok Samiti was generally using the "Om Dhwaj" to further the prospects of its candidates, that out of the agents and supporters of Sidhanti "Bharat Singh at least once and Bhagwan Dev invariably used" the Om flag on their vehicles while attending the meetings convened by the Hariana Lok Samiti in furtherance of the election campaign of Sidhantn.
that the Om flag was flying "on the pandal of the meeting" held at Majra Dubaldhan on January 19, 1962 when Sidhanti and his agents and supporters delivered speeches in support of the election campaign and that at the meeting held at Rohtak town, Piare Lal Bhajnik sang a song in the presence of Sidhanti, the purport of which was that the honour of the Om flag should be upheld, that Bhagwan Dev was using the Om flag with the consent of Sidhanti and that Pare Lal Bhajnik at the Rohtak town meeting also sang the son in honour of the Om flag with the consent of Sidhanti.
The High Court further held that the appellant had delivered speeches at Majra Dubaldhan in the pandal on which the Om flag was flying, that as even an isolated act of the use 755 of or appeal to the Om flag may constitute a corrupt practice under section 123(3) that corrupt practice by Sidhanti and his agents and by his supporters with his consent was established.
The High Court also held that Sidhanti bad appealed for votes on the ground of his language and had asked the electorate to refrain from voting for Daulta on the ground of the language of the latter, and such appeals constituted a corrupt practice.
The High Court accordingly allowed the appeal and declared the election of Sidhanti void under section 100 (1) (b) of the Act.
Against the order this appeal is preferred with certificate granted by the High Court.
Two principal questions which survive for determination in this appeal are: (1) Whether a religious symbol was used in the course of election by the appellant, his agents or other persons with his consent in furtherance of the prospects of his election; and (2) Whether appeals were made to the electorate by Sidhanti, his agents or other persons with his consent to vote in his favour on account of his language and to refrain from voting in favour of Daulta on the ground of his language.
In order to appreciate the plea raised by counsel for the parties and their beating on the evidence it may be useful to refer to the political background in the Hariana region and the constituency in particular, in which corrupt practices are alleged to have been committed.
The territory of the State of Punjab is divided into two regions the 'Hindi speaking region ' and the Tunjabi speaking region '.
The Hindi speaking region is very largely populated by Hindus, while in the Punjabi speaking region the population is approximately equally divided between the Hindus and Sikhs.
In the Punjab before the partition, Urdu and English were the 'two official languages.
After the partition a controversy about the official language arose.
The Government of Punjab decided to replace Urdu and English by Hindi in the Hindi speaking region and Punjabi in the Punjabi speaking region, and for that purpose a scheme called the 'Sachar formula ' was devised, the salient feature of which was that every student reading in the Punjab schools, by the time he passed 756 his matriculation examination should be proficient both in Hindi and Punjabi.
Under the scheme two Regional Committees were formed one known, as the Hindi Regional Committee and the other the Punjabi Regional Committee.
The function of the Committees was to advise the local Government in matters of finance and other related matters.
There was great resentment against the formation of the Regional Committees and the implementation of the Sachar formula which resulted in the launching of a movement called "the Hindi agitation".
The agitation against the language policy of the Government gained strength and there was a great mass movement in 1957 in the entire State of Punjab.
In the last week of December 1957 there was a settlement between the organisers of the movement and the State Government and the movement was called off.
It appears that some of the leading figures in this agitation attempted to make political capital out of this movement and set themselves up as probable candidates for the next election.
In the Arya Samaj in the Punjab there are two major sections, one called the 'Gurukul Section ' and the other called the 'College Section '.
The Gurukul Section is again divided into the Hariana Section and the Mahashe Krishna Section.
It is the case of Daulta that it is the Gurukul Section of the Araya Samaj relying upon the religious and linguistic differences which sought to make at the time of the election, appeals to religions and use of religious symbols.
As we have already observed.
Daulta challenged the election on the ground that Sidhanti, his election and other agents committed many corrupt practices.
Before the Tribunal he restricted his case to the corrupt practices falling within cls.
(3) and (3A) of section 123 of the Representation of the People Act 1951.
His plea of undue influence falling within cl.
(2) failed before the Tribunal and also before the High Court, and it has not been relied upon before us.
Similarly his plea that Sidhanti, his election and other agents had promoted or attempted to promote, feelings of enmity or hatred between different classes of citizens of India on grounds of religion, race, caste, community, or language was negatived by the Tribunal and also by the High Court and that plea also does not fall to be determined by us.
Daulta had also alleged 757 that appeals were made by Sidhanti and his election and other agents, to the electorate to vote for him or refrain from voting for Daulta on the ground of his Sidhanti 's religion and language and that Sidhanti and his agents used and appealed to religious symbols such as the Om flag for the furtherance of the prospects of the election of Sidhanti and for prejudicially affecting the election of Daulta.
It is on this last question about the use of and appeal to religious symbols and appeal to the language of the two candidates for the furtherance of the prospects of the election of Sidhanti that the Tribunal and the High Court have differed.
It may be useful to refer to the relevant provisions of the Act, before dealing with the matters in dispute.
Section 100(1) sets out the grounds on which an election may be declared void.
In so far as that section is material in the present appeal, it provides: "Subject to the provisions of sub section (2) if the Tribunal is of opinion. (a) * * * * * (b) that any corrupt practice has been committed by returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; (c) * * * * * (d) * * * * * the Tribunal shall declare the election of the returned candidate to be void." By sub section
(2) if in the opinion of the Tribunal.
a returned candidate has been guilty by an agent, other than his election agent, of any corrupt practice but the Tribunal is satisfied (a) that no such corrupt practice was committed at the election by the candidate or his election agent, and every such corrupt practice was committed contrary to the orders and without the consent of the candidate or his election agent , (b) * * * * * * (c) that the candidate and his election agent took all reasonable means for preventing the commission of corrupt practice at the election; and 758 (d) that in all other respects the election was free from any corrupt practice on the part of the candidate or any of his agent, the Tribunal may decide that the election of the returned candidate is not void.
Section 123 sets out what shall be deemed to be corrupt practices for the purpose of the Act.
Clause (3) as amended by Act 40 of 1961, which alone is material in this appeal, provides: "The appeal by a candidate or his agent or by any other person with the consent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, community or language or the use of, or appeal to, religious symbols, such as the national flag or the national emblem, for the furtherance of the prospects of the election of that candidate or for prejudicially affecting the election of any candidate." The clause falls into two parts (i) an appeal by a candidate, his agents or by other persons with the consent of the candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, community or language; and (ii) use of or appeal to religious symbols, national symbols or national emblems for the furtherance of the prospects of the election of the candidate or for prejudicially affecting the election of any candidate.
The first part in terms makes it a condition that the appeal is made by a candidate or his agent or any other person with the consent of the candidate or his agent.
There is no reference in the second part to the person by whom the use of, or appeal to, the religious or the national symbols, such as the national flag or the national emblem may be made, if such use of or appeal to them has been made to further the prospects of the election of the candidate or to prejudicially affect the election of any candidate.
But it is implicit in section 123(3), having regard to the terms of section 100, that the use of or appeal to the national or religious symbols must be made by the candidate of his election agent or by some other person with the consent of the candidate or his election agent, before it can be regarded as a ground for declaring the election void.
If the evidence on the record fails to establish 759 the responsibility for the use of or appeal to the religious or national symbols by the returned candidate or by his election agent or by any other person with his consent or his election agent, no ground for setting aside the election may be deemed to be made out.
The first question to which we must then turn is, whether the "Om flag" can be regarded as a "religious symbol" within the meaning of section 123 (3).
This question has to be examined in two branches (i) whether the word "Om" has any special religious significance, and, (ii) whether the use of "Om" on a flag or pennant makes it a religious symbol.
If the respondent Daulta establishes that the "Om flag" is a religious symbol, the question will arise whether the use of or appeal to the Om flag was made in the election campaign for furtherance of his prospects by Sidhanti or by his agents or other persons with his consent or the consent of his election agent, The expression "Om" is respected by the Hindus generally and has a special significance in the Hindu scriptures.
It is recited at the commencement of the recitations of Hindu religious works.
Macdonell in his A Practical Sanskrit Dictionary states that "Om" is the sacred syllable used in invocations, at the commencement of prayers, at the beginn ing and the end of Vedic recitation, and as a respectful salutation: it is a subject of many mystical speculations.
In the Sanskrit English Dictionary by Monier William it is said that "Om" is a sacred exclamation which may be uttered at the beginning and end of a reading of the Vedas or Previously to any prayer; it is also regarded as a particle of auspicious salutation.
But it is difficult to regard "Om" which is a preliminary to an incantation or to religious books as having religious significance.
"Om" it may be admitted is regarded as having high spiritual or mystical efficacy: it is used at the commencement of the recitations of religious prayers.
But the attribute of spiritual significance will not necessarily impart to its use on a flag the character of a religious symbol in the context in which the expression religious symbol occurs in the section with which we are concerned.
A symbol stands for or represents something material or abstract.
In order to be a religious symbol, there must be a visible 760 representation of a thing or concept which is religious.
To 'Om ' high spiritual or mystical efficacy is undoubtedly ascribed; but its use on a flag does not symbolise religion, or anything religious.
It is not easy therefore to see how the Om flag which merely is a pennant on which is printed the word 'Om ' can be called a religious symbol.
But assuming that the Om flag may be regarded as a religious symbol, the evidence on the record is not sufficient to establish that by Sidhanti, his election agents or any other person with his consent or the consent of his election agent, Om flag was used or exhibited, or an appeal was made by the use of the Om flag to further the prospects of Sidhanti at the election.
It may be remembered that in the trial of an election petition, the burden of proving that the election of a successful candidate is liable to be set aside on the plea that he was responsible directly or through his agents for corrupt practices at the election, lies heavily upon the applicant to establish his case, and unless it is established in both its branches i.e. the commission of acts which the law regards as corrupt, and the responsibility of the successful candidate directly or through his agents or with his consent for its practice not by mere preponderance of probability, but by cogent and reliable evidence beyond any reasonable doubt, the petition must fail.
The evidence may be examined bearing this approach to the evidence in mind.
Between the months of December 10, 1961 and February 18, 1962, fourteen meetings were held in the constituency as a part of the election campaign of Sidhnti.
These meetings were held at Beri, Barhana, Dighal, Akheri Madanpur, Sampla, Ladpur, Majra Dubaldhan, Pakasma, Assaudha.
Jhajjar, Badli Dulehra, Sisana and Bahadurgarh.
There was, it is claimed by the applicant, one more meeting on February 4, 1962, at Rohtak town which is outside the Jhajjar constituency.
The Tribunal held that the evidence was not sufficient to prove that in the meetings at Beri, Barhana, Dighal, Sampla, Ladpur, Pakasma.
Assaudha, Jhajjar, Badli, Dulehra, Sisana and Bahadurgarh 'Om ' flag was exhibited in furtherance of the election prospects of Sidhanti and with that view the High Court has agreed.
The Tribunal 761 also held that there was no reliable evidence that at Majra Dubaldhan on January 19, 1962, and at Rohtak town on February 4, 1962, 'Om ' flag was used as a religious symbol.
On this part of the case, however, the High Court disagreed with the Tribunal.
Rohtak town was not, but Rohtak suburban area was, within the constituency in which Daulta and Sidhanti were contesting the election.
Therefore the only meeting which took place within the constituency where Sidney and Daulta contested the election in which according to the High Court the Om flag was used was at Majra Dubaldhan held on January 19, 1962.
Six witnesses directly spoke about the details of that meeting, beside Sidhanti.
Sidhanti said generally that the evidence given by the wit nesses for Daulta regarding what transpired at Maira Dubal dhan and three other meetings was not true.
The witnesses for Daulta were Roop Ram.
Sukhi Ram and Ramdhari Balmiki.
The witnesses who supported the case of the appellant were Piare Lal, Prof. Sher Singh and Jug Lal.
It may be observed that the High Court placed no reliance upon the testimony of Ramdhari Balmiki and no arguments have been advanced before us suggesting that his testimony was reli able.
Roop Ram a police constable has deposed that about mid day on January 19, 1962, a meeting was held at Majra Dubaldhan and that at that meeting Piare Lal sang a bhajan about the Om flag and he saw the Om flag flying on the pandal of the meeting which was attended by four to five thousand persons.
According to the witness Nanhu Ram, Badlu Ram, Jagdev Singh Sidhanti, Bhagwan Dev, Ramdhani Balmiki, Attar Singh, Prof. Sher Singh and Acharya Bhagwan Dev made speeches, that Acharya Bhagwan Dev in the course of his speech asked people not to vote for Daulta but to vote for the candidate who was seeking election on the Hariana Lok Samiti ticket.
In cross examination he admitted that he had been supplied with a copy of the report which he had made to the D.I.G., C.I.D., Chandigarh, and that he had gone through the report two or three times, before he gave evidence.
The Tribunal refused to place reliance upon the testimony of this witness and of another police constable Ganesh Dass who claimed to have remained present in the various political meetings.
It appears that the witness had memorised the so called reports and the same were not made available to counsel for Sidhanti 762 to challenge the truth of the statements made by the wit nesses.
The High Court has not given any adequate reasons for accepting the testimony of the witness, when the Tribunal which had opportunity of seeing the witness and noting his demeanour had refused to accept the testimony.
Sukhi Ram deposed that he was a sarpanch of Dubaldhan Panchayat for about two years, and that he was present at the meeting convened by the Hariana Lok Samiti on January 19, 1962, for canvassing votes for the candidates of Hariana Lok Samiti, that Prof. Sher Singh and Sidhanti came in a jeep on which there was flying flag with 'Om ' inscribed thereon, that he saw several other vehicles flying the Om flag and that the vehicle in which he went to the meeting also was carrying the Om flag.
The Tribunal was of the view that the facts elicited in the cross examination of this witness disclosed that his recollection about other meetings which he had attended was poor, whereas his recollection about the meeting held at Majra Dubaldhan was very clear, and that the reasons given by the witness for specially remembering the details of the proceedings of the meeting in Majra Dubaldhan and not of other meetings could not be accepted.
In the view of the Tribunal the witness was interested in Daulta, and this inference was supported by the fact that Daulta had sent him a copy of his election petition before it was even presented to the Election Commission.
It also appears that the evidence given by this witness was inconsistent with the summary of the meeting given in Sch. 'D ' to the petition and for this reason according to the Tribunal the testimony of the witness "did not carry conviction" and "it was not safe to rely upon it".
The High Court after summarising the effect of the evidence observed that it did not appear from the deposition given by the witness that he was in any manner interested in Daulta.
In so observing the High Court appears unfortunately to have lost sight of the grounds given by the Tribunal.
Witness Piare Lal stated that he was present at the meeting held at Majra Dubaldhan and that none of the speakers suggested that the electors should vote on the ground of caste, creed, religion or language.
He also stated that at 763 none of the meetings there was any Om flag either inside or outside the pandal of the meetings.
Prof. Sher Singh who was another witness examined on behalf of Sidhanti deposed that slogans shouted in the meetings were political slogans and that he did not see Om flags in any pandal of the meet ings, and that he 'had instructed all the candidates and the members of the Hariana Lok Samiti not to use any flag or symbol other than the symbol allotted to them.
Jug Lal, another witness examined on behalf of Sidhanti, stated that at the meeting at Majra Dubaldhan on January 19, 1962, there were no Om flags to be seen anywhere either inside or outside the meeting and that there were no Om flags flying on any of the vehicles.
The testimony of the witnesses Piare Lal, Prof. Sher Singh and Jug Lal was discarded by the High Court, because in their view the witnesses were interested in Sidhanti.
Even if this view about the evidence of these three witnesses is accepted, the evidence led on behalf of Daulta of witnesses Sukhi Ram, Ramdhari Balmiki is wholly unreliable and the testimony of police constable Roop Ram is also not such that implicit reliance can be placed upon it.
We are unable, therefore, to agree with the High Court in the conclusion it has reached that it had been proved satisfactorily that Om flag was flown at Majra Dubaldhan where Sidhanti and other .
speakers delivered speeches in furtherance of the election campaign.
The only other meeting at which it is found by the High Court that the Om flag was used in the meeting at Rohtak town on February 4, 1962, which town, it is common ground, is not within the Jhajjar parliamentary constituency from which Sidhanti and Daulta were contesting the election.
It is, however, said that Rohtak suburban area is within the Jhajjar parliamentary constituency and a& there is a grain market in Rohtak town and a large number of voters from the Jhajjar constituency assemble in that town a meeting was held by Sidhanti in which Om flag were exhibited.
The witnesses in support of the case of Daulta are Ram Nath Sapra, Dafedar Singh, K. K. Katyal and Satyavrat Bedi.
The principal witnesses who were examined by Sidhanti in respect of this meeting were Piare Lal, Bharat Singh, Budh Dev, Prof. Sher Singh and Bhagwan Dev.
764 Ram Nath Sapra who is a correspondent of several newspapers deposed that he had attended the meeting at Rohtak town at Anai Mandi 10 or 12 days before the actual polling.
According to the witness there was a big procession taken out before the meeting which carried flags either of the symbol of the 'Rising Sun ' or of 'Om ', that he had made reports about the proceedings of the Rohtak meeting and had sent the report of the same to all the five papers of which he was the correspondent.
The Tribunal was of the view that the testimony of the witness was unreliable, because he did not remember the details of any.
other meeting convened by the other parties, and that he could not speak about the names of the speakers who took part in the meeting convened by the Hariana Lok Samiti.
The testimony of the witness therefore was "far from convincing" and the testimony of Sidhanti, Piare Lal, Bharat Singh, Budh Dev, Prof. Sher Singh and Bhagwan Dev was more reliable.
In coming to the conclusion that the evidence of the witness was unreliable the Tribunal referred to the details given in Sch. 'D ' annexed to the petition under the heading 'Summary of the meetings ' and observed that the summary was at "complete variance" with the testimony of the witness.
The High Court was of the view that the witness Ram Sapra was "wholly disinterested" and therefore his evidence must be accepted.
The High Court did not refer to the infirmities disclosed in the testimony of the witness, particularly the discrepancies between the statement of Daulta in his petition and the testimony given by this witness.
Witness Dafedar Singh who is a police constable said that he had been deputed to report about the proceedings of the meeting.
His version is also different from the version as given in Sch. 'D ' annexed to the petition.
The High Court has not referred to the testimony of this witness in support of its conclusion and nothing more need be said about him.
K.K. Katyal said that he had attended the meeting at Rohtak town as a special correspondent of the Hindustan Times, Delhi and that he recollected that flags with a symbol of 'Om ' inscribed thereon were seen flying on some 765 vehicles but it was not possible for him to say who owned those vehicles, but from the flags and placards carried on the vehicles it appeared that they were of the Hariana Lok Samiti.
He also deposed that he had gone to the office of the Hariana Lok Samiti at Rohtak and saw a similar flag flying on the building of the office.
He admitted in cross examination that he did not visit any office of the Hariana Lok Samiti either at Bahadurgarh or at Sampla as all his attention was confined to the central office of the Hariana Lok Samiti at Rohtak.
He also stated that he had seen some shopkeepers in Sampla and Bahadurgarh flying Om flags on their stalls.
In the view of the Tribunal the testimony of this witness was vague and no reliance could be placed thereon.
While generally agreeing with this view,, the High Court observed that the testimony of the witness Katyal that the Om flag was flying at the office of the Hariana Lok Samiti at Rohtak which was the headquarters office and in the procession which was led by Bharat Singh a number of Om flags were seen may be accepted.
Satyavrat Bedi who is staff correspondent of the Indian Express stated that during his survey of the election campaign he visited Sampla, Bahadurgarh and Rohtak in one day, and made his report about his observations to the newspaper Indian Express, in which he had recorded that religious symbols and religion were being frequently used for damaging the chances of success of Daulta, that he had seen a large number of flags fluttering on many house tops.
that the flag on the office of the Hariana Lok Samiti was that of Om and the other organisations had their own flags, that he saw the Om flag fluttering on the office of Sidhanti at Sampla but he did not remember whether there was any flag of 'Om ' at his election office at Bahadurgarh.
The Tribunal declined to accept this testimony.
The High Court took a different view and observed that apart from any other infirmity regarding the use of the reports made by the witness, the statement made by him about his observation that he had seen the Om flag flying on the office of the Hariana Lok Samiti and on the motor vehicle of Bharat Singh could not be ruled out.
It must be remembered however that we are concerned at this stage with the 766 question whether in the meeting at Rohtak on February 4, 1962.
Om flags were exhibited.
On that part of the case the evidence of Satyavrat Bedi is not of much use.
Sri Ram Sharma was a candidate for election on behalf of a political party called "the Hariana Front".
He deposed that he had never attended any procession or meeting organised by the Hariana Lok Samiti but he had seen the motorvehicles employed by the Hanana Lok Sanmti carrying Om flags which were used by the candidates of the Hariana Lok Samiti.
He stated that he contributed a number of articles to Hariana Tilak, Rohtak, founded by him in which he had published on January 4, 1962.
an article condemning, the use of the Om flag for the purpose of elections.
The article published on January 4, 1962, can have no bearing on the use of the flag at Rohtak in the meeting dated February 4, 1962.
The High Court did not place any reliance upon the testimony of this witness.
This is all the evidence on behalf of Daulta to which our attention was invited by counsel for the parties that at the meeting at Rohtak on February 4, 1962, Om flags were exhibited and appeals were made to the flag as a religious symbol.
Apart from the general infirmity of the testimony, the Tribunal refused to accept the evidence of the witnesses on the ground that their statements considerably departed from the summary given in Sch. 'D ' by the petitioner Daulta himself.
In view of this inconsistency between the evidence given in Court and the allegations made by the applicant Daulta in the petition, it would be difficult, after discarding the evidence with regard to a very large number of meetings, to 'hold that in the meeting at Majra Dubaldhan which was within the constituency and in the meeting at Rohtak town which was outside the constituency, Om flags were displayed or appeals were made in the name of the Om flag to further the prospects of the election of Sidhanti.
We are, therefore, unable to agree with the conclusion of the High Court that the Om flag was used for election purposes at the time when election speeches were delivered by Sidhanti at Majra Dubaldhan or Rohtak town or that the Om, flag was used on the pandals at those meetings.
767 Two other matters which have a bearing on the use of the Om flag in the course of the election campaign by Sidhanti, and on which the High Court has relied may be referred to.
The High Court has found that Sidhanti used the office of the Hariana Lok Samiti at Rohtak town as his election office, but on this part of the case our attention has not been invited to any definite evidence which directly supports this conclusion.
The High Court merely observed that it was common ground that Sidhanti did not have any office of his own at Rohtak, and inferred from that circumstance that Sidhanti was using the office of the Hariana Lok Samiti for the election campaign.
But the inference is in the face of the evidence not justifiable, especially when Rohtak town was not within the constituency.
It was conceded by Sidhanti that Bhagwan Dev Sharma an Arya Samaj leader had been accustomed for many years past to carry on his motor vehicle a pennant bearing the Om mark and his name.
Witness Bhagwan Dev Sharma stated that he had attended the meetings of the Hariana Lok Samiti and had addressed them because he agreed with their ideology and thought that the institution was for the benefit of the Hindu religion, that he had never been asked to remove the Om flag from his jeep when he reached those meetings and that he had not attended those meetings either on account of Prof. Sher Singh or Sidhanti but "in his independent capacity as a citizen of India having a right to vote", and that he approved of the candidature of Sidhanti in preference to that of his opponent.
But if the witness was accustomed to use a pennant with Om mark on it for many years past, in the absence of clear evidence to show that he was an agent of Sidhanti or that he acted with the consent of Sidhanti and made an appeal to the flag, it would be difficult to hold from the circumstances that during the days of the election campaign the witness did not remove the flag from the motor vehicle, that Sidhanti made an appeal to the electorate by using a religious symbol to further his prospects at the election.
The evidence about the user of the Om flag by Bharat Singh when he is alleged to have taken out a procession does not appear to be reliable.
768 On a careful survey of the testimony of the witnesses we are unable to agree with the conclusions recorded by the High Court that: (a) Sidhanti "had used an office of the Hariana Lok Samiti on which the "Om flag" was flying for election purposes and further that he gave election speeches at a pandal where the Om flag was fluttering in furtherance of his prospects at the election"; (b) "the agents and supporters delivered speeches about the "Om flag" at the meeting held at Majra Dubaldhan on January 19.
1962, that Piare Lal Bhajnik sang a song, the purport of which was that the honour of the Om flag should be upheld"; and (c) "the Hariana Lok Samiti, the party to which Sidhanti belonged, was using the Om flag for the purpose of election campaign", and thereby committed corrupt practices.
It is true that the use of the Om flag by Bhagwan Dev on his conveyance is admitted but that again is for reasons already set out not sufficient to enable the Court to hold that it was for the purpose of furthering the prospects of election of Sidhanti.
In considering whether appeals were made to the electorate to vote for Sidhanti on the ground of his language or to refrain from voting for Daulta on the ground of Daulta 's language, it is necessary in the first instance to ascertain the true meaning of the expression "on the ground of his language".
By section 123(3) which was introduced for the first titne in its present form by Act 40 of 1961, appeal by a candidate or his agent to vote or refrain from voting for a person on the ground of language is made a corrupt practice.
This clause must be read in the light of the fundamental right which is guaranteed by article 29(1) of the Constitution, for in ascertaining the true meaning of the corrupt practice, the area of the fundamental right of citizen must be steadily kept in view.
The clause cannot be so read as trespassing upon that fundamental right.
article 29(1) provides: "Any section of the citizens residing in the territory of India or any part thereof having a distinct 769 language, script or culture of its own shall have the right to conserve the same.
" The Constitution has thereby conferred the right, among others, to conserve their language upon the citizens of India.
Right to conserve the language of the citizens includes the right to agitate for the protection of the language.
Political agitation for conservation of the language of a section of the citizens cannot therefore be regarded as a corrupt practice within the meaning of section 123(3) of the Representation of the People Act.
That is clear from the phraseology used in section 123(3) which appears to have been deliberately and carefully chosen.
Unlike article 19(1), article 29(1) is not ' subject to any reasonable restrictions.
The right conferred, upon the section of the citizens residing in the territory of India or any part thereof to conserve their language, script or culture is made by the Constitution absolute and therefore the decision of this Court in Jumuna Prasad Mukhariya and others vs Lachhi Ram and others(1) on which reliance was placed by the High Court is not of much use.
In that case sections 123(3) and 124(5) of the Representation of the People Act as they then stood were challenged as infringing the fundamental freedom under article 19 (1) (a) of the Constitution, and the Court in negativing the contention held that the provisions of the Representation of the People Act did not stop a man from speaking: they merely prescribed conditions which must be observed if a candidate wanted to enter Parliament.
The right to stand for an election is, it was observed, a special right created by statute and can only be exercised on the conditions laid down by the statute, and if a person wants to stand for an election he must observe the rules.
These observations have no relevance to the protection of the fundamental right to conserve language.
The corrupt practice defined by cl.
(3) of section 123 is committed when an appeal is made either to vote or refrain from voting on the ground of a candidate 's language.
It is the appeal to the electorate on a ground personal to the candidate relating to his language which attracts the ban of section 100 read with section 123(3).
Therefore it is only when the electors are asked to vote or not to vote because of the (1) [19551 1 S.C.R. 608.
134 159 S.C. 49 770 particular language of the candidate that a corrupt practice may be deemed to be committed.
Where however for conservation of language of the electorate appeals are made to the electorate and promises are given that steps would be taken to conserve that language, it will not amount to a corrupt practice.
It is in the light of these principles, the correctness of the findings of the High Court that Sidhanti was guilty of the corrupt practice of appealing for votes on the ground of his language and of asking the voters to refrain from voting_ for Daulta on the ground of the language of Daulta may be examined.
The petition filed by Daulta on this part of the case was vague.
In paragraph 1 1 of his petition it was averred that Sidhanti and his agents made a systematic appeal to the audience to vote for Sidhanti and refrain from, voting for Daulta "on the ground of religion and language", and in paragraph 12 'it was averred that in the public meetings held to further the prospects of Sidhanti in the election, Sidhanti and his agents had made systematic appeals to the electorate to vote for him and refrain from voting for Daulta "on the ground of his religion and language".
A bare perusal of the particulars of the corrupt practice so set out in paragraphs 1 1 & 12 are to be found in Schs. 'C ' & 'D ' clearly shows that it was the case of Daulta that Sidhanti had said that if the electorate wanted to protect their language they should vote for the Hariana Lok Samiti candidate.
Similar exhortations are said to have been made by the other speakers at the various meetings.
It is stated in Sch.
'D ' that resolutions were passed at the meetings urging upon the Government to "abolish Punjabi from Hariana", that many speakers said that the Hariana Lok Samiti will fight for Hindi for Hariana and that they were opposed to the teaching of Punjabi in Hariana.
These exhortations to the electorate to induce the Government to change their language policy or that a political party will agitate for the protection of the language spoken by the residents of the Hariana area do not fall within the corrupt practices of appealing for votes on the ground of language of the candidate or to refrain from ' voting on the ground of language of the contesting candidate.
771 Speeches made at political meetings held for canvassing votes must be examined in the context of the atmosphere of a Political campaign and the passions which are generally aroused in such a campaign.
In adjudging whether an appeal is made to the language of the candidate, a meticulous examination of the text of the speech in the serene atmos phere of the Court room picking out a word here and a phrase there to make out an offending appeal to vote for or against a candidate on the ground of language would not be permissible.
A general and overall picture of the speeches delivered by Sidhanti and other speakers at the meeting disclosed nothing more than a tale of political promises, exhortations and inducements to vote at the forthcoming election for Sidhanti.
It is not disputed that in 1957 there was a wide spread agitation in the State of Punjab against the enforcement of the education policy of the State, incorporated in the "Sachar formula".
Many persons were imprisoned or detained in the cause of the agitation for individual acts done by them.
But the movement was not and could not be declared illegal.
It is common ground that in the Harriana region, Hindi is the predominant language of the people and if a section of the people thought that compelling the students in the Hariana region to learn Punjabi was not in their interest and in the election campaign such a view was advocated and votes were canvassed on the promise that the candidate if elected will take steps to conserve the language of the region, it would be difficult to hold that appeal as amounting to a corrupt practice.
It is open to a candidate in the course of his election campaign to criticise the policies of the Government including its language policy and to make promises to the electorate that if elected he will secure a reversal of that policy or will take measures in the Legislature to undo the danger, real, apprehended or even fancied, to the language of the people.
The object of the Hariana Lok Samiti was evidently to resist the imposition of Punjabi in the Hariana region and that object appears to have been made the platform in the election campaign.
Thereby it could not be said that the voters were asked not to vote for Daulta on the ground of his language, assuming that it was other than 772 Hindi.
Nor can it be said that it was an appeal to the voters to vote for Sidhanti on the ground of his language.
The evidence which has been referred to by the High Court regarding the speeches made by Badlu Ram and Harphul Singh on December 10, 1961, at Beri on the face of it shows that the speeches were an attack against Daulta in respect of his political conduct, behaviour and beliefs.
The speeches made at the meetings at Sampla, Ladpur and Majra Dubaldhan read like political harangues addressed to the electorate to vote for the candidate who would protect the language of the people of Hariana.
At Bahadurgarh also Sidhanti is stated to have claimed that he was opposed to the Government and its supporter Daulta in the matter of the language movement.
The evidence also showed that Sidhanti had appealed to the voters to vote for him because he was actively associated with the Hindi agitation movement and that he was championing the cause of Hindi and ' resisting the imposition of a rival language Punjabi and thereby suggesting that Daulta was hostile to the cause of Hindi language and was supporting the Punjabi language.
The criticism by 'Sidhanti in his appeal to the electorate related to the political leanings of Daulta, and his support to the policy of the Government and wag not personally directed against him.
Nor did Sidhanti appeal to the voters to vote in his favour on account of his language.
Such political speeches espousing the cause of a particular language and making promises or asking the people to protest against the Government of the day in respect of its language policy is not a corrupt practice within the description of corrupt practice under section 123(3) of the Act.
We are therefore unable to agree with the High Court that Sidhanti was guilty of any corrupt practice under section 123 (3) by appealing for votes on the ground of his language or by asking the voters to refrain from voting for Daulta on the ground of his language.
The appeal will therefore be allowed and the order passed by the Tribunal restored with costs in this Court and the High Court.
Appeal allowed.
| The appellant was declared elected to the House of the People from a parliamentary constituency.
The respondent No. 1 challenged the election of the appellant on the ground that the appellant, his election and other agents committed many corrupt practices falling within section 123 of the Representation of the People Act, 1951.
The main grievance of respondent No. was that the appellant and his agents had made appeals to the electorate to vote for him or to refrain from voting for Daulta (Respondent No. 1) "on the ground of his religion and language", and that the appellant and his agents use a religious symbol a flag called "Om Dhwaj" in all the election meetings.
The case of the appellant was that the flag was not a religious symbol and denied that it was used on any occasion by him or his agents and submitted that it was used only by one person who was always accustomed to carry it on his motor car.
The appellant also pleaded that an appeal to the electorate on the ground of language or religion did not amount to a corrupt practice within the meaning of section 123 of the Act.
The Tribunal dismissed the election petition of respondent No. I but the High Court allowed the appeal and declared the election of the appellant void under section 100(1)(b) of the Act.
Hence the appeal.
Held (i) The use of or appeal to the national or religious symbols to be a corrupt practice must be made by the candidate or his election agent, or by some other person with the consent of the candidate or his election agent, before it can be regarded as a ground for declaring the election void.
(ii) 'Om 'is regarded by Hindus as having high spiritual or mystical efficacy:it is used at the commencement of the recitations of religious prayers.
But the attribute of spiritual significance will not necessarily impart to its use on a flag the character of a religious symbol within the meaning of section 123.
A symbol stands for or represents something material or abstract.
To be a religious symbol, there must be a visible representation of a thing or concept which is religious.
To 'Om ' high spiritual or mystical efficacy is undoubtedly ascribed, but its use on 751 a flag does not symbolise religion or anything religious.
The High 'Court errd in holding that the 'Om ' flag was a religious symbol and its use in an election comes within the purview of cl.
(3) of section 123 of the Act.
(iii)Clause (3) of section 123 of the Act must be read in the light of the fundamental right which is guaranteed by article 29(1) of the Constitution; the clause cannot be read as trespassing upon The fundamental right under article 29(1).
Article 29(1) of the Constitution has conferred the Tight, among others, to conserve their language upon the citizens of India.
Right to conserve the language of the citizens includes the right to agitate for protection of the language.
Political agitation for conservation of the language of a section of the citizens cannot therefore be regarded a a corrupt practice within the meaning of section 123(3) of the Act.
Jamuna Prasad Mukhariya and Ors.
vs Lachhi Ram and Ors., [1955]1 S.C.R. 608, distinguished.
(iv)The corrupt practice defined by cl.
(3) of section 123 is committed when an appeal is made either to vote or refrain from voting on the ground of a candidate 's language.
It is the appeal to the electorate on a ground personal to the candidate relating to his language which attracts the ban of section 100 read with section 123(3).
Therefore it is only when the electors are asked to vote or not to vote because of the particular language of the candidate that a corrupt practice may be ,deemed to be committed.
Where, however, for conservation of language of the electorate appeals are made to the electorate and promises are given that steps would be taken to conserve that language, making of such appeals or promises will not amount to a corrupt practice.
|
vil Appeal Nos. 1271 and 1272 of 1978.
From the Judgment and Order dated 18.4.1978 of the Allahabad High Court in Civil Revision Nos. 161 and 163 of 1975.
G.L. Sanghi, K.B. Rohtagi and Praveen Jain for the Appellants.
Satish Chandra Aggarwal, S.K. Dhingra, Pramod Swarup, S.K. Mehta and Aman Vachhar for the Respondents.
The Judgment of the Court was delivered by OJHA, J.
These appeals by special leave have been preferred by tenants of certain premises against the judgment of the Allahabad High Court dismissing their civil revisions.
The facts in a nutshell necessary for the decision of these appeals are that one Mahabir Prasad had let out the PG NO 240 premises in question to the appellants.
It appears that on 28th November, 1966 Sukmal Chand alias Lalloo, son of Mahabir Prasad was murdered leaving Smt.
Sulochna Devi as his widow and two sons Sanjeev Kumar alias Teetu aged 1 1/2 years and Rajeev Kumar alias Cookoo aged 3 years.
Mahabir Prasad on 8th December, 1966 executed a registered deed with regard to certain properties including the premises in question which he described as his own by using the words "out of my property".
The nature of the deed would appear from the following recital contained therein: "I give the benefits arising out of the above said property to my grand sons Rajeev Kumar alias Cookoo aged 3 years, and Sanjeev Kumar alias Teetu aged 1 1/2 years S/o Sukmal Chand and Guardian Smt.
Sulochna Devi mother of the children, residents of Town Sardhana.
Therefore Smt.
Sulochna Devi will be able to maintain herself and her born and unborn children from the rent realized from the above said three shops and she will use the house as her residence and with her I and my wife Sunheri Devi will live throughout life.
Sulochna Devi will neither be able to transfer these shops and house nor to mortgage them by borrowing money.
She will have the right to maintain her children only with the benefit arising from them.
I will neither interfere with her right nor transfer the ownership of this property.
Hence this Parivarik Vayawastha Patra i.e. family settlement has been scribed.
dated 8 December.
" It further appears that after executing the said deed Mahabir Prasad informed the tenants concerned to make payment of rent to Smt.
Sulochna Devi in terms of the aforesaid deed and the tenants started paying rent accordingly.
Mahabir Prasad, however, subsequently executed a deed of cancellation dated 3rd November, 1970.
This deed too was registered and Mahabir Prasad thereby purported to cancel the deed dated t3th December, 1966 for reasons stated therein.
In this deed Mahabir Prasad inter alia stated that by the deed dated 8th December, 1966 written in favour of Sanjeev Kumar alias Teetu and Rajeev Kumar alias Cookoo, guardian Smt.
Sulochna Devi mother had been given the right to realise rent and that the deed of cancellation "debarred them from the right to realising the rent".
The tenants were informed about the deed of cancellation also.
PG NO 241 Subsequently suits were instituted by Mahabir Prasad against the appellants for recovery of arrears of rent etc.
and their eviction from the premises in their tenancy on the ground that notwithstanding being informed of the deed of cancellation they had not paid rent to him and were in arrears.
One of the pleas raised in defence by the appellants was that the deed dated 8th December, 1966 could not be unilaterally cancelled by Mahabir Prasad by the subsequent deed dated 3rd November, 1970 and that the rent claimed by Mahabir Prasad to be in arrears had already been paid by them to Smt.
Sulochna Devi.
In other words, title of Mahabir Prasad to realise rent from the appellants was disputed by them.
Sulochna Devi was also arrayed as a defendant in these suits.
She seems to have filed a written statement acknowleding receipt of rent claimed by Mahabir Prasad as arrears from the appellants.
The pleas raised by.
the appellants in their defence did not find favour with the Judge, Small Causes in whose court the suits were filed and consequently the suits were decreed.
The appellants filed revisions before the District Judge and on these revisions being dismissed the appellants filed further revisions before the High Court which too were dismissed.
It is against these judgments of the High Court that these appeals have been preferred.
With regard to the deed dated 8th December, 1966 it has been held that by the said deed only a permission bad been granted by Mahabir Prasad to Smt.
Sulochna Devi to realise rent and to maintain herself and her two children and that it did not amount to a transfer of immovable property in favour of Smt.
Sulochna Devi.
It has further been held that in this view of the matter Mahabir Prasad was competent to revoke the permission granted to Smt.
Sulochna Devi.
The other plea that the suit involved a question of title and consequently was not cognizable by a court of small causes also did not, as a consequence of the aforesaid finding, find favour with the courts below.
It has been urged by learned counsel for the appellants that by the deed dated 8th December, 1966 the right to rent and not only the right to realise the rent was transferred and this right was described in the deed by saying "I give the benefits arising out of the abovesaid property".
According to learned counsel benefits arising out of immovable property themselves partook the nature of immovable property and the said deed having been acted upon, it was not open to Mahabir Prasad to unilaterally cancel the benefits conferred on Smt.
Sulochna Devi and her sons, by the subsequent deed.
PG NO 242 Learned counsel appearing for the landlord on the other hand urged that the courts below have rightly interpreted the deed dated 3th December, 1966 to be one which only granted the permission to realise rent and the plea raised by the tenants did not involve any question of title.
Having heard learned counsel for the parties we are of the opinion that on the facts of the instant case the provisions of Section 23 of the Provincial Small Cause Courts Act (hereinafter referred to as the Act) are clearly attracted and the plaints of these cases ought to have been returned for presentation to a court having jurisdiction to determine the title.
Section 23 reads as hereunder: "23.
Return of plaints in suits involving questions of title : (1) Notwithstanding anything in the foregoing portion of this Act, when the right of a plaintiff and the relief claimed by him in a Court of Small Causes depend upon the proof or disproof of a title to immovable property or other title which such a Court cannot finally determine, the Court may at any stage of the proceedings return the plaint to be presented to a Court having jurisdiction to determine the title.
(2) When a Court returns a plaint under sub section (1), it shall comply with the provisions of the second paragraph of section 57 of the Code of Civil Procedure ( 14 of 1982) and make such order with respect to costs as it deems just and the Court shall, for the purposes of the Indian Limitation Act, 1877 (15 of 1877) be deemed to have been unable to entertain the suit by reason of a cause of a nature like to that of defect of jurisdiction.
With regard to the applicability of Section 23 aforesaid the High Court has taken the view that the said section gave a discretion to a court to return or not to return the plaint where a question of title is raised and did not debar it from deciding the suit.
If in a particular case the Judge, Small Causes did not exercise his discretion to return the plaint the said discretion could not be interfered with in a civil revision.
It is true that Section 23 does not make it obligatory on the court of small causes to invariably return the plaint once a question of title is raised by the tenant.
It is also PG NO 243 true that in a suit instituted by the landlord against his tenant on the basis of contract of tenancy, a question of title could also incidentally be gone into and that any finding recorded by a Judge, Small Causes in this behalf could not be res judicata in a suit based on title.
It cannot, however, be gainsaid that in enacting Section 23 the Legislature must have had in contemplation some cases in which the discretion to return the plaint ought to be exercised in order to do complete justice between the parties.
On the facts of the instant cases we feel that these are such cases in which in order to do complete justice between the parties the plaints ought to have been returned for presentation to a court having jurisdiction to determine the title.
In case the plea set up by the appellants that by the deed dated 8th December, 1966 the benefit arising out of immovable property which itself constituted immovable property was transferred and in pursuance of the information conveyed in this behalf by Mahabir Prasad to them the appellants started paying rent to Smt.
Sulochna Devi and that the said deed could not be unilaterally cancelled, is accepted, it is likely not only to affect the title of Mahabir Prasad to realise rent from the appellants but will also have the effect of snapping even the relationship of landlord and tenant.
between Mahabir Prasad 'and the appellants which could not he revived by the subsequent unilateral cancellation by Mahabir Prasad of the said deed dated 8th December, 1966.
In that event it may not he possible to treat the suits filed by Mahabir Prasad against the appellants to be suits between landlord and tenant simpliciter based on contract of tenancy in which an issue of title was incidentally raised.
If the suits cannot be construed to be one between landlord and tenant they would not be cognizable by a court of small causes and it is for these reasons that we are of the opinion that these are such cases where the plaints ought to have been returned for presentation to appropriate court so that none of the parties was prejudiced.
In the result.
both these appeals are allowed and the judgments and decrees of the courts below are set aside and the Judge, Small Causes is directed to return the plaints of these two cases for presentation to the appropriate court as contemplated by Section 23 of the Act.
The amount of rent which may have been deposited by the appellants in any of the courts below in these suits shall, however.
not be refunded to the appellants and shall be disbursed in accordance with the decision of the appropriate civil court.
In case the dispute about title is settled by the parties amicably, the aforesaid amount of rent can be disbursed in pursuance of such amicable settlement also.
We further direct that the tenant appellants shall, till the dispute PG NO 244 about title is decided or settled, deposit rent of the premises in their tenancy regularly as contemplated by sub section (2) of Section 30 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1977.
In the circumstances of the case, the parties shall bear their own costs throughout.
S.L. Appeals allowed.
| Section 12(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 bars suits for recovery of possession against the tenant on the ground of non payment of the standard rent until the expiration of one month next after notice in writing.
Section 12(3)(a) provides for passing of a decree for eviction of the tenant who is in arrears for a period of six months and neglects to make payment until the expiration of the notice period provided there is no dispute regarding the standard rent.
Section 12(3)(b) interdicts passing of the decree if the tenant pays or renders in the court the standard rent and permitted increases then due.
The appellants were served with a notice under section 12(2) of the Act terminating the tenancy and calling upon them to pay arrears of rent from 1st September, 1971 to 31st December, 1972.
They did not pay the amount claimed.
No dispute was raised regarding the standard rent.
The trial court and the appellate court came to the conclusion that there was neglect on the part of the appellants within the meaning of section 12(3)(a) of the Act meriting, a decree for eviction.
The High Court dismissed the appeal.
In the appeal by special leave, it was contended for the appellants that the landlord was not granting receipts, that he was not demanding rent but compensation for use and occupation, that the landlord was acting mala fide and preventing the tenant from performing his obligation, that this was not a case of bona_fide need and that the landlord was affluent and the tenant was poor.
Dismissing the appeal, PG NO 296 PG NO 297 HELD: 1.1 In view of the provisions of section 12(3)(a) and (b) of the Act and in the background of the facts and circumstances of the case, the courts below were right.
The eviction order had to follow by operation of law.
[301H D] 1.2 Sub section 3(a) of section 12 categorically provided that where the rent was payable by the month and there was no dispute regarding the amount of standard rent or permitted increases, if such rent or increases were in arrears for a period of six months or more and the tenant neglected to make payment thereof until the expiration of the period of one month after notice referred to in sub section
(2), the court shall pass a decree for eviction in any such suit for recovery of possession.
[301B] 1.3 In the instant case, the rent was payable month by month.
There was no dispute regarding the amount of standard rent or permitted increases.
Such rent or increases were in arrears for a period of six months or more.
The tenant had neglected to make payment until the expiration of the period of one month after notice referred to in sub section
The court was bound to pass a decree for eviction in, any such suit for recovery of possession.
[301C] Harbanslal Jagmohandas & Anr.
vs Prabhudas Shivlal, ; referred to.
Mohan Laxman Hede vs Noormohamed Adam Shaikh, AIR 1988 SC.
IIII distinguished.
The expression "court shall pass a decree" in sub section 3(a), of section 12 was substituted for the words "court may pass a decree" by an amendment passed in 1963, making it mandatory to pass the decree.
When the legislature has made its intention clear in specific terms, there was no scope for appeal to the "spirit of the law" and not to the strict letter of the law.
[302C D]
|
ivil Appeal No. 3255 of 1989.
From the Judgment and Order dated 29.7.1985 of the Bombay High Court in W.P. No. 2137 of 1979.
V.A. Bobde, S.D. Mudaliar and A.G. Ratnapaxkhi for the Appellant.
S.K. Dholakia, A.S. Bhasme and A.M. Khanwilkar for the Respondents.
For the Respondent No. 4 in person (not present).
The Judgment of the Court was delivered by SHARMA, J.
Notice for final disposal of the case was served on the respondents.
Heard the learned counsel for the parties.
Special leave is granted.
This case is dependent on the correct meaning and scope of Rule 59 of the Mineral Concession Rules, 1960 (hereinafter referred to as the Rules).
A certain area in village Bazargaon, District Nagpur was reserved for Nistar purposes (that is, for grazing of cattle etc.).
The respond ent No. 4 applied for grant of a mining lease in regard to the said area which was allowed.
The appellant, who is a local resident, challenged the allotment on the ground that the procedure for settlement as laid down in Rule 59 read with Rule 58 was not followed before the grant.
Rule 58 deals with availability of areas for re grant of a mining lease and requires an entry to that effect to be made in a 832 register referred to in Rule 21(2) of the Rules, and a notification to be published in the official gazette at least 30 days in advance.
The purpose obviously is to enable the members of general public to apply for the proposed lease.
Rule 59 directs the procedure in Rule 58 to be fol lowed in the cases mentioned thereunder in the following terms: "59.
Availability of certain areas for grant to be notified In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a prospecting licence or mining lease, grant the licence or lease after following the procedure laid down in rule 58.
" The appellant contends that as the prescribed procedure had not been followed, the grant in favour of the respondent No. 4 is illegal and fit to be set aside. ' 4.
Admittedly the disputed area was reserved for Nistar purposes and when an application for grant of mining lease was earlier made by a third party it was rejected on the ground that it was so~ reserved.
Further, there is no dis pute that before the impugned grant was made in favour of the respondent No. 4 the procedure prescribed by Rule 58 was not followed, and no opportunity was given to any other person before entertaining the request of the respondent No. 4.
The question in this background is whether Rule 59 is attracted to the case.
The appellant 's application under Article 226 of the Constitution was dismissed by the Bombay High Court on the ground that Rule 59 was confined to cases where earlier reservation was made for mining purposes.
The stand of the respondents that the expression "reserved for any purpose" in rule 59 does not cover a case where the area was reserved for Nistar purposes or for any purpose other than that of mining was accepted.
Earlier the expression "reserved for any purpose" was followed by the words "other than prospecting or mining for minerals", which were omitted by an amendment in 1963.
Mr. Dholakia, learned counsel for the respondents, appearing in support of the 833 impugned judgment, has contended that as a result of this amendment the expression must now be confined to cases of prospecting or mining for minerals and all other cases where the earlier reservation was for agricultural, industrial or any other purpose must be excluded from the scope of the rule.
We are not pursuaded to accept the suggested interpre tation.
Earlier the only category which was excluded from the application of Rule 59 was prospecting or mining leases and the effect of the amendment is that by omitting this exception, prospecting and mining leases are also placed in the same position as the other cases.
We do not see any reason as to why by including in the rule prospecting and mining leases, the other cases to which it applied earlier would get excluded.
The result of the amendment is to extend the rule and not to curtail its area of operation.
The words "any purpose" is of wide connotation and there is no reason to restrict its meaning.
We do not see any ground for limiting the scope of the rule so as to deprive the members of general public to approach the State with competitive terms.
It is clearly in the public interest to notify the proposal to grant a mining lease, so that the best deserving person may have a chance to be considered.
The State and its authorities will, in that case, have the choice of selecting the most suitable person by following the just and equitable criteria laid down by the Rules.
If, on the other hand, the rule is con strued as suggested by the respondents, a resourceful appli cant can succeed in striking an un deserved bargain to the prejudice of the public interest.
We are, therefore, of the view that Rule 59 covered the present case and the grant in favour of the respondent No. 4 was illegally made in violation of Rule 58.
According ly, the appeal is allowed, the judgment of the High Court is set aside and the decision to grant the mining lease in question to the respondent No. 4 is quashed.
The State Government may now issue a notification and take other steps in accordance with law before proceeding further.
There will be no order as to costs.
P.S.S. Appeal allowed.
| Section 233 of the Code of Criminal Procedure (Act V of 1898) embodies the general law as to the joinder of charges and lays down a rule that for every distinct offence there should.
be a 589 separate charge and every such charge should be tried separately.
No doubt the object of section 233 is to save the accused from being embarrassed in his defence if distinct offences are lumped together in one charge or in separate charges and are tried together but the Legislature has engrafted certain exceptions upon this rule contained in sections 234, 235, 236 and 239.
Section 235 of the Code of Criminal Procedure provides that if in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for every such offence.
The prosecution story showed that the offence of extortion committed on a particular day was one of a series of acts connected with the offence of murder and attempt to murder committed on their previous day in such a way as to form one transaction.
The incidents related in the evidence left no doubt that from the moment the accused (a Reserve Inspector of Police) started from the Police State, he committed a series of acts involving killing, injuring people, unlawfully confining others and extorting money from one of them and therefore the series of acts attributed to him constituted one transaction in the course of which two offences which were alleged to be distinct were committed.
Held, that under the circumstances the case fell within the purview of section 235 of the Code of Criminal Procedure and such joinder was permitted by the exception enacted in that section.
Where the two Judges of the High Court on appeal are divided in their opinion as to the guilt of the accused and the third Judge to whom reference is made agrees with one of them who is upholding the conviction and sentence, it is desirable as a matter of convention though not as a matter of strict law that ordinarily the extreme penalty should not be imposed.
|
Appeal No. 12 of 1952.
Appeal from the Judgment and Order dated the 18th January, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 27 of 1947.
O.T. G. Nambiar (section N. Mukherjee, with him) for the appellant.
M.C. Setalvad, Attorney General for India, and C. K.Daphtary, Solicitor General for India (G. N. Joshi and P.A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from the judgment of the High Court of Judicature at Madras dated 18th January, 1950, delivered on a reference by the Incometax .Appellate Tribunal under section 66(1) of the Indian Income tax Act, whereby the High Court answered the two questions referred in the affirmative. ' The appellant is a public limited company incorporated in the United Kingdom and owns a spinning and weaving mill located at Pondicherry in French Indial.
The year of account of the appellant is the calendar year.
In the year 1939 no sales of yarn or cloth manufactured by the company were effected in 456 British India, though in the previous year such sales were effected.
All the purchases of cotton required for the mills were made in British India by Messrs. Best & Co., Ltd. Under an agreement between the appellant and Messrs. Best & Co., Ltd., Madras, dated 11th July, 1939, Messrs. Best & Co., Ltd. were constituted the agents of the appellant for the purposes of its business in India.
Messrs. Best & Co., Ltd. have under the terms of the agreement full powers in connection with the business of the appellant in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, compounding or compromising any claim by or against the appellant.
The agents are empowered to borrow money on behalf of the appellant and to make advances.
They are also expected to secure the best commissions, brokerages, rebates, discounts and other allowances in respect of and in connection with the business of the appellant.
They are enjoined to keep proper accounts of the appellant and to pay over to the appellant the sum standing to its credit.
They are remunerated by a salary of Rs. 6,500 per mouth and a percentage commission on the profits made.
During the relevant year all the purchases of cotton required for the mill at Pondicherry were made by the agents in British India and no purchases were made through any other agency.
The agents exercised their judgment and skill and purchased such qualities and quantities of cotton and at such prices as they in their experience considered most advantageous in the interests of the company.
Prior to 1939 40 the appellant was assessed to income tax in British India on the profits computed on a turnover basis earned by the sales in British India of the goods manufactured by the appellant.
In the course of the assessment year 1939 40 the appellant stated that it discontinued its business in British India with effect from 1st April, 1939, and claimed relief under section 25`3) which was granted.
In the course of his further enquiries the Income tax Officer found 'that though the appellant was not 457 selling its goods in British India and earning a profit thereby, it continued to have an active business connection in British India having regard to the way in which the business of purchasing goods and materials for them ills was carried on.
There upon the Incometax officer held that such purchases of cotton in British India constituted a business connection in British India and that the profits attributable to the purchases were liable to tax under sections 42(1) and 42(3) of the Act.
The net income of the company was computed to be Rs. 2,81,176 and ten per cent.
of this sum was apportioned under section 42(3), of the Act as being the profits and gains reasonably attributable to that part of the business operations, which were carried out in British India.
The appellant appealed against the said order of the Income tax Officer to the Appellate Assistant Commissioner who confirmed the order of the Income tax Officer.
A further appeal by the appellant to the Tribunal was unsuccessful.
At the instance of the appellant, the Tribunal stated a case and referred the following questions for the decision of the High Court under section 66(1) of the Act : " 1.
Whether in the circumstances of this case the assessee company had any business connection in British India within the meaning of sections 42(1) and 42(3) of the Income tax Act ? 2.Whether any profits could reasonably be attributed to the purchase of entire cotton made in British India by the secretaries and agents of the assessee company within the meaning of sections 42(1) and 42(3) of the Income tax Act ? The High Court answered both these questions in the affirmative and, in our opinion, rightly.
The learned counsel for the appellant reiterated before us the arguments that he had addressed in the High Court and contended that on the facts of this case there was no scope for the finding that any profits or.
gains accrued to the assessee directly or 458 indirectly through or from any business connection in India.
It was argued that a mere purchase of raw materials or goods in British India does not result in the accrual or arising of profits and that the profits on the sale of goods arise and accrue only at the place where the sales are effected and that in the present case, there being no sales effected in British India in the year of account 1939, no profits accrued or arose to the company in British India nor could ally profits be deemed to have accrued or arisen in British India.
In support of his proposition, the learned counsel placed reliance on a number of cases, inter alia, on Board of Revenue vs Madras Export Co.(1), Jiwan Das vs Commissioner of Income tax, Lahore (2), Rahim vs Commissioner of Income tax(3), Commissioner of Incometax, of Income tax vs Little 's Oriental Balm Ltd.(5).
Most of these decisions were given under the Act of 1922, before the insertion of section 42 (3) in the Act of 1922 by the amending Act of 1939.
As against the cases relied upon by the learned counsel for the appellant, several authorities have been cited to us which have proceeded on the footing that even purchase of raw materials could be an operation in connection with a business and if it was carried on in British India it might make the profits attributable to such operation taxable under section 42 of the Indian Income tax Act.
The case Rogers Pyatt Shellac Co. vs Secretary of State for India(6) is one of the leading decisions on this point.
This case was decided under section 33 of the Indian Income tax Act, 1918, and the judgment shows that the principle followed in the case was similar to that which was subsequently embodied in section 42 (3) of the Income tax Act, 1922.
The question referred to the High Court in that case was in these terms: "Is this company which purchased shellac and mica in India for sale in the open market in America (1) Mad.
(2) (I929) 1.
L. R. (3) A.I.R. 1949 Orissa 60.
(4) A.T.R. (5) [1950) (6) (1925) I.L.R.52 Cal.
459 liable to be assessed to income tax and super tax under either Income tax Act VII of 1918 or Act XI of 1922 and the Super tax Act, VIII of 1917.
" And it was answered in the affirmative.
The same line of reasoning was adopted by the Rangoon High Court in Commissioner of Income tax Burma vs Steel Bros. Co. '(1).
Among recent cases on this point which were decided under section 42 of the Income tax Act, 1922, can be mentioned the case of Motor Union Insurance Co. Ltd. vs Commissioner of Income tax, Bombay(2) and that of Webb Sons & Co. vs Commissioner of Income tax, East Punjab(3).
In the last case, the assessee company which was incorporated in the United States of America was carrying on in America the business of manufacturing carpets.
Its only business in British India was the purchase through its agent in British India, of wool as raw material for use in the manufacture of carpets.
It was held that the purchase was an operation within the meaning of section 42 (3), and the profits from such purchases could be deemed to arise in British India and it was consequently assessable under section 42 (3) of the Indian Income tax Act.
The questions referred to the High Court in this case and relevant to this enquiry were these: "(i) Is mere purchase of raw material an operation within the meaning of section 42 (3) of the Act? (ii)Can any profit arise out of mere purchase of raw material?" While answering these questions in the affirmative it was said: "It is clear that the purchase of raw material by a firm of manufacturers is one of the processes or operations which contributes to an appreciable degree to the ultimate profit which is realized on the sale of manufactured articles.
" There is thus no uniformity of judicial opinion on the question that the mere act of purchase produces no profit.
(1) Rang.
(2) A.I.R. 1945 Bom.
(3) [1950) 460 In our judgment, the contention of the learned counsel for the appellant, and on which his whole .argument is founded, that it is the act of sale alone from which the profits accrue or arise can no longer be sustained, and has to be repelled in view of the decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co.(1).
That was a case that arose under the Excess Profits Tax Act, XV of 1940.
A firm which was resident in British India and carried on the business of manufacturing and selling groundnut oil, and owned some oil mills within British India also owned a mill in Raichur in the Hyderabad State where oil was manufactured.
The oil manufactured in Raichur was sold partly within the State of Hyderabad and partly in Bombay.
It was held by this Court that the profits of that part of the business, viz., the manufacture of oil at the mill in Raichur accrued or arose in Raichur even though the manufactured oil was sold in Bombay and the price was received there, and accordingly, that part of the profits derived from sales in Bombay which was attributable to the manufacture of the oil in Raichur was exempt from excess profits tax under the proviso to section 5 of the Act.
Reference in this case was made to the decision of the House of Lords in In re Commissioners of Taxation vs Kirk (2), wherein it was held that where income was in part derived from the extraction of ore from the soil of New South Wales Colony, and from the conversion in the latter colony of the crude ore into a merchantable product, this income was assessable under the New South Wales Land and Income Tax Assessment Act of 1895, section 15, sub sections 3 and 4, nowithstanding that the finished products were sold exclusively outside the colony.
Lord Davey while delivering the judgment of the Privy Council observed as follows : "It appears to their Lordships that there are four processes in the earning or production of this income (I) the extraction of the ore from the soil ; (2) the (1) ; (2) 461 conversion of the crude ore into a merchantable product, which is a manufacturing process; (3) the sale of the merchantable product; (4) the receipt of the moneys arising from the sale.
All these processes are necessary stages which terminate in 'money, and the income is the money resulting less the expenses attendant on all the stages.
The first process seems to their Lordships clearly within sub section 3, and the second or manufacturing Process, if not within the meaning of ' trade ' in subsection 1, is certainly included in the words any others source whatever in sub section 4.
So far as relates to these two processes, therefore, their Lordships think that the income was earned and arising and accruing in New South Wales.
" On a parity of reasoning it can well be said in this case that the profits accrue or arise to the appellant from three business processes or operations, those being (1) the purchase of cotton in British India; (2) its conversion by the process of manufacture in Pondicherry into yarn or cloth ; and (3) the sale of the merchantable product, and those have to be apportioned between these three operations.
The same line of reasoning was adopted by the Madras High Court in Bangalore Woollen, Cotton & Silk Mills Co. Ltd. vs Commissioner of Income tax, Madras(1).
There it was held that the purchase of raw materials by the man aging agents in British India would be an operation within the meaning of section 42(3) and it was reasonable to attribute a portion of the profits to such purchases in British India.
After a careful consideration of the decided cases on the subject and in view of the insertion of section 42 (3) in the Act of 1922 by the amending Act of 1939, we have reached the conclusion that in the present state of the law there is hardly any scope for maintaining the view contended for by the learned counsel for the appellant and we therefore agree with the High Court in repelling it.
While maintaining the view taken by the High Court in this case we wish (1) 462 to point out that it is not every business activity of a manufacturer that comes within the expression "operation" to which the provisions of section 42(3) are attracted.
These provisions have no application unless according to the known and accepted business notions and usages the particular activity is regarded as a well defined business operation.
Activities which are not well defined or are of a casual or isolated character would not ordinarily fall within the ambit of this rule.
Distribution of profits on different business operations or activities ought only to be made for sufficient and cogent reasons and the observations made here are limited to the facts and circumstances of this case.
In a case where all that may be known is that a few transactions of purchase of raw materials have taken place in British India, it could not ordinarily be said that the isolated acts were in their nature " operations " within the meaning of that expression.
In this case the raw materials were purchased systematically and habitually through an established agency having special skill and competency in selecting the goods to be purchased and fixing the time and place of purchase.
Such activity appears to us to be well within the import of the term " operation " as used in section 42 (3) of the Act.
It is not in the nature of an isolated transaction of purchase of raw materials.
The first contention of the assessee is therefore negatived.
The learned counsel argued in a rather half hearted manner that there was no business connection of the assessee in British India.
This contention does not require serious consideration.
An isolated transaction between a non resident and a resident in British India without any course of dealings such as might fairly be described as a business connection does not attract the application of section 42, but when there is a continuity of business relationship between the person in British India who helps to make the profits and the person outside British India, who receives or realizes the profits, such relationship does constitute business connection.
In this case there 463 was a regular agency established in British India for the purchase of the entire raw materials required for the manufacture abroad and the agent was chosen by reason of his skill, reputation and experience in the line of trade.
The terms of the agency stated in by earlier part of this judgment fully establish that Messrs. Best & Co. Ltd. were carrying on something almost akin to the business of a managing agency in India of the foreign company and the latter certainly had a connection with this agency.
We therefore negative this contention of the learned counsel as well.
For the reasons given above we uphold the view taken by the High Court and dismiss the appeal with costs.
Appeal dismissed.
| The respondent was the tenant of a tract of land which formed part of a forest and continued to remain in possession thereof after the Zermindari interest of the proprietor became vested in the State Government under the Bihar Land Reforms Act, 1952.
The Government notified its intention to constitute the forest a private protected forest and by a subsequent notification under section 30 of the Indian Forest Act prohibited the breaking up or cleaning the land of this and certain other "protected forests" for cultivation whereupon the employees 'of the Forest Department started interfering with the agricultural operations carried on by the respondent.
The respondent then sought the permission of the Collector to start reclamation and cultivation of this area and the Collector gave him permission to "go ahead with the work of reclamation and cultivation of this area.
" The forest officer disregarded the Collector 's order and made the respondent stop reclamation.
Ultimately the Government interfered insisting on the withdrawal of the Collector 's order.
The questions which arose for decision in this case was whether (1) the order passed by the Forest officer on the basis of rule of the Bihar Protected Forest Rules,which prohibited the cutting or removal of trees without the permission of the Forest Officer should prevail over the permission granted by the Collector under r. 8 and (2) whether the respondent 's right to the land had ceased under section 19 of the Bihar Private Forests Act.
Held, that rr. 1 to 4 apply to the cutting or removal of trees where inspite of such cutting the forest would remain a forest but those rules did not control the cutting of trees which would be necessary for clearing the land for cultivation or any other purpose which was controlled only by r. 8.
In the present cast the permission given by the Collector under r. 8 was in accordance with law and neither the Forest Officer nor the Government had any authority in law to interfere with that permission for the clearing or cultivation of the land.
The extinction of rights under section 19 of the Act could take place only after the publication of the final notification 728 under section 30 and not by a notification under the proviso thereof pending the completion of enquiries under the provisions of the Act.
|
Civil Appeal No. 1 197 (NT) of 1974.
Appeal by Special Leave from the Judgment and order dated 3 8 1973 of the Calcutta High Court in Income Tax Reference No. 109 of 1968.
D. Pal, T. A. Ramachandran & D. N. Gupta for the Appellant.
section T. Desai, B. B. Ahuja & Miss A. Subhashini for the Respondent.
1375 The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by special leave raises the vexed question whether a particular expenditure incurred by the assessee is of capital or revenue nature.
This question has always presented a difficult problem and continually baffled the courts, because it has not been possible, despite occasional judicial valour, to formulate a test for distinguishing between capital and revenue expenditure which will provide an infallible answer in all situations.
There have been numerous decisions where this question has been debated but it is not possible to reconcile the reasons given in all of them, since each decision has turned upon some particular aspect which has been regarded as crucial and no general principle can be deduced from any decision and applied blindly to a different kind of case where the constellation of facts may be dissimilar and other factors may be present which may give a different hue to the case.
Often cases fall in the border line and in such cases, as observed by Lord M. R. in Inland Revenue vs British Salmon Ero Engines Ltd.(1) "the spin of coin would decide The matter almost as satisfactorily as an attempt to find persons.
" But this is not one of those border line cases.
The answer to the question here is fairly clear.
But first let us state the necessary facts.
The assessee is a limited company carrying on business of manufacture of jute.
It has a factory with a certain number of looms situate in West Bengal.
It is a member of the Indian Jute Mills Association (hereinafter referred to as the Association).
The Association consists of various jute manufacturing mills as its members and it has been formed with a view to protecting the interests of the members.
The objects of the Association, inter alia, are (i) to protect, forward and defeat the trade of members; (ii) to impose restrictive conditions on the conduct of the trade; and (iii) to adjust the production of the Mills in the membership of the Association to the demand of the world market.
It appears that right from 1939, the demand of jute in the world market was rather lean and with a view to adjusting the production of the mills to the demand in the world market, a working time agreement was entered into between the members of the Association restricting the number of working hours per week, for which the mills shall be entitled to work their looms.
The first working time agreement was entered into on 9th January 1939 and it was for a duration of five years and on its expiration, the second and thereafter the third working time agreements, each for a period of five years and in .
more or less similar terms, were entered into on 12th June, 1944 and 25th November 1949 respectively.
The third working time agreement was about to expire on 11th December, 1954 and since it 1376 was felt that the necessity to restrict the number of working hours per week still continued, a fourth working time agreement was entered into between the members of the Association on 9th December 1954 and it was to remain in force for a period of five years from 12th December 1954.
We are concerned in this appeal with the fourth working time agreement and since the decision of the controversy before us turns upon the interpretation of its true nature and effect, we shall refer to some of its relevant provisions.
The first clause of the fourth working time agreement (hereinafter referred to as the "working time agreement") to which we must refer is clause (4) which provided that, subject to the provisions of clauses 11 and 12, ". . no signatory shall work more than forty five hours of work per week and such restriction of hours of work per week shall continue in force until the number of working hours allowed shall be altered in accordance with the provisions of Clauses 7(1), (2) and (3).
" Clause (5) then proceeded to explain that the number of working hours per week mentioned in the working time agreement represented the extent of hours to which signatories were in all entitled in each week to work their registered complement of looms as determined under clause (13) on the basis that they used the full complement of their loomage as registered with and certified by the committee.
This clause also contained a provision for increase of the number of working hours per week allowed to a signatory in the event of any reduction in his loomage.
It was also stipulated in this clause that the hours of work allowed to be utilised in each week shall cease at the end of that week and shall not be allowed to be carried forward.
The number of working hours per week prescribed by clause (4) was, as indicated in the opening part of that clause, subject inter alia to the provision of clause (10) and under that clause, a joint and several agreement could be made providing that throughout the duration of the working time agreement, members with registered complements of looms not exceeding 220 shall be entitled to work upto 72 hours per week.
Clause 6(a) enabled members to be registered as a "Group of Mills" if the happened to be under the control of the same managing agents or were combined by any arrangement or agreement and it was open to any member of the Group of Mills so registered to utilise the allotment of hours of work per week of other members in the same group who were not fully utilising the hours of work allowable to them under the working time agreement, provided that such transfer of hours of work was for a period of not less than six months.
Then followed clause 6(b) which is very material and it provided, inter alia, as follows: "Subject to the provisions of sub clauses (i) to (iv). signatories to this agreement shall be entitled to transfer in 1377 part or wholly their allotment of hours of work per week to any one or more of the other signatories; and upon such transfer being duly effected and registered and a certificate issued by the committee, the signatory or signatories to whom the allotment of working hours has been transferred shall be entitled to utilise the allotment of hours of work per week so transferred.
" There were four conditions precedent subject to which the allotment of hours of work transferred by one member to another could be utilised by the latter and those of them were as under: "(1) No hours of work shall be transferred unless The transfer covers hours of work per week for a period of not less than six months; (ii) All agreements to transfer shall, as a condition precedent to any rights being obtained by transferees, be submitted with an explanation to the Committee and the Committee 's decision. whether the transfer shall be allowed shall be final and conclusive.
(iii) If the Committee sanctions the transfer, it shall be a condition precedent to its utilisation that a certificate be issued and the transfer registered.
" This, transaction of transfer of allotment of hours of work per week was commonly referred to as sale of looms hours by one member to another.
The consequence of such transfer was that the hours of work per week transferred by a member were liable to be deducted from the working hours per week allowed to such member under the working time agreement and the member in whose favour such transfer was made was entitled to utilise the number of working hours per week transferred to him in addition to the working hours per week allowed to him under the working time agreement.
It was under this clause that the assessee purchased loom hours from four different jute manufacturing concerns which were signatories to the working time agreement, for the aggregate sum of Rs. 2,03,255/ during the year 1st August 1958 to 31st July 1959.
In the course of assessment for the assessment year 1960 61 for which the relevant accounting year was the previous year 1st August 1958 to 31st July 1959, the assessee claimed to deduct this amount of Rs. 2,03,255/ as revenue expenditure on the ground that it was part of the cost of operating the looms which constituted the profit making apparatus of the assessee.
The claim was disallowed by the Income tax officer but on appeal, the 1378 Appellate Assistant Commissioner accepted the claim and allowed the deduction on the view that the assessee did not acquire any capital asset when it purchased the loom hours and the amount spent by it was incurred for running the business or working it with a view to producing day to day profits and it was part of operating cost or revenue cost of production.
The Revenue preferred an appeal to the Tribunal but the appeal was unsuccessful and the Tribunal taking the same view as the Appellate Assistant Commissioner, held that the expenditure incurred by the assessee was in the nature of revenue expenditure and hence deductible in computing the profits and gains of business of the assessee.
This view taken by the Tribunal was challenged in a reference made to the High Court at the instance of the Revenue.
The High Court too was inclined to take the same view as the Tribunal, but it felt compelled by the decision of this Court in Commissioner of Income Tax vs Maheshwari Devi Jute Mills Ltd.( ') to decide in favour of the Revenue and on that view it overturned the decision of the Tribunal and held that the amount paid by the assessee for purchase of the loom hours was in the nature of capital expenditure and was, therefore, not deductible under section 10(2) (xv) of the Act.
The assessee thereupon preferred the present appeal by special leave obtained from this Court.
Now an expenditure incurred by an assessee can qualify for deduction under section 10(2) (xv) only if it is incurred wholly and exclusively for the purpose of his business, but even if it fulfils this requirement, it is not enough; it must further be of revenue as distinguished from capital nature.
Here in the present case it was not contended on behalf of the Revenue that the sum of Rs. 2,03,255/ was not laid out wholly and exclusively for the purpose of the assessee 's business but the only argument was and this argument found favour with the High Court, that it represented capital expenditure and was hence not deductible under section 10(2)(xv).
The sole question which therefore arises for determination in the appeal is whether the sum of Rs. 2,03,255/ paid by the assessee represented capital expenditure or revenue expenditure.
We shall have to examine this question on principle but before we do so, we must refer to the decision of this Court in Maheshwari Devi Jute Mills case (supra) since that is the decision which weighed heavily with the High Court in fact, compelled it to negative the claim of the assessed and held the expenditure to be on capital account.
That was a converse case where the question was whether an amount received by the assessee for sale of loom hours was in the nature of capital receipt or revenue receipt.
The view taken by this Court was that it was in the.
1379 nature of capital receipt and hence not taxable.
It was contended on A behalf of the Revenue, relying on this decision, that just as the amount realised for sale of loom hours was held to be capital receipt, so also the amount paid for purchase of loom hours must be held to be of capital nature.
But this argument suffers from a double fallacy.
In the first place it is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer.
The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer.
It was felicitously pointed out by Macnaghten, J. in Race Course Betting Control Board vs Wild( ') that a "payment may be a revenue payment from the point of view of the payer and a capital payment from the point of view of the receiver and vice versa.
Therefore, the decision in Maheshwari Devi Jute Mills ' case (supra) cannot be regarded as an authority for the proposition that payment made by an assessee for purchase of loom hours would be capital expenditure.
Whether it is capital expenditure would have to be determined having regard to the nature of the trans action and other relevant factors.
But, more importantly, it may be pointed out that Maheshwari Devi Jute Mills ' case (supra) proceeded on the basis that loom hours were a capital asset and the case was decided on that basis.
It was common ground between the parties throughout the proceedings, right from the stage of the Income tax officer upto the High Court, that the right to work the looms for the allotted hours of work was an asset capable of being transferred and this Court therefore did not allow counsel on behalf of the Revenue to raise a contention that loom hours were in the nature of a privilege and were not an asset at all.
Since it was a commonly accepted basis that loom hours were an asset or the assessee, the only argument which could be advanced on behalf of the Revenue was that when the assessee transferred a part of its hours of work per week to another member, the transaction did not amount to sale of an asset belonging to the assessee, but it was merely the turning of an asset to account by permitting the transferee to use that asset and hence the amount received by the assessee was income from business.
The Revenue submitted that "where it is a part of the normal activity of the assessee 's business to earn profit by king use of its asset by either employing it in its own manufacturing concern or by letting it out to others, consideration received for allowing the transferee to use that asset is income received from busi 1380 ness and chargeable to income tax".
The principle invoked by the Revenue was that "receipt by the exploitation of a commercial asset is the profit of the business irrespective of the manner in which the asset is exploited by the owner in the business, for the owner is entitled to exploit it to his best advantage either by using it himself personally or by letting it out to somebody else.
" This principle, sup ported as it was by numerous decisions, was accepted by the court as a valid principle, but it was pointed out that it had no application in the case before the court, because though loom hours were an asset, they could not from their very nature be let out while retaining property in them and there could be no grant of temporary right to use them.
The court therefore concluded that this was really a case of sale of loom hours and not of exploitation of loom hours by permitting user while retaining ownership and, in the circumstances, the amount received by the assessee from sale of loom hours was liable to be regarded as capital receipt and not income.
It will thus be seen that the entire case proceeded on the commonly accepted basis that loom hours were an asset and the only issue debated was whether the transaction in question constituted sale of this asset or it represented merely exploitation of the asset by permitting its user by another while retaining ownership.
No question was raised before the court as to whether loom hours were an asset at all nor was any argument advanced as to what was the true nature of the transaction.
It is quite possible that if the question had been examined fully on principle, unhampered by any pre determined hypothesis, the court might have come to a different conclusion.
This decision cannot, therefore, be regarded as an authority compelling us to take the view that the amount paid for purchase of loom hours was capital and not.
revenue expenditure.
The question is res integra and we must proceed to examine it on first principle.
It is quite clear from the terms of the working time agreement that the allotment of loom hours to different mills constituted merely a contractual restriction on the right of every mill under the general law to work its looms to their full capacity.
If there had been no working time agreement, each mill would have been entitled to work its looms uninterruptedly for twenty four hours a day throughout the week, but that would have resulted in production of jute very much in excess of the demand in the world market, leading to unfair competition and precipitous fall in jute price and in the process, prejudicially affecting all the mills and therefore with a view to protecting the interest of the mills who were members of the Association, the working time agreement was entered into restricting the number of working hours per week for which each mill could work its looms.
1381 The allotment of working hours per week under the working time k agreement was clearly not a right conferred on a mill, signatory to the working time agreement.
It was rather a restriction voluntarily accepted by each mill with a view to adjusting the production to the demand in the world market and this restriction could not possibly be regarded as an asset of such mill.
This restriction necessarily had the effect of limiting the production of the mill and consequently also the profit which the mill could otherwise make by working full loom hours.
But a provision was made in clause 6(b) of the working time agreement that the whole or a part of the working hours per week could be transferred by one mill to another for a period of not less than six months and if such transfer was approved and registered by the Committee of the Association,, the transferee mill would be entitled to utilise the number of working hours per week transferred to it in addition to the working hours per week allowed to it under the working time agreement, while the transfer of mill would cease to be entitled to avail of the number of working hours per week so transferred and these would be liable to be deduced from the number of working hours per week otherwise allotted to it.
The purchase of loom hours by a mill had therefore the effect of relaxing the restriction on the operation of looms to the extent of the number of working hours per week transferred to it, so that the transferee mill could work its looms for longer hours than permitted under the working time agreement and increase its profitability.
The amount spent on purchase of loom hours thus represented consideration paid for being able to work the loom for a longer number of hours.
It is difficult to see how such payment could possibly be regarded as expenditure on capital account.
The decided cases have, from time to time, evolved various tests distinguishing between capital and revenue expenditure but no test is paramount or conclusive.
There is no all embracing formula which can provide a ready solution to the problem; no touchstone has been devised.
Every case has to be decided on its own facts keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred.
But a few tests formulated by the court may be referred to as they might help to arrive at a correct decision of the controversy between the parties.
One celebrated test is that laid down by Lord Cave, L.C. in British Insulated and Helsby Cables Ltd. vs Atherton(1) where the learned Law Lord stated: "When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, there is very 1382 good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital.
" This test, as the parenthetical clause shows, must yield where there are special circumstances leading to a contrary conclusion and, as pointed out by Lord Radcliffe in Commissioner of Taxes vs Nechanga Consolidated Copper Mines Ltd.,(1) it would be misleading to suppose that in all cases, securing a benefit for the business would be prima facie capital expenditure "so long as the benefit is not so transitory as to have no endurance at all.
" There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down.
lt is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test.
What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test.
If the advantage consists merely in facilitating the assessee 's trading operations or enabling the management and conduct of the assesse 's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future.
The test of enduring benefit is therefore not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case.
But even if this test were applied in the present case, it does not yield a conclusion in favour of the Revenue.
Here, by purchase of loom hours no new asset has been created.
There is no addition to or expansion of the profit making apparatus of the assessee.
The income earning machine remains what it was prior to the purchase of loom hours.
The assessee is merely enabled to operate the profit making structure for a longer number of hours.
And this advantage is clearly not of an enduring nature.
It is limited in its duration to six months and, moreover, the additional working hours per week transferred to the assessee have to be utilised during the week.
and cannot be carried forward to the next week.
It is, therefore, not possible to say that any advantage of enduring benefit in the capital field was acquired by the assessee in purchasing loom hours and the test of enduring benefit cannot help the Revenue.
Another test which is often applied is the one based on distinction between fixed and circulating capital.
This test was applied by 1383 Lord Haldane in the leading case of John Smith & Son vs Moore(1) where the learned law Lord draw the distinction between fixed capital and circulating capital in words which have almost acquired the status of a definition.
He said: "Fixed capital (is) what the owner turns to profit by keeping it in his own possession; circulating capital (is) what he makes profit of by parting with it and letting it change masters." Now as long as the expenditure in question can be clearly referred to the acquisition of an asset which falls within one or the other of these two categories, such a test would be a critical one.
But this test also sometimes breaks down because there are many forms of expenditure which do not fall easily within these two categories and not infrequently, as pointed out by Lord Radcliffe in Commissioner of Taxes vs Nchanga Consolidated Copper Mines Ltd. (supra), the line of demarcation is difficult to draw and leads to subtle distinctions between profit that is made "out of" assets and profit that is made "upon" assets or "with" assets.
Moreover, there may be cases where expenditure, though referable to or in connection with fixed capital, is never the less allowable as revenue expenditure.
An illustrative example would be of expenditure incurred in preserving or maintaining capital assets.
This test is therefore clearly not one of universal application.
But even if we were to apply this test, it would not be possible to characterise the amount paid for purchase of loom hours as capital expenditure, because acquisition of additional loom hours does not add at all to the fixed capital of the assessee.
The permanent structure of which the income is to be the produce or fruit remains the same; it is not enlarged.
We are not sure whether loom hours can be regarded as part of circulating capital like labour, raw material, power etc., but it is clear beyond doubt that they are not part of fixed capital and hence even the application of this test does not compel the conclusion that the payment for purchase of loom hours was in the nature of capital expenditure.
The Revenue however contended that by purchase of loom hours the assessee acquired a right to produce more than what it otherwise would have been entitled to do and this right to produce additional quantity of goods constituted addition to or augmentation of its profit ( ' making structure.
The assessee acquired the right to produce a larger quantity of goods and to earn more income and this, according to the Revenue, amounted to acquisition of a source of profit or income which though intangible was never the less a source or 'spinner ' of income and the amount spent on purchase of this source of profit or income therefore represented expenditure of capital nature.
Now it is 1384 true that if disbursement is made for acquisition of a source of profit or income, it would ordinarily, in the absence of any other countervailing circumstances, be in the nature of capital expenditure.
But we fail to see how it can at all be said in the present case that the assessee acquired a source of profit or income when it purchased loom hours.
The source of profit or income was the profit making apparatus and this remained untouched and unaltered.
There was no enlargement of the permanent structure of which the income would be the produce or fruit.
What the assessee acquired was merely an advantage in the nature of relation of restriction on working hours imposed by the working time agreement, so that the assessee could operate its profit earning structure for a longer number of hours.
Undoubtedly, the profit earning structure of the assessee was enabled to produce more goods, but that was not because of any addition or augmentation in the profit making structure, but because the profit making structure could be operated for longer working hours.
The expenditure incurred for this purpose was primarily and essentially related to the operation or working of the looms which constituted the profit earning apparatus of the assessee.
It was an expenditure for operating or working the looms for longer working hours with a view to producing a larger quantity of goods and earning more income and was therefore in the nature of revenue expenditure.
We are conscious that in laws in life, and particularly in the field of taxation law, analogies are apt to be deceptive and misleading, but in the present content, the analogy of quota right may not be appropriate.
Take a case where acquisition of raw material is regulated by quota system and in order to obtain more raw material, the assessee purchases quota right of another.
Now it is obvious that by purchase of such quota right, the assessee would be able to acquire more raw material and that would increase the profitability of his profit making apparatus, but the amount paid for purchase of such quota right would indubitably be revenue expenditure, since it is incurred for acquiring raw material and is part of the operating cost.
Similarly, if payment has to be made for securing additional power every week, such payment would also be part of the cost of operating the profit making structure and hence in the nature of revenue expenditure, even though the effect of acquiring additional power would be to augment the productivity of the profit making structure.
On the same analogy payment made for purchase of loom hours which would enable the assessee to operate the profit making structure for a longer number of hours than those permitted under the working time agreement would also be part of the cost of performing the income earning options I and hence revenue in character.
When dealing with cases of this kind where the question is whether expenditure incurred by an assessee is capital or revenue expenditure, 1385 it is necessary to bear in mind what Dixon, J. said in Hallstrom 's Property Limited vs Federal Commissioner of Taxation(1): "What is an outgoing of capital and what is an outgoing on account of revenue depends on what the expenditure is calculated to effect from a practical and business point of view rather than upon the justice classification of the legal rights, if any, secured, employed or exhausted in the process.
" The question must be viewed in the larger context of business necessity or expediency.
If the outgoing expenditure.
is so related to the carrying on or the conduct of the business that it may be regarded as an integral part of the profit earning process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure.
See Bombay Steam Navigation Co. (1953) Pvt. Ltd. vs Commissioner of Income tax(2) The same test was formulated ' by Lord Clyde in Robert Addze & Son 's Collieries Ltd. vs Inland Revenue(3) in these words: "Is it part of the company 's working expenses, is it expenditure laid out as part of the process of profit earning ? or, on the other hand, is it a capital outlay, is it expenditure necessary for the acquisition of property or of rights of permanent character, the possession of which is a condition of carrying on its trade at all ?" It is clear from the above discussion that the payment made by the assessee for purchase of loom hours was expenditure laid out.
as part of the process of profit earning.
It was, to use Lord Soumnar 's words, an outlay of a business "in order to carry it on and to earn a profit out of this expense as an expense of carrying it on.
" It was part of the cost of operating the profit earning apparatus and was clearly in the nature of revenue expenditure.
It was pointed out by Lord Radcliffe in Commissioner of Taxes vs Nchanga Consolidated Copper Mines Ltd. (supra) that "in considering allocation of expenditure between the capital and income accounts, it is almost unavoidable to argue from analogy.
" There are always cases falling indisputably on one or the other side of the line and it is a familiar argument in tax courts that the case under review bears close analogy to a case falling on the right side of the line and must therefore be decided in the same manner.
If we apply this method, the case closes to the present one that we can find is Nchanga Consolidated Copper Mines case (supra).
The facts of this case were that three companies which were engaged in the business of copper mining formed a group and consequent on a steep fall in the price of copper in the world market, this group decided voluntarily to 1386 cut its production by 10 per cent which for the three companies together meant a cut of 27000 tons for the year in question.
It was agreed between the three companies that for the purpose of giving effect to this cut, company should cease production for one year and that the assesses company and company R should undertake between them the whole group programme for the year reduced by the overall cut of 27000 tons and should pay compensation to company for the abandonment of its production for the year.
Pursuant to this agreement the assessee paid to company 1,384,565 by way of its proportionate share of the compensation and the question arose whether this payment was in the nature of capital expenditure or revenue expenditure.
The Privy Council, held that the compensation paid by the assessee to company in consideration of the latter agreeing to cease production for one year was in the nature of revenue expenditure and was allowable as a deduction in computing the taxable income of the assessee.
Lord Radcliffe delivering the opinion of the Privy Council observed that the assessee 's arrangement with companies R and "out of which the expenditure arose, made it a cost incidental to the production and sale of the output of the mine" and as such its true analogy with an operating cost.
The payment compensation represented expenditure incurred by the assessee for enabling it to produce more goods despite the cut of 10 per cent and it was plainly part of the cost of performing the income earning operation.
This decision bears a very close analogy to the present case and if payment made by the assessee company to company for acquiring an advantage by way of entitlement to produce more goods notwithstanding the cut of 80 percent was regarded by the Privy Council as revenue expenditure, a fortiori; expenditure incurred by the assessee in the present case for purchase of loom hours so as to enable the assessee to work the profit making apparatus for a longer number of hours and produce more goods than what the assessee would otherwise be entitled to do, must be held to be of revenue character.
The decision in commissioner of Taxes vs Carron Company(1) also bears comparison with the present case.
There certain expenditure was incurred by the assessee company for the purpose of obtaining a supplementary charter altering its constitution, so that the management of the company could be placed on a sound commercial footing and restrictions on the borrowing powers of the assessee company could be removed.
The old charter contained certain anti quoted provisions and also restricted the borrowing powers of the assessee company and these features severely handicapped the assessee company in the development of its trading activities.
The House 1387 of Lords held that the expenditure incurred for obtaining the revised charter eliminating these features which operated as impediments to the profitable development of the assessee companies business was.
in the nature of revenue expenditure since it was incurred for facilitating the day to day trading operations of the assessee company and enabling the management and conduct of the assessee company 's business to be carried on more efficiently.
Lord Reid emphasised in the course of his speech that the expenditure was incurred by the assessee company "to remove antiquated restrictions which were preventing profits from being earned" and on that account held the expenditure to be of revenue character.
It must follow on an analogical reasoning that expenditure incurred by the assessee in the present case for the purpose of removing a restriction on the number of working hours for which it could operate the looms, with a view to increasing its profits, would also be in the nature of revenue expenditure.
We are therefore of the view that the payment of Rs. 2,03,255/ made by the assessee for purchase of loom hours represented revenue expenditure and was allowable as a deduction under section 10 (2) (xv) of the Act.
We accordingly allow the appeal and answer the question referred by the Tribunal in favour of the assesse and against the Revenue.
The Revenue will pay to the assessee costs throughout.
S.R. Appeal allowed.
| Right from 1939, the demand of jute in the world market was rather lean and with a view to adjusting the production of the jute mills to the demand of the world market, various jute mills formed an Association styled as Indian Jute Mills Association and the appellant is one such member of the said Association.
As per the objects of the Association a quinquenniel working time agreement was entered into between the members of the Association restricting the number of working hours per week, for which the mills shall be entitled to work their looms.
The fourth working time Agreement was entered into between the members of the Association on 9th December, 1954 and it was to remain in force for a period of five years from 12th December 1954.
As per the first clause of the fourth working time Agreement no signatory shall work more than forty five hours of work per week subject to alteration in accordance with the provisions of clauses 7(1)(2) and (3) and further subject inter alia to the provision of clause (10) and under that clause, a joint and several agreement could be made providing that throughout the duration of the working time agreement, members with registered complements of loom not exceeding 220 shall be entitled to work upto seventy two hours per week.
Clause 6(a) enabled members to be registered as a "Group of Mills" if they happened to be under the control of the same managing agents or were combined by any arrangement or agreement and it was open to any member of the Group Mills so registered to utilise the allotment of hours of work per week of other members in the same group who were not fully utilising the hours of work allowable to them under the working time agreement, provided such transfer of hours of work was for a period not less than six months.
Clause 6(b) further (J prescribed three other conditions precedent subject to which the allotment of hours of work transferred by one member to another could be utilised by the latter and two of them were: (i) All agreements to transfer shall, as a condition precedent to any rights being obtained by transferee, be submitted with an explanation to the Committee and Committee 's decision .
whether the transfer shall be allowed shall be final and conclusive and (ii) If the Committee sanctions the transfer, it shall be a condition precedent to its utilisation that a certificate be issued and the transfer registered.
This transaction of transfer of allotment of hours of work per week was commonly referred to as sale of looms hours by one member to another.
The consequence of such 1371 transfer was that the hours of work per week transferred by a member were liable to be deducted from the working hours per week allowed to such member under the working time agreement and the member in whose favour such transfer was made entitled to utilise the number of working hours per week transferred to him in addition to the working hours per week allowed to him under the working time agreement.
The assessee, under this clause purchased loom hours from four different jute manufacturing concerns which were signatories to the working time agreement, for the aggregate sum of Rs. 2,03,255/ during the year 1st August 1958 to 31st July 1959.
In the course of the assessment year 1960 61 for which the relevant accounting year was the previous year 1st August 1958 to 31st July 1959, the assessee claimed this amount of Rs. 2,03,255/ as revenue expenditure on the ground that it was part of the cost of operating the looms which constituted the profit making apparatus of the assessee.
claim was disallowed by the Income Tax officer, but on appeal, the Appellate Assistant Commissioner accepted the claim and allowed the deduction on the view that the assessee did not acquire any capital asset when it purchased the loom hours and the amount spent by it was incurred for running the business of working it with a view to producing day to day profits and it was part of operating cost or revenue cost of production.
The Revenue preferred an appeal to the Tribunal, and, having lost before it, carried the matter before the High Court by a reference.
The High Court, following the decision of the Supreme Court in Commissioner of Income Tax vs Maheshwari Devi Jute Mills Ltd., held that the amount paid by the assessee for purchase of the loom hours was in the nature of capital expenditure and was therefore not deductible under section 10(2) (xv) of the Income Tax Act.
Hence the appeal by assessee by special leave.
Allowing the appeal, the Court ^ HELD: 1.
An expenditure incurred by an assessee can qualify for deduction under section 10(2)(xv) only if it is incurred wholly and exclusively for the purpose of his business, but even if it fulfills this requirement, it is nob enough; it must further be of revenue as distinguished from capital nature 2.
Maheshwari Devi Jute Mills ' case was a converse case where the question was whether an amount received by the assessee for sale of loom hours was m the nature of capital receipt or revenue receipt and the Supreme Court took the view that it was in the nature of capital receipt and hence not taxable.
The decision in Maheshwari Devi Jute Mills ' case cannot on this account be regarded as an authority for the proposition that payment made by an assessee for purchase of loom hours would be capital expenditure, because it is not a universally true proposition that what may be capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer.
The fact that a certain payment constitutes income or capital receipt in the hands of a recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer.
Whether it is capital expenditure or revenue expenditure would have to be determined having regard to the nature of the transaction and other relevant factors.
[1378 G H, 1379 A D] H Race Course Betting Control Board vs Wild, 22 Tax Cases 182.
quoted with approval.
1372 3.
Again, Maheshwari Devi Jute Mills ' Case proceeded on the accepted basis that loom hours were a capital asset and the only issue debated was whether the transaction in question constituted sale of this asset or it represented exploitation of the asset by permitting its user by another while retaining ownership.
No question was raised before the Court as to whether tho loom hours were an asset at all nor was any argument advanced as to what was the true nature of the transaction.
This question is res integra and therefore this decision cannot be regarded as an authority for the proposition that The amount paid for purchase of loom hours was capital and not revenue expenditure.
[1379 E, 1380 F] 4.
It is quite clear from the terms of the working time agreement that the allotment of loom hours to different mills constituted merely a contractual restriction on the right of every mill under the general law to work its looms to their full capacity.
If there had been no working time agreement, each mill would have been entitled to work its looms uninterruptedly for twenty four hours a day throughout the week, but that would have resulted in production of jute very much in excess of the demand in the world market, leading to unfair competition and precipitous fall in jute price and in the process, prejudicially affecting all the mills and therefore with a view to protecting the interest of the mills who were members of the Association, the working time agreement was entered into restricting the number of working hours per week for which each mill could work its looms.
The allotment of working hours per week under the working time agreement was clearly not a right conferred on a mill, signatory to the working time agreement.
It was rather a restriction voluntarily accepted by each still with a view to adjusting the production to the demand in the world market and this restriction could not possibly be regarded as an asset of such mill.
This restriction necessarily had the effect of limiting the production of the mill and consequentially also the profit which the mill could otherwise make by working full looms hours.
But a provision was made in clause 6(b) of the working time agreement that the whole or a part of the working hours per week could be transferred by one mill to another for a period of not less than six months and if such transfer was approved and registered by the Committee of the Association, the transferee mill would be entitled to utilise the number of working hours per week transferred to it in addition to the working hours per week allowed to it under the working time agreement, while the transferor mill could cease to be entitled to avail of the number of working hours per week so transferred and those would be liable to be deducted from the number of working hours per week otherwise allotted to it.
The purchase of loom hours by a mill had therefore the effect of relating the restriction on the operation of looms to the extent of the number of working hours per week transferred to it, so that the transferer mill could work its looms for longer hours than permitted under the working time agreement and increase is profitability.
The amount spent on purchase of looms hours thus represented consideration paid for being able to work the looms for a longer number of hours.
Such payment for the purchase of loom hours cannot be regarded as expenditure on capital account.
[1380 F H, 1381 A E] 6.
The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is amount or conclusive.
There is no all embracing formula which can provide a ready solution to the problem; no touchstone has been devised.
Every case has to be decided on its own facts keeping in mind the broad picture of the whole 1373 Operation in respect of which the expenditure has been incurred.
Two of these tests are: (a) The test of enduring benefit as laid down in British Insulated and .
Helsby Cables Ltd. vs Atherton, 10 Tax Cases 155.
Even this test must yield were there are special circumstances leading to a contrary decision There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test one during benefit may break down.
It is not every advantage of enduring nature acquired by an assesses that brings the case within the principle laid down in this test.
What is material to consider is the nature of the advantage in a commercial sense.
that it is only where the advantage is in the capital field that the expenditure would be disavowable on an application of this test.
If the advantage consists merely in facilitating the assesses 's trading operations or enabling the management and conduct of the assesses 's business to be carried on more efficiently or more profitably while leaving the filed capital untouched.
the expenditure would be on revenue account, even though tho advantage may endure for an indefinite future.
The test of enduring benefit in therefore not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances off a given case.
[1381 E G, 1382 A E] commissioner of Taxes vs Nchanga Consolidated Copper Mines Ltd., followed.
(b) The test based on distinction between fixed and circulating capital as applied in John Smith and Sons vs Moore, 12 Tax Cases, 266.
So long as tho expenditure in question can be clearly referred to the acquisition of an asset which falls within one or the other of these two categories such a test would be a critical one.
But this test also sometimes breaks down because there are many forms of expenditure which do not fall easily within these two categories and not infrequently, the line of demarcation is difficult to draw and leads to subtle distinctions between profit that is made "out of" assets and profit that is made "upon" assets or "with" assets.
Moreover, there may be cases where expenditure though referable to or in connection with fixed capital is nevertheless allowable as revenue expenditure e.g. expenditure incurred in preserving or maintaining capital assets.
This test is therefore clearly not one of universal application.
[1383 A D] Commissioner of Taxes vs Nchanga Consolidated Copper Mines LTD [1965]58 ITR 241; followed.
It is true that if disbursement is made for acquisition of a source of profit or income, it would ordinarily be in the nature of capital expenditure But it cannot be said in the present case that the assesses acquired a source d profit or income when it purchased loom hours.
The source of profit or income was the profit making apparatus and this remained untouched and unaltered, There was no enlargement of the permanent structure of which the income would be the produce or fruit.
What the assesses acquired wag merely an advantage in the nature of relation of restriction on working hours imposed by the working time agreement, so that the assesses could operate its profit earning structure for a longer number of hours.
Undoubtedly the profit earn 1374 ing structure of the assesses was enabled to produce more goods, but that was not because of any addition or augmentation in the profit making structure but because the profit making structure could be operated for longer working hours.
The expenditure incurred for this purpose was primarily and essentially related to the operation or working of the looms which constituted the profit earning apparatus of the assesses.
It was an expenditure for operating or working the looms for longer working hours with a view to producing a larger quantity of goods and earning more income and was therefore in the nature of revenue expenditure.
[1384 A D] 7.
When dealing with cases where the question is whether expenditure incurred by an assesses is capital or revenue expenditure, the question must be viewed in the larger context of business necessity or expediency.
If the outgoing expenditure is so related to the carrying on or the conduct of the business that it may be regarded as an internal part of the profit earning process and not for acquisition of an asset or a right of a permanent character.
the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure.
[1384 H, 1385 A C Nelletroms ' Property Ltd. vs Federal Commr.
Of Taxation, ; ; Robert Addis & Sons Collieries Ltd. vs Inland Revenue 8 Tax Case, 671 quoted with approval.
Bombay Steam Navigation Co. P. Ltd. vs Commissioner of Income Tax, ; followed.
In the instant case (a) the payment made by the assesses for the purchase of loom hours was expenditure laid out as part of the process of profit earning.
It was an outlay of a business in order to carry it on and to earn profit out of the expense as an expense of carrying it on.
It was part of the cost of operating the profit earning apparatus and was clearly in the nature of revenue expenditure; and [1385 D E (b) the payment of Rs. 2,03,255/ made by the assesses for purchase of loom hours represented Revenue expenditure and was allowable as a deduction under section 10(2) (xv) of the Income Tax Act.
[1387 C D] Commissioner of Income Tax v Nchanga Consolidated Copper Mines ltd. ; Commissioner of Taxes vs Curron Company 45 Tax Cases 18; followed.
|
Civil Appeal No. 2020 of 1980.
From the Judgment and Order dated 5 9 1980 of the Madhya Pradesh High Court in Election Petition No. 1 of 1980.
A. K. Sen, O. P. Sharma, Rajinder Singh, P. L. Dubey and P. N. Tewari for the appellant.
section N. Kacker, Swaraj and Mrs. Sushma Swaraj for Respondent No. 1.
Y. section Chitale (Dr.) and Miss Rani Jethmalani for the Intervener.
641 The Judgment of the Court was delivered by SARKARIA, J.
This is an appeal under Sections 116(A) and 116(B) of the Representation of People Act, 1951 (hereinafter referred to as the Act) against a judgment dated September 5, 1980, of a learned Judge of the High Court of Madhya Pradesh, whereby the Election Petition 1 of 1980 filed by the respondent was accepted and the appellant 's election to Lok Sabha was declared to be void.
The principal question that falls to be determined in this appeal is, whether the election of a returned candidate whose appeal against the orders of his conviction and sentence exceeding two years imprisonment, pending at the date of the scrutiny of nomination papers, is accepted by the appellate court, resulting in his acquittal, before the decision of the election petition against him, can be declared to be void under Section 100(1) of the Act, on the ground that he was disqualified from being chosen as a candidate within the meaning of Section 8(2) of the Act.
The material facts are as follow: The respondent and the appellant contested the election as rival candidates, to the Lok Sabha from No. 18 Mahasamund Parliamentary Constituency in Madhya Pradesh.
The last date for filing nominations was December 7, 1979.
The scrutiny of the nomination papers took place on December 11, 1979.
The respondent raised an objection to the validity of the appellant 's nomination before the Returning Officer at the time of the scrutiny.
The objection was that the appellant had been convicted and sentenced to imprisonment exceeding two years by the Sessions Judge, Delhi on February 22/27, 1979, and, as such, the appellant was disqualified from being chosen as a candidate in view of sub section (2) of Section 8 of the Act.
The Returning Officer, by his order dated December 11, 1979, rejected the objection and accepted the appellant 's nomination as valid.
The result of the election was declared on January 7, 1980.
The election result was notified on January 10.
The appellant was declared elected, and the respondent was defeated.
Thereafter on February 18, 1980, the respondent filed an Election Petition in the High Court to get the election of the appellant herein, declared void under Section 100(1) (a) and 100(1) (d) (i) of the Act, alleging that at the date of the election, including the date of the scrutiny of the nomination papers, the appellant was disqualified by virtue of Section 8(2) of the Act from being, chosen as a candidate on account of his aforesaid conviction and sentence.
642 The Session Judge who had convicted the appellant, had, by his order dated February 27, 1979, passed under Section 389 (3) of the Code of Criminal Procedure, suspended the execution of the sentence to afford the appellant time to file an appeal.
On March 21, 1979, the High Court of Delhi admitted his appeal and by an order of the same date directed that his sentence shall remain suspended provided the appellant furnished a personal bond and surety in the amount of Rs. 5000/ to the satisfaction of the Sessions Judge.
The appellant 's appeal pending in the High Court was transferred to the Supreme Court under the .
This Court by its judgment dated April 11, 1980, allowed the appeal, set aside the conviction and sentence of the appellant and acquitted him of the charges against him.
Subsequently, by its impugned judgment, dated September 5, 1980, the High Court of Madya Pradesh, allowed with costs, the election petition filed by the respondent, and declared the appellant 's election to be void on the ground contained in Section 100(1) (d) (i) of the Act.
Hence this appeal.
The contentions canvassed by Shri Asoke Sen, learned counsel for the appellant may be summarised as follows: (1) The conviction and sentence of the appellant had been quashed by the Supreme Court in appeal.
The acquittal of the appellant had the effect of wiping out the conviction with retrospective effect as if he had never been convicted and sentenced.
In support of this proposition, reliance has been placed on Manni Lal vs Shri Parmi Lal & Ors.
Reference has also been made to Dilip Kumar Sharma & Ors.
vs State of Madhya Pradesh.
(2) Conviction and sentence in Section 8(2) must mean the final and ultimate conviction and sentence.
Reference has been made to Union of India vs R. Akbar Sheriff, and Dilbag Rai Jarry v Divisional Superintendent.
(3) Invalidity of the appellant 's election, in the instant case, was to be tested under clause (a) and not under clause (d) (i) of Section 100(1) of the Act, because (a) (i) "Election" within the meaning of Section 100(1) (a) connotes the entire process of election commencing with the filing of 643 nominations and ending with the declaration of the result of the poll.
The stage of the scrutiny of the nominations and their acceptance or rejection was an important step of the election process and, as such, was an integral part of the 'election '.
Reliance on this point has been placed on the decisions of this Court in N. P. Ponnuswami vs Returning Officer, Namaklal Constituency; and M. section Gill vs Chief Election Commissioner.
(ii) The term "disqualified" in clause (a) of Section 100(1), as defined in Section 7(b) means "disqualified for being chosen as, and for being, a member of either House of Parliament, etc.", and the expression "being chosen".
(which is the language of Article 102 of the Constitution also) has been interpreted by this Court in Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram & Ors., as embracing "a series of steps starting with the nomination and ending with the announcement of the election".
(b) In substance and reality, the election of the appellant has been challenged on the ground that both at the date of the scrutiny and acceptance of his nomination and at the subsequent stages of the election including the dates of poll and declaration of the election result, the appellant was disqualified for being chosen on account of his having been convicted and sentenced to imprisonment exceeding two years.
This ground finds specific mention in clause (a) and not in clause (d) (i) which is a general and residuary clause and its application to the instant case will be excluded on the principle that the special excludes the general.
(c) The phrase "any candidate" in sub clause (i) of clause (d) of Section 100 (1) does not include the returned candidate.
(This point was not seriously pressed).
(4) (a) Even if it is assumed that clause (d) (i) or (d) (iv) is applicable, then also, the instant case cannot be taken out of the ratio of Manni Lal 's case (ibid), because the effect of the quashing of the appellant 's conviction and sentence by the appellate court, during the pendency of the Election Petition before the High Court was, that the conviction and sentence were retrospectively wiped out, and the High Court could not at the date of deciding the Election Petition hold that in spite of the acquittal by the Appellate Court, the disqualification of the appellant "for being chosen" ever existed even at the date of the acceptance of his nomination paper by the Returning Officer.
The proposition enunciated by this Court in Manni Lal 's case must be taken 644 to its logical end and the imagination must not be allowed to boggle down.
(b) Clause (a) and clause (d) (i) of Section 100 (1) of the Act should be construed harmoniously.
If these clauses are construed differently, there will be serious contradictions and inconsistencies.
Under Section 100 (1) (a), the candidate whose conviction and sentence are quashed, is qualified to be chosen and elected on the principle of retrospective wiping out of conviction and sentence, and yet he remains disqualified for his nomination.
Such an anomalous result should be avoided.
(5) The effect of suspension of the sentence made by the trial court and thereafter by the High Court pending the appeal, would be that the disqualification automatically stood eclipsed.
(This point was also not pressed).
On the other hand Shri section N. Kacker, learned counsel for the respondent, made these submissions: (1) Article 102 (1) (e) of the Constitution provides that "a person shall be disqualified for being chosen as, and for being, a member of either House of Parliament ______" "if he is so disqualified by or under any law made by Parliament.
" Under Section 8(2) of the Representation of People Act, 1951, which is a law made by Parliament the appellant on account of his conviction and sentence exceeding two years, was disqualified at the date of scrutiny of nominations and the Returning Officer was bound in view of Section 36(2) (a), of the Act, to take into account only such facts as they stood on the date of the scrutiny, which is an integral step in the process of election i.e., process of "being chosen".
(Reference has been made in this connection to Chaturbhuj 's case (ibid) and Chandan Lal vs Ram Dass and Another.
(2) The phrase "date of such conviction" occurring in sub section (2) of Section 8 of the Act means the date of the initial conviction and not the date of the final conviction.
If this phrase was construed to mean the date of the final and ultimate conviction on termination of the entire judicial process in the hierarchy of courts, sub section(3) would be redundant.
Sub section (3) applies to a special category of persons mentioned therein, and its language makes it clear that in their case, conviction will not operate as disqualification unless it becomes final in the course of judicial process.
(3) The present case is governed by clause (d) (i) and not by clause (a) of Section 100(1).
In the election petition, both the 645 grounds under Section 100(1) (d) (i) and under Section 100(1) (a) were taken, because (i) the appellant was disqualified on the date of scrutiny a ground under Section 100(1) (d) (i); and (ii) the disqualification also existed on the date of declaration of election result affording ground under Section 100(1) (a).
Since the appellant was subsequently acquitted during the pendency of election petition, the ground under Section 100(1) (a) become non existent in view of the principle laid down by this Court in Manni Lal 's case (ibid).
but the ground under Section 100(1) (d) (i) still subsisted.
Consequently, at the stage of arguments before the High Court, the ground under Section 100(1) (a) was given up and the petition was pressed only on the ground under Section 100(1) (d) (i).
(4) Section 100(1)(d)(i) is applicable to a returned candidate as well.
(5) The basic distinction between clauses (a) and (d) (i) of Section 100(1) is that under the former clause the existence or non existence of disqualification of the returned candidate is to be determined as "on the date of his election", which date in view of Section 67A. means the date on which he was declared elected under Section 53 or Section 66 of the Act; whereas under clause (d) (i), the enquiry is restricted to judging the propriety or otherwise of the action of the Returning Officer in accepting his nomination on the date of scrutiny; that is to say, for purposes of the latter clause all that has to be enquired into is whether the disqualification existed on the date of scrutiny.
(6) The proposition laid down in Manni Lal 's case (ibid) to the effect that subsequent acquittal by the appellate court in a criminal matter has the effect of wiping out the conviction from the date of its very inception is not applicable to the case in hand because: (a) Manni Lal 's case was one under Section 100(1) (a); while the present case is under Section 100(1) (d) (i); (b) in Manni Lal 's case the returned candidate was not disqualified on the date of the scrutiny; whereas in the instant case the disqualification of the appellant did, in fact exist on the date of the scrutiny, although the same may have ceased to exist in point of law due to his subsequent acquittal; and (c) Section 36(2) (a) fixes a date for judging the qualification of a candidate and if the legal fiction of retrospective repeal is applied 646 to the case of subsequent acquittal wiping out the disqualification which in fact existed on the date of scrutiny, Section 36(2) (a) could be rendered nugatory and several inconsistent situations could arise.
(7) In sum, the instant case being one under Section 100(1) (d) (i) falls within the ratio of this Court 's decision in Amritlal Ambalal Patel vs Himatbhai Gumanbhai Patel & Anr.
and Manni Lal 's case is not in point.
Shri Chitale, appearing for the intervener, has elaborated contentions (5) and 6 (c) of Shri Kacker and stressed that the facts constituting the disqualification, as obtaining on the date of scrutiny, are under Section 36 the decisive factor.
Before dealing with the contentions canvassed on both sides, it will be necessary to have a look at the relevant constitutional and statutory provisions.
Article 102 of the Constitution, so far as material, reads thus: "(1) A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament (a) to (d). . . (e) if he is so disqualified by or under any law made by Parliament.
" The words "for being chosen as, and for being, a member of either House of Parliament" have been lifted from Article 102 and incorporated in the definition of "disqualified" given in Section 7(b) of the Act.
According to this definition, "disqualified" means "disqualified for being chosen as, and for being, a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State." Section 8 of the Act provides for disqualification on conviction for certain offences.
Under sub section (1), a person convicted of any of the offences specified in that sub section shall be disqualified for a period of six years from the date of such conviction.
The material part of sub sections (2) and (3) reads as under: "(2) A person convicted by a court in India for any offence and sentenced to imprisonment for not less than two years shall be disqualified from the date of such conviction and shall continue to be disqualified for a further period of five years since his release: Provided . 647 (3) Notwithstanding anything in sub section (1) and sub section (2), a disqualification under either sub section shall not, in the case of a person who on the date of the conviction is a member of Parliament or the Legislature of a State, take effect until three months have elapsed from that date or, if within that period an appeal or application for revision is brought in respect of the conviction or the sentence, until that appeal or application is disposed of by the court.
" Then there is an Explanation appended to this Section, which is not material for our purpose.
Chapter I of Part V includes Sections 30 to 39 under the main heading "Nomination of Candidates".
Section 30 requires the Election Commission to appoint dates for making nominations, scrutiny of nominations, withdrawal by candidates, for poll and also to specify the date before which the election shall be completed.
The provision in clause (b) requires that the date for the scrutiny of nominations shall be the date immediately following the last date for making nominations or, if that day is a public holiday, the next succeeding day which is not a public holiday.
Section 32 lays down that any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill that seat under the provisions of the Constitution and this Act, or under the provisions of the (20 of 1963), as the case may be.
Section 36 deals with scrutiny of nominations.
Sub section (2) (a) of the Section is material.
It reads thus: "(2) The returning officer shall then examine the nomination papers and shall decide all objections which may be made to any nomination and may, either on such objection or on his own motion, after such summary inquiry, if any, as he thinks necessary, reject any nomination on any of the following grounds: (a) that on the date fixed for the scrutiny of nominations the candidate either is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may be applicable, namely: Articles 84, 102, 173 and 191, of this Act and. . " 648 Under sub section (7), for the purposes of this Section, a certified copy of an entry in the electoral roll for the time being in force of a constituency shall be conclusive evidence of the fact that the person referred to in that entry is an elector for that constituency, unless it is proved that he is subject to a disqualification mentioned in Section 16 of the Representation of the People Act, 1950.
Before the amendment of 1956.
clauses (a) and (b) of sub section (2) of Section 36 read as under: "The returning officer shall then examine the nomination papers and. .refuse any nomination on any of the following grounds: (a) that the candidate is not qualified to be chosen to fill the seat under the Constitution or this Act; or (b) that the candidate is disqualified for being chosen to fill the seat under the Constitution or this Act. . ." The Amendment Act 27 of 1956 recast clauses (a) to (e) of the old Section.
It also combined clauses (a) and (b) and the recast clause read as follows: "(a) that the candidate is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may be applicable, 'namely:. . ." The Amendment Act 40 of 1961 substituted in Sub section (2)(a), for the words "that the candidate" the words "that on the date fixed for the scrutiny of nominations the candidate".
The same Amendment Act substituted in sub section (5) the proviso for the words "an objection is made" the words "an objection is raised by the returning officer or is made by any other person".
Thus, the amendment in sub section 2(a) was only of a clarificatory character.
It made it clear that the date of scrutiny of the nominations is a crucial date.
Next, we come to Section 100.
The Section enumerates the grounds on which an election can be declared to be void.
Before the Amendment of 1956, Section 100, so far as material, was as follows: "(1) If the Tribunal is of opinion (a) . . . . (b) . . . . (c) that the result of the election has been materially affected by the improper acceptance or rejection of 649 any nomination, the Tribunal shall declare the election to be wholly void.
Explanation. . . (2) Subject to the provisions of sub section (1) if the Tribunal is of opinion (a) . . . . (b) . . . . . (c) that the result of the election has been materially affected by the improper reception or refusal of a vote or by the reception of any vote which is void or by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act or of any other Act or rules relating to the election, or by any mistake in the use of any prescribed form, the Tribunal shall declare the election of the returned candidate to be void".
In Durga Shanker Mehta vs Thakur Raghuraj Singh & Ors.
nominations were filed for a double member Legislative Assembly constituency in Madhya Pradesh.
No objection was taken before the returning officer, that one of the candidates, Vasant Rao, was less than 25 years of age at the date of the nomination and, as such, was not qualified under Article 173 to be chosen to fill the seat.
The Returning Officer accepted his nomination.
In the Election Petition, the election of the returned candidate, Vasant Rao, was challenged on the ground that his nomination had been improperly accepted by the Returning Officer within the contemplation of Section 100(1)(c) of the Act, as then in force, because he was 'not qualified to be chosen in view of Section 173 of the Constitution.
The Tribunal held that the act of the Returning Officer in accepting the nomination of Vasant Rao, who was disqualified to be elected a member of the State Legislature under the Constitution, amounted to an improper acceptance of nomination within the meaning of Section 100(1)(c) of the Act, and as the result of the election was materially affected thereby, the whole election must be pronounced to be void.
The controversy centered round the question, whether on the facts proved and admitted the case was one under sub section (1) (c) or Section 2(c) of the then extant Section 100.
This Court held that 650 the acceptance of the nomination paper of Vasant Rao by the Returning Officer could not be said to be improper acceptance "within the contemplation of Section 100 (1) (c) of the Act, and that the case was of a description which came under sub section (2) (c) of Section 100 and not under sub section (1) (c) of the Section as it really amounted to holding an election without complying with the provisions of the Constitution.
The expression "non compliance with the provisions of the Constitution" in clause (c) of sub section (2) was held to be sufficiently wide to cover such cases where the question was not one of improper acceptance or rejection of the nomination by the Returning Officer, but there was a fundamental disability in the candidate to stand for election at all.
There was no material difference between "non compliance" and "non observance" or "breach" and this item in clause (c) of sub section (2) might be taken as a residuary provision contemplating cases where there had been infraction of the provisions of the Constitution or of the Act but which had not been specifically enumerated in the other portions of the clause.
After the decision in Durga Shanker Mehta 's case (ibid), Parliament in 1956 amended Section 100 along with Sections 36, 123, 124 and 125 of the Act.
By this Amendment, the various clauses of sub sections (1) and (2) were rearranged and recast and simplified in accordance with the recommendations of the Select Committee of Parliament, "that sub sections (1) and (2) of existing Section 100 should be suitably combined retaining the substance of the existing law and at the same time making the law simple and easily intelligible".
Now, Section 100, as amended, by the Amending Act of 1956 and subsequent Amendment Acts, reads as under: "100.
Grounds for declaring election to be void (1) Subject to the provisions of sub section (2) if the High Court is of opinion (a) that on the date of his election a returned candidate was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or this Act or the (20 of 1963); or (b) that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or 651 (c) that any nomination has been improperly rejected; or (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii)by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the High Court shall declare the election of the returned candidate to be void.
(2) If in the opinion of the High Court, a returned candidate has been guilty by an agent, other than his election agent, of any corrupt practice but the High Court is satisfied (a) that no such corrupt practice was committed at the election by the candidate or his election agent, and every such corrupt practice was committed contrary to the orders, and without the consent, of the candidate or his election agent; (b) . . . (c) that the candidate and his election agent took all reasonable means for preventing the commission of corrupt practices at the election; and (d) that in all other respects the election was free from any corrupt practice on the part of the candidate or any of his agents, then the High Court may decide that the election of the returned candidate is not void".
A plain reading of Section 100(1) of the Act shows that it can be conveniently divided into two parts.
Clauses (a), (b) and (c) 652 of the sub section fall in the first part and clause (d) along with its sub clauses falls in the second part.
The distinction between clauses (a), (b) and (c) in the first part and clause (d) in the second part lies in the fact that whereas on proof of any of the grounds mentioned in clauses (a), (b) and (c) the election has to be declared void without any further requirement, in a case falling under clause (d) the election cannot be declared void merely on proof of any of the grounds mentioned in its sub clauses, unless it is further proved "that the result of the election in so far as it concerns the returned candidate has been materially affected".
The expression "any nomination" occurring in sub clause (i) of clause (d) in the second part may include nomination of a returned candidate as well, but in the case of a returned candidate whose nomination has been improperly accepted, the effect on the result of the election so far as it concerns him, is obvious.
However, if the election is challenged on the ground that the nomination of a candidate, other than the returned candidate has been improperly accepted, the petitioner in order to succeed will be required to prove under clause (d) (i), in addition to improper acceptance the further fact that thereby the result of the election so far as it concerns the returned candidate has been materially affected.
Clause (a) of sub section (1) appears to require that the disqualification or lack of qualification of the returned candidate is to be judged with reference to "the date on his election", which date, according to Section 67A, is "the date on which a candidate is declared by the returning officer under the provisions of Section 53 or Section 66, to be elected to a House of Parliament or of the Legislature of a State".
But, the word "disqualified" used in clause (a) is capable of an expansive construction also, which may extend the scope of the inquiry under this clause to all the earlier steps in the election process.
As already noticed, Section 7(b) defines "disqualified" to mean "disqualified for being chosen as, and for being, a member of either House of Parliament etc.
" The words "for being chosen" in that definition have been interpreted by this Court in Chatturbhujs case (ibid) to include the whole "series of steps starting with the nomination and ending with the announcement of the election.
It follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen".
But this definition of "disqualified" is in terms of Section 7(b) meant for Chapter III, in Part II of the Act; while Section 100 falls in Chapter III of Part VI.
If the expression "for being chosen" which is a central limb of the definition of "disqualified", is given such an extensive interpretation which will bring in its train the whole series of steps and earlier stages in the election process commencing with the filing of the nominations.
it will 653 be repugnant to the context and inconsistent with "the date of his election".
Such a construction which will introduce disharmony and inconsistency between the various limbs of clause (a) has to be eschewed.
In the context of clause (a), therefore, the ambit of the words "for being chosen" in the definition of "disqualified" has to be restricted to "the date of his election" i.e. declaration of the result of the election under Section 53 or Section 66, and such date is to be the focal point of time in an inquiry under this clause.
In contrast with clause (a), in a case falling under clause (d) (i) of Section 100, if an objection is taken before the Returning Officer against the nomination of any candidate on the ground of his being not qualified, or being disqualified for being chosen the crucial date as per Section 36 (2) (a) with reference to which the existence or nonexistence of such disqualification is to be enquired into is the date of scrutiny of the nomination of the candidate.
The first question is whether on facts admitted or proved on record, the case falls under Section 100(1) (a) or Section 100(1) (d), or both? The burden of Shri Kacker 's arguments is that the case falls under clause (d) (i) and not under clause (a) of Section 100(1).
Learned counsel has conceded that if clause (a) were applicable, the case would have been within the ratio of Manni Lal 's case and that was why at the stage of arguments before the High Court, the challenge under clause (a) of the sub Section was given up.
We will therefore, assume that technically, the election petitioner 's case that survives is one under clause (d) (i), and not under clause (a) of Section 100(1).
Even so, the fact remains, that, in substance, the election of the appellant is being challenged on the ground that on account of his conviction and sentence exceeding two years, the appellant was under Article 102(1)(e) of the Constitution read with Sections 8(2) and 36 (2) (a) of the Act, disqualified for being chosen to fill the seat concerned.
Such being the real ground of challenge, apart from sub clause (i) sub clause (iv) of clause (d) of Section 100 (1) will also be attracted.
This is so, because the phrase, non compliance with the provisions of the Constitution or of this Act etc.", according to the decision of this Court in Durga Shanker Mehta 's case (ibid), is wide enough to cover a case where the improper acceptance of rejection of the nomination is challenged on the ground of the candidate being disqualified for being chosen.
The controversy thus narrows down into the issue: Whether on facts undisputed or proved on record, the present case falls within the ratio of Manni Lal vs Shri Parmai Lal & Ors., even if the challenge is considered to be one under clause (d) (i) and (iv) of Section 100(1).
654 Before examining the facts and ratio of Manni Lal 's case it will be worthwhile to notice here a general principle of criminal law bearing on this issue.
This principle as reiterated by this Court in Dilip Kumar Sharma 's case, ibid, (at page 289), is as follows: An order of acquittal particularly one passed on merits wipes off the conviction and sentence for all purposes, and as effectively as if it had never been passed.
An order of acquittal annulling or voiding a conviction operates from nativity.
As Kelson puts it, "it is a true annulment an annulment with retroactive force".
So when the conviction (for the offence) was quashed by the High Court (in appeal). "it killed the conviction not then, but performed the formal obsequies of the order which had died at birth '.
In Manni Lal vs Parmai Lal (ibid), this Court applied this principle to the question of the disqualification of a candidate for being chosen to fill a seat in State Legislative Assembly.
In that case, the last date for filing nominations from the U.P. Legislative Assembly Constituency, Hardoi was January 9, 1969.
The returned candidate was convicted two days later on January 11, 1969 and sentenced, inter alia, to 10 years ' rigorous imprisonment under Section 304, Indian Penal Code.
On January 16, 1969, he filed an appeal against his conviction in the High Court.
Polling took place on February 9, 1969 and the result of the election was declared on February 11, 1969, and he was successful in the election.
His election was challenged by an election petition primarily on the ground that he was disqualified under Section 8(2) of the Representation of the People Act, because on the date of his election he stood convicted for an offence of imprisonment exceeding two years.
Before the election petition was decided, the returned candidate 's appeal was allowed on September 30, 1969 by the High Court and his conviction and sentence were set aside.
The question for decision before the Court was: What was the effect of the acquittal in appeal of the returned candidate before the decision of the election petition, on his conviction and sentence, which was the main ground on which he was alleged to be disqualified for being chosen ? The bench presided over by J. C. Shah, J. (as he then was) answered this question thus: ". it is clear that, though the conviction of respondent No. 1 was recorded by the trial court on 11th January, 1969, he was acquitted on 30th September, 1969 in appeal which acquittal had the effect of completely wiping out the conviction.
The appeal having once been allowed, it has to be held that the conviction and sentence were vacated with effect 655 from the date on which the conviction was recorded and the sentence awarded.
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 the sentence awarded by the lower court.
The disqualification relied upon by the appellant was laid under section 8(2) of the Act read with Article 102(1) (e) of the Constitution.
The provision is that a person convicted by a court in India for any offence and sentenced to imprisonment for not less than two years shall be disqualified for a further period of five years since his release.
The argument on behalf of the appellant was that, though respondent No. 1 was not disqualified at the time of filing of nomination, he was, in fact, disqualified on 9th February, 1969, the date of polling, as well as on 11th February, 1969, when the result was declared. .
The argument overlooks the fact that an appellate order of acquittal takes effect retrospectively and the conviction and sentence are deemed to be set aside with effect from the date they were recorded.
Once on order of acquittal has been made, it has to be held that the conviction has been wiped out and did not exist at all.
The disqualification, which existed on the 9th or 11th February, 1969 as a fact, was wiped out when the conviction recorded on 11th January, 1969 was set aside and that acquittal took effect from that very date.
It is significant that the High Court, under Section 100(1) (a) of the Act, is to declare the election of a returned candidate to be void if the High Court is of opinion that, on the date of his election, a returned candidate was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or the Act.
It is true that the opinion has to be formed as to whether the successful candidate was disqualified on the date of his election; but this opinion is to be formed by the High Court at the time of pronouncing the judgment in the election petition.
In this case, the High Court proceeded to pronounce the judgment on 27th October, 1969.
The High Court had before it the order of acquittal which had taken effect retrospectively from 11th January, 1969.
It was therefore, impossible for the High Court to arrive at the opinion that on 19th or 11th February 1969, respondent No. 1 was disqualified.
The conviction and sentence had been retrospectively wiped out, so that the opinion required to be formed by the High Court to 656 declare the election void could not be formed.
The situation is similar to the one that could have come into existence if Parliament itself had chosen to repeal s.8(2) of the Act retrospectively with effect from 11th January, 1979." (emphasis added) The essence of the decision is in the sentences which have been underlined by us in the above extract.
In sum, what was laid down in Manni Lal 's case was that if the disqualification of the returned candidate, viz., his conviction and sentence exceeding two year 's imprisonment which existed as a fact at the date of the election, is subsequently set aside by the Appellate Court, then a challenge to his election on the ground under Section 100(1) (a) of the Act, in an election petition pending in the High Court at the date of such acquittal, must fail because the acquittal has the effect of retrospectively wiping out the disqualification as completely and effectively as if it never had existed.
In other words, the ratio decidendi logically deducible from the above extract, is that if the successful candidate is disqualified for being chosen, at the date of his election or at any earlier stage of any step in the election process on account of his conviction and sentence exceeding two years ' imprisonment, but his conviction and sentence are set aside and he is acquitted on appeal before the pronouncement of judgment in the election petition pending against him, his disqualification is annulled and rendered non est with retroactive force from its very inception, and the challenge to his election on the ground that he was so disqualified is no longer sustainable.
Learned counsel for the respondent has tried to distinguish Manni Lal 's case from the one before us on three grounds.
First, that in Manni Lal 's case, the election was challenged under clause (a) or Section 100(1); whereas in the instant case, the challenge is only on the ground under clause (d) (i) of the Section, since the plea in the election petition on the ground under said clause (a) of Section 100(1) was given at the time of arguments in the High Court.
Second, in Manni Lal 's case, the disqualification on account of conviction and sentence of the candidate concerned did not exist on the date of the scrutiny of the nomination papers, but was incurred subsequently to the acceptance of his nomination, whereas in the present case, such disqualification existed as a fact even at the date of the scrutiny of the nomination papers.
Third, in view of the mandate in Section 36(2) (a), for the purpose of an enquiry under Section 100(1) (d) (i), the existence or non existence of the disqualification is to be judged as on the date of the scrutiny of the nominations, whereas in Manni Lal, 657 the legislative mandate of Section 36(2) (a) was inapplicable, the challenge to the election being one under Section 100(1) (a) only.
It appears to us that this three fold feature pointed out by the learned counsel amounts no more than to a distinction without a difference.
The basic ground of challenge and material factual constituents thereof are common in both these cases.
In both these cases what has been challenged is the election of the successful candidate.
Although at the time of arguments in the High Court the ground under clause (a) of Section 100(1) was not pressed and no arguments were addressed with reference to that clause, it had been pleaded and proved by the election petitioner that both at the date of the scrutiny of nominations and at the date of the election, the appellant 's disqualification existed as a fact.
Another undisputed fact apparent on the record is that the appellant was acquitted by the appellate court before the decision of election petition in the High Court.
As here, in Manni Lal also, such disqualification of the successful candidate existed not only at the date of his 'election ' as defined in Section 67A, but also at the date of the poll, which was an earlier step in the process of "being chosen".
As here, there also, such disqualification had been wiped out with retroactive force on account of his acquittal after the elections but before the decision of the election petition by the High Court.
Similar to the third point raised here, in Manni Lal also, it was contended that under section 100(1) (a), the question whether the successful candidate was disqualified on the date of his election was to be determined with reference to the situation obtaining on that date only.
This contention was repelled with the observation that such opinion had to be formed by the High Court at the time it proceeds to pronounce the judgment in the election petition and High Court had at that time before it the order of acquittal which had taken effect retrospectively from the date on which the conviction had been recorded by the trial court.
Although the Court did not specifically say so, this reasoning employed by the Court in negative the contention of the election petitioner in that case, appears to have been spelled out from a construction of the phrase "if the High Court is of opinion" used by the Legislature in the opening part of Section 100(1).
This phrase, be it noted, qualifies not only clause (a), but also clause (d) of the sub section.
Thus, the ratio of Manni Lal squarely and fully applies to the present case.
On the application of that rule, the acquittal of the appellant herein by the appellate court, during the pendency of the election petition must be held to have completely and effectively wiped out the disqualification of the appellant with retrospective effect from the date of the conviction, so that in the eye of law it existed neither at the date of scrutiny of nominations, nor at the date of the 'election ' or at any other stage of the process of "being chosen".
658 In short, the acquittal of the appellant before the decision of the election petition pending in the High Court, had with retrospective effect, made his disqualification non existent, even at the date of the scrutiny of nominations.
This being the position, the High Court could not at the time of deciding the election petition form an opinion as to the 'existence ' of a non existent ground and sustain the challenge to the appellant 's election under Section 100(1) (d) (i).
It is true that in order to adjudicate upon the validity of the challenge to the appellant 's election under clause (d) (i) of Section 100(1), what was required to be determined by the High Court was whether the nomination of the appellant was properly or improperly accepted by the Returning Officer.
But, in order to determine this question, it was necessary for the High Court to decide, as a preliminary step, whether the appellant was disqualified at the date of scrutiny of the nomination papers, for if he was disqualified, his nomination could not be said to have been properly accepted by the Returning Officer and if, on the other hand, he was not disqualified, his nomination would have to be regarded as properly accepted by the Returning Officer.
The primary question before the High Court, therefore, was whether or not the appellant was disqualified at the date of scrutiny of the nomination papers and it is difficult to see how the determination of this question could be made on any principle other than that governing the determination of a similar question under clause (a) of Section 100(1).
If, as laid down in Manni Lal 's case, the returned candidate cannot be said to be disqualified at the date of the election, if before or during the pendency of the election petition in the High Court his conviction is set aside and he is acquitted by the appellate court, it must be held, on the application of the same principle, that, in like circumstances, the returned candidate cannot be said to be disqualified at the date of the scrutiny of the nomination papers.
On this view.
the appellant could not be said to be disqualified at the date of scrutiny of the nomination paper since his conviction was set aside in appeal by this Court and if that be so, the conclusion must inevitably follow that the nomination of the appellant was properly accepted by the Returning Officer.
The position is analogous to that arising where a case is decided by a Tribunal on the basis of the law then prevailing and subsequently the law is amended with retrospective effect and it is then held by the High Court in the exercise of its writ jurisdiction that the order of the Tribunal discloses an error of law apparent on the face of the record, even though having regard to the law as it then existed, the Tribunal was quite correct in deciding 659 the case in the manner it did, vide Venkatachalam vs Bombay Dyeing & Manufacturing Company Limited.
Amritlal Ambalal Patel(ibid) cited by Shri Kacker is not a parallel case.
It is clearly distinguishable.
The facts therein were materially different from Manni Lal 's case or the one before us.
In that case, the election of Amritlal Ambalal Patel to Gujarat Legislative Assembly was challenged on the ground that he was on the date of scrutiny of nominations less than 25 years of age which was the minimum age prescribed under Article 173(b) of the Constitution and, as such, not being qualified for being chosen, his nomination was wrongly accepted.
The candidate attained the age of 25 years on the date of election.
Notwithstanding this subsequent fact, it was held by the Court that the nomination of the candidate had been "improperly accepted" within the meaning of Section 100 (1)(d).
The rationale of the decision was that the attainment of the prescribed age by the candidate after the date of scrutiny of nominations did not operate retrospectively to remove his disqualification for being chosen, with effect from the date of the scrutiny of the nominations.
The disqualification on the date of the scrutiny remained unaffected.
That was not a case like the present one where the disqualification of the candidate existing as a fact at the date of the nominations, due to his conviction and sentence exceeding two years, was retrospectively wiped out owing to his subsequent acquittal by the appellate court, during the pendency of the elections petition in the High Court.
It is possible that, difficult and anomalous situations may arise if the rule in Manni Lal vs Parmai Lal is applied to a converse hypothetical case wherein the candidate whose nomination is rejected on account of his disqualification, viz., conviction and sentence exceeding two years ' imprisonment existing as a fact on the date of scrutiny of nominations, brings an election petition to challenge the election of the returned candidate on the ground that his nomination was improperly rejected, as his disqualification had been, as a result of his subsequent acquittal by an appellate court, annulled and obliterated with retroactive force.
But we do not think it necessary to indulge in this hypothetical and academic exercise.
Firstly, the instant case is not one where the election is being challenged under Section 100(1) (c) on the ground that the election petitioner 's nomination was improperly rejected.
Secondly, it has not been urged before us by the learned 660 counsel for the respondent, that Manni Lal 's case was wrongly decided and that its ratio needs reconsideration by a larger Bench.
All efforts of the learned counsel have been directed to show that the principle enunciated in Manni Lal 's case is inapplicable to the present case because on facts, between these two cases, there is a difference and a distinction, where, in reality, none that matters, really exists.
In this situation therefore, we would abide by the principle of stare decisis and follow the ratio of Manni Lal 's case, and in the result, hold that the acquittal of the appellant in appeal prior to the pronouncement of the judgment by the High Court in the election petition had the result of wiping out his disqualification as completely and effectively as if it did not exist at any time including the date of the scrutiny of the nomination papers and that his nomination paper was properly accepted by the Returning Officer.
The challenge to the election of the appellant on the ground under clause 100(1) (d) (i) must, therefore, fail.
For all the foregoing reasons, we allow this appeal, set aside the judgment of the High Court and dismiss the election petition of the respondent.
In view of the law point involved, we will leave the parties to pay and bear their own costs throughout.
V.D.K. Appeal allowed.
| Section 32(iv) of the Payment of Bonus Act provides that nothing in the Act shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or State Government or a local authority.
The Delhi Development Authority, a statutory body created under the Delhi Development Act, 1957 for the development of Delhi according to plan, paid bonus to its employees for a period of ten years upto the year 1973 74, but later discontinued payment of bonus on the advice of the Ministry of law.
The employees ' petition impugning the action of the Authority in stop ping the payment of bonus was allowed by the High Court.
On the question whether the Delhi Development Authority is a "local authority" and whether the provisions of the Payment of Bonus Act are attracted: Allowing the appeal, ^ HELD: The Delhi Development Authority is endowed with all the usual attributes and characteristics of a 'local authority ' and therefore the provisions of the Payment of Bonus Act are not attracted.
[865 A] The expression 'local authority ' is not defined in the Payment of Bonus Act.
The General Clauses Act defines it to mean a municipal committee or other authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund.
It is not a sound rule of interpretation to import the definition of an expression in one Act into another.
The definition of 'Local Fund ' in the Fundamental Rules, Treasury Code and elsewhere cannot be imported into the definition of Local Authority in the General Clauses Act and thus into the Delhi Development Act.
An authority, in order to be a local authority, must be of like nature and character as a municipal committee etc.
possessing among others many, if not all, of the distinctive attributes and characteristics of a municipal committee.
It must possess one essential feature, namely, that it is legally entitled to or entrusted by the Government with the control and management of a municipal or local fund.
[857 B H] The distinctive attributes and characteristics of a local authority are: (i) It must have separate legal existence as a corporate body; (ii) it must not be a mere governmental agency but a legally independent entity; (iii) it must function in a defined area and must ordinarily be elected wholly or partly, 855 directly or indirectly by the inhabitants of the area; (iv) it must enjoy a certain degree of autonomy, which, though not complete, must be appreciable; (v) the statute must entrust the authority with such governmental functions and duties as are usually entrusted to a municipal body for providing such amenities, as health and education services, water and sewerage, town planning and development, roads, markets, transportation etc.
to the inhabitants; (vi) it must have power to raise funds in the furtherance of its activities and the fulfillment of the projects entrusted to it by levying takes, rates, charges, fees etc.
all of which may be in addition to the moneys provided by Government.
What is essential is that the control and management of the fund must vest in the authority.
Municipal Corporation of Delhi vs Birla Cotton, Spinning Weaving Mills Delhi & Anr. ; @ 288 and Valjibhai Muljibhai Soneji and Anr.
vs The State of Bombay (Now Gujarat) & Ors. , referred to.
The Delhi Development Authority is a body corporate.
It consists of a chairman, vice chairman and a certain number of official members and non official members who are representatives of the Municipal Corporation Delhi to be elected by the Councillors and the aldermen of the Municipal Corporation and three representatives of the Metropolitan Council to be elected by that Council.
The object with which the Authority is established is "to promote and secure the development of Delhi according to plan" in accordance with the provisions of the Act.
[859 D F] The Authority is required to maintain its own Fund which was not a Consolidated Fund or a separate Development Fund but is the Fund of the Development Authority.
To this Fund are to be credited all the moneys received from the Central Government by way of grants, loans, advances or otherwise; all moneys received by way of loans of debentures; all fees and charges received by the Authority, all moneys received from the disposal of lands, buildings and other properties, all moneys received by way of rents and profits or in any other manner.
The fund is required to be applied towards meeting the expenses incurred by the Authority in the administration of the Act and for no other purposes.
The Act empowers the Authority to impose penalties on persons for undertaking or carrying out development in contravention of the master plan or without permission approval or sanction required to be given l? by the Authority.
[860 E G] An equally important feature with which the Authority is clothed is its power to make regulations a power which is analogous to the power given to municipalities to frame bye laws.
[862 G] The salient features of the Act show that the Delhi Development Authority is constituted for the specific purpose of planned development of Delhi which is a governmental function ordinarily entrusted to municipal bodies.
It has an element of popular representation though some of the members are indirectly elected.
It enjoys a considerable degree of autonomy within the bounds prescribed by the Act.
The fact that some supervision is exercised by the Central Government does not detract from the autonomy because the supervision exercised is the usual supervisory power which every State Government exercises over municipalities, District Boards etc.
[863 A D] The term "taxation" used with reference to the power of a local authority to raise funds is to be understood not in any fine and narrow sense to include 856 only compulsory exactions but in a broad generic sense to include fees levied essentially for services rendered.
Today the distinction between a tax and a fee his withered away both being compulsory exactions of money by a public authority.
The crucial test is to see whether the public authority is authorised by statute to make a compulsory extension of money and not to see whether the money so exacted is to be utilised for specific or general purposes.
[863 G H] There is no valid reason to hold that the betterment charge which the Authority can impose upon an owner of a property in respect of the increase in the value of the property is a fee and not a tax.
The charge is not levied on the basis of the increase in the value of property consequent on the development of the area.
In other words it is a charge on the accrued capital gain which may bear no proportion whatsoever to the cost of development.
[864 E] The fact that the Delhi Development Act refers in several sections to "local authority concerned" meaning thereby the ordinary local authority (as for example the Delhi Municipal Corporation) functioning in the area discharging a multiplicity of civic functions as distinguished from the Delhi Development Authority, which performs one of the several functions that a local authority performs, is no ground for holding that The Delhi Development Authority is not a local authority.
The Authority is endowed with all the usual attributes and characteristics of a local authority.
[864 H] Nor does the fact that other Municipal Acts provide for the reconstitution of a dissolved or superseeded municipality while the Delhi Development Act does not provide for such reconstitution of the Authority after it fulfills its assigned functions make it any the less a local authority.
By the very nature of the work entrusted to it its life is transient; when the work is accomplished and there is no need for its continued existence it is dissolved.
It is by what it is during its life and not by what its shape would be after it has performed its assigned functions that it can be determined whether the authority is a local authority as defined in the General Clauses Act [865 B D]
|
No. 65 of 1962.
Petition under article 32 of the CoNstitution of India for the enforcement of Fundamental Rights.
A. section R. Chari, R. K. Garg avid K. R. Chaudhri, for the petitioners.
N. section Bindra and R. H. Dhebat, for the respondents.
October 11.
The judgment of the Court was delivered by SHAH, J.
Being in possession of evidence that the petitioners and others were concerned in the commission of offences of conspiracy to smuggle gold from foreign countries into thE port of Deogad in the District of Ratnagiri, contrary to the provisions of the Sea Customs Act and the Foreien Exchange Regulation Act, P. N. Kalyankar, Sub Inspector.of Customs and Central Excise, arrested the petitioners and produced them before the judicial Magistrate F Class, 575 Deogad.
On December 29, 1961, the Government of Maharashtra promulgated a notification in exercise of the powers conferred by section 14 of the Code of Criminal Procedure, 1898 (as amended by Bombay Act XXIII of 1951 in its application to the State of Maharashtra) appointing Mr. V. M, Gehani to be a Special judicial Magistrate having jurisdiction over the area comprising Greater Bombay and Ratnagiri District, and conferred upon him all the powers of a Presidency Magistrate in respect of the trial in the case involving the seizure of approximately 49,990 tolas of foreign gold and known as the "Deogad Gold Seizure Case. ' On January 10, 1962, the Government of Maharashtra gave consent in writing as required by section 196 A sub section (2) of the Code of Criminal Procedure to the institution of criminal proceedings against the petitioners and eight others for offences punishable "under section 120B of the Indian Penal Code, 1860 read with section 167(81) of the (as amended) and section 120B of the Indian Penal Code read with section 167(81) of the (as amended) and section 8(1) of the Foreign Exchange Regulation Act.
1947 (as amended) and section 120B of the Indian Penal Code read section 8(1) with and section 23 of the Foreign Exchange Regulation Act, 1947 (as amended)".
Thereafter H. R. Jokhi, Assistant Collector of Customs & Central Excise, Marine & Prevention Division, Collectorate of Central Excise Bombay instituted a complaint in the Court of the Special Magistrate appointed under the Notification dated December 29, 1961, against 16 persons (including the petitioners) alleging that they were parties to a conspiracy at Bombay, janjira, Dabhol and Deogad (the latter three places being in the District of Ratnagiri) and other places to smuggle large quantities of gold into India, with a view to evade or attempt to evade payment of duty thereon and to evade or attempt to evade the prohibition and 576 restrictions in force relating thereto during the period from about October 1959 to the end of April 1961.
or thereabout in breach of the provisions of the and the Foreign Exchange Regulation Act, 1947, and that the said persons had in pursuance of the "conspiracy and with continuing purpose and design" in or about the month of April 1961 acquired or were concerned in importing and acquiring possession, contrary to the and the Foreign Exchange Regulation Act, gold totalling 49,990 tolas valued at over Rs. 70,00,000/ .
The petitioners applied to the Special Magistrate that they be tried at Deogad or at Ratangiri the headquarters of the District, for they were permanent residents of Deogad carrying on their respective occupations at Deogad, that they had already made their individual arrangements for their defence at Deogad and that it would be just and convenient that their trial should take place in the District of Ratnagiri.
The Magistrate rejected their appli cation.
The petitioners then moved the High Court of judicature at Bombay praying for an order that the case against the petitioners be transferred for trial to the court of some judicial Magistrate at Deogad or at Ratnagiri competent to try the case : in the alternative the petitioners prayed that the Special Magistrate Mr. Gehani be directed to try the said case either at Deogad or at Ratnagiri at which place all 'facilities ' were available.
The High Court dismissed their application.
The petitioners then moved this Court under article 32 of the Constitution for a writ of certiorari or other appropriate writ or direction quashing the Notification dated December 29, 1961., issued by the Government of Maharashtra or in the alternative declaring section 14 of the Code of Criminal Procedure as amended by the Bombay Act 23 of 1951 ultra vires and void and for an order that the case be heard at Deogad or at Ratnagiri in the State of Maharashtra by any Magistrate competent to enquire into or try the case.
By this petition 577 the petitioners submitted that section 14 of the Code of Criminal Procedure as amended by the Bombay Legislature by Act 23 of 1951 and the Notification dated December 29, 1961, issued by the Government of Maharashtra appointing Mr. Gehani as Special judicial Magistrate and investing him with the powers of a Presidency Magistrate, infringed article 14 of the Constitution.
Sub section (1) of section 14 of the Code as amended, in so far as it is material, provides "14.
Special Magistrates.
The State Government may in consultation with the High Court, confer upon any person who holds or has held any judicial post under the Union or a State, or possesses such other qualifications as may, in consultation with the High Court, be specified in this behalf by the State Government by notification in the Official Gazette, all or any of the powers conferred or conferrable by or under this Code on a judicial Magistrate in respect to particular cases or to a particular class or classes of cases, or in regard to cases generally in any local area." By section 6 A which was also added by Bombay Act 23 of 1951 in the Code, constitution of different classes of ,Judicial Magistrates was provided, and under that head were included Presidency Magistrates.
The State Government was, under the amended Code, competent to appoint a person with the requisite qualifications a Special Magistrate and to confer upon him the powers conferred or conferrable under the Code on a judicial Magistrate in respect of a particular case or a particular class or classes of cases or in regard to cases generally in any local area.
Section 14 of the Code of Criminal Procedure as originally enacted prohibited the 578 appointment of a Special Magistrate to function in any local area within the Presidency towns, but that limitation upon the power of the State Government has, by the amendment made by Bombay Act 23 of 1951, been removed, and it is now open to the Government of Maharashtra to constitute a Special judicial Magistrate with power to function in any local area including Greater Bombay.
The expression ,local area ' includes any part of a State, and it may cover more than one District.
The Government of Maharashtra therefore could appoint Mr. Gehani a Special, ' judicial Magistrate, having jurisdiction over Greater Bombay and the District of Ratnagiri and could confer upon him the powers of a Presidency Magistrate in respect of the trial of the case known as the Deogad Gold Seizure Case.
In M. K. Gopalan vs The state of Madhya Pradesh the validity of section 14 of the Code of Criminal Procedure 1898 (V of 1898.) was challenged on the plea that it was void because it infringed the fundamental right of equality before the law guaranteed by article 14 of the Constitution.
This Court held that a law vesting discretion in an authority to appoint a Special Magistrate under section 14 of the Code of Criminal Procedure to try cases entirely under the normal Procedure cannot be regarded as discriminatory and is not hit by article 14 of the Constitution.
There is substantially no difference between the powers conferrable by section 14 of the Code as originally enacted and section 14 as amended by Bombay Act 23 of 1951.
Apart from certain procedural matters such as consultation with the High Court before entrustment of the said powers, the only difference made by the Bombay Act is that a Special Magistrate may be appointed even in respect of a Presidency town.
Section 14 contemplates that a Special 'Magistrate may be entrusted with powers which are conferrable by or under the Code on a judicial Magistrate.
A Presidency Magistrate being a Judicial Magistrate under (1) 579 section 6 A as added by the Bombay Legislature, powers conferrable on a Presidency Magistrate may lawfully be conferred upon a Special judicial Magistrate who has been appointed for the Presidency town with or without any additional locality.
Section 20 of the Code of Criminal Procedure provides that every Presidency Magistrate shall exercise jurisdiction in all places within the presidency town for which he is appointed, and within the limits of the port of such town and of any navigable river or channel leading thereto, as such limits are defined under the law for the time being in force for the regulation of ports and port dues.
There is, however, nothing in this section which detracts from the authority which may be exercised by the State Government under section 14 to appoint a Special judicial Magistrate in respect of a Presidency Town nor is there any prohibition against the investiture of powers of a Presidency Magistrate upon such Magistrate in respect of a locality outside the Presidency town so long as he has jurisdiction also over a Presidency Town.
On the principle of M. K. Gopalan 's case (1), section 14 of the Code of Criminal Procedure, as amended, cannot be regarded as infringing article 14 of the Constitution.
Validity of the Notification issued by the Government of Maharashtra directing the trial by Mr. Gehani who had jurisdiction both over the Greater Bombay area and the District of Ratnagiri may now be considered.
Relying upon the judgment of this Court in Bidi Supply Company vs The Union of India (2), it was submitted that the impugned Notification was unauthorised.
That was a case where an assessee who was ordinarily assessed to income tax by Officers within the town of Calcutta was informed by letter dated January 25, 1955, in pursuance of section 5 (7 A) of the Income tax Act, 1922 (Xl of 1922) as amended by Act XL of 1940 the assessment records of the assessee were transferred from the Income tax Officer, Calcutta to the Income (1) (2) ; 580 tax Officer, Special Circle, Ranchi in the State of Bihar and that he do correspond in future regarding the assessment proceedings with that Income tax officer.
The assessee had received no previous notice of the intention of the Income tax authorities to transfer the assessment proceedings from Calcutta to Ranchi, nor had he any opportunity to make any representation against the said decision.
The assessee challenged by a petition to this Court the validity of the order of transfer contending that it violated the equal protection clause of the Constitution.
Section 64 of the Income tax Act provides for the normal place of assessment of assesses.
By subsection (1) it provides that where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income tax Officer of the area in which that place is situate, or, where the business, profession or vocation is carried on in more places than one, by the Income tax Officer of tile area in which the principal place of his business, profession or vocation is situate.
In all other cases, in assessee shall be assessed by the Income tax Officer of the area in which he resides.
By subsection (5) of section 64 it is provided, inter alia, that the provisions of sub section
(1) and (2) shall not apply where by any direction given or any distribution or allocation of work made by the Commissioner of Income tax under sub section
(5) of section 5, or in consequence of any transfer made under sub section
(7A) of section 5, a particular Income tax Officer has been charged with the function of assessing that assessee.
This Court held in the Bidi supply Company 's case (1) that sub section 5 (7A) of section 5 as it stood at the material time contemplated transfer of a pending case for a particular year.
It was observed that "the provision that such a transfer may be made 'at any stage of the proceedings ' obviously postulates proceedings actually pending, and 'stage ' refers to a point in between the commencement and the termination of those proceedings.
Further the provision that such transfer shall not render necessary (1) ; 581 the reissue of notice already issued by the Income tax Officer from whom the case is transferred quite clearly indicates that the transfer contemplated by the sub section is the transfer of a particular case actually pending before an income tax Officer of one place to the Income tax Officer of another place.
" The decision of the Court turned on the meaning of the word 'case ' used in sub section 5(7A) as enacted by the Income tax Act Amendment Act, 1940 and this Court held that the expression 'case ' meant an assessment case of a particular year.
After this decision the Legislature intervened and by the Income tax Amendment Act 26 of 1956 it added an explanation that the word 'case ' in relation to any person whose name is specified in the order of transfer means all proceedings under the Income tax Act in respect of any year which may be pending on the date of the transfer, and includes all proceedings under this Act which may be commenced after the date of the transfer in respect of any year.
The principle of the case in Bidi Supply Company (1) has no relevance in considering the validity of the Notification issued under section 14 of the Code of Criminal Procedure as amended by the Bombay Act 23 of 1951.
The assessee in the Bidi Supply Company 's case (1) obtained the benefit of a lacuna in the provisions of the Indian Income tax Act, there being apart from a provision for transfer of a pending case, no general power to transfer future assessment proceedings.
A Notification Under section 14 of the Code of Criminal Procedure is an order constituting a Special Magistrate with jurisdiction over a certain local area and with powers which are normally exercisable by a Judicial Magistrate.
The constitution of a Special Magistrate does not amount either directly or indirectly to a transfer of any 'case ': nor are there any such considerations present in that order as were pointed out by this Court in the Bidi Supply Company 's case (1) relating to the meaning of the word "case ' used in the Income tax Act, as would compel us to (1) ; 582 hold that a "case ' within the meaning of section 14 means a pending case only.
Under section 14 the State Government is competent to appoint a special Judicial Magistrate in respect of 'any particular case or a particular class or classes of cases or in regard to cases generally in any local area '.
The words used in section 14 must mean a case which is either pending or which may be instituted after the date of the constitution of the Special Magistrate.
It was then submitted that the Notification appointing a Special Magistrate, for trial of the intended complaint against the petitioners, having regard to the circumstances of this case, and conferring upon him the powers of a Presidency Magistrate operated discriminatively against the petitioners, for, it was said, other persons similarly situated as the petitioners were ordinarily liable to be tried by the Magistrate within whose jurisdiction the offence was alleged to be committed, and could not be required to go to a distance of more than three hundred miles from their normal place of residence to defend them selves.
It was urged that Mr. Gehani being a Presidency Magistrate for the trial of the case against the petitioners and others he would be sitting in Bombay where he normally functions, and it would result in great inconvenience to the petitioners to be called upon to attend the sittings of the Court in Bombay specially when there are Magistrates availa ble in Deogad who are competent to hear and decide the case against the petitioners.
By the Notification Mr. Gehani has been invested with the powers over Greater Bombay and Ratnagiri District.
His jurisdiction therefore extends over the whole of the Greater Bombay area and the District of Ratnagiri.
There is no provision in the Code of Criminal Procedure which enjoins upon a Magistrate the duty to hold his sitting in any particular place.
Under section 9(2) of the Code of Criminal Procedure the State Government is required to direct at what place or 583 places the Court of Session shall ordinarily hold its sitting, but if, in any particular case, the Court of Session is of opinion that it will tend to the general convenience of the parties and witnesses to hold its sitting at any other place in the sessions division, it may with the consent of the prosecution and the accused, sit at that place for the disposal of the case or the examination of any witness or witnesses therein.
There is, however, no similar provision in respect of the sittings to be held by Magistrates.
The Special judicial Magistrate Mr. Gehani having the power therefore to sit at any place within his local area as defined by the terms of his appointment, this Court cannot speculate as to what place Mr. Gehani will function in the exercise of his jurisdiction.
The question is one for his discretion.
It may be remembered that the petitioners had moved the High Court of Bombay asking for the transfer of the case from the Court of Mr. Gehani to any Magistrate functioning in the District of Ratnagiri, because of the alleged ground of inconvenience, and that application was rejected by the High Court.
It cannot be now urge by the petitioners that the trial at Bombay is inconvenient to them and may prejudice a fair trial.
It is true that under the Code of Criminal Procedure "every offence shall ordinarily be enquired into and tried by a Magistrate of the local area in whose jurisdiction it was committed" but the charge in this case against the accused is in respect of a conspiracy at Bombay, Deogad, Dabhol, janjira and other places to commit offences under the and the Foreign Exchange Regulation Act and also of commission in pursuance of the conspiracy of substantive offences under those Acts.
It is the prosecution case that importation of gold contrary to law took place in the area of Deogad port whereas the offenders conspired at different places including Bombay.
By designating a Special Magistrate who would have jurisdiction both over the place where the offenders are alleged to have conspired and the place where offences were 584 actually committed, the State has taken care to see that the trial of the case is held by a Magistrate who has territorial jurisdiction in both areas.
It is not suggested that the Notification was issued for any ulterior purpose.
The State has having regard to the special circumstances constituted a Special Magistrate, as it was entitled to, and the Notification does and even suggest the place where the Magistrate is to hold his sittings.
The ground of inconvenience in support of the plea of discrimination cannot therefore be sustained.
It is urged that against the order of conviction which may be passed by Mr. Gehani whole is invested with the powers of a Presidency Magistrate an appeal would lie only to the High Court whereas if the case were tried before a Magistrate of Ratnagiri District an appeal would lie to the Court of Session and a further revision application to the High Court.
This it was pointed out made a substantial difference of procedure between persons similarly situated.
It is true that if the complaint was filed in the Court of Magistrate having jurisdiction over Deogad alone, as it could lawfully be filed, an appeal would, against an order of conviction, lie to the Court of Session, Ratnagiri and an application in the exercise of revisional jurisdiction to the High Court from the order of the Court of Session.
But it is difficult to hold that this amounts to any discrimination.
Apart from the fact that the trial by a special Magistrate and an appeal directly to the High Court against the order of the Magistrate may be regarded normally as more advantageous to the accused persons, the distinction between Courts to which the appeal may lie arises out of the constitution of the Special Magistrate and not any special procedure evolved by the Notification.
On the allegation made in the complaint, the complainant could lawfully institute proceedings in the Court of a Presidency Magistrate at Bombay or of any competent Magistrate in the District of Ratnagiri.
585 Such Magistrates would by virtue of section 182 of the Code of Criminal Procedure entertain the complaint and appeals from orders of conviction recorded by them would lie to the High Court, or the Court of Session, according as the Magistrate, trying the case was a Presidency Magistrate, or a judicial Magistrate of the First Class.
The difference of the venue results from the nature of the jurisdiction exercised by the Magistrate trying the case, and not from any unequal dealing by the ' executive constituting the Courts of the Magistrates.
It is because Powers exercisable by a Presidency Magistrate are conferred upon the Special Magistrate, as they may lawfully be conferred, that the incidental right of appeal, which is prescribed, by the statute is exercisable in the High Court and not in the Court of Session.
We do not think that there is any discrimination practised by the Notification constituting a Special Magistrate for the trial of the case against the petitioners and others.
The petition therefore fails and is dismissed.
Petition dismissed.
| The petitioners challenged the validity of the orders issued by the State of Mysore under article 13(4) of the Constitution on July 10, 1961, and July 31, 1962.
The petitioners contended that they had applied for admission to the Pre Professional Class in Medicine in the Karnatak Medical College, Hubli and they would have secured admission to the said medical college but for the reservation directed to be made by the orders mentioned above.
They contended that the above mentioned orders were ultra vires.
They prayed for an appropriate writ or order restraining the respondents from giving effect to those orders and requiring them to deal with their applications for admission on merits.
Held, that the petitioners were entitled to an appropriate writ or order as claimed by them and the respondents were restrained from giving effect to the above mentioned orders.
M. R. Balaji vs State of Mysore [1963] Supp. 1 S.C.R. 439, followed.
The impugned orders we quashed only with reference to the additional reservation made in favour of the socially and 476 educationally backward classes and so the respondents were at liberty to give effect to the reservation made in favour of the ' Scheduled Castes and Scheduled Tribes, which was not challenged at all.
The said reservation continues to be operative.
|
iminal Appeal No. 42 of 1953.
Appeal by Special Leave from the Judgment and Order dated the 5th February, 1953, of the High Court of Judicature at Bombay in Criminal Appeal No. 1149 of 1952 arising out of the Judgment and Order dated the 22nd April, 1952, of the Court of the Presidency Magistrate 19th Court, Bombay, in Case No. 933/P of 1951.
B. M. Mistry, J. B. Dadachanji, Rajinder Narain and R. D. Chadda for the appellant.
M. C. Setalvad, Attorney General for India (R. Ganapathy Iyer and P. G. Gokhale, with him) for the respondent.
February 19, April 28, September 23, and September 24.
[The present Criminal Appeal (No. 42 of 1953) came up for hearing in the first instance before a Bench of Hon 'ble Judges composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.
who delivered the following Judgments dated 19th February, 1954].
BHAGWATI J. This is an appeal by special leave from a judgment of the High Court of Judicature at Bombay reversing the order of acquittal passed in favour of the appellant by the Court of the Presidency Court, Bombay, and convicting him of an offence under section 66(b) of the Bombay Prohibition Act, 1949, and sentencing him to one month 's ' rigorous imprisonment and a fine of Rs. 500.
The appellant, who was the Officiating Regional Transport Officer, Bombay Region, was on the 29th May, 195 1, at about 9.30 P.m., proceeding in his jeep car towards the Colaba Bus Stand when he knocked down three persons, Mrs. Savitribai Motwani, her husband and Miss Parvatibai Abhichandani.
The police arrested the appellant and took him to the police station.
From the police station he was taken to St. George 's Hospital in order to be examined by the doctor for alleged consumption of liquor.
The doctor found his breath smelling of alcohol.
He however found the conjunctiva were congested, the pupils were semi dilated and reacting to light.
The speech was coherent and he could behave himself and walk along a straight line.
The doctor was therefore of opinion that he did not seem to be under the influence of alcohol though he had taken alcohol in some form or the other.
The appellant was put up before the Presidency Magistrate for his trial under two offences, one under section 338 of the Indian Penal Code on three counts for causing grievous hurt to the three injured persons by doing a rash and negligent act, i.e., driving his motor car in a rash and negligent manner, and the other under section 66 (b) of the Bombay Prohibition Act.
The appellant cross examined the doctor and suggested that he had taken a medicinal preparation, B. G. Phos, and also stated in answer to the Magistrate on the 20th December, 1951, that he had not consumed any liquor but had taken medicinal preparation containing a small percentage of alcohol.
He also filed a written statement on the 13th March, 1952, setting out in detail the whole history of his case.
He stated there that owing to his ill health he had been recommended to take tonics, specially those containing vitamin B Complex and Phosphates and had regularly taken tonics, such as Wampole 's Phospho Lecitin, B. G. Phos, and Huxley 's Nerve Vigour.
He further stated that on the night in question he had at about 9 or 9.15 P.m.
after dinner 616 taken a dose of B. G. Phos and was proceeding in his jeep car for a drive via Cuffee Parade and Marine Drive when the accident took place.
He produced his driving licence and registration certificate and a copy of the agenda of the Regional Transport Authority 's meeting to be held next day and a carton of B. G. Phos on which it was stated that it contained 17 per cent alcohol according to its formula.
The learned Presidency Magistrate acquitted the appellant of both these offences.
In regard to the offence under section 66(b) of the Bombay Prohibition Act he observed that the evidence did not go to show conclusively that the appellant had consumed alcohol without a permit, that there were certain medicinal preparations which were allowed to be used by law and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit.
The respondent, the State of Bombay, took two appeals before the High Court against each of these two cases.
The High Court confirmed the acquittal in regard to the charge under section 338 of the Indian Penal Code but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act.
The High Court followed a decision of its own Division Bench in Rangarao Bala Mane vs State(1) where it had been held that "Once it is proved by the prosecution that a person has drunk or consumed liquor without a permit, it is for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he is permitted by law to take, e.g., medicated alcohol.
The prosecution is not to discharge the burden of the accused, and if in answer to a charge of drinking liquor without a permit the accused suggests that the liquor which was drunk by him was not liquor in a prohibited form or was alcohol in a medicated form, he must show it.
" The High Court observed that the Magistrate had misdirected himself on a point of law and it was therefore open to it to examine the evidence and come to its own conclusion whether the appellant had shown that he had (1) 617 taken B. G. Phos that night after dinner and that the alcoholic smell which was still found in his mouth as late as 11.30 P.m. when he was examined by the doctor" ' was the smell of the alcoholic con tents of B. G. Phos.
It came to the conclusion that the appellant had failed to prove the existence of circumstances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation and set aside the order of acquittal passed by the learned Presidency Magistrate in his favour convicting him of the offence and sentencing him as above.
It was contended on behalf of the appellant before us that the Bombay Prohibition Act, 1949, was impugned after the advent of the Constitution and this Court by its decision in The State of Bombay and Another vs
F.N.Balsara(1) inter alia declared the provisions of clause (b) of section 13 to be invalid so far as it affects the consumption or use of liquid medicinal and toilet preparations containing alcohol, that the effect of that declaration was to lift the consumption or use of liquid medicinal and toilet preparations containing alcohol from the prohibition enacted in section 13(b) and that section 66(b) was inoperative and unenforceable so far as such medicinal and toilet preparations containing alcohol were Concerned.
It was therefore incumbent on the prosecution, if a charge under section 66(b) was framed against an accused, to prove that the accused had consumed or used an intoxicant in contravention of the provisions of the Act, which provision so far as section 13(b) was concerned was to be read as prohibiting the consumption or use of liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, which were the only categories of validly prohibited liquor.
On this interpretation of the effect of the judgment in The State of Bombay and Another vs P. N. Balsara (supra) there was no question whatever of the applicability of section 105 or of section 106 of the (1) ; 618 Evidence Act as was sought to be done by the High Court.
It was further ' urged that even if an onus was cast on the accused to prove that he had consumed a liquid medicinal or toilet preparation containing alcohol that onus was lighter in burden than the onus on the prosecution and the moment the accused indicated his defence the onus again shifted on the prosecution to negative such defence.
It was urged on the other hand on behalf of the respondent that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) was to graft an exception or a proviso to section 13(b) and that the onus and the burden of proving the existence of circumstances bringing his case within the exception or proviso lay on the accused and the Court was to presume the absence of such circumstances.
(Vide section 105 of the Evidence Act).
It was further urged that the prosecution could not possibly prove that no form of liquid medicinal or toilet preparation containing alcohol was taken by the accused, that the fact of the consumption of such medicinal or toilet preparation containing alcohol was especially within the knowledge of the accused and that therefore the burden of proving such fact was upon him, and that once the prosecution had discharged the onus which lay upon it to prove that the accused had consumed liquor it would be for the accused to show that the liquor which was taken by him was a liquid medicinal or toilet preparation containing alcohol.
(Vide section 106 of the Evidence Act).
The relevant provisions of the Bombay Prohibition Act, 1949, may be here set out.
The Act was passed inter alia to amend and consolidate the law relating to the promotion and enforcement of and carrying into effect the policy of prohibition in the Province of Bombay.
Section 2(22) defined 'an "intoxicant" to mean any liquor. . . .
Section 2(24) defined "liquor" to include (a) spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol.
Chapter III enacted the prohibitions and section 13(b) provided: No person shall. . . . (b) consume or use 619 liquor Section 66(b) is the penal section and provided: "Whoever in contravention of the provisions of this Act, or of any rule, regulation or order made, or of any licence, permit, pass or authorisation issued, thereunder (b) consumes, uses, possesses or transports any intoxicant or hemp shall, on conviction, be punished.
" It may be noted that the Act as it stood before the amendment by Bombay Act XXVI of 1952 which came into operation on the 22nd October, 1952, enacted in section 103 the only presumption as to the commission of offences in certain cases which cases had nothing to do with the question before us.
This Court in The State of Bombay and Another vs F. N. Balsara (supra) held that the definition of liquor contained in section 2(24) was not ultra vires inasmuch as the word liquor as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication but also all liquids containing alcohol.
It however considered the restrictions imposed by sections 12 and 13 of, the Act on the possession, sale, use and consumption of liquor not reasonable restrictions on the fundamental right guaranteed by article 19(1) (b) of the Constitution to "acquire, hold and dispose of property" so far as medicinal and toilet preparations containing alcohol were concerned and declared the said sections invalid so far as they prohibited the possession, sale, use and consumption of these articles.
The sections were however not wholly declared void on this ground as the earlier categories mentioned in the definition of liquor, viz., spirits of wine, methylated spirits, wine, beer and toddy, were distinctly separable items which were easily severable from the last category, viz., all liquids containing alcohol, and the restrictions on the possession, sale, use and consumption of these earlier categories were not unreasonable restrictions.
It therefore declared section 13(b) invalid to the extent of the inconsistency, i.e., so far as it affected the 620 consumption or use of liquid medicinal and toilet preparations containing alcohol.
The question that falls to be determined is what was the effect of this declaration The effect of the declaration of a statute as un constitutional has been thus set out by Cooley on Constitutional Limitations, Vol.
I, page 382. "Where a Statute is adjudged to be unconstitutional, it is as if it had never been.
Rights cannot be built up under it; contracts which depend upon it for their consideration are void; it constitutes a protection to no one who has acted under it and no one can be punished for having refused obedience to it before the decision was made.
And what is true of an Act void in toto is true also as to any part of an Act which is found to be unconstitutional and which consequently has to be regarded as having never at any time been Possessed of any legal force. .
See also the dictum of Field J. in Norton vs Shelby County(1): "An unconstitutional Act is not law, it confers no rights, it imposes no duties, it affords no protection, it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.
" To the same effect are the passages from Rottschaefer on Constitutional Law, at page 34: "The legal status of a legislative provision in so far as its application involves violation of constitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results.
That theory implies that the legislative provision never had legal force as applied to cases within that class.
" Willoughby on Constitution of the United States, Second Edition, Vol. 1, page 10: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution.
It simply refuses to recognise it, and determines the rights of the (1) ; , 621 parties just as if such statute had no application.
The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute.
The opinion or reasons of the Court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal the statute.
The parties to that suit are concluded by the judgment, but no one else is bound.
A new litigant may bring a new suit, based on the very same statute, and the former decision can be relied on only as a precedent " "It simply refuses to recognise it and determines the rights of the parties just as if such statute had no application " And Willis on Constitutional Law, at page 89 " A judicial declaration of the unconstitutionality of a statute neither annuls nor repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is concerned.
The courts generally say that the effect of an unconstitutional statute is nothing.
It is as though it had never been passed The declaration was a judicial pronouncement and.
even though under article 141 of the Constitution the law declared by this Court is binding on all the Courts within the territory of India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act.
No exception or proviso was also grafted in terms on section 13(b).
The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforceable in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, today and all non medicinal and 80 622 non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under section 13(b) and the penal section 66(b).
The consumption or use of liquid medicinal or toilet preparations.
containing alcohol could not be validly prohibited and any person consuming or using such medicinal or toilet preparations containing alcohol could not be hauled up for having contravened the provisions of the Act.
No offence could be committed by the consumption of liquid medicinal or toilet preparations containing alcohol and the provision enacted in section 13(b) read in the light of the definitions of intoxicant and liquor contained in sections 2 (22) and 2(24) of the Act in so far as it prohibited the consumption or use of liquor including liquid medicinal or toilet preparations containing alcohol was rendered inoperative and unenforceable by the declaration to the extent of the inconsistency and liquid medicinal or toilet preparations containing alcohol were lifted out of the category of validly prohibited liquor.
Whatever may be the implications or the consequences of the unconstitutionality of section 13(b) to the extent of the inconsistency in other respects, here was the State enforcing the penal provisions of section 66(b) and encroaching upon the liberties of the subject.
Penal statutes should be strictly construed and the, State could only penals the consumption or use of validly prohibited liquor which only could constitute an offence under section 66(b).
The consumption or use of any intoxicant meaning any liquor in contravention of the provisions of this Act was to be punished and unless and until the prosecution proved that the accused had consumed or used liquor in contravention of the enforceable provi sions of the Act the accused could not be held guilty and punished under section 66(b).
The accused could be held guilty only if he had contravened the enforceable provisions of the Act and for the purpose of the present enquiry the only provision of the Act which he could be charged with having contravened was section 13(b), the prohibition contained in which was by reason of the declaration made by this Court enforceable only in regard to the consumption or use of Validly prohibited liquor, i.e., spirits of wine.
, methylated spirits, 623 wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
It was strenuously urged before us on behalf of the respondent that the declaration in effect, though not in terms, enacted an exception or proviso to section 13(b) and that therefore the onus lay upon the appellant to prove the existence of circumstances bringing his case within the exception or proviso.
(Vide section 105 of the Evidence Act.) It cannot be disputed that no exception or proviso was in terms enacted by this declaration.
It had the effect of rendering the prohibition of consumption or use of liquid medicinal and toilet preparations containing alcohol as having never at any time been possessed of any legal force and so not to be enforceable wherever any accused person was charged with having contravened the provisions of section 13(b) of the Act.
The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
When these several interpretations were possible in regard to the effect of the declaration on the provisions of section 13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception o r proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act? It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner.
(See also In re Kanakasabai Pillai(1) ).
It would be more in consonance with the principles of (1) A.I.R. 1940 Mad.
1. 624 criminal jurisprudence to interpret the effect of this declaration to be that the prohibition enacted in section 13(b) where it came to be enforced against any accused person after the declaration should be enforceable as regards the consumption or use of validly prohibited liquor, ?I.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, as above stated.
If this is the effect of the declaration made by this Court there is no room for holding that the only duty of the prosecution was to prove that the accused had taken liquor in some form or the other and that the burden lay on the accused to prove that be had taken a liquid medicinal or toilet preparation containing alcohol.
When an accused person is charged with having committed an offence it is for the prosecution to prove all the ingredients of the offence with which he has been charged and the ingredients of the offence under section 13(b) as stated above were that he had consumed or used liquor validly prohibited, i.e. spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
There was no presumption enacted in the Act as it stood which would throw the burden of proof on the accused to show that he had consumed or used liquid medicinal or toilet preparation containing alcohol.
There was no exception or proviso enacted either in terms or in effect in section 13(b) which attracted the operation of section 105 of the Evidence Act and cast upon the accused the burden of proving the existence of circumstances bringing his case within such exception or proviso.
The mere circumstance that the fact in regard to his consumption or use of liquid medicinal or toilet preparation containing alcohol was specially within the knowledge of the accused also could not shift the burden of proving the ingredients of the offence from the prosecution to the accused, because it is a cardinal principle of criminal jurisprudence as administered in this country that it is for the prosecution and prosecution alone to prove all the ingredients of the offence with which the 625 accused has been charged.
The accused is not bound to open his lips or to enter upon his defence unless and until the prosecution has discharged the burden which lies upon it and satisfactorily proved the guilt of the accused.
Section 106 of the Evidence Act cannot be construed to mean that the accused has by reason of the circumstance that the facts are especially within his own knowledge to prove that he has not committed the offence.
(See Attygalle vs The King(1), also In re Kanakasabai Pillai(2)).
It is for the prosecution to prove that he has committed the offence and that burden is not in any manner whatsoever displaced by section 106 of the Evidence Act.
The High Court in arriving at its decision in Rangarao Bala Mane vs State (supra) above referred to was impressed with the circumstance that the prosecution could not possibly prove that no form of medicated alcohol was taken by the accused, that there were evidently numerous forms of medicated alcohol and that it was impossible for the prosecution on the very face of things to exclude all those forms.
The difficulty was illustrated by the High Court in the manner following: "For instance, if the prosecution were to lead evidence to show that the accused had not taken medicated alcohol in the form of B. G. Phos, the accused would contend that he had taken it in some other form.
If the prosecution were to lead evidence that the accused had not taken it in the form of Winedex, the accused would say that he had taken it in the form of Waterbury 's Compound or Hall 's Wine.
These are only two instances to show how, it is impossible for the prosecution to exclude all forms of medicated alcohol.
" It therefore came to the conclusion that once the prosecution had discharged the onus which was upon it to prove that the accused person had consumed liquor, it would be for the accused to show that the liquor which was taken by him was liquor in the form of medicated alcohol, in other words, not prohibited liquor.
The difficulty thus envisaged by the High Court was, in my opinion, imaginary.
Where an accused (1) A.I.R. 1936 P.C. 169.
(2) A.I.R. 1940 Madras 1.
626 person is suspected of having committed the prohibition offence, it would be for the police to investigate the offence and while investigating the offence, it would be for the police to find out whether the accused has consumed liquor which falls within 'the enforceable prohibition enacted in section 13(b).
As there are a number of preparations which come within the category of liquid medicinal and toilet preparations consisting of or containing alcohol, there are a number of preparations which come within the category of non medicinal or non toilet liquid preparations consisting of or containing alcohol and it would be really for the police investigating the alleged offence to find out which out of the latter category of preparations the accused had consumed and bring him to book for the same.
The circumstance that the accused person was smelling of alcohol and that he had consumed liquor in some form or the other would not be an unequivocal circumstance pointing to the guilt of the accused.
The smell of alcohol could as well be the result of his having consumed medicinal or toilet preparations consisting of or containing alcohol as his having consumed validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
To hold the accused guilty under these circumstances would be to convict him merely because he was smelling of alcohol and depriving him of the benefit of doubt which an accused person is always entitled to in the event of the facts and circumstances being consistent either with his guilt or his innocence.
To adopt the reasoning which appealed to the High Court would further be tantamount to laying down that once an accused person was shown to have consumed liquor in some form or the other the presumption was that he had consumed validly prohibited liquor and the onus would be upon him to rebut that presumption by showing that lie had consumed medicinal or toilet preparation containing alcohol.
The difficulty in the way of the prosecution proving its case need not deflect the Court from arriving at a correct conclusion.
If these difficulties are genuinely 627 felt it would be for the Legislature to step in and amend the law.
It would not be the function of the Court to read something in the provisions of the law ' which is not there or to find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intentions of the Legislature might be.
If these difficulties were felt in the matter of enforcing the policy of prohibition by the State of Bombay the only remedy was to effect the necessary amendments when the Bombay Act XXVI of 1952 was enacted on the 22nd October, 1952, after this Court made the declara tion in The State of Bombay and Another vs F. N. Balsara (supra).
In my opinion it was not enough for the prosecution in the present case merely to prove that the appellant had taken alcohol in some form or the other.
The prosecution ought to have proved that the appellant had in contravention of the provisions of the Act med an intoxicant meaning any liquor which consumer regard to the declaration made by this Court having could only be validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations con sisting of or containing alcohol.
The evidence of the doctor only went to show that the appellant had consumed alcohol in some form or the other.
That was not enough and I have therefore come to the conclusion that the prosecution failed to prove that the appellant had committed the offence with which he was charged.
In view of the conclusion reached above it is un necessary to go into the interesting question which was canvassed before us at some length as to the burden of proof on the prosecution as well as the defence in a criminal trial having regard to the provisions of section 105 of the Evidence Act as also the applicability in India of the principles enunciated in Woolmington vs The Director of Public Prosecutions(1).
I would therefore allow the appeal, and quash the conviction and sentence passed upon the appellant by the High Court.
(1) ; , 628 JAGANNADHADAS J.
I have had the benefit of the judgments of both my learned brothers.
perusing But, with great regret, I feel unable to agree with the view taken by my learned brother Justice Bhagwati.
Two questions of law have been raised in this case, viz., (1) on whom does the burden of proof lie to make out that the "liquor" consumed by the appellant was or was not medicinal or toilet preparations though contain ing alcohol, and (2) what is the nature and quantum of proof required if the burden is upon the appellant.
The answer to question No. 1 depends upon the effect of the decision of this Court in The State, of Bombay and Another vs F. N. Balsara (supra) which, while holding that the definition of liquor in sub section (24) of section 2 of the Bombay Prohibition Act, 1949 (Act XXV of 1949) is valid, has declared that clause (b) of section 13 in so far as it affects the consumption or use of medicinal or toilet preparations containing alcohol, is invalid.
My learned brother Justice Bhagwati, while holding that the effect of the declaration was not to alter and amend section 13(b) of the Act, is of the opinion that in the light thereof the prohibition under section 13(b) is to be understood to relate (so far as is relevant for the present purpose) to consumption or use of "non medicinal or non toilet liquid preparation containing alcohol" and that, therefore, the burden lies on the prosecution to make out all the ingredients of the prohibition so understood with the negative thereof On the other hand, my learned brother Justice Venkatarama Ayyar is of the opinion that the effect of the decision in The State of Bombay and Another vs F. N. Balsara (Supra) is not to amend or alter section 13(b) but only to render it partly unenforceable, and hence to provide a defence to the accused, on the ground of unconstitutionality in so far as that section is sought to be applied to medicinal or toilet preparations containing alcohol and that, therefore, the burden of making out the facts required for this plea is on the accused.
I agree that no legislative function can be attributed to a judicial decision and that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not, 629 proprio vigore amend the Act.
The effect of a judicial declaration of the unconstitutionality of a statute has been stated at page 10 of Vol.
I of Willoughby on the Constitution of the United States, Second Edition, as follows: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution.
It simply refuses to recognize it, and determines the rights of the parties just as if such statute had no application.
The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute.
The opinion or reasons for the court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal. . . the statute.
The parties to that suit are concluded by the judgment, but no one else is bound.
A new litigant may bring a new suit, based on the very same statute, and the former decision. . can be relied on only as a precedent.
" This and other similar passages from other treatises relate, however, to cases where the entire legislation is unconstitutional from the very commencement of the Act, a situation which falls within the scope of article 13(2) of our Constitution.
They do not directly cover a situation which falls within article 13(1).
In the present case, though the decision in The State of Bombay and Another vs F. N. Balsara (Supra) does not by itself bring about a change in the Act, the declarations made therein are founded on article 13(1) and it is with the effect thereof we are concerned.
The question is what is the effect of article 13(1) on a pre existing valid statute, which in respect of a severable part there.
of violates fundamental rights.
Under article 13(1) such part is "void" from the date of the commencement of the Constitution, while the other part continues to be valid.
Two views of the result brought about by this voidness are possible, viz., (1) the said severable part becomes unenforceable, while it remains part of the Act, or (2) the said part goes out of the Act and the Act stands appropriately amended pro tanto.
The first is the view which appears to have been adopted 81 630 by my learned brother, Justice Venkatarama Ayyar, an the basis of certain American decisions.
I feel inclined to agree with it.
This aspect, however, was not fully presented by either side and was only suggested from the Bench in the course of arguments.
We have not had the benefit of all the relevant material being placed before us by the learned advocates on either side.
The second view was the basis of the arguments before us.
It is, therefore, necessary and desirable to deal with this case on that assumption.
The question, then, for consideration is what is the notional amendment which must be imported into the Act consistently with the decision in The State of Bombay and Another vs F. N. Balsara (supra).
The relevant portions thereof are as follows: (1) The definition of "liquor" in the Act to its full extent continues to be valid, (2) section 13(b) of the Act in so far as it relates to liquid toilet or medicinal preparations containing alcohol is invalid, and (3) this portion of the content of section 13(b) is severable.
The argument of the appellant 's learned counsel is that the essence of the valid prohibition under section 13(b) now is the consumption or use of liquor other than liquid medicinal or toilet preparations containing alcohol.
Ha urges, therefore, that section 13(b) must be taken to stand amended accordingly.
The argument, if I understood it a right, was that the word "liquor" stands amended as "prohibited liquor" or that it must be understood with this limited connotation.
I am unable to see how this can be done.
The definition of the word "liquor" with its inclusive content remaining intact and valid, that content has to be imported wholesale into the meaning of the word "liquor" in section 13(b) and it appears to me that it is not permissible to read it or understand it in a different sense.
So to read it or understand it would be to import a new definition of "prohibited liquor" into the Act and to make the consumption or use of "prohibited liquor", the offence.
What, however, the Balsara decision has done is not to authorise the importation of a new definition and the rewriting of section 13(b).
It keeps section 13(b) intact 631 but treats the consumption or use of liquid toilet or medicinal preparations containing alcohol as severable and takes such consumption or use out of the ambit of the section itself as the prohibition thereof is un constitutional.
This can be done and only done, in my opinion, by grafting an appropriate exception or proviso into section 13(b).
My learned brother, Justice Bhagwati, has in his, judgment suggested that, if it is a question of treating section 13(b) as amended,.
the amendment can be made in one of many modes and that there is no reason to choose between them and that it is not fair to an accused person to read it in a manner throwing the burden on him, when a more favourable mode is open.
The various modes of amendment are indicated in the following suggested reading of section 13(b).
"No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing 'A ' alcohol as are not or which are not or other than or save or except or provided they are not or but shall include liquid medicinal or toilet preparations containing alcohol, or all non medicinal and non toilet liquid 'B ' preparations consisting of or containing alcohol." (The underlinings and markings are mine).
Now, if the relevant portion of the section is recast in the manner above indicated, in any of the alternative modes in the portion marked 'A ' above, I have no doubt that every one of these modes is only an exception or a proviso which falls within the specific terms of section 105 of the Evidence Act, i.e., an exception or proviso "in the law defining the offence.
" If, on the other hand, the section is treated as amended by incorporating the portion marked 'B ' omitting the portion marked 'A ', it appears to me, with great respect, that it is to alter the very content of the word ' "liquor" in the section, for which I can find no legal justification.
What the decision in The State of Bombay 632 and Another vs F. N. Balsara (supra) authorises is, as I have already explained above, to keep the word "liquor" intact with its full content and sever from the provision taken as alcohol (not merely from the word "liquor") medicinal or toilet preparations.
I feel accordingly confirmed in the view that I have taken, viz., that this can only be done by engrafting an exception or a proviso.
As regards the other view suggested by my learned brother Justice Bhagwati, that without importing any alteration or amendment in the section itself, the same is to be understood as having reference to what maybe called "prohibited liquor", understanding that word with reference to the decision in The State of Bombay and Another vs F. N. Balsara (supra), here again, with great respect, I feel difficulty in imputing into a specific statutory provision a meaning different from what its plain words, in the light of the definition, indicate.
The decision in The State Of Bombay and Another vs F. N. Balsara (supra), if it does not bring about an amendment in the provision does not also provide any mere aid to interpretation.
The question is not done of insisting on a merely technical view of the matter.
I feel unable to impute to the decision in The State of Bombay and Another vs F. N. Balsara (supra), taken with article 13(1), the effect of rendering section 13(b) unworkable, which certainly was not intended.
In this view, therefore, (and on the basis put forward by learned counsel on both sides), the effect of article 13(1) on section 13(b) of the Act in the light of the decision in The State of Bombay and Another vs F. N. Balsara (supra) is that it stands amended pro tanto by means of an appropriate exception or proviso.
It follows that section 105 of the Evidence Act would in terms apply to such a situation.
Thus in either view of the effect ' of article 13(1) of the Constitution on section 13(b) of the Bombay Act in the light of the judgment in The State of Bombay and Another vs F. N. Balsara (supra) the opinion expressed by the learned Judges of the Bombay High Court that the burden of proof in a case like this lies on the accused is correct.
633 As regards the second question that has been raised namely as to the nature and quantum of the evidence required to discharge this burden of proof, considerable arguments have been advanced before us.
Our attention has been drawn to the existence of conflicting decisions in the High Courts on this topic.
On the one side there is the decision of the Full Bench of the Allahabad High Court in Prabhoo vs Emperor(1) and on the other, there is a later Special Bench decision of the Bombay High Court in Government of Bombay vs Sakur(2).
In my opinion it is unnecessary for us to resolve that conflict in this case, since, on either view, the finding of the appellate Court that the burden has not been discharged on the available material seems to me to be correct.
In particular it is to be noticed that the appellant put forward a specific defence in Paragraph 8 of the written statement filed by him into Court in answer to the charge.
In support of this defence he has given no proof of any circumstances, which must be within his knowledge, to render the defence reasonably probable even if be may not have been able to prove the same strictly to the hilt.
I am, therefore, of the opinion that the conviction of the appellant under section 66(b) of the Bombay Prohibition Act, 1949, is correct.
But in the circumstances, it is not necessary to send him back to jail.
I would, therefore, reduce the sentence of imprisonment to the period already undergone.
In the result, the appeal has to be dismissed subject to this modification.
VENKATARAMA AYYAR J.
I regret that I am unable to agree with the view taken by my learned brother, Bhagwati J.
The facts giving rise to this appeal have been stated in his Judgment which I have had the advantage of reading and it is unnecessary to restate them.
The point for decision shortly is whether in a prosecution under section 66(b) of the Bombay Prohibition Act, XXV of 1949, for contravention of section 13(b), the prosecution has to establish not merely that liquor had been taken in some form but that further what was taken was not a medicinal preparation.
The (1) I.L.R. 1941 All.
(2) 48 Bom.
L. R. 746; A.I.R. 1947 Bom.
634 learned Judges of the Bombay High Court held following an earlier decision of that Court in Rangrao Bala Mane vs State (supra) that once the prosecution had established that the accused had taken alcohol in some form it was for him to establish that he had taken a medicinal preparation, both on the ground that it was in the nature of an exception which it was for the party pleading it to establish under section 105 of the Evidence Act and that it was a matter specially within his knowledge and that therefore the burden of proving it lay on him under section 106 of the Evidence ' Act.
The appellant challenges the correctness of this deci sion and contends that it is opposed to the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra).
It will be convenient first to refer to the statutory provisions bearing on the question and ascertain what the position is thereunder, and then consider how it is affected by the decision of this Court in The State Of Bombay and Another vs F. N. Balsara (supra).
The relevant provisions of the Bombay Prohibition Act are sections 2(24), 13(b) and 66(b).
Section 2(24) defines "liquor" as including all liquids consisting of or containing alcohol.
Section 13(b) enacts that no person shall use or consume liquor and a contravention of this provision is made punishable under section 66(b).
As medicinal preparations containing alcohol are liquor as defined in section 2(24) the consumption thereof will be an offence punishable under the Act and it will be no answer to a prosecution for contravention of section 13(b) that what was consumed was a medicinal preparation and a question of the kind now presented to us therefore could not possibly arise under the Act prior to the Constitution.
I may next consider the effect of the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) on the legal position under the Act.
It was there held inter alia that section 13(b) in so far as it prohibited the consumption of medicinal preparations was an unreasonable restriction on the rights of an owner to hold and enjoy property and was therefore void as being repugnant to article 19 (1) (f) of the 635 Constitution.
The appellant contends that the effect of this declaration was to remove medicinal preparations from out of the purview of section 13(b); that ' that section should therefore be read as if it had been amended to the effect that no person shall use or consume liquor other than medicinal preparations or toilets; that in that view no question of the accused having to rely on an exception arose and no question of the burden being thrown on him under section 105; and that as the offence itself consisted in consuming a liquor which was not a medicinal preparation, the burden would lie on the prosecution to establish that what was consumed was a prohibited liquor.
On the other hand, the respondent contends that the definition of liquor in section 2(24) includes not only beverages but also medicinal preparations, that the extended definition would apply to section 13(b) as well, that the immunity of medicinal preparations containing alcohol from the operation of the section by reason of the decision in The, State of Bombay and Another vs F. N. Balsara (supra) must in consequence be treated as an exception to it and that the 'section should be read as containing a saving in favour of those preparations, in the nature of an exception or proviso, the burden of establishing which under section 105 of the Evidence Act would be on the accused.
I agree with the appellant that section 105 has no application.
We are not here concerned with any exception, general or special, under the Penal Code or any other law defining the offence.
The exception or proviso, if it may be so called, arises as a result of the decision of this Court and not under any statute and section 105 cannot therefore in terms apply.
At the same time it is difficult to see how the decision in The State of Bombay and Another vs F. N. Balsara (Supra) can be considered to effect an amendment of section 13(b) so as to exclude medicinal preparations from out of its ambit.
The rival contentions which have been presented to us on the effect of the decision in The State of Bombay and Another vs F. N. Balsara (supra) proceed both of them on the basis that ' section 13(b) has in some manner been amended by it; according to the appellant, the 636 section must be taken to have been amended by excluding medicinal preparations from the word " liquor" according to the respondent, by inserting an exception or proviso to the section in favour of such preparations.
That, however, is not the correct position.
Decisions of Court do not amend or add to a statute.
That is a purely legislative function.
They merely interpret the law and declare whether it is valid or not and the result of a declaration that it is not valid is that no effect could be given to it in a Court of law.
If therefore section 13(b) cannot be construed as itself amended or modified by reason of the decision in The State of Bombay and Another vs F. N. Balsara (supra), there is no reason to hold that medicinal preparations containing alcohol, which fell within its scope before, have gone out of it after that decision.
This argument therefore does not furnish any ground for throwing the burden on the prosecution under section 13( b) to establish not merely that what was consumed was liquor but that it was not a medicinal preparation.
The question of burden of proof must therefore be decided not on the basis of a suppositions amendment of the section or addition of an exception or proviso to it but on the language of the section as it stands and with reference to Well established principles of law.
Under that section it is an offence to use or consume liquor and that under the definition in section 2(24) includes medicinal preparations containing alcohol.
One of the points raised in The State of Bombay and Another vs F. N. Balsara (supra) was that the State Legislature which was competent to legislate on into xicating liquor could not under that head of legislation enact a law in respect of medicinal preparations containing alcohol because the words "intoxicating liquor" meant beverages and not medicines but this contention was negatived by this Court on the ground that the words "intoxicating liquor" had acquired an extended sense as including medicinal preparations containing alcohol and that the Legislature was competent while enacting a law with reference to intoxicating liquors to legislate on medicinal preparations 637 containing alcohol.
The definition of "liquor" in section 2(24) in its extended sense having thus been held to be valid, it follows that unless there is something in the particular provision to the contrary, the word "liquor" must wherever it occurs in the statute include medicinal preparations and that is the meaning which it must bear in section 13(b).
In The State of Bombay and Another vs F. N. Balsara (supra), it is on the footing that medicinal preparations are included in section 13 that the entire discussion on its validity with reference to article 19(1) (f) proceeds.
We therefore start with this that under section 13(b), the Legislature has made it an offence to take alcohol in any form, whether as beverages or as medicinal preparations.
That being the position and it having been decided that the section in so far as it relates to medicinal preparations is void as repugnant to article 19(1) (f), the question as to who should prove whether what was consumed was alcohol or medicinal preparation containing alcohol appears to me to admit of a simple answer.
There is a strong presumption in favour of the constitutionality of a statute and it is for those who assail it as unconstitutional to establish it.
The contention of the appellant is, when analyzed, that section 13(b) is bad in so far as it hits medicinal preparations containing alcohol as it contravenes article 19(1) (f) of the Constitution, and the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) is relied on as supporting it.
But before the appellant can bring himself within that decision, he must establish that what he consumed was a medicinal preparation.
The plea of unconstitutionality is not established unless all the elements necessary to sustain such a plea are established ; and as observed by this Court in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(1), "the burden of making out facts requisite for the constitutional invalidity of the convictions" is on the appellant.
He has therefore to make out as a fact that what he consumed was a medicinal preparation and as a matter of law, that section 13(b) is bad in so far as it prohibits it.
The decision of this Court concludes the (1) ; ,1202.
82 638 question in his favour so 'far as the second point is concerned.
But the burden of establishing the first point, that in fact what he consumed was a medicinal preparation, still remains on him.
It was argued for the appellant that this Court had declared that section 13(b) was void under article 13(1) of the Constitution in so far as it related to medicinal preparations; that that meant that it was to that extent a nullity and that it should in consequence be read as if it did not include medicinal preparations.
The question is, what is the legal effect of a statute being declared unconstitutional.
The answer to it depends on two considerations, firstly, does the constitutional prohibition which has been infringed affect the competence of the Legislature to enact the law or does it merely operate as a check on the exercise of a power which is within its competence; and secondly, if it is merely a check, whether it is enacted for the benefit of individuals or whether it is imposed for the benefit of the general public on grounds of public policy.
If the statute is beyond the competence of the Legislature, as for example, when a State enacts a law which is within the exclusive competence of the Union, it would be a nullity.
That would also be the position when a limitation is imposed on the legislative power in the interests of the public, as, for instance, the provisions in Chapter XIII of the Constitution relating to inter State trade and commerce.
But when the law is within the com petence of the Legislature and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity but is merely unenforceable.
Such an unconstitutionality can be waived and in that case the law becomes enforceable.
In America this principle is well setted.
(Vide Cooley on Constitutional Limitations, Volume 1, pages 368 to 371; Willis on Constitutional Law, at pages 524, 531, 542 and 558; Rottschaefer on Constitutional Law, at pages 28 and 29 30).
In Shepard vs Barron(1), it was observed that "provisions of a constitutional nature, intended for the protection of the property owner, may be waived by him.
" In Pierce vs Somerset Railway(2), (1) ; ; (2) I71 U.S. 64I ; ; 639 the position was thus stated: "A person may by his acts or omission to act waive a right which he might otherwise have under the Constitution of the United States, as well as under a statute." In Pierce Oil Corporation vs Phoenix Refining Co.(1), where a statute was impugned on the ground that it imposed unreasonable restrictions on the rights of a corporation to carry on business and thereby violated the rights guaranteed under the Fourteenth Amendment, the Court observed "There is nothing in the nature of such a constitutional right as is here asserted to prevent its being waived or the right to claim it barred, as other rights may be, by deliberate election or by conduct inconsistent with the assertion of such a right." The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals.
The rights guaranteed under article 19(1) (f) are enacted for the benefit of owners of properties and when a law is found to infringe that provision, it is open to.
any person whose rights have been infringed to waive it and when there is waiver there is no legal impediment to the enforcement of the law.
It would be otherwise if the statute was a nullity; in which case it can neither be waived nor enforced.
If then the law is merely unenforceable and can take effect when waived it cannot be treated as non est and as effaced out of the statute book.
It is scarcely necessary to add that the question of waiver is relevant to the present controversy not as bearing on any issue of fact arising for determination in this case but as showing the nature of the right declared under article 19(1) (f) and the effect in law of a statute contravening it.
Another point of distinction noticed by American jurists between unconstitutionality arising by reason of lack of legislative competence and that arising by reason of a check imposed on a competent Legislature may also be mentioned.
While a statute passed by a Legislature which had no competence cannot acquire validity when the Legislature subsequently acquires competence, a statute which was within the competence of the Legislature at the time of its enactment but (1) 259 U S 125; ; 640 which infringes a constitutional prohibition could be enforced proprio vigore when once the prohibition is removed.
The law is thus stated in Willoughby on the Constitution of the United States, Volume 1, at page 11: "The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature,, and, if thus tested it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted.
However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or, by reason of its silence, is to be construed as indicating that there should be no regulation, the act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed.
" The authority cited in support of this observation is the decision in Wilkerson vs Rahrer(1).
There the State of Kansas enacted a law in 1889 forbidding the sale of intoxicating liquors in the state.
Though it was valid with reference to intra state sales, it was unconstitutional in so far as it related to inter State sales.
In 1890 the Congress passed a legislation conferring authority on the States to enact prohibition laws with reference to inter State trade.
A prosecution having been instituted under the 1889 Act in respect of sales effected after the Congress legislation of 1890, one of the contentions urged was that as the State law was unconstitutional when it was enacted it was void and it could not be enforced even though the bar had been removed by the Congress legislation of 1890.
In repelling this contention the Court observed: " This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for (1) ; ; 35 L. Ed.572.
641 the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress.
That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the State law was required before it could have the effect upon imported which it had always had upon domestic property.
" The position is thus stated by Cooley in his work on Constitutional Law, at page 201 : " A court 's decision merely decides the case that is then under adjudication, and a finding of unconstitu tionality does not destroy the statute but.
merely involves a refusal to enforce it.
" Rottschaefer, after referring to the conflict of authorities on the point in the States refers to the decision in Wilkerson V. Rahrer(1), as embodying the better view.
This question again, it may be noted, does not arise as such for determination in this case and is material only as showing that an infringement of a constitutional ' prohibition which does not affect the competence of a Legislature but is merely a check on its exercise does not render the law a nullity.
In view of the principles discussed above, the use of the word "void" in article 13(1) is not decisive on the question as to the precise effect of a law being repugnant to article 19(1) (f).
Reference may be made in this connection to the statement of the law in Corpus Juris, Volume 67, page 263 et seq., to which counsel for the respondent invited our attention.
It is there pointed out that the word "void" in statutes and decisions might mean either that is "absolutely void" or "relatively void" ; that "that is 'absolutely void which the law or the nature of things forbids to be enforced at all, and that is relatively void ' which the law condemns as a wrong to individuals and refuses to enforce as against them"; that what is absolutely void is incapable of confirmation and ratification; and that what is relatively void could be waived.
The true scope of article 13(1) was considered by this Court in Kesavan Madhava Menon vs State Of (I) ; ; 642 Bombay(1).
There the point for determination was whether the Constitution was retrospective in its operation.
In the course of his judgment Das J. observed: "It should further be seen that article 13(1) does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes.
On the contrary, it provides that all existing laws, in so far as they are inconsistent with the fundamental rights, shall be void to the extent of their inconsistency.
They are not void for all purposes but they are void only to the extent they come into conflict with the fundamental rights. . .
Article 13(1) cannot be read as obliterating the entire operation of the inconsistent laws, or to wipe them out altogether from the statute book. . . .
The effect of article 13(1) is quite different from the effect of the expiry of a temporary statute or the repeal of a statute by a subsequent statute.
As already explained, article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise of fundamental rights on and after the date of commencement of the Constitution.
" It is true that the question which the Court was considering there was different from the one which we have now to decide in this appeal.
But those observations embody a principle which is applicable to the present case as well.
In effect, "void" in article 13(1) was construed as meaning, in the language of American jurists, "relatively void.
Therefore both on the ground that a judicial determination does not operate as an amendment of the statute and, on the ground that a declaration that the impugned law is void under article 13(1) as repugnant to article 19(1) (f) merely renders it unenforceable, I am of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) cannot be held to remove medicinal preparations from out of the purview of section 13(b).
I therefore agree with the learned Judges (1) ; 643 of the Bombay High Court, though not for the reasons given by them, that the burden of establishing that.
what was consumed was a medicinal preparation lies on the appellant.
It was next contended that even if the burden lay on the appellant,to prove that he had taken a medicinal preparation, he must be held on the evidence to have discharged it because the doctor who examined him at 11 30 P.m., on the day of the occurrence stated in his evidence that he was coherent in his speech and could walk along a straight line, that the smelling of alcohol could be caused by oxidation and that the condition of the conjunctive in the eyes could result from street dust.
It was argued that if the prosecution evidence did not exclude the possibility of the defence being true, then notwithstanding section 105 of the Evidence Act the burden which lay on the posecution of establishing the offence had not been discharged and reliance was placed on the decision in Woolmington vs Director of Public Prosecutions(1), and on Indian authorities wherein it was followed: Emperor vs U.Damapala(2); Parbhoo vs Emperor(1).
In opposition to these authorities counsel for the respondent relied on the decision in Government of Bombay vs Sakur(4).
The question is whether if the burden lay upon the appellant the conclusion of the learned Judges that it had not been discharged is on the evidence a reasonable one.
If it is, this Court cannot interfere with it in an appeal under article 136.
It must be noted that the appellant himself led no evidence in support of the plea.
If at least the evidence which the prosecution adduced disclosed facts which would lend support to the defence, it might then have been open to the appellant to rely on them without himself having to adduce independent evidence but none such were elicited.
The learned Judges in the Court below have approached the case from the correct standpoint and have discussed the entire evidence with a view to find whether on that the (1) ; (2) I.L.R. 14 Rang.
(3) I.L.R. 194i All.
(4) A.I.R. 1947 Bom.
38; 48 Bom.
L.R. 616.
644 defence was reasonably probable.
They held that the giving of coherent answers or walking in a straight line would only show that the appellant was not drunk at that time but would not show that he had not consumed liquor.
They also remarked that the appellant could have informed both the sub inspector and the doctor who examined him that he had taken medicine in which case the police might have been in a position to find out whether there was a medicine bottle at his residence at that time.
If the learned Judges were right in their view that the burden lay on the appellant, their finding that it had not been discharged is not one which is open to attack.
It was also contended that the trial magistrate having acquitted the appellant, the presumption of innocence which the law raises in favour of the accused became reinforced and that there were no compelling reasons for the appellate Court to have reversed the order of acquittal.
But the judgment of the trial Court was based on the view that the burden was on the prosecution to establish that the accused had not taken a medicinal preparation and when the learned Judges differed from that view, they had to review the evidence afresh and decide whether the appellant had discharged the burden and their finding on the question is not vitiated by any misdirection.
In the result the conviction of the appellant under section 66(b) of the Bombay Prohibition Act must be confirmed.
As regards the sentence of one month 's imprisonment passed on him, it appears that he has already served 22 days out of it.
The justice of the case does not require that he should be again sent to jail.
I would, therefore, reduce the sentence of imprisonment to the period already undergone.
Subject to this modification, I am of the opinion that this appeal should be dismissed.
By THE Court Having regard to the judgments of the majority, the appeal will be dismissed subject to the modification that the sentence imposed upon the appellant will be reduced to that already undergone.
Bail bond will be cancelled.
Appeal dismissed and sentence reduced.
645 [There was an application for review of the aforesaid Judgments under article 137 of the Constitution and the Hon 'ble Judges of the original Bench (Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.) passed the following order dated 28th April, 1954, referring the case for the opinion of the Constitution Bench.] The Order of the Court was pronounced by BHAGWATI J.
We grant the review and reopen the case to enable us to obtain the opinion of a larger Bench on the constitutional question raised in the judgments previously delivered by us.
Under proviso to article 145 of the Constitution, we refer the following question for the opinion of the Constitution Bench of the Court.
"What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1) (f) of the Constitution?" On receipt of the opinion the case will be taken up for further consideration.
[In pursuance of the above reference under the proviso to article 145(3) of the Constitution their Lordships of the Constitution Bench (Mehr Chand Mahajan C. J., Mukherjea, section R. Das, Vivian Bose and Ghulam Hasan JJ.) gave the following Opinion dated 23rd September, 1954.] MEHR CHAND MAHAJAN C.J. (Mukherjea, Vivian Bose and Ghulam Hasan JJ.
concurring) A Bench of this Court hearing an appeal under the provisions of Chapter IV of the Constitution has referred, under article 145(3) of the Constitution, for the opinion of the Constitution Bench the following point: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid (1) 83 646 medicinal or toilet preparations containing alcohol, on ,the ground that it infringes article 19(1) (f) of the Constitution?" The facts giving rise to the reference are these: Shri Pesikaka, the appellant in the case, was at the relevant period, officiating Regional Transport Officer, Bombay Region.
On the 29th May, 1951, at about 9 30 P.m., while proceeding in his jeep towards Colaba Bus Stand, he knocked down three persons.
He was arrested by the police and taken to the police station and then to St. George 's Hospital.
The doctor, found his breath smelling of alcohol, conjunctiva congested, pupils semi dilated and reacting to light, and speech coherent.
He could behave himself and walk along a straight line.
In the opinion of the doctor the appellant did not seem to be under the influence of alcohol, though he had taken alcohol in some form or other.
On these facts.
the appellant was prosecuted for having committed offences under section 338, Indian Penal Code (rash driving), as well as under section 66(b) of the Bombay Prohibition Act.
In defence it was suggested that he had taken a medicinal preparation, B.G. Phos, and had not consumed any liquor, and that on the night in q question he had taken at about 9 or 9 15 p.m. after dinner a dose of B. G. Phos which contained 17 per cent.
of alcohol according to its formula.
The learned Presidency Magistrate acquitted the appellant on the finding that the prosecution had failed to establish his guilt under either of the sections under which he was charged.
With regard.
to the offence under section 66(b) of the Bombay Prohibition Act, it was observed that there were certain medicinal preparations which were allowed to be used by law, and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit.
The State of Bombay appealed against the acquittal order to the High Court.
The High Court confirmed the acquittal in regard to the charge under section 338, Indian Penal Code, but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act followed a decision of its own ' Division 647 Bench in Rangrao Bala Mane vs The State (supra) where it had been held that once it was proved by the prosecution that a person had drunk or consumed liquor without a permit, it was for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he was permitted by law to take, e.g., medicated alcohol.
On this view of the law, on the merits of the case it was held that the appellant had failed to prove the existence of circum stances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation.
In the result the appellant was sentenced to one month 's rigorous imprisonment and a fine.
of Rs. 500.
Against this order an appeal was admitted in this Court by special leave and was heard by a Bench of the Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.
on the 19th February, 1954.
The learned Judges could not reach an una nimous decision and expressed different and divergent opinions.
Bhagwati J. wanted to allow the appeal and quash the conviction.
He was of the opinion that the onus rested on the prosecution to prove that the liquor consumed by the appellant was prohibited liquor under section 13(b) of the Act and that the prosecution had failed to prove this.
This, in the opinion of the learned Judge, was the consequence of the declaration of unconstitutionality of a portion of section 13(b) by this Court in The State of Bombay and Another vs F. N. Balsara (supra).
Venkatarama Ayyar dissented from this view.
He was of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) could not be held to have the effect of taking out medicinal preparations from the purview of section 13(b) and that its effect was merely to render that part of the section unenforceable and that the onus rested on the accused to establish the plea of unconstitutionality, and it could not be held established unless all the elements necessary to sustain such a plea were proved and the accused had therefore to make out as a fact that what he had 648 consumed was a medicinal 'preparation.
On the merits of the case it was held that the accused had failed to discharge the burden that rested on him.
In the result the conviction of the appellant by the High Court was upheld.
Jagannadhadas J. agreed in the result reached by Venkatarama Ayyar J. but on different grounds.
lie was of the opinion that the only way to give full effect to the judgment in The, State Bombay and Another vs F. N. Balsara (supra) was to engraft an appropriate exception or proviso upon section 13(b) in the light of that decision.
He considered that The State of Bombay and Another vs F., N. Balsara (supra) did not import a new definition or re write section 13(b).
It kept the section intact but treated the consumption of liquid or medicinal preparations containing alcohol as beyond its ambit and thus engrafted an exception or proviso on to section 13(b).
On this view of the effect of Balsara 's decision it was held that the onus rested on the accused to establish that his case fell within the exception and he had failed to discharge that onus.
In accordance with the opinion of the majority the conviction of the appellant, under section 66(b) of the Bombay Prohibition Act was confirmed and the appeal was dismissed but the sentence was reduced to that already undergone.
On a petition for review being presented, the learned Judges granted the review on the 26th April, 1954, and reopened the case, to enable them to obtain the opinion of the Constitution Bench of this Court on the constitutional question formulated and mentioned above.
For a proper appreciation of the question referred to us, it is necessary to set out what this Court decided In The State of Bombay and Another vs F. N. Balsara (supra).
In that case the constitutional validity of the Bombay Prohibition Act (XXV of 1949) was challenged on different grounds.
This attack substantially failed and the Act was maintained as it was passed, with the exception of 'a few provisions that were declared invalid.
Inter alia, clause (b) of section 13 so far as it affected the consumption or use of such medicinal and toilet preparations containing alcohol was held invalid.
640 Section 2(24) of the Act defined a "liquor" to include spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol.
Section 13(b) prohibits the use or consumption of liquor without a permit.
Section 66(b) which is the penal section provides that "whoever in contravention of the provisions of this Act consumes, uses any intoxicant shall, on conviction, be punished.
" The appellant was charged under section 66(b) of the Act for having used or consumed liquor the use of which was prohibited by section 13(b).
In The State of Bombay and Another vs F. N. Balsara (supra), the part of the section that brought all liquids containing alcohol within its ambit was declared invalid and the section therefore, though it stood intact as enacted in respect of prohibited liquor up to the date of the coming into force of the Constitution and qua non citizens subsequently, a part of it was declared invalid, and so far as it concerned citizens, qua them that part of the section ceased to have legal effect.
The problem now raised is; what is the effect of this partial declaration of the invalidity of section 13(b) on the case of a citizen prosecuted under section 66(b) for committing a breach of the provisions of the section after the coming into force of the Constitution.
Our opinion on this question is that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), that clause (b) of section 13 of the Bombay Prohibition Act is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, is to render part of section 13(b) of the Bombay Prohibition Act, inoperative, ineffective and ineffectual and thus unenforceable.
The part of the section which has been declared void has no legal force so far as citizens are concerned and it cannot be recognized as valid law for determining the rights of citizens.
In other words, the ambit of the section stands narrowed down so far as its enforceability against citizens is concerned and no notice can be taken of the part of the section struck down in a prosecution for contravention of the provisions of that section, with 650 the consequence that in prosecutions against citizens of India under section 13(b), the offence of contravention of the section can only be proved if it is established that they have used or consumed liquor or an intoxicant which is prohibited by that part of the section which has been declared valid and enforceable and without reference to its unenforceable part.
No notice at all should be taken of that other part as it has no relevance in such an enquiry, having no legal effect.
In a criminal case unless the prosecution proves a contravention of a provision that is legally enforceable and valid, it cannot succeed.
No onus is cast on the accused to prove that his case falls under that part of the section which has been held unenforceable.
The High Court was in error in placing the onus on the accused to prove that he had consumed alcohol that could be consumed without a permit merely on proof that he was smelling of alcohol.
In our judgment, that was not the correct approach to the question.
The bare circumstance that a citizen accused of an offence under section 66(b) is smelling of alcohol is compatible both with his innocence as well as his guilt.
It is a neutral circumstance.
The smell of alcohol may be due to the fact that the accused had contravened the enforceable part of section 13(b) of the Prohibition Act.
It may well be due also to the tact that he had taken alcohol which fell under the unenforceable and inoperative part of the section.
That being so, it is the duty of the prosecution to prove that the alcohol of which he was smelling was such that it came within the category of prohibited alcohols and the onus was not discharged or shifted by merely proving a smell of alcohol.
The onus thus cast on the prosecution may be light or heavy according to the circumstances of each case.
The intensity of the smell itself may be such that it may negative its being of a permissible variety.
Export evidence may prove that consumption in small doses of medicinal or other preparations permitted cannot produce the smell or a state of body or mind amounting to drunkenness.
Be that as it may, the question is one of fact to be decided according to the circumstance of each case.
It is open to the accused to prove in defence that what he 651 consumed was not prohibited alcohol, but failure of the defence to prove it cannot lead to his conviction unless it is established to the satisfaction of the Judge by the prosecution that the case comes within the enforceable part of section 13(b), contravention of which alone is made an offence under the provisions of section 66 of the Bombay Prohibition Act.
Our reasons for this opinion are these.
The meaning to be given to the expression "void" in article 13(1) is no longer res integra.
It stands concluded by the majority decision in Kesava Madhava Menon vs The State of Bombay(,).
The minority view there was that the word "void" had the same meaning as " repeal" and therefore a statute which came into clash with fundamental rights stood obliterated from the statute book altogether, and that such a statute was void ab initio.
The majority however held that the word "void" in article 13(1), so far as existing laws were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion, article 13 had not been given any retrospective effect.
The majority however held that after the coming into force of the Constitution the effect of article 13(1) on such repug nant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect.
It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America.
The result therefore of this pronouncement is that the part of the section of an existing law which is un constitutional is not law, and is null and void.
For determining the rights and obligations of citizens the part declared void should be notionally taken to be (I) (1951] S.C.R, 228. 652 obliterated.
from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution.
Thus, in this situation, there is no scope for introducing terms like "relatively void" coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are not quite familiar in this country.
We are also not able to endorse the opinion expressed by our learned brother, Venkatarama Ayyar, that a declaration of unconstitutionality brought about by lack of legislative power stands on a different footing from a declaration of unconstitutionality brought about by reason of abridgement of fundamental rights.
We think that it is not a correct proposition that constitutional provisions in Part III of our Constitution merely operate as a check on the exercise of legislative power.
It is axiomatic that when the lawmaking power of a State is restricted by a written fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity.
Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them.
They represent but two aspects of want of legislative power.
The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution.
A mere reference to the provisions of article 13(2) and articles 245 and 246 is sufficient to indicate that there is no competency in Parliament or a State Legislature to make a law which comes info clash with Part III of the Constitution after the coming into force of the Constitution.
Article 13(2) is in these terms : "The State shall not make any law which takes away or abridges; the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.
" 653 This is a clear and unequivocal mandate of the funda mental law prohibiting the State from making any laws which come into conflict with Part III of the Constitution.
The authority thus conferred by articles 245 and 246 to make laws subject wise in the different Legislatures is qualified by the declaration made in article 13(2).
That power can only be exercised subject to the prohibition contained in article 13(2).
On the construction of article 13(2) there was no divergence of opinion between the majority and the minority in Kesava Madhava Menon vs The State of Bombay (supra).
It was only on the construction of article 13(1) that the difference arose because it was felt that that article could not retrospectively invalidate laws which when made were constitutional according to the Constitution then in force.
Again, we are not able to subscribe to the view that in a criminal prosecution it is open to an accused person to waive his constitutional right and get convicted.
A reference.
to Cooley 's Constitutional Limitations, Vol.
I, p. 371, makes the proposition clear.
Therein the learned professor says that a party may consent to waive rights of property, but the trial and punishment for public offences are not within the province of individual consent or agreement.
In our opinion, the doctrine of waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter.
No inference in deciding the case should have been raised on the basis of such a theory.
The learned Attorney General when questioned about the doctrine did not seem to be very enthusiastic about it.
Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution.
We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; 84 654 liberty of thought, expression, belief, faith and worship; equality of status and of opportunity.
These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights.
They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy.
Reference to some of the articles, inter alia, articles 15(1), 20, 21 makes the proposition quite plain.
A citizen cannot get discrimination by telling the State "You can discriminate", or get convicted by waiving the protection given under articles 20 and 21.
The learned Attorney General contended that the correct approach to the question was that there being a strong Presumption in favour of the constitutionality, of a statute, it is for those who assail it as unconstitutional to establish it, and therefore it was for the appellant to establish that the statute was.
unconstitutional, and that unless he proved facts requisite for the constitutional invalidity of the conviction he could not succeed.
We cannot agree that that is a correct way of judging criminal cases.
The constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens and had to be regarded as null and void in determining whether a citizen was guilty of an offence.
Article 141 of the Constitution declares that the law declared by the Supreme Court shall be binding on all Courts within the territory of India.
In view of this clear enactment there is no scope in India for the application of the American doctrine enunciated by Willoughby ("The Constitution of the United States" Vol.
I, P. 10), wherein the learned author states, "the declaration by a court of unconstitutionality of a statute which is in conflict with the Constitution affects the parties only and there is no judgment against the statute; that the opinion or reasons of the court may operate as a precedent for the determination of other similar cases, but it does 655 not strike the statute from the statute book; the parties to that suit are concluded by the judgment, but no one else is bound; a new litigant may bring a new suit, based on the very same statute, and the former decision cannot be pleaded as an estoppel, but can be relied on only as a precedent.
" Once a statute is declared void under article 13(1) or 13(2) by this Court, that declaration has the force of law, and the statute so declared void is no longer law qua persons whose fundamental rights are thus infringed.
In America there is no similar statutory provision and that being so, the doctrine enunciated by the learned author can have no application here.
In this country once a law has been struck down as unconstitutional law by a Court, no notice can be taken of that law by any Court, and in every case an accused person need not start proving that the law is unconstitutional.
The Court is not empowered to look at that part of the law which has been declared as void, and therefore there is no onus resting on the accused person to prove that the law that has already been declared unconstitutional is unconstitutional in that particular case as well.
The Court has to take notice only of what the law of the land is, and convict the accused only if he contravenes the law of the land.
Our learned brother, Jagannadhadas J., took the view that the only appropriate way of giving effect to the judgment in The State of Bombay and Another vs F. N. Balsara (supra) was by engrafting an exception or proviso to section 13(b) in the light of that decision and that the onus of proving the exception was on the accused person.
This, in our judgment, is again not a true approach to the question.
As pointed out by the learned Judge himself, the Court has no power to re write the section.
It has to be kept intact.
The Court therefore has no power to engraft an exception or a proviso on section 13(b) of the Bombay Prohibition Act.
Apart from this circumstance it seems plain that unless there is a power to make a law inconsistent with the provisions of Part III of the Constitution, there can be no power to engraft an exception of the nature suggested by our brother.
An exception or proviso 656 can only be engrafted for the purpose of excluding from the substantive part of the section certain matters which but for the proviso would be within it.
But when there is no power to enact at all what is proposed to be embodied in the exception, there is no power to enact an exception by enacting a law which the Legislature is not competent to make.
The State has no power to make a law abridging fundamental rights and therefore there is no power to engraft an exception by taking something out of a law which cannot be enacted.
It is therefore difficult to treat what was declared void in The State of Bombay and Another vs F. N. Balsara (supra) as an exception to section 13(b) of the Bombay Prohibition Act and apply the rule enunciated in sec tion 105 of the Evidence Act to the case of the appellant.
The only correct approach to the subject is to ignore the part of the section declared void by this Court in The State of Bombay and Another vs F. N. Balsara (supra) and see if the prosecution has succeeded in bringing the offence home to the accused on the part of the section that remains good law.
With the observations made above the opinion in this case is returned to the Bench which originally heard the appeal.
DAS J. I respectfully beg to differ from the opinion of the majority of this Court just delivered by my Lord the Chief Justice.
It is, therefore, incumbent on me to formulate my answer to the question referred to this Constitution Bench and state shortly the reasons in support thereof.
It is necessary at the outset to refer to the relevant statutory provisions bearing on the question.
The appellant before us was prosecuted on a charge under section 13 read with section 66(b) of the Bombay Prohibition Act, 1949 (Act XXV of 1949).
The relevant part of section 66(b) of the Act which is the penal section reads as follows: "66.
Whoever in contravention of the provisions of this Act (a). . . . . (b)consumes, uses, possesses or transports any intoxicant or hemp, 657 (c). . . . . . . (d). . . . . . . shall, on conviction, be punished. . . " By section 2 (22) "intoxicant" is defined as meaning "any liquor, intoxicating drug, opium or a any Other substance which the State Government may, by notification in the Official Gazette, declare to be an intoxicant.
" Read in the light of this definition consumption, use, etc., of "liquor" is within the mischief of this section.
Further, it will be noticed that what is made punishable is not consumption, use, etc.
of liquor simpliciter but consumption, use, etc., of liquor "in contravention of the provisions of this Act.
" The prosecution, as the charge shows, relied on section 13 as being the provision of the Act in contravention of which the consumption, use, etc., was alleged to have been made by the appellant who was the accused person.
That section is to be found in Chapter III beaded "Prohibitions".
So far as it is material for our purpose, it runs thus: "13.
No person shall (b) consume or use liquor; or (c) By section 2 (24) "liquor" is defined as including "(a) spirits of wine; denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol; and (b) any other intoxicating substance which the State Government may, by notification in the Official Gazette, declare to be liquor for the purposes of this Act.
" Therefore the prohibition of section 13(b)extends to the consumption or use of each and everyone of the above enumerated items which are included in the definition of "liquor".
It follows that whoever consumes or uses any of these enumerated substances contravenes the provisions of section 13(b) and consumption or use of any of these substances in contravention of this provision is an offence punishable under section 66(b).
658 The Bombay Prohibition Act containing the above ,provisions came into force on the 20th May, 1949.
It is conceded on all hands that it was a perfectly valid piece of legislation enacted well within its legislative competency by the then Bombay Legislative Assembly.
Then came the Constitution of India on the 26th January, 1950.
Article 19(1)(f) gives to all citizens the fundamental right to acquire, hold and dispose of property.
By sub article(5) however,it is provided that nothing in clause(f) shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of the right conferred by sub clause (f) either in the interests of the general public or for the protection of the interests of any Scheduled Tribe.
The Bombay Prohibition Act, 1949, was an existing law.
By virtue of sub article (5) the right conferred by sub clause (f) cannot affect the operation of the Act in so far as it imposes reasonable restrictions of the kind mentioned in that sub article.
If, however, this existing law imposes restrictions which are unreasonable then it becomes inconsistent with the right guaranteed to the citizens by article 19(1)(f) and consequently under article 13(1) "shall, to the extent of such inconsistency, be void".
It is beyond all dispute that it is for the Court to judge whether the restrictions imposed by any existing law or any Part thereof on the fundamental rights of citizens are reasonable or unreasonable in the interest of the general public or for the protection of the interests of any Scheduled Tribe.
If the Court holds that the restrictions are unreasonable then the Act or the part thereof which imposes such unreasonable restrictions comes into conflict and becomes inconsistent with the fundamental right con ferred on the citizens by article 19(1)(f) and is by article 13(1).
rendered void, not in toto or for all purposes or for all persons but "to the extent of such inconsistency", i.e., to the extent it is inconsistent with the exercise of that fundamental right by the citizens.
This is plainly the position, as I see it.
Shortly after the commencement of the Constitution the validity of the Bombay Prohibition Act was 659 challenged in its entirety.
One F. N. Balsara, claiming to be an Indian citizen prayed to the High Court, at Bombay, infer alia, for a writ of mandamus against the State of Bombay and the Prohibition Commissioner ordering them (i) to forbear from enforcing against him the provisions of the Prohibition Act and (ii) to allow him to exercise his right to possess, consume and use certain articles, namely, whisky, brandy, wine, beer, medicated wine, eau de cologne, lavender water and medicinal preparations containing alcohol.
The High Court, agreeing with some of the petitioner 's contentions and disagreeing with others, declared some of the provisions of the Act to be invalid and the rest to be valid.
Both the State of Bombay and the petitioner, Balsara, appealed to this Court after obtaining a certificate from the High Court under article 132(1) of the Constitution.
The judgment of this Court in those appeals was pronounced on the 25th May, 1951.
See The State of Bombay and Another vs F. N. Balsara (supra).
So far as it is material for our present purpose this Court held (1) that under entry 31 of List II of the Seventh Schedule to the Government of India Act, 1935, the Provincial Legislatures had the power to make laws with respect to "intoxicating liquors, that is to say, the 'production, manufacture, possession, transport, purchase and sale of intoxicating liquors" and there was, therefore, no legislative incompetency in the Bombay Legislature to enact the Bombay Prohibition Act, 1949; (2) that the word "liquor" as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication, but also liquids containing alcohol and, therefore, the definition of "liquor" contained in section 2(24) of the Act was not ultra vires, and (3) that the restrictions imposed by sections 12 and 13 of the Act on the possession, sale, use and consumption of liquor were not reasonable restrictions on the fundamental right guaranteed by article 19(1)(f), so far as medicinal and toilet preparations containing 660 alcohol were concerned and that the said sections were invalid so far as they prohibited the possession, sale, use.
and consumption of these articles, but that those sections were not wholly void on this ground as the earlier categories mentioned in the definition of liquor, namely, spirits of wine, methylated spirit, wine, beer and toddy were distinctly separable items which were easily severable from the last category, namely, all liquors containing alcohol and further that the last category of "all liquids consisting of or containing alcohol" were again capable of being split up in several sub categories, e.g., liquid medicinal and toilet preparations containing alcohol and the restrictions on the possession, sale, use and consumption of the earlier categories and all liquids containing alcohol other than medicinal and toilet preparations were not unreasonable.
In the result this Court declared certain provisions of the Act invalid.
Amongst the provisions declared invalid was section 13(b), but it was so declared only "so far as it affects the consumption or use of such medicinal and toilet preparations containing alcohol." This declaration, no doubt, was made pursuant to article 13(1) of the Constitution.
The very foundation of this declaration was that the prohibition imposed by this section against the consumption or use of liquid medicinal or toilet preparations was an unreasonable restriction on the exercise of the fundamental right of citizens to acquire, hold and dispose of property which in that case was liquid medicinal or toilet preparations containing alcohol ' The law thus declared by this Court is, by virtue of article 141 of the Constitution, binding on all Courts within the territory of India.
The offence with which the appellant was charged was alleged to have been committed on the 29th May, 1951, that is to say, four days after this Court pronounced its judgment in The State of Bombay and Another vs F. N. Balsara (supra).
On the 22nd April, 1952, the learned Presidency Magistrate acquitted the appellant of that charge with the following remark: "The evidence also does not go to show conclusively that the accused had consumed alcohol without a permit There are.
certain medicinal preparations which are 661 allowed to be used by law and there must be satisfactory evidence to show that the accused has not consumed those tonics but only liquor for which he ought to have a permit.
" The State appealed to the High Court against this order of acquittal.
The High Court following its own earlier decision in Rangrao Bala, Mane vs State (supra) reversed the order of the Presidency Magistrate.
The appellant came up to this Court in appeal after having obtained special leave from this Court.
The appeal came up for hearing before a Division Bench of this Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.
Bhagwati J. clearly and, if I may respectfully say so, correctly accepted the position that the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) "was a judicial pronouncement and that even though under article 141 of the Constitution the law declared by this Court was binding on all Courts in India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act." Having accepted this position the learned Judge logically and, again I say with respect, correctly repelled the argu ment that the result of the decision in The State of Bombay and Another vs F. N. Balsara (supra) was to introduce, not in terms but in effect, an exception or proviso to section 13(b) and that consequently the onus lay on the appellant to prove the existence of circumstances bringing his case within the exception or proviso as laid down in section 105 of the Evidence Act.
The learned Judge, however, observed: "The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforce.
able in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and 85 662 non toilet liquid preparations consisting of or containing alcohol.
The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under the section 13(b) and the penal section 66(b).
" The learned Judge proceeded to illustrate how the effect of the declaration could be worked out: "The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol.
When these several interpretations were possible in regard to the effect of the declaration on the provisions of section,13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception or proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act9 It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner.
(See also In re Kanakasabai Pillai)(1).
" With the utmost respect to the learned Judge, the modes of working out the effect of the declaration indicated by him clearly involve the acceptance of one or other of the different forms of amendment of the section, although according to his views expressed (1) A.I. R. 1940 Mad.
I. 663 earlier in his judgment the effect of the declaration was not to alter or amend section 13(b) of the Act.
Venkatarama Ayyar J., however, took the view that as the Court had no legislative function and as judicial decisions did not amend or add to a statute but merely interpreted the law and declared whether it was valid or not, the result of a judicial declaration that a statute or any part thereof was not valid was only that no effect could be given to it in a Court of law but that it did not mean that the statute or the part thereof declared void had gone out of the statute book after the Court 's decision.
He also held that section 105 of the Evidence Act would not in terms apply as article 19(1)(f) could not be said to form an exception to section 13(b).
He rested his decision on the ground that the inclusive definition of "liquor" adopted in section 2(24) of the Act having been held to be within entry 31 in List II of the Seventh Schedule to the Government of India Act, 1935, and, therefore, valid, that meaning should be its connotation in section 13(b) as well and that under the section so read the offence would be established as soon as consumption or use of "liquor" so defined was established and that the plea that what was consumed was medicinal preparation containing alcohol was really a plea that the section, in so far as it prohibits consumption or use of liquid medicinal or toilet preparations containing alcohol, infringed the citizens ' fundamental right under article 19(1)(f) and was, therefore, unconstitutional as declared by this Court.
His view was that it was for those who pleaded unconstitutionality to establish all the elements which would go to establish that plea.
Jagannadhadas J. felt inclined to agree with the view of Venkatarama Ayyar J. but as that aspect of the matter had not been fully argued he passed on to the argument canvassed before them, namely, that the part of the section declared invalid went out of the Act and the Act stood appropriately amended pro tanto.
This, according to the learned Judge, involved, that the word "liquor" stood amended as "prohibited liquor" or that it was to be understood with this limited connotation.
This argument he could not accept.
His view was that what the decision in The, State of Bombay and Another vs 664 F. N. Balsara (supra) had done was not to authorise ,the importation of a new definition or to rewrite the section but, leaving the section intact, to treat the consumption or use of liquid medicinal or toilet preparations containing alcohol as taken out of the ambit of the section itself as the prohibition thereof was unconstitutional.
This, according to the learned Judge, could only be done by grafting an appropriate exception or proviso into section 13(b).
The result of the hearing before that Bench was that Bhagwati J. held that the appeal should be allowed but Jagannadhadas and Venkatarama Ayyar JJ. were for dismissing the appeal.
An application for review was, however, made on the ground that the judgments of the learned Judges involved a decision on constitutional matters which that Bench had no jurisdiction to decide but which could only be dealt with by a Constitution Bench.
By an order made on the 26th April, 1954, under the proviso to sub article (3) of article 145 that Bench accordingly referred the following question for the opinion of the Constitution Bench, namely: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1)(f) of the Constitution?" The effect of a judicial declaration of a statute as unconstitutional has been stated by Field J. in Norton vs Shelby County(1) to be that the statute is no law and that, in legal contemplation, it is to be treated as inoperative as though it had never been passed.
Cooley, in his Constitutional Limitations, Volume 1, page 382, has adopted this dictum of Field J. and expressed the view that where a statute is adjudged to be unconstitutional it is as if it had never been.
I am unable to accept the proposition so widely stated.
Even American text book writers have felt that the statement of (1) ; ; 665 Field J. needs to be somewhat qualified.
(See, Willoughby on the Constitution of the United States, Volume 1, page 11 and Willis on Constitutional Law, page 890).
The dictum, it will be observed, related to a statute which was made after the commencement of the Constitution and which was in violation of the provisions of the Constitution.
It cannot obviously apply to a case where a statute which was enacted before the commencement of the Constitution is declared to have become unconstitutional and void.
In such a situation it cannot be said that the judicial declaration means that such a statute is void for all purposes including past transactions that took place before the commencement of the Constitution.
The Bombay Act was an existing law and the declaration in The State of Bombay and Another vs F. N. Balsara (supra) cannot and does not affect anything done under the Act prior to the commencement of the Constitution.
It will be further noticed that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not declare the entire Act or even the entire section 13(b) to be void.
It only declares void a part of section 13(b), that is to say only that part of it which prohibits a citizen from consuming or using only liquid medicinal or toilet preparations containing alcohol.
The section, in its entirety, is still enforceable against all noncitizens.
Even as against citizens the prohibition of the section with respect to the consumption or use of the earlier categories of liquor, namely, "spirits of wine, denatured spirits, wine, beer, toddy" ' is fully operative.
Moreover, even the prohibition against consumption or use of the last category of liquor, namely, "all liquids consisting of or containing alcohol" remains operative even as against citizens except in so far as it prohibits them from consuming or using liquid medicinal or toilet preparations containing alcohol.
In such a situation the passages from Cooley on Constitutional Limitations and the dictum of Field J. can have no application.
This is put beyond controversy by the decision of this Court in Keshava Madhava Menon vs The State of Bombay (supra).
The Bombay Act being an existing law, the declaration made by 666 this Court in The State of Bombay and Another vs F. N. Balsara (supra) must be taken to have been made under article 13(1).
The article does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes.
The declaration in The State of Bombay and Another vs F. N. Balsara (supra), as I understand it, is that the prohibition contained in section 13(b) against the consumption or use of one particular variety of liquid Consisting of or containing alcohol, namely, liquid medicinal or toilet preparations containing alcohol imposes an unreasonable restriction on the exercise of a citizen 's fundamental right under article 19(1) (f) and is, therefore, unconstitutional and as such void to that extent.
The result of it is that the prohibi tion of that part of section 13(b) will be ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol.
No part of the section is obliterated or scratched out from the statute book or in any way altered or amended, for that is not the function of the Court.
The judicial declaration that a art of the section is unconstitutional and void only nullifies that offending Part in the sense that it renders that part ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol in exercise of his fundamental right.
In other words, when a citizen is charged with an offence under section 66(b) read with section 13(b) he will be entitled to say "I am a citizen of India.
I have consumed or used liquid medicinal or toilet preparations containing alcohol.
I am entitled to do so under article 19(1) (f).
The Supreme Court has in The State, of Bombay and Another vs F. N. Balsara (supra) declared the law, namely, that in such cir cumstances the prohibition of section 13(b) is void as against me with respect to such consumption or use of liquid medicinal or toilet preparations containing alcohol " This plea, if substantiated, will be a complete answer to the charge.
In short, the judicial declaration serves to provide a defence to a citizen who has consumed or used liquid medicinal or toilet preparations 667 containing alcohol.
Test the matter in this way.
Suppose after the declaration a person is charged with an offence under section 66(b) read with section 13(b) and in such a case the prosecution proves that the accused has taken alcohol in some form or other, as is the evidence of the doctor in the present case.
What is to happen if nothing further is proved by either party ? Surely, in such a situation a conviction must follow.
If the accused person desires to avail himself of the benefit of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), surely he must prove first of all that he is a citizen.
The onus of this clearly lies on the accused.
The next question is whether that is the only onus that lies on the accused.
To my mind he has to allege and prove not only that he is a citizen but that he has consumed or used liquid medicinal or toilet preparations containing alcohol and it is only on such proof that he can claim the benefit of the declaration of law made in The State of Bombay and Another vs F. N. Balsara (supra) and establish his defence.
The very basis of that declaration is that a citizen has the fundamental right to consume or use liquid medicinal or toilet preparations containing alcohol and section 13(b) in so far as it prohibits such consumption or use imposes an unreasonable restriction on his fundamental right under article 19(1) (f).
In other words, the on us is on him to establish the situation or circumstances in which that part of the section which has been declared to be void should not be applicable to him.
If he establishes the fact that he is a citizen and that he has consumed or used such liquid, then the declaration in The State of Bombay and Another vs F. N. Balsara (supra) will establish the law, namely, that the prohibition of section 13(b) and the penalty under section 66(b) are not applicable to him being inconsistent with his fundamental right.
To say that after the judicial pronouncement the section should be read qua a citizen as if liquid medicinal or toilet preparations are not there or that the ambit of the offence has narrowed down to a prohibition against the consumption or use of only the earlier categories of liquor set forth in the definition is, to my mind, 868 tantamount to saying, covertly if not openly , that the judicial pronouncement has to that extent amended the section.
To say that after the declaration the offence has become limited to the consumption or use of prohibited liquor is to alter or amend the definition of liquor although it has been held to be valid.
I repeat that it is not within the competence of a Court to alter or amend a statute and that the effect of the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) is not to lift or take away or add anything out of or to the section at all.
What it does is to declare, as a matter of law, that in a certain situation, namely, when liquid medicinal or toilet preparations containing alcohol are consumed or used, a certain part of section 13(b), that is to say, that part of it which prohibits the consumption or use of liquid medicinal or toilet preparations containing alcohol, shall be void qua a particular class of persons, namely, citizens.
In other words, the declaration in The State Of Bombay and Another vs F. N. Balsara (supra) serves to provide a defence only to a citizen who has consumed or used liquid medicinal or toilet preparations.
It is for the accused person, who seeks to ward off the applicability of the section to him by having resort to the declaration made in The State of Bombay and Another vs F. N. Balsara (supra), to establish the situations or circumstances on which that declaration is founded.
In short a person who challenges the validity of the section on the ground of its unconstitutionality has the advantage of the declaration as a matter of law but the facts on which that declaration is based have nevertheless to be established in each particular case where the declaration is sought to be availed of.
I answer the question referred to us accordingly.
It has been strenuously urged before us, as before the Division Bench, that such a view as to the effect of this Court 's declaration will run counter to the well established principle of criminal jurisprudence that the onus of establishing the charge is always on the prosecution, for it will throw the burden of proof on the accused person.
This argument has considerably impressed Bhagwati J. and has also weighed with my 669 learned colleagues on the present Bench.
It is, however, not unusual in certain classes of cases or in certain circumstances to throw the onus of proof of a defence on the accused person.
Section 105 of the Evidence Act is an instance in point.
Section 114, ill.
(a) of the same Act is another provision to which reference may be made.
Section 103 of this very Bombay Prohibition Act raises a very strong presumption of guilt and throws the burden on the accused to prove his innocence in certain cases.
Take section 96 of the Indian, Penal Code which says " Nothing is an offence which is done in the exercise of the right of private defence.
" Nobody will contend that this section requires the prosecution to prove that the acts constituting the offence charged against the accused were not done in the exercise of the right of private defence.
It is obvious that this section serves to provide the accused person with a defence and if the accused person can prove that he did the acts complained of in defence of his person or property and if the acts were reasonable in the circumstances of the case he establishes his defence.
It is not necessary to multiply instances.
It seems to me that the declaration in The State of Bombay and Another vs F. N. Balsara (supra) gives a citizen who has consumed or used liquid medicinal or toilet preparations containing alcohol a defence to a charge under section 66(b) read with section 13(b) of the Bombay Prohibition Act, but it is for the accused person to prove the facts on which that declaration of law is founded.
I see no hardship whatever in this, for the requisite facts are within his special knowledge.
To adopt the contrary view will be to ignore the sound principle well established in law that a judicial declaration of invalidity does not repeal, alter or amend a statute.
As I hold that the declaration does not operate as an amendment of the section, I must logically hold, 'with respect to the view of Jagannadhadas J. that the declaration cannot be treated as having grafted an exception or proviso to section 13(b).
86 670 In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Ayyar J. on that part of the ' case.
1, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on legislative power or the effect of the declaration under article 13(1) being "relatively void.
" On those topics prefer to express no opinion on this occasion.
BY THE COURT.
The reference is answered in accordance with the opinion of the majority.
[After the opinion of the Constitution Bench the following Order, dated 24th September, 1954, was pronounced by a Bench composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. who had originally heard the appeal.] The Order of the Court was pronounced by BHAGWATI J.
We have received the opinion expressed by the Constitution Bench.
According to that opinion, which is expressed in the majority judgment, the onus lay on the prosecution to prove that the alcohol of which the accused was smelling was such that it came within the category of prohibited alcohols.
We have heard the learned Attorney General on the question whether that onus has been discharged and he has frankly conceded that on the material placed before us it cannot be urged that that onus has been discharged by the prosecution.
The result, therefore, is that the conviction of the appellant will be quashed and the fine, if paid, will be refunded.
Conviction set aside.
| The respondent, filed petitions under Am.
226 and 227 in the Assam High Court asking that notifications by the State Government of the transfer of one District & Sessions Judge and the appointment and posting of another be quashed on the ground that the High Court alone could make the transfers and.
in any event, the High Court was to be consulted and was not consulted before the impugned orders were made.
The High Court held that there was no consultation with regard to the posting of one of the District Judges and that his transfer was irregular as the High Court alone could have ordered it; and furthermore that the transfer of the other.
District Judge was for a like reason also irregular.
Holding, however, that none of the District Judges could be said to occupy wrongly the office of District & Sessions judge, the High Court declined the writ of quo warranto and dismissed the petition, but without costs to the State Govenment.
One of the learned Judges of the High Court who comprised the Division Bench that heard the petitions,, in a separate but concurring judgment, passed some scathing remarks on the action of the Government which he described as mala fide and actuated by some ulterior motive.
On being moved by the State Government, the High Court granted certificates under article 132 of the Constitution to appeal to the Supreme Court on the ground that the judgment involved the interpretation of articles 233 and 235 of the Constitution.
By these appeals the State Government sought a reversal of the opinion of the High Court on the two Articles.
Three questions arose for decision in the appeal: (a) who is to order transfer of a District Judge the State Government or the High Court; (b) is the provision regarding consultation in article 233 mandatory or directory and if the former, whether the High Court was not in fact consulted; and (c) whether the remarks complained of about the State Government made by the learned Judge should be expunged.
HELD: (i) Under article 233 the Governor is only concerned with the appointment, promotion and posting to the cadre of district Judges but not with the transfer of District Judges already appointed or promoted and posted to the cadre.
The latter is a matter of control of District Judges which is vested in the High Court under article 235.
[460 G] The word posting means either to station some one at a place or to assign someone to a post, I.e. a position or a job, especially one to which a person is appointed.
In article 233 it bears the second meaning.
The word occurs in association with the words 'appointment ' and 'promotion ' and takes its colour from them.
These words indicate the stage when 454 455 a person first gets a position or job and 'posting 'by association means the assignment of an appointee or promotee to a position in the cadre of District Judges.
The word 'posting ' cannot be understood in the sense of 'transfer ' when the idea of appointment and promotion is involved in the combination.
This meaning is quite out of place because 'transfer ' operates at a stage beyond appointment and promotion.
Transfer, therefore, falls within the control vested in the High Court.
[460 C G] State of West Bengal vs Nripendranath Bagcht,[1966] 1 S.C.R. 771, referred to.
(ii) As the High Court acting under article 235 and not the State Government is the authority to make transfers, no question can arise of a consultation on this account.
In the present case, however, consultation as required by article 233, was necessary before one of the District Judges was promoted and posted as a District Judge.
Chandra Mohan vs U.P. , referred to.
(iii) The power to expunge is an extraordinary power and can be exercised only when a clear case is made out.
Although the opinion of this Court may be that the learned Judge need not have made the remarks complained of, it could not be said that in making them he acted with such impropriety that the extraordinary powers should be exercised.
[462 DIP]
|
Appeals Nos. 317 & 318 of 1950.
Appeals by special leave from the judgment and order dated the 29th June 1955 of the Labour Appellate Tribunal of India at Calcutta in Appeals Nos.
61 and 81 of 1954.
N. C. Chatterjee, section N. Mukherjee and B. N. Ghose, for the appellants in C. A. No. 317 of 56 and respondent No. 1 in C. A. No. 318 of 56.
A. V. Viswanatha Sastri, A. K. Dutt and B. P. Maheshwari, for the appellants in C. A. No. 318 of 56 and respondents in C. A. No. 317 of 56. 1959.
May 8.
The Judgment of the Court was delivered by WANCHOO J.
These are two appeals by special leave against the same decision of the Labour Appellate Tribunal of India in a dispute between Messrs. Shalimar Works Ltd., Howrah (hereinafter called the company) and its workmen represented by two unions (hereinafter called the workmen).
Appeal No. 317 is by the company while appeal No. 318 is by the workmen.
We shall dispose them of by one judgment.
There was a dispute between the company and its workmen on a number of matters and it was referred to the Sixth Industrial Tribunal for adjudication by the Government of West Bengal.
Only two matters now survive out of the many referred to the Tribunal, namely, (1) profit sharing bonus and (2) reinstatement of 250 old workmen.
We shall first deal with the question of profit sharing bonus.
It appears that the company had a profit sharing bonus scheme in force on the following lines.
It provided that after making certain deductions, if the remaining profit was between Rs. 1,50,000 and Rs. 1,99,999, the workmen would be entitled to quarter of a month 's average basic pay as bonus, When the 152 remaining profit was between Rs. 2 00 lakhs and Rs. 2,49,999, the bonus went up to half of a month 's average basic pay.
When the remaining profit was between Rs. 2,50,000 and Rs. 2,99,999, the bonus was to be three quarters of a month 's average basic pay and when the remaining profit was Rs. 3 lacs or more the bonus was to equal one month 's basic pay.
No bonus was to be paid if the profit was less than Rs. 1,50,000.
There were provisions that the full bonus would be paid to a workmen who had attended 275 days in a year (inclusive of holidays and leave with pay) while those with less attendance were to be paid proportionately with the condition that if the attendance of any workman was less than 100 days he would be entitled to no bonus.
The workmen wanted this scheme to be revised and the main revision they desired was that the bonus should begin with a profit of Rs. 25,000 after the usual deductions when it would be one week 's wages and should go on increasing till it came to three months ' wages for profit above Rs. 1 lakh and upto Rs. 3 lakhs; thereafter it should increase further at the rate of 21 days ' wages for each lakh over 3 lakhs.
This was opposed by the company, though the company agreed to a change in the quantum of bonus when profit after deductions was Rs. 3 lakhs or above.
In the scheme in force, the bonus was equal to one month 's basic pay when the profit was Rs. 3 lakhs or above, with no further increase whatsoever be the profits.
The company agreed to revise this term and suggested that when profit was (i)between Rs. 3 lakhs to Rs. 4 lakhs, bonus should be four weeks ' wages; (ii) above Rs. 4 lakhs upto Rs. 5 lakhs, bonus should be five weeks ' wages.
(iii)above Rs. 5 lakhs, it should be six weeks 'wages The Industrial Tribunal did not accept fully the contentions of either party in this connection, though it varied the scheme in force in certain particulars.
After the variation the scheme was as below 153 For remaining profit after the usual deductions (i)from Rs.80,000 to bonus at the rate of one Rs.1,99,999, week 's average basic pay; (ii) from Rs.2 00 lakhs to bonus at the rate of half Rs. 2,49,999, of a month 's average basic pay; (iii) from Rs.2 50 lakhs to bonus at the rate of three Rs. 2 99,999, quarters of a month 's average basic.pay; (iv) from Rs. 3 00 lakhs to bonus at the rate of four Rs. 4 00 lakhs, weeks ' average basic pay; (v) from above bonus at the rate of six Rs.4 00 lakhs up weeks ' average basic toRs. 5 00 lakhs pay ; and (vi) from above bonus at the rate of two Rs. 5 00 lakhs, months ' average basic pay.
The Industrial Tribunal also accepted 275 days ' attendance for earning full bonus and proportionate bonus when the attendance fell below 275 days and the minimum of 100 days ' attendance for earning any bonus at all.
It also held that bonus for the years 1951 and 1952 should be paid at the existing rates while revised rates should be applied from the year 1953 onwards.
Both parties appealed to the Labour Appellate Tribunal against this revision.
The company contended that no greater revision than what it had agreed to should have been ordered.
In the workmen 's appeal it was contended that the scheme put forward on their behalf should have been accepted.
They further contended that the condition of minimum attendance for 100 days should not have been laid down and that the bonus for the years 1951 and 1952 should have been awarded at the revised rates.
The Appellate Tribunal saw no reason to interfere with the award of the Industrial Tribunal in this respect and dismissed the appeals with one modification,, namely, it added that if in any year it was found 154 that the bonus worked out according to the award of the Industrial Tribunal was less than profit bonus, calculated according to the Full Bench formula evolved in the Mill Owners ' Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, Bombay (1), the workmen would be entitled to bonus under the formula; otherwise they would get bonus under the scheme as modified by the Industrial Tribunal., In the appeals before us, the company has attacked the revision ordered by the Industrial Tribunal, which was upheld by the Appellate Tribunal, as also the condition added by the latter; while the workmen have attacked the scale fixed by the Industrial Tribunal as also the order of payment of bonus for the years 1951 and 1952, according to the scheme in force before the revision by the Industrial Tribunal, and the conditions as to attendance.
Learned counsel for the parties, however, agreed before us that the revision made by the Industrial Tribunal was acceptable to both the parties and that the condition laid down by the Appellate Tribunal that where the bonus according to the scheme is less than the bonus worked out according to the Full Bench formula that formula should be applied, should be deleted.
In view of this agreed statement, we delete the condition laid down by the Appellate Tribunal and order that bonus should be paid in accordance with the scheme as revised by the Industrial Tribunal.
Learned counsel for the workmen, however, urged that the condition as to minimum attendance of 100 days for entitlement to any bonus at all and of minimum attendance of 275 days for entitlement to full bonus was arbitrary and should be set aside.
This condition has been accepted by both the Tribunals and appears reasonable and we see no reason to interfere.
It was further contended that bonus for the years 1951 and 1952 should have been ordered to be paid according to the revised scheme.
This contention was also negatived by the two Tribunals and we see no reason to differ from them.
The two appeals therefore with respect to bonus are dismissed subject to the modification given above.
(1) 155 We now come to the question relating to the term in the reference as to the reinstatement of 250 old workmen.
it is necessary to state certain facts in this connection.
It appears that a Major Engineering Tribunal was set up by the Government of West Bengal in October 1947 to decide disputes between major engineering firms and their workmen.
The company as well as the workmen were parties to the disputes which was pending before that tribunal.
The issues before that tribunal were of a very comprehensive nature and included all kinds of disputes that could arise between employers and employees.
While that adjudication was pending the workmen suddenly pressed certain demands upon the company for immediate solution without awaiting the award of the tribunal, even though the demands so put forward were under adjudication.
The company naturally refused to meet the demands when they were under investigation by the tribunal.
Consequently, the workmen who had come to work on March 23,1948, started a sit down strike after they had entered the company 's premises.
This strike continued from March 23 to 27, and it was on March 27 that the workmen were ejected from the premises by the police according to the case of the company or were induced to leave the premises by the police according to the case of the workmen.
Anyhow, after the workmen left the premises on 27th, the company gave notice on that day that the Works would be 'closed indefinitely.
Another notice was given by the company on April 6, 1948, in which it was notified that all those who had resorted to illegal strike from March 23, 1948, would be deemed to have been discharged from that date.
Thereafter no work was done till May 15, 1948.
On that date the company gave a notice that if sufficient suitable men applied for employment on or before May 19, the works would be opened on a limited scale from May 20.
It seems, however, that nothing came out of this notice.
Eventually on July 5, the company gave another notice to the effect that the works would reopen on July 6, 1948, and all old employees could apply, and if reengaged their past services would 156 be counted and their conditions of service would be as awarded by the Major Engineering Tribunal, which, it seems, had given its award in the meantime.
It was also said in the notice that upto July 21, the company would only consider engagement of former employees and no fresh labour would be recruited till that date.
Thereafter the majority of the old workmen applied for being retaken in service and everyone who applied upto July 21 was reengaged.
Thereafter the company refused to reengage the old employees, a few of whom are said to have applied in November and December, 1948, August, 1951, February, 1952 and January, 1953.
It appears that in November, 1949, the Assistant Labour Commissioner was moved by one of the trade unions about non employment of 249 workmen.
He wrote to the company in that connection and it replied that the workmen had been discharged for having taken part in an illegal strike and it could not see its way to reemploy them.
For a long time nothing seems to have happened thereafter till we come to October 7, 1952, when the first reference was made with respect to the reinstatement of 250 old workmen.
The original reference was to the tribunal consisting of Shri S.K. Niyogi.
That gentleman went on retirement before he could dispose of the reference and consequently another reference was made on November 18, 1953 to the present tribunal consisting of Shri M.L. Chakraborty.
No list of 250 workmen was sent to the Tribunal about whom it was to consider the question of reinstatement.
No list of these workmen was filed even before the Industrial Tribunal during the adjudication proceedings: It was only after the arguments on behalf of the company were over on December 14,1953, that a list of names was filed before the Industrial Tribunal.
This list consisted of 220 persons only though the reference was with respect to 250.
As has been pointed out by the Appellate Tribunal, it was a carelessly prepared list in which some names were repeated.
Against some serial numbers there were neither names nor ticket numbers.
In spite of this, the Industrial Tribunal ordered reinstatement without specifying who were to be reinstated; it really 157 did not know who were the persons to be reinstated.
What it did was to order the company in order that identity of the workmen to be reinstated might be established to give a general notice on its notice board notifying the strikers to come and join their duties on a fixed date and to reinstate whichever striker applied within the time allowed.
This award of the Industrial Tribunal has been rightly criticised by the Appellate Tribunal, which has charactrized this reinstatement as " vague and highly objectionable ".
The Appellate Tribunal was of the view that " no award could be so loosely or vaguely made ".
It further went on to consider whether identity could in any manner be fixed.
In this connection it relied on the remarks made by the company (which had, however, objected to the production of the list at that late stage) on this list under orders of the Indust rial Tribunal.
From these remarks the Appellate Tribunal came to the conclusion that the identity of 115 workmen had been established.
It found that 100 out of them had withdrawn their provident fund.
It, therefore, held that so far as these 100 were concerned, they accepted the order of discharge because of the with.
drawal of the provident fund and no further relief could be granted to them.
As for the remaining fifteen workmen, it pointed out that they had not withdrawn their provident fund.
It, therefore, ordered these fifteen workmen to be reinstated.
Finally, it ordered that no compensation could be allowed to the workmen for the period between their discharge and their reinstatement because of the delay on their part in asking for redress.
The reason which impelled the Appellate Tribunal to order reinstatement was that the notice of discharge dated April 6, 1948, was not served on the workmen individually and though the notice of July 5, 1948, inviting the former workmen to come and join the company was given wide publicity, it was also not served on the workmen individually.
According to the Appellate Tribunal, " the net result was that there was defective communication of notice of discharge to the workmen and the notice offering reinstatement was not also sufficiently published to enable it to hold 158 that the defect was cured ".
As to the sit down strike itself, both the Tribunals were of the view that the strike was the result of pre concerted action and there was no justification for it when the matter was pending before a tribunal for adjudication.
The plea of the workmen that the strike resulted spontaneously because of the insult offered by the manager to a deputation of the workmen on March 23 was disbelieved by both the Tribunals.
The main contention on behalf of the company in this connection is that when both the Tribunals had found the sit down strike unjustified, they should have held that the company was entitled to discharge the workmen, in the particular circumstances of this case.
It is also urged that the discharge took place in April, 1948 and the company reopened in July, 1948; the reference of the matter more than four years after without the list of the workmen said to have been discharged, was not proper.
On the other hand it has been urged on behalf of the workmen that as a, dispute was pending between the company and its workmen, the company could not discharge the workmen without obtaining permission of the tribunal under section 33 of the , and inasmuch as the notice of discharge of April 6, 1948, was given without obtaining the sanction of the tribunal before whom the dispute was then pending, it was a breach of section 33 and therefore the order of discharge being in breach of law the workmen were entitled to reinstatement.
There is no doubt that strictly speaking the order of the company discharging its workmen on April 6, 1948, when a dispute was admittedly pending was a breach of section 33; (see Punjab National Bank Ltd. vs Employees of the Bank,(1)).
The remedy for such a, breach is provided in section 33 A and it can be availed of by an individual workman.
If therefore it was felt by the workmen who were discharged on April 6, 1948, that there was breach of section 33 by the company, they should have applied individually or collectively to the tribunal under section 33 A. None of them did this.
It is true that some kind of letter was written to the Assistant (1) 159 Labour Commissioner in November, 1949, but that was also very late and nothing seems to have happened thereafter for almost another three years, till the first reference was made on October 7, 1952.
It is true that there is no limitation prescribed for reference of disputes to an industrial tribunal; even so it is only reasonable that disputes should be referred as soon as possible after they have arisen and after conciliation proceedings have failed, particularly so when disputes relate to discharge of workmen wholesale, as in this case.
The industry has to carry on and if for any, reason there has been a wholesale discharge of workmen and closure of the industry followed by its reopening and fresh recruitment of labour, it is necessary that a dispute regarding reinstatement of a large number of workmen should be referred for adjudication within a reasonable time.
We are of opinion that in this particular case the dispute was not referred for adjudication within a reasonable time as it was sent to the Industrial Tribunal more than four years after even reemployment of most of the old workmen.
We have also pointed out that it was open to the workmen themselves even individually to apply under section 33 A in this case; but neither that was done by the workmen nor was the matter referred for adjudication within a reasonable time.
In these circumstances, we are of opinion that the tribunal would be justified in refusing the relief of reinstatement to avoid dislocation of the industry and that is the correct order to make.
In addition, the reference in this case was vague inasmuch as the names of 250 workmen to be reinstated were not sent to the Industrial Tribunal and no list of these men was given to it till practically after the whole proceeding was over.
Even the list then supplied was so bad that the Industrial Tribunal did not think it worthwhile to act upon it, and directed the company to give a notice to the strikers to ask for re employment within a certain time.
This the company had already done on July 5, 1948.
That notice had gained con siderable publicity, for the majority of the workmen did appear thereafter for re employment by July 21.
In the circumstances there was no reason for ordering 160 reinstatement of any one on such a vague reference after such an unreasonable length of time.
The defect, in the order of discharge of April 6, due to permission not having been obtained under section 33 can in the circumstances of this case be ignored on the ground that the workmen who did not rejoin in July 1948, were not interested in reinstatement: firstly, on account of the circumstances in which that order came to be made after an illegal and unjustified sit down strike, secondly, because the workmen in their turn did not avail themselves of the remedy under section 33 A which.
was open to them, and thirdly, because the reference was made after an unreasonable length of time and in a vague manner.
We are therefore of opinion that the Appellate Tribunal should not have ordered the reinstatement of even the fifteen workmen in the circumstances as their case was exactly the same as the case of the hundred workmen, except in the matter of the withdrawal of the provident fund.
After the application for special leave was allowed this Court made an order on September 26, 1955, that seven days ' wages every month should be paid by the company to the fifteen workmen who had been ordered to be reinstated.
Learned counsel for the company informs us that of these fifteen, only seven have been turning up to receive this payment while eight men never turned up.
This shows that these eight are not interested in the reinstatement.
Of the remaining seven, two, according to the learned counsel for the company, have obtained other jobs while one is said to be a member of Parliament.
The company was prepared to reinstate, out of human considerations, the other four, though, it contends that legally and rightly so it is not bound to reinstate any one of these fifteen workmen.
These four workmen whom the company is prepared to take back are Nitai Manji, Satya Charan Das, Mustafa Khan and Akil ud Din.
The appeal of the company must therefore be allowed with respect to the remaining eleven workmen who have been ordered to be reinstated by the Appellate Tribunal.
The order of the Appellate Tribunal will stand with respect to the four workmen named above in 161 view of the company 's willingness to take them back.
The appeal of the workmen on the question of reinstatment fails and is hereby dismissed.
We may, however, make it clear that payment made pursuant to the order of this Court will not in any event be refundable or adjustable towards the future wages of those workmen who will be reinstated by the company.
Both the company and the workmen have raised other points in their respective grounds of appeal; but as they have not been pressed before us we need not say anything with respect to them.
In these circumstances we are of opinion that both the parties will bear their own costs of this Court.
Appeal No. 317 allowed.
Appeal No. 318 dismissed.
| On March 23, 1948, while certain disputes were under adjudication the workmen pressed the same demands upon the company for immediate solution without awaiting the award of the tribunal.
The company refused to meet the demands and thereupon the workmen went on an illegal sit down strike.
The company closed the works indefinitely and notified that all those workmen who had resorted to the illegal strike were discharged from that date.
On July 5 the company notified that the works would open on July 6 and all old employees could apply for reengagement upto July 21.
A majority of them applied for being retaken and all those who applied upto July 21 were taken but those who applied after that date were refused.
On November 18, 1953, the Government made a reference in respect of the reinstatement Of 250 old workmen who had not been retaken.
No list of the 250 workmen was sent to the tribunal nor was such a list filed even during the adjudication proceedings but after the arguments on behalf of the company were over a carelessly prepared list Of 220 persons was filed before the tribunal by the workmen on December 14, 1953.
The Tribunal ordered reinstatement without specifying who were to be reinstated.
It directed the company to give a general notice notifying the strikers to come and join their duties on a fixed date and to reinstate those who applied within the time allowed.
On appeal, the Labour Appellate Tribunal upheld the order of reinstatement in respect Of 15 workmen only.
Held, that there was no reason for ordering reinstatement of any of the workmen on such a vague reference made after such an unreasonable delay.
It was reasonable that disputes should be referred as soon as possible after they had arisen and after conciliation proceedings had failed, particularly in cases of wholesale discharge of workmen followed by fresh recruitment of labour.
Though the workmen were discharged during the pendency of a dispute in violation of section 33 of the , the remedy of the workmen was to apply under section 33 A of the Act; but that was not done.
This defect in the discharge of the workmen could be ignored in the circumstances of this case on account of the illegal strike, the failure to 151 avail of the remedy under section 33 A and the delay and vagueness of the reference which all show that the workmen were not interested in reinstatement.
|
iminal Appeal No. 41 of 1952.
Appeal by Special Leave from the Judgment and Order dated the 3rd October,, 1951, of the High Court of Judicature for the State of Punjab at Simla (Bhandari and Soni JJ in Criminal Appeal No. 86 of 1961, arising out of the Judgment and Order dated the, 31st January, 1951, of the Court of the Sessions Judge, Ambala, in Case No. 23 of '1950 and Trial No. 2 of 1951, 96 Jai GopalSethi (B. L. Kohli with him) for the Appellant.
H.S. Gujral, for the respondent.
Bhagat Singh Chawla, for the Caveator.
October 22.
The judgment 0f the Court was delivered by MAHAJAN J. Palvinder Kaur,was tried for offences under sections 302 and 201, Indian Penal Code, in connection with the murder of her husband, Jaspal Singh.
She was convicted by the Sessions Judge under section, 302 and sentenced to transportation for life.
No verdict was recorded regarding the charge under section 201, Indian Penal Code.
appeal to the High Court she was acquitted of the charge of murder, but was convicted under section 201, Indian Penal Code, and sentenced to seven years ' rigorous Imprisonment.
Her appeal by special leave is now before us.
Jaspal Singh, deceased, was the son of the Chief of Bhareli (Punjab).
He was married to Palvinder Kaur a few years ago and they had two children.
The. husband and wife were living together in Bhareli house, Ambala.
It is said that Jaspal 's relations with his father and grandfather, were not very cordial and the two elders thought that Palvinder Kaur was responsible, for this.
It is also said that Jaspal lived the allowance he got from his father and supplemented his income by selling milk and eggs and by doing some odd jobs.
Mohinderpal Singh (a fugitive from justice) who is related to the appellant and was employed as a storekeeper in Baldevnagar Camp, Ambala, used occasionally to reside in Bhareli house.
It is suggested that he had started a liaison with Palvinder.
The prosecution case is that Sardar Jaspal was administered potassium cyanide poison by the appellant and Mohinderpal the afternoon of the 6th February, 1950.
The dead body was then put into a large trunk and kept in one of the rooms in the house in Ambala city.
About ten days later i.e., the 97 16th February, 1950, Mohinderpal during the absence of the appellant, removed the trunk from the house in a jeep when he came there with Amrik Singh and Kartar Singh (P. Ws.), two watermen of the Baldevnagar Camp.
The trunk was then taken to Baldevnagar Camp and was kept in a store room there.
Three days later, the 19th February, 1950, Mohinderpal accompanied by Palvinder and a domestic servant, Trilok Chand (P. W. 27), took the trunk a few miles the ' road leading to Rajpura, got to a katcha road and in the vicinity of village Chhat took the jeep to a well a mound and threw, the box into it.
The jeep was taken to a gurdwara where it was washed.
After the disappearance of the deceased, his father made enquiries from Mohinderpal regarding the ' whereabouts of his missing son.
Mohinderpal made various false statements to him.
the 8th March, 1950, the father advertised in the "Daily Milap" begging his son to return home as soon as possible as the condition of his wife and children and parents had become miserable owing to his absence.
On the 10th March, 1950, i.e., a, month and ten days after the alleged murder and 19 days after the trunk was thrown into the well, obnoxious smell was coming out of the well, and the matter being reported to the lambardars of ' village Chhat, the trunk was taken out.
The matter was reported to the police and Sardar Banta Singh, Sub Inspector of Police, the 11th March arrived at the scene and prepared the inquest report and sent for the doctor.
The postmortem examination was performed the spot the next day.
No photograph of the body was taken and it was allowed to be cremated.
After more than two and a half months, the 28th April, 1950 th first information report was lodged against the appellant and Mohinderpal and the26th June a challan was presented in the court of the committing magistrate Mohinderpal was not traceable and the case Was started against the appellant alone, 98 There is no direct evidence to establish that the appellant or Mohinderpal or both of them administered potassium cyanide to Jaspal and the evidence regarding the murder is purely circumstantial.
The learned Sessions Judge took the view that the circumstantial evidence in the case was incompatible with the innocence of the accused, and held that the case against the appellant was proved beyond any reasonable doubt.
The High Court appeal arrived at a different conclusion.
It held that though the body found from the well was not capable of identification, the clothes recovered from the trunk and found the body proved that it was the body of Jaspal.
It further held that the cause of death could not be ascertained from the medical evidence given in the case.
The evidence the question of the identity of the dead body consisted of the statement of constable Lachhman 'Singh, of the clothes and other ' articles recovered from inside the trunk and of an alleged confession of the accused.
As regards the first piece of evidence the High Court expressed the following opinion: "There is in our opinion considerable force in the contention that not only are foot constable Lachhman Singh and Assistant Sub Inspector Banta Singh testifying to the facts which are false to their knowledge but that the prosecution are responsible for deliberately introducing a false witness and for asking the other witnesses to support the story narrated by Lachhman Singh that he identified the body to be that of Jaspal Singh the 11th March and communicate the information to the father of the deceased the following day.) ' As regards the extra judicial confessions alleged to.
have been made to Sardar Rup Singh and Sardar Balwant Singh, father and grandfather of the deceased, they were held inadmissible and unreliable.
The confession made by Palvinder to the magistrate, the 15th April, 1950, was however used in evidence against her the following reasoning: "It is true that strictly speaking exculpatory statements in which the prisoner denies her guilt cannot 99 be regarded as confessions, but these statements are often used as circumstantial evidence of guilty consciousness by showing them to be false and fabricated.
" It was also found that though Palvinder might have desired to continue her illicit intrigue with Mohinderpal she may not have desired to sacrifice her wealth and position at the altar of love.
She may have had ' a motive to kill her husband but a stronger motive to preserve her own position as the wife of a prospective chief of Bhareli and that in this situation it was by no means impossible that the murder was committed by Mohinderpal alone without the consent and knowledge of Palvinder, and that though a strong suspicion attached to Palvinder, it was impossible to state with confidence that poison was administered by her.
Therefore it was not possible to convict her under section 302, Indian Penal Code.
Concerning the charge under section 201, Indian Penal Code, the High Court held that the most important piece of evidence in support of the charge was the confession which Palvinder made the 15th April, 1950, and this confession, though retracted, was corroborated this point by independent evidence and established the charge.
The judgment of the High Court was impugned before us a large number of grounds.
Inter alia, it was contended that in examining Palvinder Kaur at great length the High Court contravened the provisions of the Code of Criminal Procedure and that the Full Bench decision of the High Court in Dhara Singh 's case(1) was wrong in law, that the alleged confession of the appellant being an.
exculpatory statement, the same was inadmissible in evidence and could not be used as evidence against her, that it had been contradicted in most material particulars by the prosecution evidence itself and was false and that in any case it could not be used piecemeal; that the offences under sections 302/34 and 201, Indian Penal Code, being distinct offences committed at two different times and being (1) (I952) , 100 separate transactions, the appellant having been convicted of the offence under section 302, Indian Penal Code, only by the Session Judge, the High Court had no jurisdiction when acquitting her of that offence to, convict her under section 201 of the same Code; that the statements of Mohinderpal to 'various witnesses land his conduct were not relevant against the appellant; that Karamchand and Mst.
Lachhmi were in the nature of accomplices and the High Court erred in relying their testimony without any corrobora tion; that the High Court having disbelieved eight of the witnesses of the prosecution and having held that they were falsely introduced into the case, the investigation being extremely belated and the story having been developed at different stages, the High Court should not have relied the same; and lastly that the pieces of circumstantial evidence proved against the appellant were consistent with several innocent explanations and the High Court therefore erred in relying them without excluding those possi bilities.
The decision of the appeal, in our view, lies within a very narrow compass and it is not necessary to pronounce all the points that were argued before us.
In our judgment, there is no evidence 'to establish affirmatively that the death of Jaspal was caused by potassium cyanide and that being so, the charge under section 201, Indian Penal Code, must also fail. ' The High Court in reaching a contrary conclusion not only acted suspicions and conjectures but inadmissible evidence.
, The circumstances in which Jaspal died will for ever remain shrouded in mystery and the material placed the record it is not possible to unravel them.
It may well be that he was murdered by Mohinderpal without the knowledge or consent of Palvinder and the incident took place at Baldevnagar Camp and not at the house and that Mohinderpal alone disposed of the dead body and that the confession of Palvinder is wholly false and the advertisement issued in Milap correctly reflected the facts 101 so far as she was concerned.
The evidence led by the prosecution, however, is of such a character that no, reliance can be placed it and no affirmative conclusions can be drawn from it.
The remarks of the Sessions Judge; that the consequences had definitely revealed that justice could not always be procured by wealth and other worldly resources and that the case would perhaps go down in history as one of the most sensational cases because of the parties involved and the gruesome way"in which the murder was committed, disclose a frame of mind not necessarily judicial.
It was unnecessary to introduce sentimentalism in a judicial decision.
The High Court was not able to reach a positive conclusion that Palvinder was responsible for the murder of her husband.
Whether Jaspal committed suicide or died of poison taken under a mistake or whether poison was administared to him by the appellant or by Mohinderpal or by both of them are questions the answers to which have been left very vague and indefinite by the circumstantial evidence in the case.
In view of the situation of the parties and the belated investigation of the case and the sensation it created, it was absolutely necessary for the courts below to safeguard them.
selves against the danger of basing their conclusions suspicions howsoever strong.
Seems to us that the trial court, &Ad to a certain extent the High Court, fell into the same error against which warning was given by Baron Alderson in Beg.
vs Hodge(1), where he said as follows: The mind was apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts of one connected whole; and the more ingenious the mind of the individual, the more likely was it, considering such matters, to overreach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete.
" (1) 102 We had recently occasion to emphasize this point in Nargundkar vs The State of Madhya Pradesh(1).
In order to establish the charge under section 201, Indian Penal Code, it is essential to prove that an offence has been committed mere suspicion that it has been committed is not sufficient,that the accused knew or had reason to believe that such offence had been committed and with the requisite knowledge and with the intent to screen the offender from legal punishment causes the evidence thereof to disappear or gives false information respecting such offences knowing or having reason to believe the same to be false.
It was essential in these circumstances for the prosecution to establish affirmatively that the death of Jaspal was caused by the administration of potassium cyanide by some person (the appellant having been acquitted of this charge) and that she had reason to believe that it was so caused and with that knowledge she took part in the concealment and 'disposal of the dead body.
There is no evidence whatsoever this point.
The following facts, that Jaspal died, that his body was found in a trunk and was discovered from a well and that the appellant took part in the disposal of the body do not establish the cause of his death or the manner and circumstances in which it came about.
As already stated, there is no direct evidence to prove that potassium cyanide was administered to him by any person.
The best evidence this question would have been that of the doctor who performed the postmortem examination.
That evidence does not prove that Jaspal died as a result of administration of potassium cyanide.
the other hand, the doctor was of the opinion that there were no positive postmortem signs which could suggest poisoning.
He stated that potassium cyanide being corrosive poison, would produce hypermia, softening and ulceration of the gastro intestinal track and that in this case he did not notice any such signs.
He further said that potassium cyanide corrodes the lips and the mouth, and none of these signs was the body.
This evidence (1) [1952] S.C.R, 1091 103 therefore instead of proving that death was caused by administration of potassium cyanide, to the extent it.
goes, negatives that fact.
The High Court placed reliance the confession of Palvinder made the 15th April, 1950, to bold this fact proved.
The confession is in these terms: "My husband Jaspal Singh was fond of hunting as well as of photography.
From hunting whatever skins (khalls) he brought home he became fond of colouring them.
He also began to do the work of washing of photos out of eagerness.
One day in December, 1949, Jaspal Singh said to my cousin (Tay 's son) Mohinderpal Singh to, get him material for washing photos.
He(Mohinderpal Singh) said to Harnam Singh, who is head clerk in Baldevnagar Camp, to bring the same from,the Cantt.
Harnam Singh went to the Cantt.
and return said that the material for washing photos could be had only by a responsible Government official.
He told so to Mohinderpat Singh, who said that Harnam Singh should take his name and get the medicine.
Thereupon Harnam Singh went to the Cantt.
and brought the medicine.
I kept this medicine.
As the medicine wassticking to the paper I put it in water in a small bottle and kept it in the almirah.
In those days my husband was in Ambala and I lived with him in the kothi in the city.
He went for hunting for 2 3 days and there he developed abdominal trouble and began to purge.
He sent for medicine 3 4 days from Dr. Sohan Singh.
One day I placed his medicine bottle in the almirah where medicine, for washing photos had been placed.
I was sitting outside and Jaspal Singh enquired from me where his medicine, was.
I told him that it was in the almirah.
By mistake he took that medicine which was meant for washing photos.
At that time, he fell down and my little son was standing by his side.
He said 'Mama, Papa had fallen '.
I went inside and saw, that he was in agony and in short time be expired.
Thereafter I went to Mohinderpal Singh 104 and told him all that had happened.
He said that father of Jaspal Singh had arrived and that he should be 'intimated.
But I did not tell him, because his connections were not good with his son and myself.
Out of fear I placed his corpse in a box and Mohinderpal Singh helped me in doing so.
For 4 5 days the box remained in my kothi.
Thereafter I said to Mohinderpal Singh that if he did not help me I would die.
, He got removed that box from my kothi with the help of my servants and placing the same in his jeep went to his store in Baldevnagar Camp and kept the same there.
That box remained there for 8 10 days.
Thereafter one day I went to the camp and from there got placed the trunk in the jeep and going with Mohinderpal Singh I threw the same in a well near Chhat Banur.
I do not remember the date when Jaspal Singh took the medicine by mistake.
It was perhaps in January, 1950.
" The statement read as a whole is of an exculpatory character.
It does not suggest or prove the commission of any offence under the Indian Penal Code by any one.
It not only exculpates her from the commission of an offence but also exculpates Mohinderpal.
It states that the death of Jaspal was accidental.
The statement does not amount to a confession and is thus inadmissible in evidence.
It was observed by their Lordships of the Privy Council in Narayanaswami vs Emperor(1) that the word "confession" as used in the Evidence Act cannot be construed as meaning a statement by an accused suggesting the inference that he committed the crime.
A confession must either admit in terms the offence, or at any rate substantially all the 'facts which constitute the offence.
An admission of a gravely incriminating fact, even a conclusively, incriminating fact, is not of itself a confession.
A statement that contains self exculpatory matter 'cannot amount to a confession, if the exculpatory statement is of some fact, which if true, would negative the offence alleged to be confessed.
In this view of the law the High Court (1) (1939) 66 I.A. 66; A.I.R. 1939 P.C. 47: 105 was in error in treating the statement of Palvinder as the most important piece of evidence in support of the charge under section 201, Indian Penal ' Code.
The learned Judges in one part of their judgment observed that strictly speaking exculpatory statements in which the prisoner denies her guilt cannot be regarded as confessions, but went to say that such statements are often used as circumstantial evidence of guilty consciousness by showing them to be false and fabricated.
With great respect we have not been able,to follow the meaning of these observations and the learned counsel appearing at the Bar for the prosecution was unable to explain what these words exactly indicated.
The statement not being a confession and being of an exculpatory nature in which the guilt had been denied by the prisoner, it could not be used as evidence in the case to prove her guilt.
Not only was the High Court in error in treating the alleged confession of Palvinder as evidence in the case but it was further in error in accepting a part of it after finding that the rest of it was false.
It said that the statement that the deceased took poison by mistake should be ruled out of consideration for the simple reason that if the deceased had taken poison by mistake the conduct of the parties would have been completely different, and that she would have then run to his side and raised a hue and cry and would have sent immediately for medical aid, that it was incredible that if the deceased had taken poison by mistake, his wife Would have,stood idly by and allowed him to die.
The court thus accepted the inculpatory part of that statement and rejected the exculpatory part.
In doing so it contravened the well accepted rule regarding the use of confession and admission that these must either be accepted as a whole or rejected as a whole and that the court is not competent to accept only the inculpatory part while rejecting the exculpatory part as inherently incredible.
Reference in this connection may be made to the observations of the Full Bench of the Allahabad 106 High Court in Emperor vs Balmakund(1), with which observations we fully concur.
The confession there comprised of two elements, (a) an account of how the accused killed the women, and (b) an account of his reasons for doing so, the former element being inculpatory and the latter exculpatory and the question referred to the Full Bench was: Can the court if it is of opinion that the inculpatory part commends belief and the exculpatory part is inherently incredible, act upon the former and refuse to act upon the latter ? The answer to the reference was that where there is no other evidence to show affirmatively that any portion of the exculpatory element in the confession is false, the court must accept or reject the confession as a whole and cannot accept only the inculpatory element while rejecting the exculpatory element as inherently incredible.
The alleged confession of Palvinder is wholly of an ' exculpatory nature and does not admit the commission, of any crime whatsoever.
The suspicious circumstances from which an inference of guilt would be drawn were contained in that part of the statement which concerned the disposal of the dead body.
This part of the statement could not be used as evidence by holding that the first part which was of an exculpatory character was false when there was no evidence to prove that it was so, and the only material which it could be so hold was the conduct mentioned in the latter part of the same statement and stated to be inconsistent with the earlier part of the confession.
The result therefore is that no use can be made of the statement made by Palvinder and contained in the alleged confession and which the High Court thought was the most important piece of evidence in the case to prove that the death of Jaspal was caused by poisoning or as a result of an offence having been committed.
Once this confession is excluded altogether, there remains no evidence for holding that Jaspal died as a result of the administration of potas sium cyanide.
(1) (193o) I.L.R. 52 All.
107 The circumstantial evidence referred to by the High Court which according to it tends to establish that Jaspal did not die a natural death is of the ' following nature: That Palvinder and Mohinderpal had a motive to get rid of the deceased as she was carrying with Mohinderpal.
The motive, even if proved in the case, cannot prove the circumstances under which Jaspal died or the cause which resulted in his death.
That Mohinderpal was proved to be in possession of a quantity of potassium cyanide and was in a position to administer it to the deceased is a cir cumstance of a neutral character.
Mere possession of potassium cyanide by Mohinderpal without its being traced in the body of Jaspal cannot establish that his death was caused by this deadly poison.
In any case, the circumstance is not of a character which is wholly incompatible with the innocence of the appellant.
The other evidence referred to by the High Court as corroborating the latter part of Palvinder 's alleged confession in the view of the case that we have taken does not require any discussion because if the confession is inadmissible, no question of corroborating it arises.
Mr. Sethi argued that the statements contained in the alleged confession are contradicted rather than corroborated by the evidence led by the prosecution and that the confession is proved to be untrue.
It is unnecessary to discuss this matter in the view that we have taken of the case.
The result, therefore, is that we are constrained to hold that there is no material, direct or indirect, for the finding reached by the High Court that the death of Jaspal wascaused by the administration of potassium cyanide.
If we believe the defence version his death was the result of an accident.
If that version is disbelieved,then there is no proof as to the cause of his death.
The method and manner in which the dead body of Jaspal was dealt with and disposed of raise some suspicion but from these, facts a positive conclusion cannot be reached that he died an unnatural death necessarily, Cases are not unknown 108 where death is accidental and the accused has acted in a peculiar manner regarding the disposal of the dead body for reasons best known to himself.
One of them might well be that he was afraid of a false case being started against him.
Life and liberty of persons cannot be put in jeopardy mere suspicions, howsoever strong, and they can only be deprived of these the basis of definite proof.
In this case, as found by the High Court, not only were the Sub Inspector of police and police constables and other witnesses guilty of telling deliberate lies but the prosecution was blameworthy in introducing witnesses in the case to support their lies and that being so, we feel that it would be unsafe to convict the appellant the material that is left after eliminating the perjured,, false and inadmissible evidence.
For the reasons given above we allow this appeal, set aside the conviction of the appellant under section 201, Indian Penal Code, and acquit her of that charge also.
Appeal allowed.
| The appellant decree holders in an execution proceeding accepted delivery of possession and granted a receipt to the Nazir of the Court acknowledging full delivery of possession to them but allowed the respondents, Bengal Breweries, to remain in possession with their permission.
The appellant also permitted the execution case to be dismissed on the basis that full possession had been delivered to them by the respondents.
Sometime thereafter the appellant made a fresh application for execution against the respondent, for eviction which was resisted under section 47 of the Civil Procedure Code alleging that so far as they were concerned, the decree had been fully executed as a result of the earlier execution proceeding which had terminated, and that further execution was not permissible in law.
Held, that it is open to the decree holder to accept delivery of possession under 0. 21, r. 35, of the Code of Civil Procedure without actual removal of the person in possession.
If he does that then he is bound to the position that the decree has been fully executed, and it cannot be executed any more.
Held, further, that on the principle in Saila Bala Dassi vs 681 Nirmala Sundari Dassi whereby the purchaser from the appel lant under a purchase made prior to the appeal was brought on the record of the appeal, a purchaser from the respondent under a conveyance made prior to the appeal could be brought on the record of the appeal.
Saila Bala Dassi vs Nirmala Sundari Dassi, [1958] S.C.R. 1287, followed, Maharaja Jagadish Nath Roy vs Nafay Chandra Paramanik, , approved.
|
ivil Appeal Nos.1756 59 of 1991.
From the Judgment and Order dated 17.1.1990 of the Allahabad High Court in C.M.W.P. Nos.10962,10901, 10902 and 10903 of 1987.
Raju Rama Chandran for the Appellants.
Prem Malhotra for the Respondents.
The Judgment of the Court was delivered by K.JAGANNATHA SHETTY,J.
We grant Special Leave and proceed to dispose of these appeals.
These appeals preferred against the decision of the Allahabad High Court raise common questions as to the scope of Regulations 17(2) and 17(3) of the U.P. State Road Transport Corporation Employees (Other than officers) Service Regulations, 1981 (`the Regulations ').
277 The respondents were appointed as drivers in the erstwhile U.P. Government Roadways.
Upon the formation of the U.P.State Road Transport Corporation (`Corporation ') they were absorbed in the services of the Corporation.
The Corporation has framed the Regulations inter alia prescribing medical test to drivers every year for the purpose of assessing their suitability for the job.
Pursuant to these Regulations, the Managing Director of the Corporation issued a circular dated December 19,1986 stating that all drivers should be medically examined and those found unsuitable either because of ill health or poor eye sight, be not given duty and their services be dispensed with.
This was followed by another circular dated March 12, 1987 by which the Managing Director directed the Regional Managers to terminate the services of the drivers who are medically found unfit to drive the vehicles.
It was also directed in the circular that such employees whose services are dispensed with should be paid benefits like retrenchment compensation under Section 6(N) of the U.P. Industrial Act.
In the beginning of 1987, all the respondents were subjected to medical examination and it was found that their eye sights were defective.
In view of the medical report, the Corporation discharged them with immediate effect by paying them one month salary in lieu of notice and also retrenchment compensation under the Industrial Disputes Act.
The respondents challenged their retrenchment by means of writ petitions before the Allahabad High Court.
The High Court has allowed the writ petitions directing the Corporation to offer alternative jobs to the respondents.
The Corporation being aggrieved by the decision of the High Court has appealed to this Court.
Regulations 17(2) and 17(3) read as follows: "17(2) A person, appointed to the post of driver, will be required to undergo medical test, particularly vision test, every year or at such intervals as may be prescribed by the General Manager from time to time.
17(3) The service of a person who fails to pass the fitness test, referred to in the sub regulation (2), may be dispensed with: 278 Provided that the persons, whose services are so dispensed with may, in the discretion of the Corporation, be offered alternative job.
" Regulation 17(2) requires that the drivers have to undergo medical test particularly vision test every year, or at such intervals as may be prescribed by the General Manager of the Corporation.
Regulation 17(3) has two branches.
The first branch provides power to the Corporation to remove the driver from the service who fails to pass the medical test.
The second branch of Regulation 17(3) though styled as proviso also appears to be an independent branch.
It is not proviso.
The proviso ordinarily carves out an exception from the general rule enacted in the main provision.
However, sometimes the insertion of a proviso by the draftsman is not strictly adhered to its legitimate use and it may be in substance a substantive provision adding to and not merely excepting something out of or qualifying what goes before it.
The proviso with which we are concerned in Regulation 17(3) does not carve out an exception from the general rule contained in the first branch.
It is an independent and substantive provision providing discretion to the Corporation to offer an alternative job to the retrenched driver.
This offer is to be made after the exercise of power under the first branch of Regulation 17(3).
There is therefore, no doubt that the second branch of Regulation 17(3) is a substantive provision and not in the nature of a proviso to first branch thereof.
The first branch of Regulation 17(3) appears to be in the public interest.
The driver who is found medically unfit to drive the vehicle on the public road certainly cannot be permitted to continue as a driver.
His driving licence is liable to be revoked.
His continuance as driver would, perhaps be perilous to the interests of passengers and pedestrians.
The Corporation therefore, has been empowered to remove him from service as driver.
At the same time, the second branch to Regulation 17(3) shows concern for the person who has been removed from service for want of medical fitness.
It confers discretion on the Corporation to offer him an alternative job.
What does this mean in practical terms? Does it mean that the retrenched driver has a statutory right to get an alternative job? Is it obligatory for the Corporation to offer an alternative job to the driver who is certified to be medically unfit for the driver 's job? The High Court has expressed the view that the Corporation before terminating the service of a driver who fails to satisfy the medical test, is obliged to offer him an alternative job and that offer shall be in writing.
In other 279 words, the High Court seems to be of the opinion that the proviso to Regulation 17(3) imposes an obligation on the Corporation to offer an alternative job to all those who are found medically unfit to carry on their duties in the existing jobs.
The view taken by the High Court appears to be fallacious.
The discretion conferred by Regulation 17(3) confers no vested right on the retrenched workmen to get an alternative job in the Corporation.
Like all other statutory discretion in the administrative law, Regulation 17(3) creates no legal right in favour of a person in respect of whom the discretion is required to be exercised other than a right to have his case honestly considered for an alternative job by the Corporation.
The High Court was equally in error in directing the Corporation to offer alternative job to drivers who are found to be medically unfit before dispensing with their services.
The Court cannot dictate the decision of the statutory authority that ought to be made in the exercise of discretion in a given case.
The Court cannot direct the statutory authority to exercise the discretion in a particular manner not expressly required by law.
The Court could only command the statutory authority by a writ of mandamus to perform its duty by exercising the discretion according to law.
Whether alternative job is to be offered or not is a matter left to the discretion of the competent authority of the Corporation and the Corporation has to exercise the discretion in individual cases.
The Court cannot command the Corporation to exercise discretion in a particular manner and in favour of a particular person.
That would be beyond the jurisdiction of the Court.
In the instant case, the Corporation has denied itself the discretion to offer an alternative job which the regulation requires it to exercise in individual cases of retrenchment.
As earlier stated, the Managing Director has issued two circulars: (i) dated December 19, 1986 and (ii) dated March 12 1987 directing the Regional Managers to dispense with the services of the drivers who are found to be medically unfit to drive the vehicles.
It is directed in the circulars that such drivers should be paid benefits like retrenchment compensation which they are entitled to under the U.P.Industrial Disputes Act.
The circulars thus leave no scope for exercising discretion to consider the individual cases of retrenched drivers for any alternative job.
It may be stated that the statutory discretion cannot be fettered by self created rules or policy.
Although it is open to an authority to which discretion has been entrusted to lay down the norms or rules to regulate exercise 280 of discretion it cannot, however, deny itself the discretion which the statute requires it to exercise in individual cases.
The concerned authority of the Corporation therefore, notwithstanding the said circulars are required to consider the cases of retrenched drivers for alternative jobs.
Counsel for the respondents argued that the object of Regulation 17(3) was to rehabilitate the drivers who are found to be medically unfit to drive vehicles and it is therefore, obligatory for the authority or Officer of the Corporation to exercise discretion in favour of such drivers by offering them alternative jobs.
But counsel for the Corporation considers that it is an absolute discretion of the Corporation to offer or not to offer an alternative job to such drivers and there is no compulsion in the matter.
These are, in our opinion, extreme contentions which are not sustainable under law.
There are two aspects to be borne in mind in exercising the discretion.
Firstly, there are constraints within which the Corporation has to exercise its discretion.
The Corporation is a public utility organisation where medicating motion is efficiency and effectiveness of public service.
Efficiency and effectiveness of public service are the basic concepts which cannot be sacrificed in public administration by any statutory corporation.
The Corporation has to render this public service within the resource use and allocation.
It is within these constraints the Corporation has to exercise its discretion and perform its task.
The second aspect relates to the manner in which the statutory discretion is to be exercised.
The discretion allowed by the statute to the holder of an office, as Lord Halsbury observed in Sharp vs Wakefield, at 179 is intended to be exercised "according to the rules of reason and justice, not according to private opinion; according to law and not humor.
It is to be, no arbitrary, vague and fanciful but legal and regular.
And it must be exercised within the limits to which an honest man competent to the discharge of his office ought to confine himself." Every discretion conferred by statute on a holder of public office must be exercised in furtherance of accomplishment of purpose of the power.
The purpose of discretionary decision making under Regulation 17(3) was intended to rehabilitate the disabled drivers to the extent possible and within the above said constraints.
The Corporation therefore, cannot act mechanically.
The discretion should not be exercised according to whim, caprice or ritual.
The discretion should be exercised reasonably and rationally.
It should be exercised faithfully and impartially.
There should be proper value judgment with fairness and equity.
Those drivers would have served 281 the Corporation till their superannuation but for their unfortunate medical unfitness to carry on the driver 's job.
Therefore, it would not be improper if the discretion is exercised with greater concern for and sympathetic outlook to the disabled drivers subject of course to the paramount consideration of good and efficient administration.
These are some of the relevant factors to be borne in mind in exercising the discretion vested in the Corporation under Regulation 17(3).
In the result we allow these appeals.
In reversal of the judgment of the High Court, we direct the Corporation to consider the cases of respondents in the light of the observations made.
In the circumstances of the case, however, we make no order as to costs.
D.R.L. Appeals allowed.
| The respondents were employed as drivers in the U.P.State Road Transport Corporation.
The Corporation has framed the U.P.State Road Transport Corporation Employees (other than Officers) Service Regulations, 1981, Regulations 17(2) inter alia requires the drivers to undergo medical test particularly vision test every year and under Regulation 17(3) services of those drivers who fail to pass the fitness test are to be dispensed with, with the proviso that such drivers may, in the discretion of the Corporation, be offered alternative jobs.
Pursuant to these Regulations, the Managing Director of the Corporation issued two circulars dated December 19, 1986 and March 12, 1987 directing the Regional Managers to terminate the Services of the drivers who are medically found unfit to drive the vehicles with the further direction that such drivers should be paid benefits like retrenchment compensation under Section 6(N) of the U.P.Industrial Disputes Act.
The respondents were subjected to medical examination and it was found that their eye sights were defective.
Consequently, the Corporation discharged the respondents with immediate effect by paying them one month salary in lieu of notice and also retrenchment compensation under the U.P. Industrial Disputes Act.
The respondents challenged their retrenchment by means of writ petitions before the High Court.
The High Court allowed the writ petitions directing the Corporation to offer alternative jobs to the respondents.
Being aggrieved, the Corporation has preferred these appeals to this Court.
Allowing the appeals, the Court, 275 HELD: 1.
Regulation 17(2) requires that the drivers have to undergo medical test particularly vision test every year, or at such intervals as may be prescribed by the General Manager of the Corporation.
Regulation 17(3) has two branches.
The first branch provides power to the Corporation to remove the driver from the service who fails to pass the medical test.
The second branch of Regulation 17(3) though styled as proviso is an independent and substantive provision providing discretion to the Corporation to offer an alternative job to the retrenched driver.
[278B D] 2.
The discretion conferred by Regulation 17(3) confers no vested right on the retrenched workmen to get an alternative job in the Corporation.
Like all other statutory discretion in the administrative law, Regulation 17(3) creates no legal right in favour of a person in respect of whom the discretion is required to be exercised other than a right to have his case honestly considered for an alternative job by the Corporation.
[279B] 3.
The High Court was in error in directing the Corporation to offer alternative jobs to the respondents because the Court cannot direct the statutory authority to exercise the discretion in a particular manner not expressly required by law and that it could only command the statutory authority by a writ of mandamus to perform its duty by exercising the discretion according to law.
The Court cannot command the Corporation to exercise discretion in a particular manner and in favour of a particular person.
That would be beyond the jurisdiction of the Court.
[279E] In the instant case, the Corporation has denied itself the discretion to offer an alternative job which the regulation requires it to exercise in individual cases of retrenchment.
Although it is open to an authority to which discretion has been entrusted to lay down the norms or rules to regulate exercise of discretion, it cannot however deny itself the discretion which the statute requires it to exercise in individual cases.
The concerned authority of the Corporation therefore are required to consider the cases of retrenched drivers for alternative jobs.[279F G;280A] 4.1 There are two aspects to be borne in mind in exercising the discretion.
Firstly, there are constraints with which the Corporation has to exercise its discretion and perform its task.
The Corporation is a public utility organisation where mediating motion is efficiency and effectiveness of public service.
Efficiency and effectiveness of public 276 service are the basic concepts which cannot be sacrificed in public administration by any statutory corporation.
The Corporation has to render this public service within the resource use and allocation.[280D] 4.2 The second aspect relates to the manner in which the statutory discretion is to be exercised.
Every discretion conferred by statute on a holder of public office must be exercised in furtherance of accomplishment of purpose of the power.
[280E G] Sharp vs Wakefield, at 179, referred to.
The Corporation therefore cannot act mechanically.
The discretion should not be exercised according to him, caprice and ritual.
The discretion should be exercised reasonably and rationally.
It should be exercised faithfully and impartially.
There should be proper value judgment with fairness and equity.
[280H] Therefore, it would not be improper if the discretion is exercised with greater concern for and sympathetic outlook to the disabled drivers subject of course to the paramount consideration of good and efficient administration.
[281A B]
|
: Criminal Appeal No. 75 of 1983.
Appeal by Special leave from the Judgment and order dated the 20th December, 1976 of.
the Madras High Court in Criminal Appeal No. 182 of 1975 and Referred Trial No. 11 of 1975.
R.K Garg and R. Satish for the Appellant/Petitioner.
A.V. Rangam for the Respondent.
The order of the Court was delivered by 350 CHINNAPPA REDDY, J. A prisoner condemned to death over eight years ago claims that it is not lawful to hang him now.
Let us put the worst against him first.
He was the principal accused in the case and, so to say, the arch villian of a villainous piece.
He was the brain behind a cruel conspiracy to impersonate Customs officers ' pretend to question unsuspecting visitors to the city of Madras, abduct them on the pretext of interrogating them, administer sleeping pills to the unsuspecting victims steal their cash and jewels and finally murder them.
The plan was ingeniously fiendish and the appellant was the architect.
There is no question that the learned Sessions Judge very rightly sentenced him to death But that was in January 1975.
Since then he has been kept in solitary confinement, quite contrary to our ruling in Sunil Batra vs Delhi Administra tion(1).
Before that he was a 'prisoner under remand ' for two years.
So, the prisoner claims that to take away his life after keeping him in jail for ten years, eight of which in illegal solitary confinement, is a gross violation o the Fundamental Right guaranteed by article 21 af the Constitution.
Let us examine his claim.
First let us get rid of the cobwebs of prejudice Sure, the murders were wicked and diabolic.
The appellant and his friends showed no mercy to their victims.
Why should any mercy be shown to them? But, gently, we must remind ourselves it is not Shylock 's pound of flesh that are seek, nor a chilling of the human spirit.
It is justice to the killer too and not justice untempered by mercy that we dispense.
Of course, we cannot refuse to pass the sentence of death where the circumstances cry for it.
But, the question is whether in a case where after the sentence of death is given, the accused person is made to undergo inhuman and degrading punishment or where the execution of the sentence is endlessly delayed and the accused is made to suffer the most excruciating agony and anguish, is it not open to a court of appeal or a court exercising writ jurisdiction, in an appropriate proceeding, to take note of the circumstance when it is brought to its notice and give relief where necessary? Before adverting to the constitutional implications of prolong ed delay in the execution of a sentence of death, let us refer to the judicial attitude towards such delay in India and elsewhere.
In Piaradusadh vs Emperor(2), the Federal Court of India took into consideration the circumstance that the appellant had been 351 awaiting the execution of the death sentence for over a year to alter the sentence to one of transportation for life.
In Ediga Annamma vs State af Andhra Pradesh(l), Krishna Iyer and Sarkaria, JJ observed that "the 'brooding horror of hanging ' which has been haunting the prisoner in her condemned cell for over two years" had an "ameliorative impact" and was "a factor of humane significance in the sentencing context".
In State of U.P. vs Lalla Singh(2) Gupta and Kailasam, JJ, were dealing with a case of gruesome murder of three persons, the head of one of whom was severed.
The learned judges, while of the view that the Sessions Judge was perfectly in order in imposing the sentence of death, thought that as the offences had been committed More than six years ago, the ends of justice did not require the sentence of death to be confirmed.
In Bhagwan Baux Singh vs State of U.P.(3), the sentence of death was commuted to imprisonment for life by Murtaza Fazal Ali and Kailasam, JJ, having particular regard to the fact that the sentence of death had been imposed more than two and a half years ago.
In Sadhu Singh vs State of U.P.(4), Sarkaria, Sen, JJ, and one of us (Chinnappa Reddy, JJ took into account the circumstance that the appellant was under spectre of the sentence of death for over three years and seven months to alter the sentence of death to one of imprisonment for life.
In State of U.P. vs Sahai(5), Murtaza Fazal Ali, Baharul Islam and Varadarajan, JJ, while holding that the murders were 'extremely gruesome, brutal and dastardly ', nonetheless declined to pass the sentence of death on the ground that more than eight years had elapsed since the occurrence.
In Furman vs State of Georgia(6), Justice Brennan observed, "The prospect of pending execution exacts a frightful toll during the 352 inevitable long wait between the imposition of sentence and the actual infliction of death".
In Noel Riley and Ors.
vs The Attorney General and Another(1) the majority of the Lords of the Judicial Committee of the Privy Council expressed no opinion on the question whether the delayed execution of a sentence of death by hanging could be described as "inhuman or degrading punishment".
But Lord Scarman and Lord Brightman who gave the minority opinion, after referring.
to the British practice and Furman vs State of Georgia, People vs Chessman, People vs Anderson, Ediga Anamma vs State of Andhra Pradesh, Rajendra Prasad vs State of U.P. and Tyrer vs United Kingdom, said: "It is no exaggeration, therefore, to say that the jurisprudence of the civilised world, much of which is derived from common law principles and the prohibition against cruel and unusual punishment in the English Bill of Rights, has recognised and acknowledged that prolonged delay in executing a sentence of death can make the punishment when it comes inhuman and degrading.
As the Supreme Court of California commented in Anderson 's case (supra), it is cruel and has dehumanising effects.
Sentence of death is one thing: sentence of death followed by lengthy imprisonment prior to execution is another.
"It is of course true that a period of anguish and suffering is an inevitable consequence of sentence of death.
But a prolongation of it beyond the time necessary for appeal and consideration of reprieve is not.
And it is no answer to say that the man will struggle to stay alive.
In truth, it is this ineradicable human desire which makes prolongation inhuman and degrading.
The anguish of alternating hope and despair, the agony of uncertainty, the consequences of such suffering on the mental, emotional, and physical integrity and health of the individual are vividly described in the evidence of the effect of the delay in the circumstances of these five cases.
We need not rehearse the facts, which are not in dispute.
We do not doubt that the appellants have proved that they have been subjected to a cruel and dehumanising experience . . . . . . . . 353 "Prolonged delay when it arises from factors outside the control of the condemned man can render a decision to carry out the sentence of death an inhuman and degrading punishment.
It is, of course, for the applicant for constitutional protection to show that the delay was inordinate, arose from no act of his, and was likely to cause such acute suffering that the infliction of the death penalty would be in the circumstances which had arisen inhuman or degrading.
Such a case has been established, in our view, by these appellants.
" While we entirely agree with Lord Scarman and Lord Brightman about the dehumanising effect of prolonged delay after the sentence of death, we enter a little caveat, but only that we may go further.
We think that the cause of the delay is immaterial when the sentence is death.
Be the cause for the delay, the time necessary for appeal and consideration of reprieve or some other cause for which the accused himself may be responsible, it would not alter the dehumanising character of the delay.
What are the constitutional implications of the dehumanising factor of prolonged delay in the execution of a sentence of death? Let us turn at once to article 21 of the Constitution, for, it is to that article that we must first look for protection whenever life or liberty is threatened.
article 21 says: "No person shall be deprived of his life or personal liberty except according to procedure established by law." The dimensions of article 21 which at one time appeared to be constricted by A.R. Gopalan vs State of Madras(1) have been truly expanded by Maneka Gandhi vs Union of India(2) and Sunil Batra etc.
vs Delhi Administration.(3) In Maneka Gandhi vs Union of India(2), it was held that the various articles of the Constitution in Chapter III (Fundamental Rights) were not several, isolated walled fortresses, each not reacting on the other, but, on the other hand, were parts of a great scheme to secure certain basic rights to the citizens of the country, each article designed to expand but never to curtail the content of the right secured by the other article.
No article was a complete code in 354 itself and several of the Fundamental Rights guaranteed by Chapter Ill of the Constitution overlapped each other.
So, a law satisfying the requirements of article 21 would still have to meet the challenge of article 14 and article 19 of the Constitution.
In regard to article 21 itself, it was held that the procedure contemplated by the article had to be fair, just and reasonable, and not some semblance of procedure, fanciful, oppressive or arbitrary.
Chandrachud.
J, (as he then was) said: "But the mere prescription of some kind of procedure cannot ever meet the mandate of article 21.
The procedure prescribed by law has to be fair, just and reasonable, not fanciful, oppressive or arbitrary.
" Chandrachud, J. expressed his total agreement with Bhagawati, J 's following observations: "The law must, therefore, now be taken to be well settled that article 21 does not exclude article 19 and that even if there is a law prescribing a procedure for depriving a person of 'personal liberty ' and there is consequently no infringement of the fundamental right conferred by article 21, such law, in so far as it abridges or takes away any fundamental right under article 19 would have to meet the challenge of that article. ' Bhagwati, J. further observed: "But apart altogether from these observations in A.K Gopalan 's case, which have great weight, we find that even on principle the concept of reasonableness must be projected in the procedure contemplated by article 21, having regard to the impact of article 14 on article 21.
" Again he said: "The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non arbitrariness pervades article 14 like a brooding omnipresence and the procedure contemplated by article 21 must answer the test of reasonableness in order to be in conformity with article 14.
It must be "right and just and fair" and pot arbitrary, fanciful or oppressive; otherwise, it would be 355 no procedure at all and the requirement of article 21 would A not be satisfied.
" In Sunil Batra vs Delhi Administration(1), Krishna Iyer, J. while dealing with the question whether solitary confinement could be indicted on a person awaiting death sentence, observed: B "True our Constitution has no 'due process ' clause or the VIII Amendment; but, in this branch of law, after Cooper and Maneka Gandhi, the consequence is the same.
For what is punitively outrageous, scandalizingly unusual or cruel and rehabilitatively counter productive, is unarguably unreasonable and arbitrary and is shot down by " articles 14 and 19 and if inflicted with procedural unfairness, falls foul of article 21.
Part III of the Constitution does not part company with the prisoner at the gates, and judicial oversight protects the prisoner 's shrunken fundamental rights, if flouted, frowned upon or frozen by the prison D authority.
Is a person under death sentence or under trial unilaterally dubbed dangerous liable to suffer extra torment too deep for tears? Emphatically no, lest social justice, dignity of the individual, equality before the law, procedure established by law and the seven lamps of freedom (article 19) become chimerical constitutional claptrap.
" In the same case, Desai, J. said: "The word "law" in the expression "procedure established by law" in article 21 has been interpreted to mean in Maneka Gandhi 's case (supra) that the law must be right, just and fair, and not arbitrary, fanciful or oppressive.
otherwise it would be no procedure at all and the requirement of article 21 would not be satisfied.
If it is arbitrary it would be violative of article 14.
" In Bachun Singh vs State of Punjab(2) Sarkaria, J. summarised the effect of Maneka Gandhi in these words: 356 "In Maneka Gandhi 's case, which was a decision by a Bench of seven learned Judges, it was held by Bhagwati, J. his concurring judgment, that the expression 'personal liberty ' in article 21 is of the widest amplitude and it covers a variety of rights which go to constitute the personal liberty of man and some of them have been raised to the status of distinct fundamental rights under article 19.
It was further observed that articles 14, 19 and 21 are not to be interpreted in water tight compartments, and consequently, a law depriving a person of personal liberty and prescribing a procedure for that purpose within the meaning of article 21 has to stand the test of one or more of the fundamental rights conferred under article 19 which may be applicable in a given situation, ex hypothesi it must also be liable to be tested with reference to article 14.
The principle of reasonableness pervades all the three articles, with the result, that the procedure contemplated by article 21 must be 'right and just and fair ' and not 'arbitrary, fanciful or oppressive ' otherwise it should be no procedure at all and the requirement of article 21 would not be satisfied".
The learned judge then referred to article 21 and said, "If this article is expanded in accordance with the interpretative principle indicated in Maneka Gandhi, it will read as follows: "No person shall be deprived of his life or personal liberty except according to fair, just and reasonable procedure established by valid law".
In the converse positive form, the expanded Article will read as below: "A person may be deprived of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law". "Thus expanded and read for interpretative purposes, article 21 clearly brings out the implication, that the Founding Fathers recognised the right of the State to deprive a person of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law".
357 The question whether a prisoner under a lawful sentence of A '.
death or imprisonment could claim Fundamental Rights was considered in Bhuvan Mohan Patnaik vs State of A.P.(l).
Chandrachud, J. (as he then was) declared: "Convicts are not, by mere reason of the conviction.
denuded of all the Fundamental Rights which they other wise possess.
A compulsion under the authority of law, following upon a conviction, to live in a prison house entails to by its own force the deprivation of fundamental freedoms like the right to move freely throughout the territory of India or the right to "practise" a profession.
A man of profession would thus stand stripped of his right to hold consultations while serving out his sentence.
But the Constitution guarantees other freedoms like the right to acquire, hold and dispose of property for the exercise of which incarceration can be no impediment.
Likewise, even convict is entitled to the precious right guaranteed by Article 21 of the Constitution that he shall not be deprived of his life or personal liberty except according to procedure established by law".
The declaration of Chadrachud, I. in Bhuvan Mohan Patniak 's case was quoted with approval and accepted by the Constitution Bench in Sunil Batra vs Administration (supra).
We may also refer here to State of Maharashtra vs Prabhakar Pandurang Sangzgiri and Anr '(2) where a Constitution Bench repelled the argument that the Bombay Conditions of Detention order 1951 conferred privileges but not rights on the detenu with the p observation: "If this argument were to be accepted, it would mean that the detenu could be starved to death if there was no condition providing for giving food to the detenu".
The Court has also recognised that the right to life and liberty guaranteed by article 21 of the Constitution includes the right to a speedy trial.
The right to a speedy trial may not be an expressly guaranteed constitutional right in India, but it is implicit in the 358 right to a fair trial which has been held to be part of the right to life and liberty guaranteed by Art.21 of the Constitution.
After referring to situations where an accused person may be seriously jeopardised in the conduct of his defence with the passage of time, it was observed by one of us in State of Maharashtra vs Champalal(l): "Such situations, in appropriate cases, we may readily infer an infringement of the right to life and liberty guaranteed by article 21 of the Constitution.
Denial of a speedy trial may with or without proof of something more lead to an inevitable inference of prejudice and denial of justice.
It is prejudice to a man to be detained without trial.
It is prejudice to a man to be denied a fair trial.
A fair trial implies a speedy trial." Earlier in Hussainara Khatoon (I) vs Home Secretary(2), it was observed by Bhagwati.
J.: "If a person is deprived of his liberty under a procedure which is not "reasonable, fair or just", such deprivation would be violative of his fundamental right under article 21 and he would be entitled to enforce such fundamental right and secure his release.
Now obviously procedure prescribed by law for depriving a person of his liberty cannot be 'reasonable, fair or just ' unless that procedure ensures a speedy trial for determination of the guilt of such person.
No procedure which does not ensure a reasonably quick trial can be regarded as 'reasonable, fair or just ' and it would fall foul of article 21.
There can, therefore, be no doubt that speedy trial, and by speedy trial we mean reasonably expeditious trial, is an integral and essential part of the fundamental right to life and liberty enshrined in article 21.
" In Hussainara Khatoon (IV) vs Home Secretary(3), the principle was re affirmed and Bhagwati, J. added: "Speedy trial is, as held by us in our earlier judgment dated February 26, 1979, an essential ingredient of 'reason 359 able, fair and just ' procedure guaranteed by article 21 and it is the constitutional obligation of the State to devise such a procedure as would ensure speedy trial to the accused." In the same case, it was further observed that the right to free legal services was implicit in article 21 as no procedure could be said to be reasonable, fair and just which did not provide for legal service to those who could not secure them themselves.
That free legal services to the poor and the needy was an essential element of any reasonable, fair and just procedure had already been decided in M:H. Hoskot vs State of Maharashtra(l).
So, what do we have now? articles 14, 19 and 21 are not mutually exclusive.
They sustain, strengthen and nourish each other.
They are available to prisoners as well as free men.
Prison walls do not keep out Fundamental Rights.
A person under sentence of death may also claim Fundamental Rights.
The fiat of article 21, as explained, is that any procedure which deprives a person of his life or liberty must be just, fair and reasonable.
Just, fair and reasonable procedure implies a right to free legal services where he cannot avail them.
It implies a right to a speedy trial.
It implies humane conditions of detection, preventive or punitive. 'Procedure established by law ' does not end with the pronouncement of sentence; it includes tho carrying out of sentence.
That is as far as we have gone so far.
It seems to us but a short step, but a step in the right direction, to hold that prolonged detention to await the execution of a sentence of death is an unjust, unfair and unreasonable procedure and the only way to undo the wrong is to quash the sentence of death.
In the United States of America where the right to a speedy trial is a constitutionally guaranteed right, the denial of a speedy trial has been held to entitle an accused person to the dismissal of the indictment or the vacation of the sentence (vide Strunk vs United States(2).
Analogy of American Law is not permissible, but interpreting our Constitution sui generis, as we are bound to do, we find no impediment in holding that the dehumanising factor of prolonged delay in the execution of a sentence of death has the constitutional implication of depriving a person of his life in an unjust, unfair and unreasonable way as to offend the constitutional guarantee that no person shall be deprived of his life or personal liberty except 360 according to procedure established by law.
The appropriate relief in such a case ii tn vacate the sentence of death.
What may be considered prolonged delay so as to attract the constitutional protection of article 21 against the execution of a sentence of death is a ticklish question.
In Ediga Annamma 's case, two years was considered sufficient to justify interference with the sentence of death.
In Bhagwan Baux 's case, two and a half years and in Sadhu Singh 's case, three and a half years were taken as sufficient to justify altering the sentence of death into one of imprisonment for life.
The Code of Criminal Procedure provides that a sentence of death imposed by a court of Session must be confirmed by the High Court.
The practice, to our knowledge, has always been to give top priority to the hearing of such cases by the High Courts.
So, also in this Court.
There are provisions in the Constitution (articles 72 and 161) which invest the President and the Governor with power to suspend, remit or commute a sentence of death.
Making all reasonable allowance for the time necessary for appeal and considered of reprieve, we think that delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke article 21 and demand the quashing of the sentence of death.
We therefore accept the special leave petition, allow the appeal as also the Writ Petition and quash the sentence of death.
In the place of the sentence of death, we substitute the sentence of imprisonment for life.
H.L.C. Appeal allowed.
| The appellant was sentenced to death in January, 1975 on a charge of committing wicked and diabolic murders and since then he was in solitary confinement.
Before conviction.
he had been a 'prisoner under remand ' for two years.
The appellant 's contention was that to take away his life after keeping him in jail for ten years, eight of which in illegal solitary confinement, would be violative of article 21.
Allowing the appeal and converting the sentence of death to one of imprisonment for life, ^ HELD: The dehumanising factor of prolonged delay in the execution of a sentence of death has the constitutional implication of depriving a person of his life in an unjust, unfair and unreasonable way so as to offend the constitutional guarantee that no person shall be deprived of his life or personal liberty except according.
to procedure established by law.
Making all reasonable allowance for the time necessary.
for appeal and consideration of reprieve, a delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke article 21 and demand the quashing of the sentence of death.
[359 G H, 360 D E] (i) A convict is entitled to the precious right guaranteed in article 21.
The right to a speedy trill is implicit in the right to a fair trial which has been held to be part of the right to life and liberty guaranteed by this Article.
[357 D, 357 G H, 358 A] Bhuvan Mohan Patnaik vs State of A.P., [1975] 2 S.C.R. 24; Sunil Batra vs Delhi Administration, [1979] 1 S.C.R. 392; State of Maharashtra vs Prabhakar Pandurang Sanpzgiri & Anr., ; ; State of, Maharashtra vs Champalal, A.l.R. ; Hussainara Khatoon (I) vs Home Secretary, ; and Hussainara Khatoon (IV) vs Home Secretary, ; referred to.
349 (ii) Tho Sat of article 21 is that any procedure which deprives a person of his life or liberty must be just, fair and 'reasonable.
It implies humane conditions of detention, preventive or punitive. 'Procedure established by law ' does not end with the pronouncement of sentence; it includes the carrying out of sentence.
Prolonged detention to await the execution of a sentence, of death is an unjust, unfair and unreasonable procedure and the only way to undo the wrong is to quash the sentence of death [359 D E, 359 G H, 360 A] Maneka Gandhi vs Union of India, [1978] 2 S.C.R. 621, Sunil Batra vs Delhi Administration, ; and Bachan Singh vs State of Punjab, A.I.R. referred to.
(iii) Sentence of death is one thing; sentence of death followed by lengthy imprisonment prior to execution is another.
A period of anguish and suffering is an inevitable consequence of sentence of death, but a prolongation of it beyond the time necessary for appeal and consideration of retrieve is not.
And, it is no answer to say that the man will struggle to stay alive.
In truth, it is this ineradicable, human desire which makes prolongation inhuman and degrading with its anguish of alternating hope and despair, the agony of uncertainty and the consequences of such suffering on the mental, emotional and physical integrity and health of the individual.
Where, after the sentence of death is given, the accused is made to undergo inhuman, and degrading punishment or where the execution of the sentence is endlessly delayed and the accused is made to super the most excruciating agony and anguish, it is open to a court of appeal or a court exercising writ jurisdiction, in an appropriate proceeding, to take note Of the circumstance when it is brought to its notice and give relief where necessary.
[352 E G, E] Noel Riley & Ors.
vs The Attorney General & Anr., [1982] Crl.
Law Review 679; Piaradusadh Y. Emperor, A.I.R. ; Ediga Annamma vs State of Andhra Pradesh, ; ; State of U.P. vs Lalla Singh, A.I.R. ; Bhagwan Baux Singh vs State of U.P., A.I R ; Sadhu Singh vs State of U.P., A.I.R. ; State of U.P. vs Sahai, A.I.R. and Furman vs State of Georgia, ; , referred to.
|
Civil Appeal No. 44 of 1950.
Appeal from a judgment and decree of the High Court of Bombay (Sen and Dixit JJ.) dated 21st February, 1947, in First Appeal No. 64 of 1943.
C.K. Daphtary, Solicitor General (section B. Jutbar, with him) for the appellant.
N.C. Chatterjee (N. K. Gamadia, with him) for the respondents.
October 5.
The Judgment of Kania CJ.
, Das and Bose JJ. was read by Das J. Patanjali Sastri and Chandrasekhara Aiyar JJ.
delivered separate Judgments.
45 DAS J.
This is an appeal from the judgment of a Bench of the Bombay High Court (Sen and Dixit JJ.) delivered on February 2, 1947, in an appeal filed under section 18 of the Bombay City Land Revenue Act 11 of 1876 against the judgment of the Revenue Judge at Bombay delivered on October 27, 1942, in a suit filed by the respondents, the Municipal Corporation of the City of Bombay, and Madusudan Damodar Bhat, the then Municipal Commissioner for the City of Bom bay, against the Collector of Bombay.
There is no substantial dispute as to the facts leading up to this litigation and they may be shortly stated.
In 1865, the Government of Bombay, having decided to construct an Eastern Boulevard, called upon the Corporation of Jus tices of the Peace for the City of Bombay, the predecessor in title of the respondent Corporation, to remove its then existing fish and vegetable markets from the site required for the construction of the Boulevard.
The then Municipal Commissioner Mr. Arthur Crawford, after whom the present municipal market was named, applied for the site set aside for the exhibition buildings on the Esplanades for the pur pose of constructing new markets as the existing markets could not be removed until new markets had been provided.
On December 5, 1865, the Architectural Improvement Committee informed the Government that it had no objection to the proposed she measuring about 7 acres being "rented to the Municipal Commissioner" and suggested that "the annual charge of one pie per square yard be levied in consideration of the expense of filling in the ground.
" Computed at this rate, the annual rental would have amounted to about Rs. 176.
On December 19, 1865, the Government passed the fol lowing resolution : "(1) Government approve of the site and authorise its grant.
(2) The plans should be submitted for approval; but Government do not consider any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community.
" 46 Pursuant to the aforesaid Resolution, possession of the site was made over to the then Municipal Commis sioner, but no formal grant was executed as required by Statute 22 & 23 Vic. C. 41.
It has nowhere been contended that even if the statutory formalities had been complied with the grant upon the terms mentioned in the Resolution would nevertheless have been invalid being in excess of the powers of the Government.
The Municipal Com missioner had the site filled up and leveled at the expense of the Corporation.
The plans were approved by the Govern ment and the market buildings were erected by the Corpora tion at considerable expense.
The respondent Corporation was incorporated in 1888 as the successor of the Corporation of the Justices of the Peace for the City of Bombay and it continued in possession of the land and the buildings with out paying any rent to the Government according to the Government Resolution of 1865.
Indeed, it is pleaded in paragraph 7 of the plaint and it is not denied in the writ ten statement that acting upon the said grant contained in the Resolution and the terms contained therein the respond ent Corporation and its predecessor spent considerable sums of money in building and improving the market and have been in possession of the land and the buildings thereon for over 70 years in accordance with the terms of the Resolution and that no land revenue or rent had been paid to the Government ever since the grant was made.
It is in evidence that besides giving up the sites on which the old markets had been situate, a total sum of Rs. 17,65,980 12 1 has been spent by the Corporation up to March 31,1940, in filling up and leveling the site and erecting and maintaining the new market buildings on this site.
In 1911, a portion of the market site was acquired by the Government for the widening of the Palton Road.
Upon the Collector of Bombay being called upon to put in ,his claim, if any, to any part of the compensation money awarded by the Land Acquisition Officer, the Superintendent,, City Survey, on behalf of the Collec tor, replied that Government had no claim in respect of the said land.
The respondent 47 Corporation, therefore, received the whole of the compen sation money and it continued in possession of the rest of the land and the buildings thereon without payment of any rent.
On March 18, 1938, the appellant Collector of Bombay informed the respondent Municipal Commissioner that it was proposed to assess the land occupied by the Crawford Market under section 8 of the Bombay City Land Revenue Act II of 1876 and asked for certain information to enable him to do so.
In his reply, the Municipal Commissioner wrote to say that the site of the market had been given to the Municipal ity as a gift for the construction of the market and that, therefore the question of assessment did not arise.
The appellant Collector of Bombay having insisted that in spite of the Government Resolution of 1865 the Government had the right to assess the site, the Mayor of Bombay on March 23, 1939, wrote a letter to the Government stating, inter alia, as follows : "The Corporation have been advised that there can be no doubt that it was the intention of Government to make a permanent grant of the land to the Municipality, and, fur ther, that it was also the intention that permanent grant should be free from rent and from assessment to land revenue.
I am to point out that the word 'rent ' was used in official documents with the greatest frequency with refer ence to the land revenue leviable by the East India Company and later by Government in the City of Bombay and in the Presidency.
It is, therefore, clear that it was the inten tion of Government in 1865 that this grant should be free from any form of rent or assessment.
The Corporation were put into possession for a period of over 70 years, during which period the land has without interruption been devoted to the purpose for which the grant was made.
Throughout this long period there has been no suggestion from Govern ment that the grant was other than a permanent one, free of revenue, or that the terms of the grant were in any way subject to revision," 48 The above contentions were repudiated by the Govern ment in its letter of January 1, 1940, in the following terms: " As regards the contention that the land has been held by the Municipality uninterruptedly for over 70 years with out any suggestion from Government that it was liable to assessment, I am to state the right to levy the assessment is the prerogative of the Crown and a mere non user of this prerogative cannot destroy it.
Besides, conditions have considerably altered since the land was originally allotted to the Municipality without charging any ground rent or assessment; the Municipality has been recovering substantial rents by letting out stalls in the market and should now be in a position to pay the assessment.
Under the circum stances, the levy of assessment in this case can no longer be foregone or postponed.
" On January 31, 1940, the appellant Collector assessed the land under section 8 of the Bombay Act II of 1876 with a guarantee of 50 years as under : "Assessment Rs. 7,500 per annum for the first 10 years from 1st April, 1940.
Assessment Rs. 15,000 per annum for the next 10 years.
Assessment Rs. 30,000 per annum for the remaining 30 years.
" The assessment was to begin to run from I st April, 1940, and the first payment of the assessment was to become due on 1st April, 1941.
The present suit was thereupon filed in the Court of the Revenue Judge in accordance with the provisions of the Bombay City Land Revenue Act, 1876, for the following reliefs, inter alia : "(a) that it may be declared that there is a right on the part of the plaintiff Corporation in limitation of the right of Government to assess the said land and that the plaintiff Corporation is entitled to hold the said land for ever without payment of any assessment and that the Govern ment has no right to assess the said premises, 49 (b) That the said assessment may be declared ultra vires, invalid and may be ordered to be set aside.
" By his judgment dated October 27, 1942, the learned Revenue Judge dismissed the suit with costs.
The Corporation appealed to the High Court.
Before the High Court, as before us, two of the learned Revenue Judge 's conclusions were not challenged namely, (1) that the Government Resolu tion of 1865 was bad in law either as a grant or even as a contract and could not by itself operate to give any inter est in the land to the respondent Corporation because of the non compliance with the formalities required to be observed by Statute 22 & 23 Vic. C. 41 in the matter of disposition of all real and personal estate vested in the Crown under Statute 21 & 22 Vic. C. 106, and (2) that the Crown 's right to levy assessment on property was a prerogative right to which the ordinary presumption that rights to property which had not been asserted or exercised for a long period of years had been granted away did not apply What was urged before and accepted by the High Court was that the right of the Government to levy any assessment on the land in ques tion had been lost and could not be asserted or exercised by the Government by reason of the equity arising on the facts and circumstances of the case in favour of the respondent Corporation on the principle established by the decision in Ramsden vs Dyson(1) which was adopted by Jenkins C.J. in The Municipal Corporation of the City of Bombay vs The Secretary of State(2) and which equity was, on the authorities, bind ing on the Crown.
After dealing with the cases of Dadoba Janardhan vs The Collector of Bombay(3) and Jethabhoy Rut tonsey vs The Collector of Bombay(4) the High Court observed : "We think, on a reading of the language of the Govern ment Resolution dated the 19th December, 1865, that we should be justified in holding (within the meaning of the rule in Ramsden vs Dyson) that an expectation was created or encouraged by the landlord that the Municipality was to get possession of the land rent free and that the latter took possession of the land with the consent of the landlord, and upon such expectation, with the knowledge of the landlord and without objection by him, laid out money upon the land."
According to the High Court the rule of equity enunciated in Ramsden vs Dyson (supra) was not, as pointed out by Jenkins C.J. in Municipal Corporation of the City of Bombay vs The Secretary of State (supra), dependent on the validity of the disposition and could be asserted even where the statutory formalities relating to the disposition of the property had not been observed and performed, and that this equity constituted a right on the part of the respondent Corporation in limitation of the right of the Government in consequence of a specific limit to assessment having been established and preserved within the meaning of section 8 of the Act II of 1876 so as to disentitle the Government from assessing the land in question.
The High Court relied on the decision in Kamalavahooji Maharaj vs The Collector of Bombay(1) in support of their view that section 8 of the Bombay Act II of 1876 would apply even where the specific limit was nil.
In the result, the High Court reversed the decision of the learned Revenue Judge, allowed the appeal and passed a decree declaring the rights of the respondent Corporation and awarding to it the costs in both Courts.
The Collector of Bombay appealed to the Federal Court and the appeal has now come up for hearing before us.
There has been considerable discussion before us as to the precise scope and effect of the principle of equity enunciated in Ramsden vs Dyson (supra), as to whether such principle should be extended to the facts of the present case, whether the facts 'of this case attract the applica tion of the equity established in Ramsden vs Dyson (supra)or attract the equity established in Maddison vs Alderson (2) and Walsh vs Lonsdale(3) and finally as to whether, in view of the decision (1) (3) (2) 51 of the Privy Council in Ariff vs Jadunath(1), the equity in Ramsden vs Dyson (supra) can prevail against the requirement of formalities laid down in the Victorian Statute referred to above any more than the equity in Maddison vs Alderson (supra)can do against the requirements of the Transfer of Property Act and whether the decision in The Municipal Corporation of the City of Bombay vs The Secretary of State(2) requires reconsideration in the light of the deci sion in Ariff 's case (supra).
In the view we have taken, it is not necessary to go into, and to express any opinion on, any of these questions, for this appeal can, in our opinion, be disposed of on a narrower and shorter ground.
The Government claims to assess the lands in terms of section 8 of the Bombay Act II of 1876 which runs thus : "8.It shall be the duty of the Collector, subject to the orders of the Provincial Government, to fix and to levy the assessment for land revenue.
Where there is no right on the part of the superior holder in limitation of the right of the Provincial Govern ment to assess, the assessment shall be fixed at the discre tion of the Collector subject to the control of the Provin cial Government.
When there is a right on the part of the superior holder in limitation of the right of the Provincial Government, in consequence of a specific limit to assessment having been established and preserved, the assessment shall not exceed such specific limit.
" The sole question for our consideration is whether, on the facts of this case, the respondent Corporation has succeeded in establishing in itself a right in limitation of the right of the Government to assess the land in conse quence of a specific limit to assessment having been estab lished and preserved.
There is no dispute that by reason of the non compliance with the statutory formalities the Gov ernment Resolution of 1865 is not an effectual grant passing title in the land to the respondent Corporation and is not also an enforceable contract.
On the other hand, there is no doubt as to the existence of an intention on the part of the Government to make and on the part of the Corporation to take a grant of the land in terms of the Resolution of 1865 including an undertaking by the Government not to charge any rent.
Both parties acted on the basis of that Resolution and the prede cessor in title of the respondent Corporation went into possession of the land in question pursuant to the Govern ment Resolution of 1865 and, acting upon the said Resolution and the terms contained therein, the respondent Corporation and its predecessor in title spent considerable sums of money in leveling the site and erecting and maintaining the market buildings and have been in possession of the land for over 70 years.
What, in the circumstances was the legal position of the respondent Corporation and its predecessor in title in relation to the land in question?
They were in possession of the land to which they had no legal title at all.
Therefore, the position of the respondent Corporation and its predecessor in title was that of a person having no legal title but nevertheless holding possession of the land under color of an invalid grant of the land in perpetuity and free from rent for the purpose of a market.
Such pos session not being referable to any legal title it was prima facie adverse to the legal title of the Government as owner of the land from the very moment the predecessor in title of the respondent Corporation took possession of the land under the invalid grant.
This possession has continued openly, as of right and uninterruptedly for over 70 years and the respondent Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this period, that is to say, the right to hold the land in perpetuity free from rent but only for the purposes of a market in terms of the Government Resolution of 1865.
The immunity from the liability to pay rent is just as much an integral part or an inseverable incident of the title so acquired as is the obligation to hold the land for the purposes of a market and for no other purpose.
There is no question 53 of acquisition by adverse possession of the Government 's prerogative right to levy assessment.
What the respondent Corporation has acquired is the legal right to hold the land in perpetuity free of rent for the specific purpose of erecting and maintaining a market upon the terms of the Government Resolution as if a legal grant had been made to it.
The right thus acquired includes, as part of it, an immunity from payment of rent which must necessarily consti tute a right in limitation of the Government 's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of section 8 of the Bombay Act II of 1876.
It is true, as pointed out by the Privy Council in Karnalavahooji Maharaj vs Collector of Bombay (supra) that the words of the section would appear to apply rather to the case of a limitation on the right to assess than to the case of a complete exemption from assessment but such a construction would not protect the cases of total exemption which, as conceded in that very case, did in fact exist and were recognised and protected by virtue of the words of section 8 of the Bombay Act II of 1876.
It has not been suggested before us that there are no cases of total exemption or that those cases are protected by any provision of law other than that of this very section.
There is, therefore, no escape from the conclusion arrived at by the High Court, with which we concur, that the words of section 8 would apply to a case where total exemp tion from assessment was granted.
In other words, specific limit may be nil for the purposes of section 8 of the Act.
It was sought to be argued that even if the Government be precluded from enhancing the "rent" in view of the terms of the Government Resolution, it cannot be held to have disentitled itself from its prerogative right to assess "land revenue".
This contention is sought to be rounded on a distinction between "rent" and" land revenue".
This contention, however, was not raised in the written statement and was not made the subjectmatter of any issue on which the parties went to trial and was never put forward before either of the Courts 54 below.
Indeed, in the letter of the Mayor of Bombay dated March 22, 1939, to which reference has been made, it was clearly alleged that the word "rent" was used in official documents with the greatest frequency with reference to the land revenue leviable by the East India Company and later by the Government in the City of Bombay and in the Presidency.
" In the Government 's reply dated January 24, 1940, also quoted above this assertion was never repudiated or denied.
In the premises, the appellant cannot be permit ted at this stage to raise this contention rounded on the supposed distinction, if any, between "rent" and "land revenue" and for the purpose of this case we must proceed on the basis that the word "rent" in the Government Resolution of 1865 was synonymous with or included" land revenue.
" In our opinion, for reasons stated above, the actual decision of the High Court was correct and this appeal should be dismissed with costs, and we order accordingly.
PATANJALI SASTRI j. I am of opinion that this appeal should be allowed and I will briefly indicate my reasons without recapitulating the facts which have been fully stated in the judgment of my learned brother Das which I have had the advantage of reading.
The appeal concerns a claim by the Provincial Govern ment of Bombay to charge land revenue on a plot of land on which the predecessors of the respondent Municipality erect ed the buildings known as the Crawford Market in the City of Bombay.
It is common ground that the land in question would be assessable to land revenue under section 8 of the Bombay City Land Revenue Act (No. II of 1876) unless the respondent established "a right in limitation of the right of the Provincial Government in consequence of a specific limit to assessment having been established and preserved", in which case, the assessment must not exceed such specific limit.
It has been held, and it is not now disputed, that the words quoted above cover 55 a right of total exemption from assessment, the "specific limit" in such a case being nil (see Goswamini Shri Kamala vahooji vs Collector of Bombay (1).
The only question, therefore, is whether the respondent has established a right to such exemption.
The resolution of the Government dated 19th December, 1865, authorising the grant of the land without "any rent being charged to the Municipality as the market will be like other buildings for the benefit of the whole community" did not by itself purport to pass title to the land in question or to confer on the Municipality a right to exemp tion from land revenue.
Admittedly no formal instrument was executed either granting the land or exempting it from assessment.
Nor could the resolution be regarded as a valid disposition of property or an enforceable contract not to charge revenue on the land, as it did not comply with the requirements of the statute 22& 23 Vic. C. 41 which pre scribed certain formalities to be observed for such transactions.
As pointed out by Jenkins C.J. in Municipal Corpora tion of the City of Bombay vs The Secretary of State (2) all land in British India having been vested in the Crown by 21 & 22 Vic. C. 106, the Governor in Council in Bombay could not dispose of property or enter into a contract on behalf of the Crown except in exercise of the power bestowed on them for the purpose under 22 & 23 Vic. C. 41, and that power could be exercised only by observing the formalities prescribed by that statute.
The learned Judges of the High Court, while recognising this difficulty in the way of the respondent establishing a legal right to exemption from assessment, held that the conduct of the Provincial Govern ment in allowing and, indeed, encouraging the respondent to erect the buildings at great cost on the faith of the prom ise not to charge land revenue contained in the Resolution of 19th December, 1865, precluded the respondent on the equitable principle recognised in Ramsden vs Dyson from assessing the land in question, and that this equity was a "right" in limitation of the right of the Provincial Government to assess.
I am unable to share that view.
There is, in my opin ion, no room here for the application of the principle of Ramsden vs Dyson(1).
That decision has been explained by the Privy Council in Ariff vs Jadunath(2) as based on the equitable doctrine of part performance which, their Lord ships held, could not be applied so as to nullify the ex press provisions of the Transfer of Property Act relating to the creation of leases.
They observed : Whether an English equitable doctrine should, in any case, be applied so as to modify the effect of an Indian statute may well be doubted; but that an English equitable doctrine, affecting the provisions of an English statute relating to the right to sue upon a contract, should be applied, by analogy, to such a statute as the Transfer of Property Act and with such a result as to create without any writing an interest which the statute says can only be created by means of a registered instrument, appears to their Lordships, in the absence of some binding authority to that effect, to be impossible."
After quoting the well known passage in the judgment of Lord Kingsdown, their Lordships commented thus : "It will be noticed that Lord Kingsdown is dealing with the case of express verbal contract or something 'which amounts to the same thing. '
He nowhere puts the case of estoppel; the word is not mentioned.
He would appear to be dealing simply with the equitable doctrine of part performance.
His reference to Gregory vs Mighall [(1811) 18 Ves.3281 confirms this view, for that case was simply an earlier instance of the application of the doctrine.
Even if Lord Kingsdown 's language was intended to cover something beyond the equitable doctrine of part performance in relation to the Statute of Frauds, and was intended to refer to circum stances in which a court of equity will enforce a title to land against the person who at law is the owner thereof, the title must, nevertheless, in their Lordships ' view, be based either upon contract express or implied, or upon some statement of fact grounding an estoppel.
In the later decision in Mian Pir Bux vs Sardar Ma horned(1) their Lordships reiterated the same view and held that English equitable doctrines did not afford in India a valid defence to an action in ejectment based on title.
After these decisions of the Privy Council elucidating the principles underlying Ramsden vs Dyson(2) and Maddison vs Alderson(3), it seems to me clear that they have no application to the facts of the present case.
They can no more prevail against the statutory provisions regarding the disposition of property or the making of contracts by Gov ernment than against the provisions of the Transfer of Property Act requiring registered instruments for effecting certain classes of transactions.
No question of estoppel by representation arises, for the Government made no represen tation of fact which it now seeks to deny.
Nor can any case of estoppel by acquiescence be rounded on the facts of the case.
Both parties knew the facts and neither was misled.
There was no lying by and letting another run into a trap [per Cotton L.J. in Russell vs Watts(4)].
The conduct of the parties was referable to the express agreement evidenced by the Government Resolution of 19th December, 1865, to make a grant of the land free of rent (which, in such context, means and includes revenue).
No question, therefore, of any implied contract could arise.
Unfortunately for the respond ent, the express agreement was unenforceable owing to non observance of the prescribed statutory formalities, though it was acted upon by both sides.
No question arises here as to the respondent 's title to the land which apparently has been perfected by lapse of time.
But it is clear that no right of exemption has been established either on the basis of express or implied contract or on the basis of the equitable principles of part performance or estoppel by acquiescence.
It was next contended that, on the analogy of the line of cases holding that a limited interest in land could be acquired by adverse possession for over the statutory peri od, the respondent 's possession of the land in dispute without payment of any quit rent or revenue for over 70 years to the knowledge of the Government perfected its title to hold the land free from liability to pay land revenue.
It is difficult to appreciate the argument so far as the claim to exemption is concerned.
There is no question here of acquisition of a limited interest in land by adverse possession.
The respondent was asserting full ownership and a right of exemption from assessment and the Government agreed with that view as shown by their letter dated 26th June, 1921, to the Land Acquisition Officer for the City of Bombay wherein they stated that "no Government claim in respect of the land under acquisition (a portion of the land here in question) in the above mentioned case is made as the land vests in the Municipality.
" Be it noted that the Government made no claim even to a portion of the compensa tion on the basis of any right of resumption reserved to them, the Resolution of 1865 having made no such reserva tion.
The position then was that throughout the period of adverse possession, the respondent Municipality regarded itself and was regarded by the Government as absolute owner of the land with the additional right of exemption from assessment to land revenue with the result that the Govern ment 's "right to such property" (the subject of adverse possession) was "extinguished" under section 28 of the Limitation Act.
But the right to levy land revenue was no part of the Government 's right to the property.
It is a prerogative right of the Crown which was placed ' on a statu tory basis under the Bombay City Land Revenue Act of 1876, and could be exercised in respect of a land only on the footing that it belonged to another, the "superior holder", for, the claim to levy assessment itself implies a recogni tion of ownership in 59 another.
It is, therefore, difficult to see how adverse possession of the land could entitle the respondent to exemption from assessment of land revenue.
It was said that the Government having intended to grant the land on the terms that it was to be held free of quit rent or revenue and the respondent having held the land on such terms claiming it to be exempt from assessment, a title to hold it on those terms was perfected by the adverse possession, the covenant for exemption from assessment forming part and parcel of the title.
In other words, the respondent should be placed in the same position as if the Government had made a valid revenue free grant.
The argument is, to my mind, fallacious.
If the Government had given effect to their expressed intention by executing an instru ment in writing observing the due formalities, the respond ent would, no doubt, have secured a valid title to the property with a contract binding the Government not to charge revenue, supported as it was by consideration.
But, as already stated, the Government 's promise not to charge land revenue was unenforceable from the inception, and the respondent 's adverse possession of the land, though accompa nied by a claim to exemption from revenue, could not destroy the Crown 's prerogative right to impose assessment on the land.
A somewhat analogous question arose in Goswamini Shri Kamala Vahooji vs Collector of Bombay(1).
The Government admitted that no land revenue had ever been charged in respect of the land which was enjoyed by the holders for more than a century without payment of revenue and it was urged that in virtue of such a long enjoyment a lost grant of the land on the terms that it should be held free from liability to pay revenue must be presumed.
Rejecting that contention, their Lordships observed : "The appellant submits that in the circumstances a lost grant should be presumed, and that this lost grant should be presumed to have contained an exemption from land revenue or a 'right in limitation of the right of Government to assess the property.
The law may presume the existence of a grant which has been lost where it is sought to disturb a person in the enjoyment of right which he and his predecessors have immemorially enjoyed, but it is a different thing to seek to presume that the Crown has by some lost grant deprived 'itself of the prerogative power to tax the property of its subjects, and their Lordships are of opinion that this plea is untenable." (italics mine).
The decision shows that exemption from land revenue does not form part and parcel of the title to land but is collateral to it.
If a presumed lost grant could not cover it neither could title by adverse possession.
I would allow the appeal but make no order as to costs.
I had the advantage of reading the judgment prepared by my learned brother; Mr. Justice Das, and 1 agree in the conclusion he has reached; but i wish to add a few words of my own on some of the points that have been discussed during the course of the hearing.
In the first place, there can be little doubt that the word "rent" in paragraph 2 of the Government Resolution of the 19th December 1865, means "assessment ".
It is true that this word is used generally in cases of landlord and tenant, but when it is remembered that here the Govern ment was parting with the land vested in the Crown in favour of the Municipal Corporation of Bombay, it can safely be assumed or presumed that they were thinking not merely of their rights as landlord but also of their prerogative right as well.
That the land was going to be used for the build ing of markets for the benefit of the whole community and, therefore, should not be charged with rent is a considera tion more relevant and appropriate to the prerogative right to assess than to a right to collect rent in respect of a transaction of lease.
Moreover, it is well known that when ever we speak of 61 a rent free grant of an inam by the Government, what is meant is land revenue or assessment.
The Resolution in question authorized the grant of the site.
There is apparently no grant in writing, conforming to the formalities prescribed by the law then in force.
Part of the site was wanted for the erection of stables and the question of title to that portion was considered and decided in The Municipal Corporation of the City of Bombay vs The Secretary of State for India in Council (1), where the Government gave the Municipality notice to quit and brought a suit for rent on the alleged determination of the tenancy.
It is part of the same transaction with which we are concerned now, and it seems to me that there was no valid grant.
The grant having been authorized, the Corpora tion went into possession and it is not denied that they have built the Crawford Market at enormous cost.
Though the grant was invalid, the Corporation has now acquired a title by adverse possession to the site; this, however, is not the case with reference to the stable site covered by the afore said Bombay decision.
There the question was brought before the Court, well within the 60 years ' period.
The Crawford Market site has been in the possession of the Municipal Corporation for over 60 years under an invalid grant, a term of which was that no rent should be charged.
We are not concerned now with any question of ejectment or determination of tenancy.
Could it be said that the right to levy assessment on the land, enjoyed without any payment of any kind so far, was lost by adverse possession ?
I find it difficult to give an affirmative answer.
Before a right could be said to be acquired or lost by adverse possession, it must have been the subject of possession by a man without title as against the person with the rightful title.
Right to levy assessment is a prerogative right of the Government and it is hard to conceive of a case where it could be said to be lost by adverse possession.
True, there can be adverse possession of a limited right like that of a mortgagee or a lessee or even a perma nent tenant, but still a right must have been enjoyed by the possessor adversely to the claim of the true owner.
It is unnecessary to go into the wider question whether the denial of the right to levy assessment and possession of property coupled with this denial for over a period of 60 years will negative that right; it is sufficient to say that no right to levy assessment was exercised in the case before us before March, 1938, and the denial was only afterwards.
This, however, does not determine the case in favour of the appellant, as there is a question of equity to con sider and on which the appellant failed in the court below.
In fact, it is the crucial point for determination.
When the Architectural Improvement Committee proposed to levy a nominal rent, the Government stated that no rent need be charged, as the markets to be built were for the benefit of the whole community.
This was a representation made by the Government when the site was given and possession was taken.
How far this representation was taken into consideration when the Corporation of Bombay took possession of the site under the grant is not necessary to be considered at any great length.
It is just possible that they would have taken the site even with the nominal rent, but it is equally possible that had they known that the rent was in the nature of assessment and liable to enhancement from time to time or periodically, they would have insisted on getting a site free from assessment in consideration of the sites they gave up for forming the eastern Boulevard.
The allegation in.paragraph 7 of the plaint that the Corporation acted on the faith of the terms contained in the grant has not been denied by the Government.
The accident that the grant was invalid does not wipe out the existence of the representation of the fact that it was acted upon by the Corporation.
Even if the suit had been brought within 60 years for ejectment and the Corporation had no answer to such a claim, the right to levy assessment might have conceivably stood on a different footing.
In any event, 63 there can be no doubt that it would have been competent for a Court of equity to give compensation for the expenditure and protect the possession in the meantime.
Lord Kingsdown refers to this aspect of the matter in Ramsden vs Dyson (1).
In the present case, the Corporation stands on much firmer ground.
They have acquired a title to the land which the Government cannot upset or challenge.
This acquisition of title is as a result of the law of limitation.
It has nothing to do with any conduct on the part of the Corpora tion which can be said to have rendered the representation about non liability to assessment of no legal effect or consequence.
The invalidity of the grant does not lead to the obliteration of the representation.
Can the Government be now allowed to go back on the representation, and ,if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must pre vent being committed?
If the resolution can be read as meaning that the grant was of rent free land, the case would come strictly within the doctrine of estoppel enunciated in section 115 of the Indian Evidence Act.
But even otherwise, that is, if there was merely the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it.
Whether it is the equity recognised in Ramsden 's case(1), or it is some other form of equity, is not of much importance.
Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power.
As pointed out by Jenkins C.J. in Dadoba Janardhan 's case (2), a different conclusion would be "opposed to what is reasonable, to what is probable, and to what is fair.
" I am of the opinion that the decision of the Privy Council in Ariff vs Jadunath (3) is not applicable to the facts before us, as the doctrine of part performance (1) (2) Dadoba Janardan vs The Collector of Bombay (1901) I.L.R,.25 Born.(3) (1931) 58 I.A. 91.64 is not being invoked here as in that case, to clothe a person with title which he cannot acquire except by the pursuit of or in conformity with certain legal forms.
Here, as pointed out already, the Corporation became the full and absolute owner of the site on the lapse of SO years from the date of the grant.
Appeal dismissed.
| In assessment proceedings under the Wealth Tax Act for four assessment years the assessee claimed a deduction in the computation of his net wealth on account of income tax, wealth tax and gift tax liabilities.
The Wealth Tax Officer allowed only part of the deductions claimed The appeal of the assessee was dismissed by the Appellate Assistant Commissioner of Wealth Tax.
In the second appeal before the Appellate Tribunal, the assessee filed statements showing particulars of the income tax, wealth tax and gift tax liabilities in respect of the different assessment years.
The Revenue contended that the income tax liability and the gift tax liability for one of the assessment years [1965 66] had been cancelled by the Appellate Assistant Commissioner in appeals against the assessment orders and those appellate orders of the Appellate Assistant Commissioner having become final in view of the dismissal of the Revenue 's appeals by the Appellate Tribunal, there was no outstanding demand on account of income tax and gift tax for that year and that therefore these two items do not constitute 'debts owed ' by the assessee and so would not qualify for deduction under section 2(m) of the Wealth Tax Act.
The Appellate Tribunal following two judgments of this Court [Commissioner of Income Tax vs Keshoram Industries Pvt.
Ltd. (1966) 59 I.T.R. 767 and H.H. Setu Parvati Bayi vs Commissioner of Wealth Tax Kerala , held that so long as the liability to pay the tax had arisen before the relevant valuation dates it was immaterial that the assessments were quantified after the valuation of dates, that the question whether a debt was owed by the assessee must be examined with reference to the position obtaining on the valuation date and that nothing happening subsequently could be considered in computing the net wealth.
491 The High Court having refused te call for a reference from the Appellate Tribunal under section 27(3) of the Act the Revenue appealed to this Court.
Allowing the appeals in part.
^ HELD: 1.
Whether a debt was owed by the assessee on the valuation date would depend on the fact that a liability had already crystallised under the relevant taxing statute on the valuation date.
[494 D] 2.
An income tax liability crystallises on the last day of the previous year relevant to the assessment year under the Income Tax Act, a wealth tax liability crystallises on the valuation date for the relevant assessment year under the Wealth Tax Act and a gift tax liability crystallises on the last day of the previous year for the relevant assessment year under the Gift Tax Act.
[494 E] 3.
The quantification of the income tax, wealth tax or gift tax liability is determined by a corresponding assessment order, and even if the assessment order is made after the valuation date relevant to the wealth tax assessment in which the claim to deduction is made, there is a debt owed by the assessee on the valuation date.
It is the quantification of the tax liability by the ultimate judicial authority which will determine the amount of the debt owed by the assessee on the valuation date.
So long as such ultimate determination indicates the existence of a positive tax liability, it must be held that there is a debt owed by the assessee on the valuation date even though such determination may be subsequent in point of time to the valuation date.
If, however, it is found on such ultimate determination that there is no tax liability it cannot be said that merely because originally a tax liability could be envisaged there was a debt owed by the assessee.
[495 B E] 4.
Section 2(m) (iii) (a) denies deduction of an amount of tax which is outstanding on the valuation date if the assessee contends in appeal, revision or other proceeding that he is not liable to pay the tax.
It presupposes that there is a subsisting tax demand and the assessee has challenged its validity.
It refers to the initial stage only where an appeal, revision or other proceeding is pending merely.
It does not proceed beyond that stage to the point where, in consequence of such appeal, revision or other proceeding, the tax liability has been found to be nil.
Once it is determined that the tax liability is nil, it cannot be said that any amount of tax is outstanding.
Such a situation does not bring section 2(m) (iii) (a) into operation at all.
If upon the ultimate determination it is found that the amount of tax is nil, the assessee is denied the deduction claimed by him not on the ground of section 2(m) (iii) (a) but because the superior authority has found that there is no tax liability whatever.
[496 A D] In the instant case, the income tax and the gift tax liabilities for the assessment year 1965 66 subsequently set aside on appeal after the valuation dates, cannot be regarded as debts owed by the assessee on the relevant valuation dates.
[495 G] 492 Commissioner of Income Tax vs Keshoram Industries Pvt Ltd. ; ; H.H. Setu Parvati Bayi vs Commissioner of Wealth Tax, Kerala referred to.
Late P. Appavoo Pillai vs Commissioner of Wealth Tax Madras reversed.
|
1 of 1991.
IN Writ Petition No. 491 of 1991.
WITH Writ Petition Nos. 541 & 560 of 1991 etc.
(Under Article 32 of the Constitution of India).
G. Ramaswamy, Attorney General, Shanti Bhushan, Ashok Desai, Hardev Singh, Ms. Indira Jaisingh, P.S. Poti, Rajinder Sachhar, M.K. Ramamurty, R.K. Garg, S.K. Garg, S.K. Dholakia, Santosh Hedge, V.N. Ganpule, Tapas Ray, N.B. Shetye, P.P. Rao, Kapil Sibal, D.S. Tewatia, Hari Swarup, Jayant, Jayant Bhushan, Prashant Bhushan, Ms. Madhoo Moolchandani, Ms. Kamini Jaiswal, A.K. Srivastava, E.M.S. Anam, N.D. Garg, A.M. Khanwilkar and Ms. A. Subhashini for the Appearing Parties.
The following Order of the Court was delivered: This writ petition is by a body of advocates styled "Sub Committee on Judicial Accountability" and raises certain questions as to the validity and implementation of the action of the Speaker of the Lok Sabha admitting a notice of motion moved by 108 Members of Parliament under Article 124(5)read with the and constituting an Inquiry Committee consisting of a Judge of the Supreme Court, Chief Justice of a High Court and a jurist to investigate into the allegations of misconduct made against a sitting 743 Judge of the Supreme Court pertaining to his conduct as the erstwhile Chief Justice of the Punjab and Haryana High Court.
The main prayers in the writ petition are that the Union Government be directed to afford facilities to the Inquiry Committee to discharge its constitutional and statutory functions; and for directions to the Hon 'ble Chief Justice of India to abstain from allocating any judicial work to the concerned Judge during the pendency of the proceedings before the Committee.
In regard to the latter prayer that notice should go to the Hon 'ble Chief Justice of India, we think that aspect of the matter should be deferred for the present and considered at the appropriate stage of the final hearing.
In regard to the directions to the Union Government, the Union Government by means of an affidavit subscribed to by the Joint Secretary, Ministry of Law and Justice, has made manifest its stand that in its view the motion initiated by the 108 Members of Parliament on which the Speaker took the decision to constitute a Committee had lapsed with the dissolution of the Lok Sabha and that nothing further remains to be done in the matter.
It is in that view, as averred in the affidavit, that the Government of India did not advise the President to issue any notification as required by Para 9 read with Para 11(b)(i), of Second Schedule to the Constitution enabling the sitting Judge of this Court and the Chief Justice of High Court to reckon the time spent by them in functioning as members of the Committee as part of their `actual service '.
The contention of the petitioner is that having regard to the constitutional and statutory of the sitting Judges who function in the Committee, the time spent by them in performance of such function is to be reckoned as part of their `actual service ' as judges and no notification under the concerned provisions by the President is necessary.
It is relevant to mention here that some of the interveners who seek to oppose the writ petition have, in addition to their stand against the writ petition, also filed individual writ petitions of their own in which, more or less, they seek to endorse the stand taken by the Government raising the question as to whether the motion survives the dissolution of the Lok Sabha or not.
Shri Shanti Bhushan, learned counsel for the petitioner made an impassioned plea that having regard to the dire need of maintaining public confidence in the apex institution and its reputation it is necessary that the concerned Judge should abstain from discharging judicial functions during the pendency of the enquiry against him.
In the alternative, it is submitted that if a direction to that effect is not issued, 744 it should at the least necessarily be directed that pending disposal of the writ petition on merits, the Union of India shall afford to the Committee such facilities as may be necessary for its effective and prompt functioning.
Shri Shanti Bhushan submitted that even if ultimately the writ petition fails no loss or injury would be caused to anybody and what would have resulted would only be that the eminent body of Judges would have Occasion to look into the allegations against a sitting Judge and if they found the allegations to be baseless, the concerned Judge would be cleared of the imputations and cloud against his conduct.
He urged, if such a direction or interim mandamus is not issued it would seriously impair the image of the Court as the apex Court in the country and affect the confidence of the people in the quality of justice dispensed by it.
We have given our anxious consideration to the matter and having regard to the nature and importance of the issues involved it is appropriate that the main matter along with the connected writ petitions is heard as expeditiously as possible.
We, therefore, direct that his matter be listed on July 9, 1991 with a direction that hearing of the matters be proceeded with day to day until conclusion.
We also indicated that arguments on all sides should be completed within a period of ten working days and the learned counsel for all the parties and interveners should file their written arguments in advance latest by July 1, 1991.
The actual hearing time to each of the counsel will be appointed at the commencement of the hearing on July 9, 1991.
In this view of the matter, we think it appropriate not to embark upon an examination of the contentions in support of and the prayer for interlocutory relief.
We, however, make it clear that our disinclination to issue any interlocutory orders at this stage shall not be construed as an expression of opinion on the merits of the merits of the issues either way and shall not also be construed as an interdiction of the functioning of the Committee if the Committee otherwise considers appropriate to proceed with the matter.
We also make it clear that during the pendency of these matters before this Court no proceeding pending or filed hereafter in any other court shall be heard or any order passed therein relating to the issues involved in these matters.
NVP Petition dispose of.
| A Writ Petition filed by the Petitioner Committee, a body of Advocates, praying for directions to be issued to the Union government and the Chief Justice of India, in connection with the enquiry into allegation of misconduct made against a sitting Judge of the Supreme Court, pertaining to his conduct as Chief Justice of a High Court, raised certain questions as to the validity and implementation of the action of the Speaker of the Lok Sabha in admitting a notice of motion moved by the Members of Parliament under Article 124(5) of the Constitution of India, 1950 read with .
Some intervention applications, opposing the Writ Petition, and some other Writ Petitions more of less endorsing the Government 's stand raising the question as to whether the motion in question survived the dissolution of the Lok Sabha or not, were also filed.
Praying for interim direction, which was identical with the prayer in main Writ Petition, it was urged on behalf of the Petitioner Committee that having regard to the dire need of maintaining public confidence in the institution and its reputation as apex Court, it was necessary that the concerned Judge should abstain from discharging judicial functions during the pendnecy of the enquiry, and a direction should be issued accordingly, or pending disposal of the Writ Petition, the Union Government should be directed to afford all necessary facilities to the Committee for smooth and efficient functioning.
Directing expeditious hearing of the Writ Petition and connected matters, this Court, 742 HELD: 1.1 Having regard to the nature and importance of the issues involved, it is appropriate that the main matter along with the connected writ petitions is heard as expeditiously as possible.
Accordingly, this matter should be listed on July 9, 1991 and hearing of the matters proceeded with day to day until conclusion.
[744D] 1.2 In the circumstances, it is not appropriate to embark upon an examination of the prayer for interlocutory relief.
However, the Court 's disinclination to issue any interlocutory orders at this stage should not be construed as an expression of opinion on the merits of the issues either way and as an interdiction of the functioning of the Committee, if the Committee otherwise considers appropriate to proceed with the matter.
[744E F]
|
Appeal No. 511 of 1976.
(Appeal by Special Leave from the order dated 19 8 1975 of the First Labour Court Ahmedabad in Appln. 493/75).
R.P. Bhatt, D.K. Agarwal, K. K. Jain and Bishamber Lal, for the Appellant.
710 V. M. Tarkunde, K.L. Hathi, P.C. Kapur and Miss M. Tarkunde, for the Respondent.
The Judgment of the Court was delivered by GOSWAMI, J.
A complaint was made to the Labour Court by the respondent, Mazdoor Mahajan Mandal, Baroda (briefly the union) alleging the lock out declared by the appellant to be illegal.
The appellant, Priya Laxmi Mills Ltd. (briefly the management) resisted the petition.
After examining the oral and documentary evidence the Labour Court came to the conclusion that the lock out was illegal under clauses (a) and (h) of sub section (1) of section 98 of the Bombay Industrial Relations Act, 1946 (briefly the Act).
A brief reference to the facts will be appropriate at this stage.
The present appellant purchased this textile mill from M/s. Sayaji Mills Ltd. in 1972 when it had about 2500 work men besides officers.
It is said that in 1974 the textile industry suffered adverse market conditions, accumulation of stocks, shortage of raw materials and bank credit squeeze in consequence of which the management started experiencing acute financial difficulties which were aggravated by a spate of litigation between the appellant and the previous owners.
The appellant somehow continued to pay the wages of the workmen upto February 1975 although in an irregular manner.
The mill works in three shifts.
By a notice of April 13, 1975, the management notified a lay off from the first shift of April 14, 1975, till further notice.
The lay off was in the departments of spinning, weaving, grey folding and engineering as per the lists containing the names of the workmen and the members of the staff connected therewith.
Other departments, however, were allowed to continue to work as usual.
It was mentioned in the notice.
of lay off that a workman, if eligible, shall be paid lay off compensation as provided under the law.
The permanent workmen of laid off departments who were eligible to get compensation under the law were required to present themselves in the respective departments at the start of their respective shifts and get themselves marked as "laid off".
Naturally, therefore, although, the workmen were laid off they had to attend the mill premises for being marked present at the time of the commencement of the shift in order to be able to claim lay off compensation.
In view of the mounting tension on account of irregular payment of wages for quite some time and the subsequent lay off, negotiations were also afoot between the management and the union without much headway.
According to the management the workmen refused to accept the decision of lay off and they continued to remain inside the mill premises even after getting their presence marked.
Some employees remained in the department while a large number of them collected outside the department and refused to go out of the mill premises.
It is said that the workmen started staging a 'dharna ' daily in the administra 711 tive office of the mills thereby disrupting its normal and smooth working.
This state of affairs continued from April 14, 1975, to April 21, 1975.
The workmen did not pay any head to the request of the management to leave the premises after they had been marked present.
In this background, on April 21, 1975, at about 4.00 P.M. a section of the workmen forcibly entered the Guest House No. 2, and trespassed into the living room of Shri L. Grover, Establishment Officer of the mills, dragged him out of the room and took him into the administrative office and kept him there under restraint and illegal confinement for about 24 hours.
The workmen also removed the personal belongings of Shri Grover.
They also gheraoed and kept under restraint and illegal confine ment the Deputy Executive Director, Shri V.K. Bagla, the Deputy Chief Executive (Works) Shri S.C. Gandhi and other senior officers in the mill premises with effect from 7.00 P.M. on April 21, 1975.
The officers were kept in illegal confinement without food and other basic amenities of life continuously for 21 hours.
It is said that the officers were abused and humiliated.
The workers also held out threats to their lives.
The management also referred to other alleged unruly and undisciplined behaviour of the workmen.
The officers were ultimately brought out with the help of the police authorities at about 4.00 P.M. on April 22, 1975.
The employees, however, continued 'dharna ' inside the mill premises on April 22 and the night between April 22 and April 23.
It is, thus, the management 's case that under the .circumstances mentioned above the company was compelled to declare a lock out from the first shift of April 23, 1975: It may be appropriate to set out the lock out notice dated April 23, 1975: "We hereby give notice to all concerned that a lock out is declared with effect from the begin ning of l st shift commencing at 7.00 a.m. on 23 4 1975 in our mills for the following or any of the reasons given below: (a) On or about 4.30 p.m. on 21 4 1975 a section of the workmen forcibly entered into the mill Guest House No. 2 and trespassed into the room in which Shri L. Grover, the Establishment Officer of the mills resides, dragged him out of the room and took him to the Administrative Office of the mills and kept him there under restraint and illegal confinement for about 24 hours.
The work ers also removed personal belongings of Shri Grov er.
(b) The workers gheraoed, kept in restraint and illegal confinement.
our Dy.
Executive Direc tor, Shri V.K. Bagla, Dy.
Chief Executive (Works) Shri S.C. Gandhi, and other senior officers in the mill premises with effect from 7.00 p.m. of Monday, the 21st April 75.
Those officers were kept in illegal confinement without food and other basic amenities of life continuously for 21 hours.
(c) The workers not only kept the above mentioned officers under wrongful restraint but also abused and humiliat 712 ed them.
Threats were advanced to the life of these officers and to the effect that the mill property will also be damaged.
(d) The workers employed in spinning and weaving departments including their preparatories and partly engineering department have been laid off with effect from 14 4 75.
These workmen, in stead of leaving the factory premises after lay off attendance staged dharana daily in the adminis trative office of the mills thereby disrupting its normal and smooth working.
(f) The workers have also arrested the move ment of cloth bales from mill godowns thereby disrupting the bales of the finished goods.
The lock out hereby declared will cover all the departments of the mills except the Watch and Ward and essential service which will continue to function as usual and will not be affected by this notice.
" X X X X The union denied, the various allegations made against the workmen, and stated that the lock out was carried out with a view to pressurise the union and the workmen to accept the management 's terms with regard to the mode of payment of their salary as well as the lay off arrangements introduced by the management.
Both sides produced documentary evidence as well as examined witnesses.
The management examined four witnesses whereas the union examined two witnesses on their behalf.
After examining the entire evidence the Labour Court came to the conclusion that the lockout was an illegal lock out.
Hence this appeal by special leave.
The question that falls for decision is whether the lock out in question is illegal under section 98(1)(a) of the Act.
We are not required to consider whether it is also illegal under section 98(1)(h) of the Act as referred to by the Labour Court.
According to section 98(1)(a), "a lock out shall be illegal if it is commenced or continued in cases where it relates to any industrial matter specified in Schedule III or regulated by any standing order for the time being in force".
We are not required to consider the second part of section 98(1)(a) which refers to the standing order.
Sched ule III enumerates seven items out of which we are required to consider only item 6(ii) which reads as follows : "Employment including unemployment of persons previously employed in the industry concerned".
Before we proceed further we may take note of the definition of lock out which is found in sec tion 3 (24) of the Act: " 'Lock out ' means the dosing of a place or part of a place of employment or the total or partial suspension Of 713 work by an employer or the total or partial refusal by an employer to continue to employ persons em ployed by him, where such closing, suspension, or refusal occurs in consequence of an industrial dispute and is intended for the purpose of (a) compelling any of the employees directly af fected by such closing, suspension or refusal or any other employees of his, or (b) aiding any other employer in compelling persons employed by him, to accept any term or condition of or affecting employment.
" This definition is differently worded from what is there in the .
We, however, find that in the Trade Disputes Act, 1929, lock out is similarly defined as in the present Act.
By section 2(1) of the Industrial Disputes Act, lock out "means the closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of per sons employed by him".
This Court, while interpreting the above defini tion, in Management of Kairbetta Estate, Kotesiri vs Rajamanickam and others, C) observed as follows : "Even so, the essential character of a lock out continues to be substantially the same.
Lock out can be described as the entithesis of a strike.
Just as a strike is a weapon available to the employees for enforcing their industrial demands, a lock out is a weapon available to the employer to persuade by a coercive process the employees to see his point of view and to accept his demands.
" It should, however, be made clear that lock out can be declared also for reasons similar to those described in the present notice of lock out.
In that case although it will be lock out in anoth er sense, it may not be a lock out within the meaning of section 3 (24) of the Act.
That kind of a lock out with the avowed object of preventing violence and threat to life and property may even be justified on facts in a given case.
In such a situation 'it may be difficult to prove that it is an illegal lock out since in an illegal lock out the sole object is to compel the workmen to accept the terms of the employer which the workers consid er as unreasonable and oppressive.
In the instant case although we do not approve of the Labour Court 's observations in the order to a possible effect that threats and gheraoes "are the normal behaviour when an occasion like this takes place", we cannot say that its ultimate conclusion after appreciation (1) ; 714 of the evidence is such that it may call for inter ference in an application under Article 136 of the Constitution.
The Labour Court has given a finding at paragraph 15 of the as follows : "Coming now to the other important ingredient viz. intention on the part of 'the management to compel the workers directly affected by such clos ing to accept any term or condition affecting employment, it appears that there was such an intention on the part of the management.
The opponent company, because of the financial diffi culties which they were facing wanted the workers to agree to accept lay off and also agree to accept wages not on the specified days as per the existing awards, etc.
but as and when the management could pay .
In my opinion, therefore it could be said that all the ingredients of an illegal 'lock out ' were present in this case".
The Labour Court has taken note of the fact that there was no evidence of any violence being caused to the property of the mill notwithstanding the presence of a huge crowd said to be in a riotous mood.
The tribunal also took the view that the officers were not confined in.
their rooms as such as represented but they themselves did not like to come out perhaps due to apprehension.
The Labour Court was of opin ion that the situation was not of such a grave nature which called for such a drastic step like a lock out.
The Labour Court seems to be of the further view that since the manage ment has been in continuous financial difficulties heading towards a closure and closure would have put the management under an obligation to pay compensation under section 25 FFF under the , opportunity was taken to declare a lock out on the slightest opportunity.
It is not possible for us to reappraise the evidence and come to a different conclusion on the facts in this appeal.
We are also unable to hold that the conclusions of the Labour Court are perverse or even against the weight of evidence on record.
The only question, therefore, that survives is whether on the finding of the Labour Court the lock out is illegal.
It is contended on behalf of the appellant that item 6(ii) in Schedule Iii to the Act which deals with the unemployment of persons previously employed in the industry concerned cannot govern a case of lay off.
According to counsel lay off is not unemployment since the relationship of master and servant is not snapped.
We are unable to accept this contention.
Lay off is not defined in the Act but has been defined in section (KKK) of the : " 'lay off ' (with its grammatical variations and cognate expressions ) means the failure, refus al or inability of an employer on account of short age of coal, power or raw materials 715 or 'the accumulation, of stocks or the breakdown of machinery or for any other reason to give employ ment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched".
X X X X X Even according to the dictionary meaning, lay off means to discontinue work or activity; to dismiss or discharge temporarily.
When workers are in employment and they are laid of, that immediately results in their unemployment, howsoever temporary, and such an unemployment will clearly come under item 6(ii) in Schedule III of the Act.
It is not disputed that "unemployment" is an industrial matter as defined under section 3(18) of the Act.
Since unemployment is an industrial matter under item 6(ii) of Schedule III to the Act, the lock out which has been found by the Labour Court to have direct connection with lay of is clearly illegal under section 98(1)(a) of the Act.
In the result the appeal fails and is dis missed with costs.
P.B.R Appeal dis missed.
| By a Notification issued under the , the Government fixed the minimum rates of wages in respect of potteries industry, on the basis of a committee 's report.
Later, proceedings were started against the second appellant, a partnership firm .manufacturing
Mangalore type roofing tiles, on the complaint of an inspector alleging that the partners of the firm had failed to produce their muster roll and the wages register for his examination.
The Magistrate acquitted the appellant holding that Entry 22 did not cover roofing tiles.
The High Court affirmed the ac quittal on merits, but opined that manufacture of roofing tiles was included in the potteries industry.
The appellants contended that the Articles mentioned in the explanation were exhaustive of the objects covered by entry 22, and did not cover roofing tiles, while the re spondent State contended that the Explanation "includes" not only the objects mentioned therein, but other articles like roofing tiles.
Allowing the appeal, the Court, HELD: (1) The word "includes" is generally used as a word of extension, but has been used here the sense of means '; this is the only construction that the word can.
bear in the context.
In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of Entry 22.
[882 G H] Dilworth vs Commissioner of Stamps applied.
(2) The manufacture of Mangalore pattern roofing tiles is outside the purview of Entry 22.
The explanation could not possibly have been introduced to extend the meaning of potteries industry or the articles listed therein added ex abundanti cautela.
[882 D F; 883 A]
|
minal Appeal No. 24 of 1956.
On appeal by special leave from the judgment and order dated the, 26th September 1955 of the Allahabad High Court (Lucknow Bench) in Criminal Appeal No. 195 of 1955 and Capital Sentence No. 17 of 1955 arising out of the judgment and order dated the 11th April 1955 of the Court of the Sessions Judge at Bahraich in Criminal S.T. No. 9 of 1955.
D. R. Prem, for the appellant.
K. B. Asthana and C. P. Lal, for the respondent.
March 12.
The Judgment of the Court was delivered by IMAM J.
The appellant 'was sentenced to death for the murder of one Ram Dularey.
He was also sentenced to seven years ' rigorous imprisonment for having robbed the murdered man of his goods.
He was tried along with two other persons, who were ' acquitted, by the Sessions Judge of Bahraich.
All the four assessors,, who attended the trial, were of the opinion that the appellant was guilty.
The High Court of Allahabad affirmed the conviction and the sentence and this appeal is by special leave, 193 Certain facts have been proved beyond all doubt.
Indeed, the most important of them are admitted by the appellant in his statement under section 342 of the Code of Criminal Procedure when examined in the Court of Sessions.
It has been established by the evidence in the case that the deceased Ram Dularey, a shop keeper of Jarwal, had gone to Lucknow to purchase goods for his shop.
On his return journey, he got down from the train at Jarwal Road Station on the 2nd of July, 1954, at about 9 30 p.m.
He had with him articles consisting of a box, a balti, a gunny bag, jholas and other things.
Shortly thereafter, he engaged the appellant 's cart to take him and his goods to his village.
Two other persons also got on to the cart.
The appellant was driving the cart.
Neither the deceased nor the articles, which were with him, nor the cart ever reached Jarwal.
In the morning, Ram Dularey 's body was found near a bridge in close vicinity of Jarwal. 'Information was sent to the police who commenced investigation and their enquiriesed them to the appellant, who was arrested on the 6th of July, 1954.
The appellant gave the key of his kothri to the police with which it was opened.
From the kothri numerous articles were recovered, including a big knife exhibit 20 with blood stains, a dhoti exhibit 3, a box exhibit 9, a balti exhibit I,, a chadar exhibit 2, a gunny bag exhibit 13 and a jhola exhibit 24.
It is not necessary to give the details of the other articles recovered.
The knife was sent to the Chemical Examiner along with the dhoti.
Although minute blood stains were detected on the knife, they were not sufficient to enable a comparison in a blood group test.
No blood was discovered on the dhoti.
The dhoti exhibit 3, the box exhibit 9, the balti exhibit 1, the chadar exhibit 2, the gunny bag exhibit 13 and the jhola exhibit 24 have been identified as belonging to the deceased Ram Dularey.
When examined under section 342 of the Code of Criminal Procedure by the Sessions Judge, the appellant stated that the deceased Ram Dularey bad asked him to take his goods in his cart and it was agreed that Rs. 2 would be paid as the fare.
The appellant 194 took the deceased on his cart with his goods including the box exhibit 9.
Two other men were also in the cart who got down at the Sugar Mill gate at the Railway Station.
At the Raduayan Bridge three men enquired if Ram Dularey was in the cart.
Ram Dularey responded and got down from the cart asking the appellant to halt his cart at Jarwal Bazar Bridge, where he waited for the deceased until 4 a.m., but the deceased did not turn up.
As the appellant did not know the house of the deceased in Jarwal Bazar, he took the dead man 's goods in his cart to his own house as his buffaloes were very hungry.
To the question as to whether any article of the deceased was recovered from his house by the police, the appellant stated that he handed over to the police all the property of the deceased which be had looked in the kothri.
He asserted that he had told the people in his village as well as the Mukhia that he would hand over the property to its owner when he came to take it.
Concerning the knife, he disowned its ownership and could not say how it came to be found in his house.
So far as the dhoti exhibit 3 is concerned, the appellant claimed it as his.
On behalf of the appellant, it was urged that the evidence in the case was insufficient to establish any of the charges framed against him.
In the alternative, it was suggested, that as the co accused of the appellant had been acquitted the latter could not be convicted of the offence of murder by the application of the provisions of section 34 of the Indian Penal Code in the absence of proof that any act of his caused the death of Ram Dularey.
It was also submitted that no question was put by the Sessions Judge to the appellant when he was examined under section 342 of the Code of Criminal Procedure concerning the act of murder or robbery.
We have examined the statement of the appellant recorded under section 342 of the Code of Criminal Procedure by the Sessions Judge.
At the very commencemeilt of the record of that statement, the Sessions Judge readout the appellant 's statement under section 342 of the Code of Criminal Procedure before 195 the Committing Magistrate and enquired 'Whether it was correct.
, to which the 'appellant replied in the affirmative.
The statement of the appellant before the Magistrate is admissible under section 287 of the Code of Criminal Procedure.
The Magistrate pointedly asked the appellant as to whether he along with the other accused murdered Ram Dularey and had taken his property to which the appellant replied in the negative.
It was not necessary for the Sessions Judge to specifically repeat the same when the appellant admitted his statement before the Committing Magistrate as correct when read out to him.
Apart from this, when the statement of the appellant to the Sessions Judge is read as a whole, it clearly shows that the appellant knew what the accusation against him was and he offered an explanation for the disappearance of Ram Dularey from his cart and for his possession of the deceased 's goods.
There is no justification for supposing that there had been any prejudice caused to the appellant on account of improper or insufficient recording of his statement by the Sessions Judge under section 342 of the Code of Criminal Procedure.
On the facts proved beyond question it is clear that the last time the deceased was seen alive was in the company of the appellant and two other persons when the cart started for Jarwal and his goods were ' on that cart.
There is, however, no evidence as to what happened in the course of the journey.
Concerning that we have only the statement of the accused.
The evidence next establishes that after the cart started, next morning, the 3rd of July, the dead body of Ram Dularey was found not far from Jarwal.
His goods had disappeared and some of them at any rate were found in the possession of the appellant on the 6th of July.
The real question is whether the evidence in the case establishes that the appellant murdered and robbed Ram Dularey.
The evidence is circumstantial.
Before we deal with that evidence, it is necessary to consider how far recent possession of property of a deceased, in circumstances clearly indicating that he 196 had been murdered and robbed, would suggest that not only the possessor of the property was a thief or a receiver of stolen property, but that it also indicated that he was guilty of a more aggravated crime which had connection with the theft.
In the case of The Emperor vs Sheikh Neamatulla(1) Sir Lawrence Jenkins had the occasion to examine this question.
After referring to section 114 of the Evidence Act, be quoted the following passage from Wills on Circumstantial Evidence: "the possession of stolen goods recently after the loss of them, may be indicative not merely of the offence of larceny, or of receiving with guilty knowledge, but of any other more aggravated crime which has been connected with theft.
This particular fact of presumption commonly forms also a material element of evidence in cases of murder; which special application of it has often been emphatically recognized".
In the case of Queen Empress vs Sami and Another(2) at page 432, the learned Judges of the High Court observed, "Under these circumstances, and in the absence of any explanation, the presumption arises that any one who took part in the robbery also took part in the murder.
In cases in which murder and robbery have been shown to form parts of one transaction, it has been held that recent and unexplained possession of the stolen property while it would be presumptive evidence against a prisoner on the charge of robbery would similarly be evidence against him on the charge of murder.
All the facts which tell against the appellant, especially his conduct indicating a consciousness of guilt, point equally to the conclusion that he was guilty as well of the murder as of the robbery. . . . .
In the case of Emperor vs Chintamoni Shahu(3), the opinion was expressed that "the possession of stolen goods recently after the loss of them may be indicative not merely of the offence of larceny or of receiving with guilty knowledge but of any other more aggravated Crime which has been (1) [1913]17 C.W.N. 1077.
(2) Mad.
(a) A.I.R. 1930 Cal.
379. 197 connected with the theft; this particular fact of pre sumption forms also a material element of evidence in the case of murder".
A similar view seems to have been taken in the case of In re Guli Venkataswamy(1) as well as in the case of Ramprashad Makundram Rajput vs The Crown(2).
In the present case it is established beyond doubt that the deceased travelled with his goods with the appellant on his bullock cart.
He should have reached his destination Jarwal in the course of the night.
He never got there.
Obviously, he was murdered on his way home.
On the appellant 's own statement, he and the deceased were alone in the cart after the other two persons had got off the cart at the Sugar Mill gate.
Thereafter the deceased was never seen alive by any one.
He was found murdered.
The appellant was found in possession of the deceased 's goods three days afterwards.
The appellant made no effort to trace the whereabouts of the deceased or lodge information of his disappearance from the bullock cart.
The appellant has told the court that some people called the deceased while the cart was on its journey and the deceased told him to wait for him at a certain place.
He waited until 4 a.m. but the deceased never turned up.
This should have aroused his suspicions and he should have informed the police or someone in authority about it.
He says he informed the Mukhia and all the people about it.
Neither the Mukhia nor anyone has been examined by the appellant to support his story.
Reliance was placed on the statement of Iftikhar Ahmad P.W. 7) who spoke of a rumour in the village that the appellant had brought the property of a man on his cart who had gone away and that this rumour had been spread by the appellant.
It is clear, however, that the witness was not speaking of this from his personal knowledge and his statement is not legal evidence.
On the other hand, if really the appellant had spread such a rumour there is no adequate explanation for his failure to inform the authorities.
He (1) A.I.R. 1950 Mad. 309.
(2) A.I.R. 1949 Nag.
26 198 knew he was in possession of a large number of articles belonging to the man who had hired his cart but had disappeared in very strange circumstances.
In addition, there is no explanation for his possession of a big blood stained knife, a weapon which if used against the deceased, could have caused the injuries found on him.
It is true that the blood stains were minute and have not been established to be of human blood.
The appellant, however, denied that the knife belonged to him, and has not explained as to how it came to be in his possession.
It is impossible to believe his story that he waited until 4 a.m. for the deceased to return.
The cart had started from Jarwal Road Station at about 10 p.m.
It could not have been more than a couple of hours later that the deceased left the cart.
To wait from that time until 4 a.m. at a place not far from Jarwal itself appears to be a fantastic story.
It is true that none of the clothes of the appellant were found to be bloodstained, as they should have been, if he bad parti cipated in the murder, having regard to the nature of the injuries on the deceased.
These clothes were not seized until the 6th July, some three days later, and the appellant could have removed all traces of blood stains from his clothing in that time.
The appellant was convicted of the offences of murder and robbery by the Sessions Judge by the application of section 34 of the Indian Penal Code.
The charge framed, however, was one of murder and robbery and there was no mention of these offences having been committed in the furtherance of a common intention.
The High Court, however, found that the appellant along with two others committed these offences and they shared in the goods robbed.
On this finding, even if the co accused of the appellant were acquitted, the appellant could be convicted by the application of the provisions of section 34 of the Indian Penal Code.
The charge framed against the appellant was for murder and robbery and the only question to be decided was whether the evidence was sufficient to support such a charge or did it merely establish offences less grave in nature.
We think it 199 was and are satisfied that it establishes the offences of murder and robbery against the appellant and not merely the minor offence of robbery or theft.
It is impossible to accept the submission that the evidence does not establish any offence having been committed by the appellant.
Having regard to what is established in the case and the principles deducible from the cases cited, we are satisfied that the appellant has been rightly convicted of the offences of murder and robbery.
The appeal is accordingly dismissed.
| Both the appellants were officers of Indian Oil Corporation.
The Corporation invited tenders from experienced contractors for rock cutting, filling and levelling of certain land acquired by it.
On the notified date it opened the tenders received from eleven contractors.
But in the meantime since it made a change in the specification of work to be done it asked the tenderers to submit revised tender.
The direction to submit fresh tenders was restricted only to the original 11 tenderers.
Even so it was alleged that a tender form was issued by the appellants to A 4, who was not one of the 11 tenderers.
there was again a change in the specification of the work to be done at the suggestion of foreign collaborators.
The appellants were alleged to have asked the concerned officers of the Corporation to make a fresh survey along with A 4, keeping in view the suggestion of the foreign collaborators.
Eventually the contract was given to A 4.
The prosecution alleged that (1) the conduct of the appellants showed their keenness to have the contract entrusted to A 4.
(2) the issue of work order was inflated with figures relating to rock cutting and filling; and (3) the appellants removed certain original documents from the departmental files and substituted in their place fabricated material.
The appellants who were charged with offences under section 120B and section 109 IPC and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947 were convicted and sentenced to undergo imprisonment.
On the question whether the appellants had been rightly convicted under section 5(1)(d) of the Prevention of Corruption Act.
Allowing the appeals, ^ HELD: 1.
An analysis of the circumstantial evidence adduced by the prosecution did not lead to the unerring certainty that the appellants acted with any dishonest or corrupt motive or abused their position.
[904 F] 2.
(a) It is well settled that abuse of position, in order to come within the mischief of section 5(1)(d) of the Act, must necessarily be dishonest so that it may be proved that the accused caused deliberate loss to the department.
Further it is for the prosecution to prove affirmatively that the accused, by corrupt or illegal means or by abusing his position, obtained any pecuniary advantage for some other person.
[892 G; 893 A].
(b) Again, the fundamental rule relating to the proof of guilt based on circumstantial evidence is that there is always danger that conjecture or suspicion might take the place of legal proof.
In such cases the mind is apt to take a pleasure in adapting circumstances to one another and even in straining them a 876 little, if need be to force them to form parts of one connected whole and the more ingenious the mind of the individual the more likely it is, in considering such matters, to over reach and mislead itself to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete.
[893 B D].
(c) In cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused.
Again, the circumstances should be of a conclusive nature and should be such as to exclude every hypothesis but the one proposed to be proved.
In other words there must be a chain of evidence so far complete as not to give any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused.
[893 D F].
M. Narayanana Nambiar vs State of Kerala, [1963] Supp.
2 SCR 724; Major section K. Kale vs State of Maharashtra, ; ; Hanumant Govind Nergundkar vs State of M.P., [1952] SCR 1091, AIR 1952 SC 343; Palvinder Kaur vs State of Punjab, ; ; Charan Singh vs State of U.P., AIR 1967 SC 529; referred to.
(d) The principle that inculpatory fact must be inconsistent with the innocence of the accused and incapable of explanation on any other hypothesis than that of guilt does not mean that any extravagant hypothesis would be sufficient to sustain the principle, but that the hypothesis suggested must be reasonable.
[893 G].
Govinda Reddy vs State of Mysore, AIR 1960 SC 29; referred to.
In the instant case the conduct of the appellants in preferring A 4 to any new contractor did not savour of dishonest intentions on their part.
Although the notice was sent by registered post to the 11 original tenderers there is nothing in that notice or elsewhere on the record to indicate that other contractors were precluded from submitting their tenders or that the corrigendum extending the date for submission of the tenders was neither intended to be published nor was it actually published.
The High Court had missed this fact.
The High Court was also wrong in thinking that out of the nine contractors who submitted their revised tenders eight were from the original nine tenderers and the ninth was A 4.
In fact five of the contractors that submitted the fresh tenders were fresh tenderers.
Moreover none of the officers of the Finance and Engineering Department of the Corporation who handled the file relating to the grant of contract ever raised any objection regarding the improper reception or entertainment of A 4 's tender.
This showed that there was nothing wrong about the issue of tender Form to A 4 or its entertainment by the appellants.
The contract in question was not a specialised job requiring any extra ordinary skill.
A 4 was the Corporation 's old and tried contractor who had previously executed a number of works including rock cutting.
(2) Though it cannot be gainsaid that the second appellant had been extremely negligent in not scrutinising the papers, he affixed his signature in a routine manner to the work order prepared by his subordinates without realising 877 the importance of his act, placing implicit faith in the integrity of the latter.
[900 E F] (3) There is no clear, cogent and convincing evidence to show that the appellants had a hand in the removal of the level plans from the departmental file relating to the contract and substitution of the faked plans.
[900 G].
|
Civil Appeal No. 971 of 1968 From the judgment and decree dated the 10 5 1965 of the Punjab High Court at Chandigarh in R.F.A. No.181 of 1957.
section K. Mehta, K. R. Nagaraja and P. N. Puri for the appellant.
V. M. Tarkunde, J. P. Agarwal and Miss Manik Tarkunde for respondents 1 6.
The Judgment of the Court was delivered by SARKIRIA, J.
This appeal on certificate is directed against a judgment of the High Court of Punjab and Haryana awarding to the plaintiff respondents a decree for Rs. 21,600.
It arises out of these facts: On January 21, 1955, Lala Wazir Singh deceased, a retired Divisional Engineer (Railways) was traveling from Delhi to Hissar by a bus belonging to the Krishna Bus Service Ltd. (hereinafter referred to as the Company).
On the way, the vehicle went out of order.
180 Lala Wazir Singh and some other passengers were then transferred to another bus No. DLB 5749 belonging to the same Company.
This bus was being driven by Harbans Singh, defendant 3 (Respondent 8 herein) who was an employee of the Company, acting under its directions and instructions.
When at about 3 p.m., this bus was negotiating a turn in village Kheri Sadh, a few miles from Rohtak, it over turned, causing the death of Lala Wazir Singh, at the spot and in injuries to several other passengers.
The widow, the sons, the daughters, the grandsons and grand daughters of the deceased instituted a suit in the court of the Subordinate Judge, 1st Class, Rohtak for the recovery of Rs. 50,000 as damages for the loss caused to them on account of his death.
The Company was impleaded as defendant No. 1, the Insurance Company was joined as defendant No. 2 and the driver of the bus as defendant 3.
it was alleged that the accident causing the death of Lala Wazir Singh, occurred on account of the negligence of defendants 1 and 3.
The bus, it was pleaded, was not in proper order; it was overloaded with passengers and goods, and despite these facts, defendant 3 drove it at a very high speed while it was negotiating a turn.
The liability.
of the employer Company was sought to be fixed on the ground that it was negligent in employing such a rash and negligent driver and that the accident occurred when defendant 3 was acting in the course of its employment.
In their written statement presented on July 16, 1956, the Company admitted that the bus involved in the accident belonged to it and at the time of the accident it was driven by their employee, defendant 3.
In regard to the allegations of negligence, the Company replied: "The accident alleged by the plaintiffs was not due to any negligent or careless driving of Harbans Singh Driver of the vehicle owned by the defendant but was vis major.
There was rain on that day and the front was slippery.
The bus overturned and the death of the said Wazir Chand (Singh) was in no case the result of overturning of the Bus.
" While finding that the death of Lala Wazir Singh had occurred on account of injuries sustained by him in the accident in question, the trial court held that the accident took place "on account of the r breaking of the tie rod of the vehicle due to which the bus went out of the control of the driver".
The tie rod, according to the trial court, broke because the front left wheel of the vehicle while it was negotiating a turn, fell into a pit.
The court further held that the.
vehicle was not overloaded and its speed at the time of the accident was not more than 20 or 25 miles per hour, and as such, was not excessive.
On these premises, the trial court concluded that the is plaintiffs had failed to prove that the accident involving fatal injuries to the deceased, was due to rash or negligent driving by defendant No.r 3.
It further held that in case Issues 1 and 2, were decided in favour of the plaintiffs, the maximum damages awardable to them would be Rs. 34,210, i.e., the amount of pension which the deceased would have earned, had he been alive for 9 years and 2 months after the accident.
181 On these findings, the trial court dismissed the suit leaving the parties to bear their own costs.
Aggrieved, the plaintiffs preferred an appeal to the High Court.
The Division Bench who heard the appeal, has after appraising the evidence on record, reversed the findings of the trial court and held that "the accident was due to negligence attributable to defendant 3 or both defendants 1 and 3".
This finding of negligence recorded by the High Court is based on facts appearing in the evidence of PWs.
5, 6 and 8 who were c found by it to be entirely trustworthy.
These facts are: (i) The bus was overloaded with goods and passengers.
There were 60 or .62 passengers including 10 or 12 children, in it (vide PWs 5 and 6).
(ii) It was drizzling; the road was wet and slippery (vide P.s.
S and 6); (iii) The tie rod of the bus was not found broken but only "opened" (dismantled) when it was examined by the expert motor mechanic, PW 8, on the day following the accident.
The hand brake and the foot brakes were also found in a bad condition; (IV) At the time of the accident the bus was negotiating a turn and passing through the habitation of village Cherry; (v) Immediately before the accident the bus was making a zigzag movement and was being driven at fast speed despite the protests and shouts of the passengers asking the driver to slow down; (vi) the speed of the bus at the material time, according to PW 6, was about 30 miles per hour; (vii) The bus overturned as a result of which Lala Warier Suing died at the spot and other passengers, including PW S, received serious injuries.
The High Court further reinforced its finding with an adverse inference against the defendants drawn from the fact that the driver (defendant 3) who knew best the relevant facts, did not appear in the witness stand to explain the circumstances in which the accident occurred.
In this connection it observed: "Buses do not, in such circumstances, normally and in the ordinary course, turn turtle.
The transaction thus speaks for itself: in other words res ipsa loquitur and in the absence of explanation by defendant No. 3 and his employer, defendant No. 1 the established facts and circa stances accompanying the fatal injury caused to the deceased clearly raise a presumption or at least permit an inference of negligence on the part of defendant No. 3 The Court below was thus clearly wrong in negativing negligence on the part of defendant No. 3.
I would accordingly reverse the conclusion of the court below on this point and hold that the accident was due to the negligence of defendant No. 3 and was not inevitable which could not be obviated by ordinary care, caution and skill on his part.
" On the above facts and the premises, the High Court concluded that the accident was due to the negligence of the driver and was "not inevitable which could not be obviated by ordinary care, caution u skill on his part".
In the result, it awarded a decree for Rh.
21,600 182 as damages against defendants 1 and 3 proportionate costs, limiting the liability of the Insurance Company, defendant No. 2 to Rs. 2,000 only, plus proportionate costs.
Hence this appeal.
It is an undisputed fact that Lala Wazir Singh died in the bus accident on 21.1.1955.
It is further common ground that the bus while negotiating a turn, had overturned causing fatal injuries to the deceased, and that at the relevant time it was being driven by Harbans Singh defendant, an employee of the appellant Company.
It is also admitted that the bus belonged to the appellant company.
The only issue in controversy is, whether the accident involving the death of L. Wazir Singh, was caused due to the negligence of defendant 1 or both defendants 1 and 3.
Mr. Mehta, appearing for the appellant contends that the High Court while conceding that the plaintiffs ' witnesses were not able to assign the reason for the accident, wrongly spelled out negligence on the part of the driver from the bald circumstance that the bus had overturned.
It is submitted that the High Court committed an error of law inasmuch as it assumed that the overturning of the bus was res ipsa loquitur and had shifted the burden on the defendants to show that the accident and the consequent death of L. Wazir Singh was not due to their negligence.
It is submitted that res ipsa loquitur is merely a Latin phrase and does not convey any legal principle.
Reliance has been placed on this Court 's decision in Shyam Sunder and ors.
vs State of Rajasthan(1).
Mr. Mehta further maintains that the trial court had correctly held on the basis of evidence on record, that the accident occurred due to the sudden breaking of the tie rod and not due to any negligence on the part of the driver.
To us, none of these contentions appears to be well founded.
ordinarily, in Second Appeal it is not necessary for this Court to reappraise the evidence on record because the first appellate court is supposed to be the final court of fact.
Nevertheless, on the insistence of the Counsel for the appellant, we have examined the evidence on the record.
We have no hesitation in holding, in agreement with the High Court, that the evidence rendered by PWs 5, 6 and 8 was reliable and cogent enough to establish facts which, in their totality, unerringly point to the conclusion that the accident was due to the negligence of the driver, defendant No. 3.
Kali Ram, PW 5, was one of the passengers in the ill fated bus.
He, also, received injuries in the accident.
For treatment of his injuries he remained in hospital for twenty days.
He was therefore supposed to have personal knowledge and experience of the circumstances in which the accident occurred.
He testified that the bus was overloaded, and the driver unheeding the protests and shouts of the passengers to go slow, was driving it at a fast speed.
He further stated now near village Kheri, the vehicle after making zig zag movements overturned causing the death of one passenger at the spot and injuries to the witness and other passengers.
(1) ; 183 Subedar Ram Kishan, PW 6, is a retired Army officer and knows motor driving.
His house is just near the place of the accident.
According to his estimate, the speed of the bus, while it was negotiating the turn, just before the accident, was 30 miles per hour and it was moving in a zig zag manner, being not in the control of the driver.
In cross examination, the witness accepted a suggestion put by the defence, and stated that in his presence, the driver had told the police that the accident had occurred due to the breaking of the tie rod.
The witness further conceded that there was pit by the side of the road, but repelled the suggestion that the tie rod could be broken by a sudden jerk at the turning.
Raghbir Singh PW 8 was a motor mechanic.
He examined the bus at the site on the 22nd January.
According to him, the tie rod had not broken down, but had been opened", implying that it had been subsequently tampered with.
The witness found that the handbrake and foot brakes of the vehicle were in a bad condition.
He did not find the pipe of the hydraulic foot brake in a broken condition.
For its finding that the accident had taken place on account of the breaking of the tie rod of the vehicle, the trial court sought support from the evidence of PW 5 and DW 6.
It is manifest that correctly read, the evidence of PW 6 does not justify that conclusion.
The mere fact that sometime after the accident during police investigation, the driver came out with the story that the accident occurred due to the breaking of the tie rod, was no ground to believe, without demur.
that such breaking was the cause of the accident.
The evidence of the expert, DW 6, was dogmatic and worthless.
His opinion was not based on an examination of the vehicle and was rightly rejected by the High Court.
On the other hand, the testimony of PW 8 who had examined the vehicle one day after the accident, was quite convincing, and it could reasonably lead to the conclusion that the tie rod of the vehicle had been tampered with an untied sometime after the accident.
The defendants led oral evidence to prove that near the place of the accident, there was a pit in the road, and when the bus was negotiating a turn, its front wheel fell in that pit, and as a result of this fall, the tie rod end of the steering wheel broke loose and the bus went out of control.
In the first place, DWs 2 and 3, who were examined to substantiate this story, did not say that the wheel of the bus had fallen in that pit.
Secondly, the story of this pit and the breaking of the tie rod, was not even faintly adumbrated in the written statement.
It was subsequently developed as an after thought.
Even if it is assumed for the sake of argument that one wheel of the bus had fallen into the pit, and the resultant shock broke the tie rod causing the vehicle to go out of control, then also that would not, when viewed in the light of the other circumstances of the case, negative the inference of negligence on the part of defendants 1 and 3.
The pit was according to Gordhan, DW 2, hardly four feet in 1 3 L390SCI/76 184 length and 6 inches deep.
It was not in the mettled part of the road but in the kacha berm.
The bus was negotiating a turn.
There, the road runs through the habitation of a village.
lt was drizzling and the road was wet and slippery.
The speed of the bus at the relevant time, according to PW 6, was 30 miles per hour, and according to DWs 2, 4 and 5, it was 25 miles per hour.
The bus was overloaded.
In these peculiar circumstances, a duty was cast on the drier lo go dead slow.
A speed of 25 to 30 miles per hour, in these conditions and in this situation, at the turning of the road, would be imprudently excessive.
Had the bus been properly maintained in a sound road worthy condition, and used with due care and driven with due caution, the tie rod should not have broken loose by the fall of the wheel in a pit hardly six inches deep, particularly when the upward thrust of the water in the pit would have largely absorbed the shock of the fall.
The pit was in the kacha berm and not right in the mettled portion.
The driver could have with ordinary care and diligence avoided it.
Thus, the breaking of the tie rod assuming it did break was at best, a neutral circumstance.
As rightly pointed out by the High Court, buses in sound road worthy condition, driven with ordinary care, do not normally over turn.
It would be for the driver who had special knowledge of relevant facts to explain why the vehicle overturned.
The maximum res ipsa loquitur would be attracted to such a case.
Defendants 1 and 3 had failed to rebut the presumption of negligence that arose from the manifest circumstances of the case.
, In Barkway vs South Wales Transport Co. Ltd.( ' ') a motor omnibus loaded with passengers was passing through a village when the off side front tyre burst; the omnibus went over to the off side of the road, mounted the pavement, crashed into some railings, and fell down an embankment, killing four of the passengers, including the plaintiff 's husband.
On these facts, Asquith L.J. summarised the position as to the onus of proof thus: "If the defendants ' omnibus leave the road and falls down an embankment, and this without more is proved, then res ipsa loquitur, there is a presumption that the event is caused by negligence on the part of the defendants, and the plaintiff succeeds unless the defendants can rebut this pre sumption, (ii) It is no rebuttal for the defendants to show, again without more, that the immediate cause of this omnibus leaving the road is a tyre burst, since a tyre burst per se is a neutral even consistent, and equally consistent, with negligence or due diligence on the part of the defendants.
When a balance has been tilted one way, you cannot redress it by adding an equal weight to each scale.
The depressed scale will remain down.
This is the effect of the decision in Laurie vs Raglan Building Co. Ltd., where not a tyre burst but a skid was involved.
(1) 185 (iii) To displace the presumption, the defendants must go further and prove (or it must emerge from the evidence as a whole) either (a) that the burst itself was due to a specific cause which does not connote negligence on their part but points to its absence as more probable, or (b) if they can point to no such specific cause, that they used all reason able care in and about the management of their tyres.
" The above observations apply with greater force to the facts of the present case.
Shyam Sunder 's case (supra), cited by Mr. Mehta does not advance his case.
There, the radiator of the vehicle was getting heated frequently and the driver was pouring water therein after every 6 or 7 miles of journey.
It took the vehicle 9 hours to cover a distance of 70 miles and thereafter it suddenly caught fire.
On these facts this Court, speaking through Mathew J., held that there was some defect in the mechanism and the driver was negligent in putting the vehicle on the road.
Since the driver could not explain the cause of the accident which was within his exclusive knowledge and it was not possible for the plaintiff to give any evidence as to the cause of the accident, the maxim res ipsa loquitur was attracted to the case.
Coming back to the instant case, it may be observed that the driver was admittedly an employee of the appellant Company, and at the relevant time he was acting in the course of his employment.
The vehicle was the property of the appellant Company, under whose management defendant 3 was working at the material time.
It is well settled that where in an action for negligence the thing causing fatal injury to the deceased and consequent pecuniary loss to the plaintiff, is shown to be under the management of the defendant or his servants and the accident is such as in the ordinary course of events does not happen, if those who have the management use proper care, that affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care.
The appellant Company was therefore fully liable for the negligent act of its employee and the injury resulting therefrom.
No other point has been argued before us.
In the light of all that has been said above, the appeal fails and is hereby dismissed with costs.
S.R.Appeal dismissed.
| After recording a complaint dated 7 4 1969 by one "SDM" that the accused appellant, a head constable, demanded a sum of Rs. 10/ for not putting up a challan on 8 4 1969 before the SDM, Delhi in a case pending against him, (the said sum being payable by 3.00 p.m.
On 7 4 1969 and also a sum of Rs. 50/ For not challenging him in future, the Anti Corruption Department arranged a raid to detect the accused, as his name was not known to the complainant.
On a signal from the complainant, after the receipt of the G.C. Note of Rs. 10/ (the number of which was already noted by the Anti Corruption Department by the accused, the raid party including the trap witnesses surrounded the accused, recovered the G.C. note of Rs. 10/ which tallied with the number already noted besides a further sum of Rs. 51/ and two challans referred to in the complaint of "SDM".
The statement of the accused duly signed by him and witnessed by the trap witnesses and also a search memo duly signed by the accused and the trap witnesses, were produced as documentary evidence at the ", trial.
The accused was charged under s, 161, I.P.C. read with section 5(2) read with section (5) (d) of the Prevention of Corruption Act, 1947, found guilty, convicted and sentenced to one year rigorous imprisonment besides fine.
On appeal the High Court affirmed the conviction and the sentence.
Dismissing the appeal by special leave, the Court, ^ HELD: (1) In a case under section 161 I.P.C. and section 5(2) read with s.(5)(d) of the Prevention of Corruption Act, 1947, where there was a clinching factor that a particular already marked currency note was recovered from the left side front pocket of the shirt of the accused that too immediately after its receipt from the complainant and which fact is corroborated by the seizure memo duly signed by the accused about the state of its recovery duly witnessed and also by 9 L390SCI/76 120 the oral evidence, the defence story of the complainant giving a ten rupee note wrapped inside the "purchee" is absolutely false.
When such a conclusive proot is found with regard to this part of the case, viz. "seizure of the currency note; deficiency of corroboration with regard to the negotiation of the accused with the complainant pales into insignificance.
[126 A F] (2) When witnesses swear home through a two inch board and sometimes quantitatively the defence musters up a number of witnesses, the court has to be extremely cautious and careful to enter a verdict of guilty only if the complainant 's version is supported by some clinching circumstance of such character and quality as may reasonably assure the judicial mind about the truth of the real position against the accused.
[126 G H] (3) A defence plea of planting any incriminating object, in answer to a .
charge, to be successful must be or at any rate should reasonably appear to have been made without the knowledge or acquiesence of the accused.
Ram Prakash Arora vs State of Punjab [1972] 3 S.C.C. 652, distinguished.
(4) When, in a trial against a head constable for not challaning, evidence was clearly led regarding the said challan, which had been handed over to the accused by the complainant along with the currency note, and the accused was fully aware of the charge, he had to meet and made no mistake in taking a defence, a particular mention of the challan against the complainant instead of Charan Dass in the charge, does not result in any "material prejudice" to the accused.
[127 A B] (5) Where the complainant comes from a class of poor hawkers who some how eke out their living, unable to pay the demanded bribe for purchasing immunity from being challaned by the accused head constable, and out of desperation, takes recourse to public authorities against such illegal proposals he is an unwilling or forced bribe giver.
Such an unwilling or forced bribe giver may not even be stagmatised as an accomplice in the strict sense of the term of "participes criminis".
[127 D F] (6) There is no rule of law that even if a witness is otherwise reliable and independent his association in a pre arranged raid about which he had become acquainted makes him an accomplice or a partisan witness.
In the absence of anything to warrant a contrary conclusion, conviction is not untenable merely because it is based on the testimony of such a witness.
Every witness of a raiding party cannot be dubbed as an accomplice per se or even as an interested witness in total absence of materials justifying such an inference.
[128 A 13] (7) In a case, where on a complaint made to the Inspector of the Anti Corruption Department he recorded the same, arranged for the raid by noting each step taken, thereafter in a regular manner, the steps taken by him in order to detect the accused while taking the bribe comes within the term "investigation" under section 4 of the Criminal Procedure Code, 1898.
The fact that he, had also later on forwarded the complaint for formal registration of the case at the police station having the jurisdiction did not do away with the character of the "investigation" already commenced, by the Inspector on recording the Complainant 's statement disclosing a cognizable offence.
[128 F H] Therefore, any statement made by the accused in answer to questions put by the Inspector is inadmissible under section 162, Criminal Procedure Code and neither the prosecution nor the accused can take advantage of these answers.
[129 A] (8) For an offence under the Prevention of Corruption Act, 1947, the conduct of the accused would be relevant under section 8 of the evidence Act, if his Immediate reactions to the illegal overture of the complainant or his action in inserting unwanted something in his pocket were revealed in the form of acts accompanied then and there or immediately thereafter by words or gestures reliably established.
In the present case, there is no evidence to support an innocent Piece of conduct of the accused.
[129 B C] 121
|
pecial Leave Petitions (Civil) Nos.
5678 79 of 1987.
990 From the Judgment and Order dated 8.4.1987 of the Cal cutta High Court in F.M.A.T. Nos. 2256 and 1350 of 1986.
S.R. Srivastava for the Petitioners.
Tapas Ray, Somnath Chatterjee, Sushil Kumar Jain, B.P. Singh and A. Misra for the Respondents.
The Order of the Court was delivered by SEN, J.
These special leave petitions are directed against a judgment and order of a Division Bench of the High Court of Calcutta dated April 8. 1987 upholding the judgment and order of a learned Single Judge dated July 17, 1986 dismissing the petition filed by the petitioners under article 226 of the Constitution.
By the writ petition the petition ers had challenged the legality and propriety of the grant of licence by the Calcutta Municipal Corporation of the subsoil of Satyanarayan Park to respondent No. 14 Messrs Happy Homes & Hotels Private Limited for a period of 30 years for the implementation of a development scheme, name ly, construction of a two storeyed airconditioned under ground basement market and parking place on mani fold grounds inter alia that the construction of the said under ground market would affect the ecological balance because the park was situate in a densely populated area like Burra bazar in the Metropolitan City of Calcutta, that the con struction would effect traffic jams in or about the said area leading to a further ecological imbalance and that the Corporation had no authority to grant the licence of the subsoil of the park for the implementation of any develop ment scheme which was not for the development of the park by way of a proper and adequate or proper utilisation of such park.
In a considered judgment, the learned Single Judge (Umesh .Chandra Banerjee, J.) repelled the contentions advanced on behalf of the petitioners.
He considered the questions in depth and held that the grant of licence of the subsoil of Satyanarayan Park for construction of the under ground market would not destroy its intrinsic character as a park and the implementation of the development scheme by the Municipal Corporation was a bona fide exercise of its statu tory powers.
The contention regarding ecological imbalance has been negatived by the learned Single Judge as being based on an erroneous assumption of facts, observing: "The contention of ecological imbalance, in my view, is wholly on an erroneous assumption of facts.
It is not that there will be no Park as such a Park would be there, the 991 children 's playground would be there and all the other amenities which a modern Park en joins would be provided for.
The difference being whereas the existing one is on the ground level, after the completion of the project the park will be on an elevated level.
Incidentally, it is to be recorded that Satya Narayan Park for about a decade is in a de plorable state and excepting there being some tall trees, there was no maintenance of the park as a park by the Corporation Authorities.
The contention that greenery would be lost in the Park cannot also be accepted.
There was not a blade of grass on the Park.
The impor tance of a green spot in a highly congested area like Burrabazar cannot be disputed but the continuation of the project would not, in the facts and circumstances of the case and as appear from record affect such a green spot.
On the contrary, it would ensure the creation of such a green belt.
" Agreeing with the learned Single Judge, a Division Bench (Chittatosh Mookerjee, CJ and Amarendra Chandra Sen Gupta, J.) dismissed the appeal preferred by the petitioners.
According to the learned Judges, there were no allegations of mala fides and there was no doubt whatever that the Municipal Corporation acted in bona fide exercise of its statutory powers under the Act to grant the licence of the subsoil of Satyanarayan Park for the construction of the underground market and therefore the Court ought not to strike down the action of the Municipal Corporation as ultra vires under section 353(2) of the Calcutta Municipal Corporation Act, 1980.
They further held that they were unable to sub scribe to the restricted construction placed on behalf of the petitioners that the expression 'development work ' in section 353(2) read with the Explanation thereto can only mean development work either underground or on the surface of the park qua development of the park i.e. for the development and improvement by way of proper and adequate or better utilisation of any such park.
In these petitions, two questions mainly arise, namely: (1) Whether the grant of licence by deed of licence dated February 15, 1985 by the Municipal Corporation in favour of respondent No. 14 Messrs Happy Homes & Hotels Private Limit ed of the subsoil of Satyanarayan Park in the Burrabazar area of the Metropolitan City of 992 Calcutta for implementation of a development scheme, namely, to build and construct a two storeyed underground aircondi tioned basement market, and to hold the said market for a period of 30 years from the date of execution of the deed on payment of a premium of Rs.30 lakhs and a licence fee of Rs.40,000 per month on condition that the licensee shall at its own cost relocate and maintain the park on the top of the said market for augmenting and improving amenities to the citizens which shall always remain as a public park belonging to the Municipal Corporation, was in breach of its statutory powers under sub section
(2) of section 353 read with the Explanation thereto of the Calcutta Municipal Corporation Act, 1980.
(2) Should the expression 'development work ' in section 353(2) of the Act read with the Explanation thereto be construed to mean development work qua the park i.e. such development work must be confined to the proper and better utilisation of the park? Shri Shanti Bhushan, learned counsel for the petitioners assails the action of the Municipal Corporation substantial ly on two grounds: (1) The Municipal Corporation has no power to alienate or part with possession of any public street, park, square or garden or the subsoil thereof for the purpose of implementation of any development work.
The Corporation being a creature of the statute must function within the four confines of the Act creating it and in the absence of any provision for the conferral of such a power, it had no authority to grant a licence of the subsoil of Satyanarayan Park for the purpose of construction of the underground market.
(2) On a true construction of sub s.(2) of section 353 read with Explanation thereto the development work either underground or on the surface of a public street, park, square or garden must be for development and improve ment by way of proper and adequate or better utilisation of any such public street, park, square or garden.
The learned counsel placed reliance on the decision in Attorney General vs Corporation of Sunderland LR, [187576] for the submission that the position of the Municipal Corpora tion in regard to public parks, gardens, squares and streets under the Act was that of a trustee and the Corporation would be guilty of breach of trust in employing any part thereof for purposes other than those contemplated by the Act.
In reply Shri Somnath Chatterjee, learned counsel ap pearing for respondent No. 14 Messrs Happy Homes & Hotels Private Limited contended that the grant of licence by the Municipal Corporation of the subsoil of Satyanarayan Park was a bona fide exercise of its statutory powers and the construction of the underground market would 993 not destroy its intrinsic character as a park and there was no warrant, as the High Court has held, to give a restric tive meaning to the expression 'development work ' in section 353(2) of the Act read with the Explanation thereto.
At the hearing, the learned counsel drew our attention to the supplementary affidavit filed on behalf of his client dated July 25, 1987 showing that the structural work of the under ground market has been completed and the concrete roof has been laid.
All that remains is the laying of a park.
It appears therefrom that the value of the work done so far is Rs.2.30 crores out of the estimated cost of Rs.4.51 crores and that the underground airconditioned market is likely to be commissioned within a couple of months.
It also appears that respondent No. 14 has entered into a contract with Joshi & Associates, Architects for re development and re laying of Satyanarayan Park as a terrace ' garden.
The letter of the Agri Horticultural Society of India dated July 24, 1987 gives a detailed scheme for such re location of the park as a terrace garden with tall trees.
It provides for laying of a spacious lawn admeasuring about 12,000 square feet .with replantation of fast growing tall trees and dwarf trees, laying of shrubs etc.
The material on record clearly shows that the intrinsic character of Satyanarayan Park as a public park would not be destroyed by the construction of the underground market which with its raised height at 6 feet from the road level is to have a terrace garden with tail trees all around and it would remain a place of recrea tion.
This dispels the contention of Shri Shanti Bhushan based on Attorney General vs Corporation of Sunderland that the construction of the underground market would destroy the intrinsic character of Satyanarayan Park as a park.
Under the scheme there would be no construction on the park; the underground market would be under the park and not over the park.
The only difference is that the park would be re located at a height of 6 feet above the road level easily accessible by three separate staircases.
Under the scheme, Satyanarayan Park would become a real park with a lush green garden with tall trees, shrubs etc.
and a centre for relaxa tion of the thickly congested Burrabazar locality and in particular for the children as a playground.
It is signifi cant that the Division Bench has issued a writ of mandamus commanding the respondents to restore Satyanarayan Park as a public park as stipulated in the deed of licence dated February 15, 1985 and to maintain it as a public garden.
Shri Somnath Chatterjee has drawn our attention to the finding of the learned Single Judge that the development scheme would not create any ecological imbalance.
On the contrary, the implementation of the scheme would ensure the creation of a green belt.
It was conceded before the learned Single Judge that the terrace garden with 994 green grass would be laid on the upper basement of the underground market.
As regards the apprehension expressed by Shri Shanti Bhushan that tall trees would disappear from the park, it is enough to say that the learned Single Judge has in his judgment observed that there is no basis for this apprehension at all.
He records that as a matter of fact, replantation of tall trees has already been effected in terms of the earlier order passed by the Division Bench under the expert supervision of the Agri Horticultural Society of India.
Thus, there would be a 'patch of green ' in the thickly congested Burrabazar area which would tend to improve, rather than retard, ecological balance and there would be a place of recreation for all and in particular for the children as a playground.
In the facts and circumstances of the case, the High Court was justified in holding that the implementation of the development scheme would squarely fall within the ambit of sub s.(2) of section 353 of the Calcutta Municipal Corporation Act.
1980 and the construction of the underground market is not intended and meant to destroy the intrinsic character of Satyanarayan Park as a public park but on the contrary, the scheme is to re locate and redevel op the park as a public park as a place for public recrea tion.
We find no justification whatever to interfere with the judgment of the High Court.
Before parting with the case, we wish to mention that we impressed upon Shri Somnath Chatterjee, learned counsel for respondent No. 14 that the grant of a fully airconditioned underground market on a premium of Rs.30 lakhs and a rent of Rs.40,000 per month which was revisable at the end of every 30 years has to be altered.
It was clearly against the public interest to grant the market on a rent of Rs.40,000 per month having regard to the spiral rise of rents of commercial premises in all urban areas throughout the coun try.
We directed the parties to revise the terms and posted the case for further directions on August 12, 1987.
We are happy to record that on that day Shri Chatterjee made a statement that his client is prepared to revise the terms as to the rate of licence fee.
He filed an affidavit sworn by Ram Niranjan Kajaria, Director, Messrs Happy Homes & Hotels Private Limited giving an undertaking to the following effect: (L) Messrs Happy Homes & Hotels Private Limited shall pay licence fee Rs. 75,000 per month which shall be revisable at the end of every three years.
(2) It shall maintain the underground market in proper state of repairs and the airconditioning plant installed therein in proper workman like condition until the expiry or determination of the licence.
(3) It shall re locate and re develop Satyana rayan Park as a public park at its own expense as provided in the deed of licence dated 995 February 15, 1985 for which it has entered into a contract with AgriHorticultural Society of India, Alipore, Calcutta and it shall maintain properly the said park as a public park throughout the entire period of 30 years.
Subject to this modification, the special leave peti tions are dismissed without any order as to costs.
S.L. Petitions dis missed.
| The petitioners filed a writ petition in the High Court, challenging the legality and propriety of the grant of a licence by the Calcutta Municipal Corporation of the sub soil of Satyanarayan Park to respondent No. 14 Messrs.
Happy Homes & Hotels Private Limited for a period of 30 years for the implementation of a development scheme, name ly, construction of a two storeyed air conditioned under ground basement market and parking place.
The High Court (Single Judge) repelled the contentions of the petitioners and dismissed the writ petition.
Against the judgment and order of the Single Judge, the petitioners preferred an appeal before the Division Bench of the High Court.
The Division Bench dismissed the appeal.
Aggrieved by the deci sion of the High Court, the petitioners filed petitions for special leave before this Court for relief.
Disposing of the petitions, the Court, HELD: In these petitions, two questions mainly arose, namely, (i) whether the grant of licence by the Municipal Corporation in favour of respondent No. 14, Messrs. Happy Homes and Hotels Pvt. Ltd., of the sub soil of Satyanarayan Park for the implementation of a development scheme, namely, to hold the said market for 30 years on payment of a premium of Rs.30 lakhs and a licence fee of Rs.40,000 per month on certain terms and conditions, was in breach of its statutory powers under sub section
(2) of section 353, read with the Explanation thereto of the Calcutta Municipal Corporation Act, 1980, and (ii) should the expression 'development work ' in section 353 (2) of the said Act, read with the Explanation thereto be con strued to mean development work qua the park, i.e., such development work must be confined to the proper and better utilisation of the park? [991G H; 992A C] 988 Counsel for the petitioners assailed the action of the Municipal Corporation substantially on two grounds briefly stated as (i) The Municipal Corporation had no power to alienate or part with possession of any public street, park, square or garden or the sub soil thereof for the purpose of implementation of any development work, etc., and (ii) On a true construction of sub section
(2) of section 353, read with the Explanation thereto, the development work either underground or on the surface of a public street, park, square or gar den, must be for development and improvement by way of proper and adequate or better utilisation of any such public street, park, etc.
[992D F] Shri Somnath Chatterjee, counsel for respondent No. 14, contended that the grant of licence by the Municipal Corpo ration of the sub soil of Satyanarayan Park was a bona fide exercise of its statutory powers, and the construction of the underground market would not destroy its intrinsic character as a park and there was no warrant to give a restrictive meaning to the expression 'development work ' in section 353(2) of the Act, read with the Explanation thereto.
He drew attention of the Court to a supplementary affidavit filed by his client, showing that the structural work of the underground market had been completed and the concrete roof had been laid, and all that remained was the laying of a park.
It appeared therefrom that the value of the work done so far was Rs.2.30 crores out of the estimated cost of Rs.4.50 crores, and the underground air conditioned market was likely to be commissioned within a couple of months, and also that the respondent No. 14 had entered into a contract with Joshi & Associates, Architects, for the re development and relaying of the Satyanarayan Park as a terrace garden; a letter of the Agri Horticultural Society of India gave a detailed scheme for such re location of the park as a ter race garden, etc.
[992H; 993A C] The material on record clearly showed that the intrinsic character of the Satyanarayan Park as public park would not be destroyed by the construction of the underground market which with its raised height at 6 feet from the road level was to have a terrace garden.
Under the scheme, there would be no construction on the park; the underground market would be under the park and not over the park, and the Satyanaray an Park would become a real park with a lush green garden, tail trees and shrubs, etc.
It was significant that the Division Bench had issued a writ of mandamus commanding the respondents to restore Satyanarayan Park as a public part as stipulated in the deed of licence and to maintain it as a public park.
The High Court (Single Judge) gave the finding that the development scheme would not create any ecological 989 imbalance, but would ensure the creation of a green belt.
There would thus be a 'patch of green ' in the thickly con gested Burrabazar area which would tend to improve the ecological balance and provide a place of recreation for all.
[993D G; 994A C] In the facts and circumstances of the case, the High Court was justified in holding that the implementation of the development scheme would squarely fall within the ambit of sub section
(2) of section 353 of the Calcutta Municipal Corpora tion Act, 1980 and the construction of the underground market was not intended and meant to destroy the intrinsic character of the Satyanarayan Park as a public park; on the contrary, the scheme was to re locate and re develop the part as a public park.
There was no justification whatever to interfere with the judgment of the High Court.
[994C D] The Court directed that the grant of a fully air condi tioned market on a premium of Rs.30 lakhs and a rent of Rs.40,000 per month, which was revisable at the end of 30 years had to be altered.
It was clearly against the public interest to grant the market on a rent of Rs.40,000 per month, having regard to the spiral rise of rents of commer cial premises in all urban areas.
The Court directed the parties to revise the terms and posted the case for further directions on August 12, 1987.
On that day, Shri Som Nath Chatterjee filed on affidavit on behalf of his client, giving an undertaking to the following effect: (1) M/s. Happy Homes & Hotels Pvt. Ltd. shall pay licence fee @Rs.75,000 per month which shall be revisable at the end of the every three years; (2) It shall maintain the underground market in proper state of affairs and the air conditioning plant therein in proper workman like condition until the expiry or determination of the licence; (3) It shall re locate and re develop Satyanarayan Park as a public park at its own expense as provided in the deed of licence for which it has entered into a contract with Agri Horticultural Society of India, and it shall maintain properly the said park as a public park throughout the entire period of 30 years.
[994E H; 995A] The Special Leave Petitions were dismissed subject to this modification.
[995B] Attorney General vs Corporation of Sunderland LR , referred to.
|
Civil Appeal No. 1170 of 1973.
(From the judgment and order dated the 25 4 1973 of the Andhra Pradesh High Court in Election Petition No. 4 of 1972) P. Basi Reddy, C. Sadasiva Reddy, G. Narayana Rao and Mrs. Vimala Markendeyulu, for the appellant.
B. Shiv Shankar, A. V. Rangam, Miss A. Subhashini and K. Venkata Ramiah, for the residents.
The Judgment of the Court was delivered by FAZAL ALI,J.
This is an appeal under section 116A of the Representation of the People Act, 1951 (hereinafter referred to as 'the Act ') by Venkata Reddy who was Respondent No. 1 in the election petition filed before the High Court of Andhra Pradesh.
The appeal arises out of the general elections held to the Andhra Pradesh Legislative Assembly in March 1972 from Gooty Assembly Constituency.
The appellant Venkata Reddy, T. Papa Sab and R. Sultan (the election petitioner before the High Court) applied for Congress ticket for the Gooty Assembly Constituency seat.
The District Congress Committee, Anantapur recommended the names of R. Sultan, Papa Sab and Ramachandra Goud but did not recommend the name of the appellant The Andhra Pradesh Provincial Congress Committee, however; recommended.
the name of R. Sultan the first respondent alone.
This recommendation appears to have been accepted by the All lndia Congress Committee which gave the Congress ticket to the first respondent R. Sultan oh February 1, 1972 as a result thereof the other candidates, namely, the appellant Venkata Reddy, T. Papa Sab and Venkata Subbayya decided to contest the election as independent candidates, whereas Venkata Naidu got the Congress (O) ticket.
The polling to the aforesaid constituency was held on March 8, 1972 and counting was done on March 12, 1972 on which date the result was also declared.
The appellant was declared elected having secured 19,974 votes polled in the constituency.
Respondent No. 1 R. Sultan lost by a narrow margin of 471 votes having polled 19,503 votes.
The other respondents were accordingly defeated and we are not at all concerned with their cases.
Respondent No. 1 R. Sultan filed an election petition before the Andhra Pradesh High Court on April 20, 1972 which was assigned to Sriramulu, J., who tried the election petition.
For the sake of convenience we shall refer to Venkata Reddy as the appellant and R. Sultan who was the election petitioner before the High Court as the contesting respondent.
The contesting respondent sought to challenge the election of the appellant on various grounds and alleged that the appellant had indulged in a large number of corrupt practices as envisaged by section 123 of the Act.
namely, bribery, corruption, communal propaganda, impersonation of voters, excessive expenses, improper rejection and reception of ballot papers etc.
The contesting respondent also filed an application before the Trial Judge that as number of irregularities were committed in tho rejection and acceptance of the ballot paper, the Court should allow scrutiny 450 and recounting of the votes.
The Court, after considering the evidence of the parties on this point, eventually allowed the application, but ultimately it held that even if there was any irregularity it had not caused any material .
change in the election.
The petition was resisted by the appellant who emphatically denied all the allegations made by the contesting respondent and submitted that the elections were free and fair and that the appellant had not indulged in any corrupt practice at all.
The appellant further pleaded that all the allegations made by the contesting respondent were figment of his imagination and were totally untrue.
On the question of corrupt practices, particularly the distribution of objectionable pamphlets, as the contesting respondent had not given full and material particulars in his election petition,.the appellant filed an application on July 7, 1972 praying that the Court may direct the contesting respondent to file better particulars by way of amendment.
The Court directed the contesting respondent to supply fresh particulars and accordingly the contesting respondent filed his application for amendment by incorporating material particulars on August 29, 1972.
On the pleadings of the parties the High Court framed as many as 35 issues in the present case.
After taking the evidence of the parties the Court decided all the issues against the contesting respondent except issues Nos. 7, 26 and 27 which were decided in favour of the con testing respondent.
In view of the findings given by the learned Judge the election of the appellant was set aside, but the learned Judge refused to grant the relief to the contesting respondent for being declared as duly elected to the seat in question.
It is against this decision that the appellant has come up to this Court in appeal.
Mr. P. Basi Reddy learned counsel for the appellant has assailed before us the findings of the High Court on issues Nos. 7, 26 and 27 as these were the only issues which affected the appellant.
Mr. B. Shiv Sankar, learned counsel for the contesting respondent has endeavoured to,support the judgment of the High Court by submitting that the findings arrived at by the High Court were based on a correct and proper appreciation of the evidence and the facts and circumstances or the record.
In a democracy such as ours, the purity and sanctity of elections, the sacrosanct and sacred nature of the electoral process must be preserved and maintained.
The valuable verdict of the people at the polls must be given due respect and candour and should not be disregarded or set at naught on vague, indefinite, frivolous or fanciful allegations or on evidence which is of a shaky or prevaricating character.
It is well settled that the onus lies heavily on the election petitioner to make out a strong case for setting aside an election.
In our country election is a fairly costly and expensive venture and the Representation of the People Act has provided sufficient safeguards to make the elections fair and free.
In these circumstances.
therefore, election results cannot be lightly brushed aside in election disputes.
At the same time it is necessary to protect the purity and sobriety of the elections by ensuring that the candidates do not secure the valuable votes of the People by undue influence.
fraud, communal propaganda, bribery or other corrupt practices as laid down in the Act.
451 Another principle that is equally well settled is that the election A petitioner in order to succeed must plead all.
material particulars ' and prove them by clear and cogent evidence.
The allegations of corrupt practices being in the nature of a quasi criminal charge the same must be proved beyond any shadow of doubt.
Where the election petitioner seeks to prove the charge by purely partisan evidence ? consisting of his workers, agents, supporters and friends, the Court would have to approach the evidence with great care and caution, scrutiny and circumspection, and would, as a matter of prudence r though not as a rule of law, require corroboration of such evidence from independent quarters, unless the Court is fully satisfied that the evidence is so credit worthy and true, spotless and blemishless, cogent and consistent, that no corroboration to lend further assurance is necessary.
It has to be borne in mind that the attempt of the agents or supporters of the defeated candidate is always to get the election set aside by means fair or foul and the evidence of such witnesses, therefore, must be regarded as highly interested and tainted evidence which should be acted upon only if the Court is satisfied that the evidence is true and does not suffer from any infirmity.
Where, however, 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 is not the conclusive test of truth Judicial experience shows that sometimes even r a tutored or parrot ' like evidence can be consistent and free from discrepancies and yet not worthy of credence.
It is, however, difficult to lay down a rule of universal application because each case will have to be decided on its own facts, but in appreciating the evidence the broad features mentioned above must be borne in mind and have been emphasised by this Court in a large catena of decisions a few of them may be refer red to here.
In Bhanu Kumar Shastri vs Mohan Lal Sukhadia and others,(l) this Court observed as follows: "Allegation of corrupt practice is a charge of criminal nature.
The provisions in the Representation of the People Act are intended to preserve the purity of the election, but at the same time these provisions should not be subverted for the impure purposes of maligning candidates who happen to be in the Government on the eve of the election, X X X The Court is always vigilant to watch not only the conduct of the candidates and to protect their character from being defamed hut also to see that the character and conduct of the public is not corroded by corrupt motive or evil purposes of candidates.
The genuine and bona fide aims and aspirations of candidates have to be protected on the one hand and mala fide abuse and arrogance of power will have to be censured on the other.
" (1) 119711 I S.C.C. 370.
452 Similarly in Rahim Khan vs Khurshid Ahmed & ors.(l) Krishna Iyer, J., speaking for the Court most lucidly and aptly observed as follows: "An election once held is not to be treated in a light hearted manner and defeated candidates or disgruntled electors should ' not get away with it by filing election petitions on unsubstantial grounds and irresponsible evidence, there by introducing a serious element of uncertainty in the verdict already rendered by the electorate.
An election is a , politically sacred public act, not of one person or of one official, but of the collective will of the whole constituency.
Courts naturally must respect this public expression secretly written and show extreme reluctance to set aside or declare void an election which has already been held unless clear and cogent testimony compelling the court to uphold the corrupt practice allege against the returned candidate is adduced.
Indeed election petitions where corrupt practices are imputed must be regarded as proceedings of a quasi criminal nature wherein strict proof is necessary.
The burden is therefore heavy on him who assails an election which has been concluded.
" To the same effect is the decision of this Court in Abdul Hussain Mir vs Shamsul huda and Another(2) where this Court observed as fol lows: "Even so, certain basic legal guidelines cannot be lost sight of while adjudging an election dispute.
The verdict at the polls wears a protective mantle in a democratic polity.
The Court will vacate such ballot count return only on proof beyond reasonable doubt of corrupt practices.
Charges, such as have been imputed here, are viewed as quasi criminal, carrying other penalties from losing a seat, and strong testimony is needed to subvert a Returning officer 's declaration.
x x x x x When elections are challenged on grounds with a criminal taint the benefit of doubt in testimonial matters be longs to the returned candidate.
Similarly in Ghasi Ram vs Dal Singh & others(3) while emphasizing the standard of proof in an election case for a corrupt practice of bribery, Hidayatullah, J., as he then was, speaking for the Court observed thus: "In Anjaneya Reddy vs Gangi Reddy and others 21 E.L.R. 247 it was held that the proof required to establish a corrupt practice must be almost of the character required to establish a criminal charge.
In our opinion the law requires that a corrupt practice involving bribery must be fully established.
The evidence must show clearly that the promise or gift directly or (1) ; (2) ; (3) ; 453 indirectly was made to an elector to vote or refrain from voting at an election.
" A We have gone through the judgment of the High Court, particularly on issue Nos. 7, 26 and 27 and find that although in his prelude to the discussion on issue No. 7 the learned Judge has referred to the various authorities and has correctly adumbrated the legal propositions he does not appear to have applied the principles enunciated in the decisions correctly to the facts or the evidence covered by this issue.
It also appears that the learned Judge has applied two different standards in appreciating the evidence with respect to issues Nos. 7, 26 & 27 and other issues on which he has given findings against the contesting respondent.
For instance, while he has refused to accept the evidence of a partisan or an interested witness being staunch supporters of the contesting respondent on other issues, particularly issue No. 8, he has, while dealing with the evidence of the witnesses on issue No. 7 which suffers.
from the self same infirmity, readily accepted their evidence without even noticing the deep interest that these witnesses had in supporting or bolstering up the case of the contesting respondent.
We shall, however, refer to this aspect of the matter after we have dealt with the evidence led by the parties on these issues.
In the light of the principles enunciated by us we shall now proceed to discuss and examine the findings of the High Court on issue No. 7 and the evidence led thereon by the parties.
Issue No. 7 was cast by the Trial Judge thus: "Did the 1st respondent (the appellant) commit a corrupt practice under section 123(1) of the Representation of the People Act by making an offer to pay Rs. 25,000/ to the petitioner and trying to induce him not to contest the election ?" To begin with we would like to refer to the pleadings of the contesting respondent in order to show the exact material particulars averred in the election petition itself.
The allegation which is the subject matter of issue No. 7 is to be found in paragraph 12 of the election petition appearing at p. 23 of the Paper Book (Vol.
R. Sultan the contesting respondent had alleged that he had applied for a Congress ticket for Gooty Assembly constituency and.
was ultimately granted the said ticket by the Central Election Committee, Delhi on February 1, 1972.
Although the D.C.C. ad hoc Congress Committee, Anantapur, had recommended the name of the contesting respondent and others, the Provincial Congress Committee `recommended the name of the contesting respondent alone which was finally accepted by the Central Election Committee at Delhi.
After having been given the Congress ticket the contesting respondent returned to Hyderabad on February 2, 1972 and a day later he was contacted on telephone by Mustafa of Guntakal one of his supporters and had a talk with him regarding the filing of his nomination paper.
The contesting respondent told Mustafa that he would be reaching Gooty on February 4, 1972, for filing his nomination papers for the Gooty Assembly constituency and that Mustafa also should reach Gooty on the morning of February 4, 1972.
We might pause for a little while 454 here and notice two important averments.
In the first place it was the definite case of the contesting respondent that his visit to Gooty on February 4, 1972, was for the purpose of filing his nomination papers, but it appears from the evidence that he did not file his nomination on this date but some time later.
Secondly during his talk with Mustafa on the telephone the contesting respondent did not ask him to bring P.W. 29 Nabi Saheb and P.W. 33 Chinna Bhemanna with him to Gooty.
Resuming the thread of averments in the election petition, the further facts are that the contesting respondent reached Gooty on February 4, 1972 at about 10 00 A.M. and proceeded to Bharat Sewak Samaj hereafter referred to as 'B.S.S. ' Building which is sometimes described as an office and sometimes as a Guest House in the evidence.
P.Ws. 29 and 33 and some others were waiting for the contesting respondent at the B.S.S. Building.
The contesting respondent then, along with P.Ws. 29 and 33 went to Taluk office for obtaining a copy of the voters list for the Gooty Assembly constituency and reached the Taluk office at about 11 00 A.M.
While he was returning from the Taluk office the appellant met the contesting respondent and wished him and after talking for some time he made an offer of Rs. 25,000/ to be paid to the contesting respondent if he agreed to withdraw from the election and help the appellant.
This offer is said to have been made in the presence of P.Ws. 29 and 33.
Even after the contesting respondent refused the offer he was again persuaded by the appellant to consider the same and on his final refusal the appellant threatened that the contesting respondent was bound to face defeat in the elections.
It was also alleged that the appellant took the refusal of the offer as a challenge and spent money lavishly to win the election.
The last part of the averment which forms the subject matter of issue No. 8 and certain other issues has not been accepted by the High Court.
These are the only particulars mentioned in the petition with respect to the offer of bribe which is the subject matter of issue No. 7.
In the course of the evidence.
however, a new fact was sought to be introduced by the contesting respondent, namely, that P Ws. 29 & 33 returned to the B.S.S. Building after the contesting respondent refused the offer of the appellant and then the two witnesses P.Ws. 29 & 33 narrated the entire incident to P.W. 34 Mustafa and P.W. 22 Ramachandraiah and others.
This fact was introduced in order to lend corroboration to the evidence of the contesting respondent and that of P.Ws. 29 and 32.
But as this was undoubtedly a material particular or an additional fact pertaining to the averments in paragraph 12 of the election petition and the same not having been mentioned has to be completely excluded from consideration.
We shall.
however.
dilate on this matter when we deal with the evidence led by the contesting respondent on this point.
In short, therefore, the story regarding the offer of bribery and the occasion for it may be conveniently divided into three stages: Stage No. 1.
This stage starts with the decision of the Central Election Committee, Delhi, in giving the Congress ticket to the contesting respondent and as consequence there of his arrival at Hyderabad on February 2, 1972.
On reaching Hyderabad the contesting respondent 455 who is P.W. 16 received a telephone call from Mustafa who was asked to go to Gooty on February 4, 1972 in order to meet the contesting respondent.
Accordingly the contesting respondent reached Gooty on February 4, 1972 and accompanied by P.Ws. 29 and 33 left for the Taluk office.
This is the end of the drama enacted in Stage No. I.
The facts are proved by P.W. 16 the contesting respondent himself, by Mustafa P.W. 34 and by P.Ws. 29 and 33.
It may be mentioned here that all the witnesses examined to prove the facts covered by this stage are interested witnesses who are staunch supporters of the contesting respondent and there appears to be a serious discrepancy in the evidence led on this point.
It appears from the evidence that when the contesting respondent reached B.S.S. Building apart from P.Ws. 29 and 33, P.Ws. 34 and 22 were also present.
P.Ws. 34 and 22 however did not accompany the contesting respondent to the Taluk office.
P.W. 22 Ramachandraiah says that he did not go tor the Taluk office because of ill health and P.W. 34 Mustafa says that he did not go as he had some work at the Railway Station.
It may 'also be noticed that in paragraph 12 of the election petition where the material particulars are given by the contesting respondent, while it is clearly mentioned that when the contesting respondent reached Gooty P.Ws. 29 & 33 were there, the name of P.W. 22 is not specifically mentioned as being present at Gooty.
It would appear from the evidence of P.W. 22 that he was a great friend and supporter of the contesting respondent and even the learned Judge has commented on the deep interest which P.W. 22 had shown in order to support the case of the contesting respondent.
It is, therefore, difficult to believe that if P.W. 22 would have been present at the B.S.S. Building how could the contesting respondent have omitted to mention the name of his most confident friend and supporter in paragraph 12 of his election petition.
This taken together with the fact that P.W. 22 had given a lame excuse for not having accompanied the contesting respondent to the Taluk office clearly throws a considerable amount of suspicion on the presence of P.W. 22 at Gooty on February 4, 1972.
Similarly, while P.W. 34 Mustafa gives a specific reason why he had not accompanied the contesting respondent to the Taluk office.
namely, that he had some work at the Railway Station, which is also deposed to by P.W. 16 himself, yet this fact which was within the knowledge of the contesting respondent at that very time is not mentioned in the election petition.
Another important circumstance that has to be noticed is that whereas in the election petition it is the definite case of the contesting respondent that he had to go to Gooty on February 4, 1972 for filing his nomination papers the evidence shows that the did not file the nomination papers at all on that date but he merely applied for the voters list of the constituency.
This is important, because, while it may have been relevant for P.Ws. 29 & 33 to accompany the contesting respondent to the Taluk office if it was the question of his filing nomination papers, their presence at the Taluk office was not at all necessary if the contesting respondent had merely to take a copy of the voters list which could have been done by him alone.
P.W. 16 the contesting respondent has no doubt proved the facts mentioned above.
Similarly P.W. 34 has supported the contesting 456 respondent regarding his having a talk with the contesting respondent on the telephone and his being asked to go to Gooty on February 4, 1972.
P.Ws. 29 and 33 have also said that they were asked by P.W. 34 Mustafa to accompany him to Gooty in order to meet the contesting respondent.
Thus so far as the facts in stage No.
I are concerned, whether they are true or not, they do not appear to be very relevant for the purpose of issue No. 7.
Stage No. 11 This brings us to stage No. 2 which is the bulwark aud the bedrock of the case of the contesting respondent regarding the offer of bribe said to have been made by the appellant to him.
So ar as this stage is concerned the only evidence that the contesting respondent has given consists of the testimony of P.Ws. 29 and 33 apart from his own evidence.
We would first deal with the evidence of P.Ws. 29 and 33 before coming to the evidence of the contesting respondent himself.
P.W. 29 Nabi Saheb appears to be one of the most interested witnesses and a great friend and supporter of the contesting respondent.
He admits at p. 498 of the Paper Book (Vol.
Ill) that both the witness and Mustafa P.W. 34 worked for the contesting respondent during the recent general elections.
He then says that Mustafa approached him on February 3, 1972 and requested him and W. 33 Chinna Bhemanna to accompany him to Gooty.
The witness further admits that the contesting respondent R. Sultan and he had been friends for the last ten years.
A suggestion was given by the appellant that his younger brother Khaja Hussain was godown keeper of the B.S.S. at Guntakal and he was arrested on the charge of sling goods and that the contesting respondent Sultan had helped him.
The witness admits at p. 501 of the Paper Book (Vol.
III) that the police had no doubt arrested his younger brother who was a Godown Keeper of the B.S.S. and he further admits that the case was later shown out.
He, however, denied the suggestion that Sultan helped his brother.
It is, however, admitted by Sultan P.W. 16 at p. 307 of the Paper Book (Vol. II) that he was the Secretary of the B.S section and was, therefore, obviously in a position to help the brother of the witness.
In these circumstances, therefore, to begin with, the Court has to approach the evidence of this witness with great care and caution because be was not only a close friend of the contesting respondent, but was also his supporter and worker and he was interested in giving evidence which may result in the election of the appellant being set aside He states that when the contesting respondent decided to go to the Taluk office on February 4, 1972, P.W. 34 Mustafa did not accompany the party because he had some work at the Railway Station with the result that P.W. 33 and the witness only accompanied the contesting respondent.
The witness further stated that he accompanied the contesting respondent to the Taluk office but P.W. 33 Ramachandraiah stayed behind as he was not keeping good health.
Thereafter when the contesting respondent came out of the Taluk office the party went towards the place where the car was parked when on the way the appellant met them and greeted the contesting respondent.
There the appellant is said to have offered Rs. 25,000/ if the contesting respondent agreed not to contest the election.
Sultan laughed and 457 spurned the offer.
The witness as also P.W. 33 Chinna Bheemanna told the appellant that Sultan the contesting respondent did not require the money, when the appellant repeated the offer which was again refused.
Thereafter the party returned to the B.S.S. Building where P.W. 22 Ramachandraiah and P.W. 34 Mustafa and others were waiting in the office of the B.S.S.
Both the witness and P.W. 33 narrated the incident relating to the offer of bribe to Mustafa P.W. 33 and Ramachandraiah P.W. 22.
P.W. 33 Chinna Bheemanna who is the other witness has narrated more or less the same facts regarding their reaching the B.S.S. Building at Gooty, their accompanying the contesting respondent to the Taluk office, the offer of bribe made by the appellant and the narration of the facts to P.Ws. 22 and 34.
P.W. 16 the contesting respondent had also deposed to these facts.
C The learned Judge has accepted the evidence of these witnesses because he thought that there was no major discrepancy in the testimony of these witnesses.
Further more, the learned Judge, has, on a consideration of the evidence of P.Ws. 23, 38, 39 and 41, held that both the contesting respondent and the appellant were present at Taluk office on February 4 1972 near about 12 Noon and from their presence he appears to Lave presumed that the offer of bribe must have been made.
We are, however, unable to agree with this somewhat unusual process of reasoning.
The mere fact that the contesting respondent and the appellant happened to be present at the Taluk office on February 4, 1972, at about the same time does not necessarily lead to the inference that the appellant must have made the offer of bribe which is quite a different fact and has to be proved separately and independently.
Indeed if one has to wander in the domain of conjectures, then it can be equally said of the contesting respondent that the presence of the appellant at the same day and time at the Taluk office furnished him an occasion to concoct and bolster up a case of the alleged offer of bribe by the appellant to the contesting respondent and in order to prove this allegation the contesting respondent had no difficulty by enlisting the support not of any independent witness but his own stooges hirelings or friends and supporters.
While, therefore, we agree with the finding of the learned Judge that the appellant and the contesting respondent were no doubt present at the Taluk office on February 4, 1972 it by no means follow that the story of the offer of bribe is true on this ground alone.
In fact the learned counsel for the appellant also has not disputed the fact that the contesting respondent or the appellant were actually present in the Taluk office on February 4, 1972 at the relevant time a fact which is proved by independent witnesses and documentary evidence.
What the learned Judge has overlooked is the fact that while it is very easy to make an allegation of an offer of bribe, it is very difficult for the person against whom the allegation is made to rebut the same.
The learned Judge also failed to consider that the actual offer alleged to have been made by the appellant to the contesting respondent has been proved only by the partisan and highly interested testimony of P.Ws. 29 and 33 which was sought to be corroborated by equally interested testimony of P.Ws. 22 and 34, and no attempt was made to examine any independent witness even 458 though the evidence was that at the B.S.S. Building, apart from P.Ws. 22 and 34 other persons were also present.
So far as P.W. 29 is concerned we have shown that he is a thoroughly interest ed witness being a close friend of the contesting respondent.
P.W. 33 Chinna Bheemanna is also a partisan witness.
He admits that he was a worker of Sultan during the last elections.
He further admits at p. 536 of the Paper Book (Vol.
III) that he tried to procure the B ' evidence of one Sunkanna for the contesting respondent in this respect.
The witness deposed thus: "Sultan asked Sunkanna to come and give evidence in this case.
Yesterday when I was coming here I approached Sunkanna.
But at that time he was not in his house.
Then I sent another person to Sunkanna asking him to come to Hyderabad to give evidence.
" This shows the extent to which the witness could go in order to support the case of the contesting respondent.
The witness further admits that he was a member of the B.S.S. and therefore a colleague of Sultan.
It seems to us that the evidence of P.Ws. 16, 29 and 33 regarding the offer of bribe in the circumstances mentioned by them is inherently improbable.
In the first place it would appear from the topography of the spot where the talk between the contesting respondent and the appellant took place that the place was a crowded one and was situated in the heart of the Taluk office surrounded by the District Munsif Court.
According to P.W. 16 apart from the District Munsif 's Court there were four other offices in that compound and that there was a crowd near the District Munsif 's Court.
He also admits that there was a canteen in between the Taluk office and the District Munsif 's court where people were sitting.
Similarly P.W. 29 has admitted that the canteen was situated only at a distance of 10 to 15 yards from the place where the talk regarding the offer of bribe took place and that the District Munsif 's Court was at some distance from the canteen.
He also admits that the litigant public sit under the trees near the Munsif 's Court.
The distance between the Munsif 's Court and the place where Sultan 's car was parked would be about 30 to 40 yards.
In view of these surroundings it is most unlikely that the appellant would make an offer of bribe to the contesting respondent in such an open and crowded place where he could be exposed by Sultan at any time.
The offer of bribe was undoubtedly a criminal act and the Munsif 's Court being near at hand , the appellant would have faced a grave risk in making such an offer.
Further more, ' it appears that the appellant was not fully acquainted with Sultan the contesting` respondent though he may have seen him once or twice.
No one makes an offer of bribe to strangers without knowing their reaction.
Further more, it is impossible to believe that even if the offer of the bribe is made it would be made in the presence of the witnesses who were accompanying Sultan so that the person who makes the offer of bribe would be a party to the creation of clear evidence against him.
It is absolutely against the normal and prudent human conduct to make such an offer at a crowded place in the presence of the two witnesses who were known to be the supporters of the contesting respondent and persist in making the offer in site of the blunt refusal of the same by the contesting respondent.
On the other hand the natural conduct of the appellant would have 459 been to take the contesting respondent to a secluded spot where he A would not be seen or heard by any body ' and then make the offer.
In fact P.W. 16 clearly suggests that the appellant had taken him aside but he says that the other witnesses did not part with his company and also came ' there and yet the appellant did not object to their presence.
We find it difficult to believe that the offer of bribe would be made by the appellant in these circumstances.
The learned Judge, however, has tried to draw an artificial distinction between an offer of bribe and a payment of actual bribe.
He seems to think that whereas an offer of bribe could be made in a crowded place in the presence of the witnesses as no money was`to be passed, yet when actual payment of bribe was to be made it should have been done in a secluded place.
This reasoning of the learned Judge is not at all intelligible to us.
Under the provisions of section 123(1)(A) of the Act an offer of bribe or payment of actual bribe are both electoral offences amounting to corrupt practices which are to be visited with similar consequences.
The offences of an offer of bribe or of actual payment of bribe were of the same nature and it cannot be said that one is a lesser crime and the other is a graver one.
Neither the criminal law nor the election statute seek to draw any distinction between an offer of bribe or actual payment of bribe.
In these circumstances, therefore, whether it is an offer of bribe or it is a payment of actual bribe, normal human conduct requires that if a person intends to commit such an offence he would not do so in a crowded place but would try to find out a secluded spot so that complete secrecy is maintained.
Another important circumstance that makes the story put forward by the witness regarding ' the offer of bribe absolutely incredible is the absence of any genesis or occasion for the presence of the witnesses at the Taluk office or for that matter for accompanying the contesting respondent Sultan to the Taluk office.
To begin with we have already indicated that in paragraph 12 of the election petition the main purpose of the visit of the contesting respondent Sultan to the Taluk office was to file his nomination papers.
Indeed if this was the purpose of his visit one could have understood the significance of Sultan 's asking his supporters accompanying him to the Taluk office because the filing of nomination papers is one of the most important and momentous steps in the electoral process.
From the evidence of the witnesses as also that of Sultan the contesting respondent it is clear that Sultan did not at all go to the Taluk office for the purpose of filing his nomination papers but had only applied for a copy of the voters list: For this purpose the presence of P.Ws. 29 and 33 was not at all necessary.
Even P.W. 29 says at p. 502 of the Paper Book (Vol.
III) that Sultan had told the witness that he was going to the Taluk office to purchase the voters list.
Further more, even though the witnesses accompanied Sultan they do not appear to have given him any worthwhile assistance Both P.Ws. 29 and 33 categorically state that they did nothing at all at the Taluk office except sitting in the verandah.
P.W. 29 states as follows: "We sat in the front verandah of the Taluk office along with Sultan.
With whom Sultan spoke and what he did in the Taluk office, I do not know.
" 460 It would, therefore, be clear from the evidence of this witness that except for sitting in the verandah there was absolutely no occasion for their presence at the Taluk office, nor there was any earthly reason why Sultan should have taken them to the Taluk office except for the fact that he wanted them to witness the offer of bribe.
This, however, could not be possible, because there was nothing to show that Sultan knew before hand that he would meet the appellant at the Taluk office and that the appellant would make an offer of bribe to him.
This circumstance, therefore, which is in some variance from the allegation made in the pleadings smacks of a concoction and throws a good deal of doubt on the presence of these two witnesses at the Taluk office.
We have already indicated ' that both P.Ws. 29 and 33 are thoroughly interested witnesses.
P.W. 33 apart from being a worker of Sultan is a member of the B.S.S. Of which the contesting respondent Sultan is the Secretary.
The only other witness so far as the facts in Stage No. II are concerned is P.W. 16 the contesting respondent himself.
P.W 16 is the most interested witness who also bears serious animus against, the appellant.
It would appear from his evidence that the appellant held, at the instance of one K. Suryanarayana Reddi, filed a complaint against the contesting respondent for cheating and that the contesting respondent had filed a petition in the High Court for quashing the 3, investigation in pursuance of the complaint.
He further stated that , he had also filed a criminal complaint against Suryanarayana Reddi in the Magistrate 's Court at Gooty and.
P.Ws. 22 and 29 had been cited as witnesses in that case.
Apart from the animus, it would also appear that P.Ws.
22 & 29 are stock witnesses of the contesting respondent to be utilised wherever and whenever necessary.
Further more, P.W. 16 narrates an incident at the Travellers Bungalow at Anantapur which happened before the general elections of 1972 in the presence of Challa Subbarayudu, where again the appellant seems to have requested him not to contest the elections.
This fact is not mentioned in the election petition at all and it seems to us that it has been concocted for the first time in the evidence of P.W. 16 in order to give credence to his version that the appellant had made an offer of bribe.
Another inherent improbability in the version given by P.W. 16 and P.Ws. 29 & 33 regarding the offer of bribe is that the appellant i himself was aspiring for the Congress ticket and was therefore fully conscious and aware that the influence that the Congress party wielded and the resources it possessed.
He was also aware that the contenting respondent Sultan was a Congress nominee having been granted the Congress ticket by the Central Election Committee and he had, therefore, the support of such a big party behind him.
Would he, under these circumstances ever dare to think of making an offer of bribe and that too at a crowded place in the presence of the witnesses, of all persons to` the contesting respondent and persist in that offer even after the same was refused by the contesting respondent.
These two circumstances appear to introduce an element of intrinsic infirmity in the evidence led by the contesting respondent on this point and the story appears to us to be too good to be true.
461 Another important circumstance that makes the story of the contesting.
respondent on this point improbable and untrue is the fact that the appellant should have made an offer of bribe as early as February 4, 1972.
According to the evidence the last date for filing nomination papers was February 8, 1972 and for withdrawal was February 11, 1972.
If the appellant had succeeded in persuading the contesting respondent to accept his offer and withdraw from the Contest, even then that would not have served the purpose of the appellant because with the resourcefulness that the Congress party possessed it could have set up any other nominee immediately who would have filed the nomination papers by February 8.
In these circumstances if the appellant was really bent upon seeing that no Congress candidate entered the field he would have made the offer of bribe, if any, either on February 7, 1972 or February 8, 1972, so that no chance was given to any party to sponsor any other candidate.
Lastly the conduct of the contesting respondent is a clear pointer to the incredibility of the version propounded by him and his witnesses on this point.
Assuming that the version given by the contesting respondent is true, then it was a very serious matter so far as the prestige of the Congress party was concerned.
By offering bribe to a Congress nominee the appellant had sought to throw a challenge to the party itself.
In his election petition P.W. 16 has also mentioned the fact that the appellant had thrown a challenge on his refusal that he would be defeated.
It would appear from the evidence of P.W. 22 at p. 428 of the Paper Book (Vol.
III) that after returning from the Taluk office and having lunch, the witness, Sultan and Mustafa r went to Anantapur.
It would appear from paragraph 12 of the election petition that the District Congress Committee office is situated at Anantapur.
P.W. 29 also states at p. 500 of the Paper Book (Vol.
III) that P.W. 22, Mustafa P.W. 34 and Sultan left for Anantapur.
P.W. 34 Mustafa also states at P. 548 of the Paper Book (Vol.
III) that when the incident about the offer of bribe by the appellant was narrated to him he said that it was monstrous to sell away the Congress ticket.
Indeed if this was the feeling of P.W. 16 and his supporters, then it is impossible to believe that had the offer been made by the appellant at Gooty either Sultan or his supporters would not make a complaint of this serious incident to any of the office bearers of the District Congress Committee at Anantapur, particularly when they went to Anantapur soon after the incident from Gooty.
The fact that no such report or information was sent to the District Congress Committee at Anantapur or any where else, throws a mountain of cloud of suspicion and doubt on the version put forward by the contesting respondent.
The learned Judge has noticed some of the improbabilities mentioned above but not all of them and seems to have brushed them aside on trivial grounds and has readily accepted the evidence of the P. Ws merely because there was no major discrepancy in the evidence of the witnesses.
In our opinion, the approach made by the learned Judge was not correct.
If the broad probabilities and the unusual conduct of the contesting respondent and the witnesses rendered the version presented by them unbelievable or doubtful, then the Court could not refuse to take notice of such 15 522SCI/76 462 circumstances.
For these reasons, therefore, we find ourselves unable to agree with the learned Judge that the offer of bribe at Gutty Taluk office as alleged by P.W. 16 and P.Ws. 29 & 33 was made by the appellant to P.W. 16.
We therefore disbelieve the facts sought to be proved by the contesting respondent in Stage No. II.
This bring us to the last scene of the drama, namely Stage No. Ill.
According to the contesting respondent, after the offer made by the appellant to the contesting respondent was refused by him in the Taluk office, the contesting respondent along with P.Ws 29 and 33.
returned to the B.S.S. Building at Gooty.
On return to the B.S.S. Building they found P.Ws.
22 Ramachandraiah and P.W. 34 Mustafa there.
According to P.Ws 29 and 33 the witnesses were laughing and when they were asked by P.Ws. 22 & 34 they narrated the entire incident which had happened at the Taluk office.
According to P.W. 16, however, when he arrived at the B.S.S. Office after his visit to the Taluk office P.Ws 22 and 34 asked him as to what is the news, and instead of replying to them P.Ws 29 & 33 narrated the incident which happened at the Taluk Office, namely, the offer of the bribe.
P.Ws 29 & 33 have, however, given a slightly different version.
But what is most extraordinary in this incident is that whereas in ordinary circumstances we would have expected Sultan the contesting respondent himself who was the hero of the whole show and to whom the offer of the bribe had been made by the appellant to narrate the facts to his friends P.Ws. 22 and 34, but instead of that Sultan remained absolutely silent and P.Ws. 29 & 33 were assigned the role of doing the talking.
This conduct of the contesting respondent is not at all understandable.
Again there does not appear to be any good reason why P.W. 22 Ramachandraiah and P.W. 34 Mustafa were left behind and not taken to the Taluk office.
According to P W. 22 he did not go because of ill health.
This appears to us to be a figment of his imagination.
If P.W. 22 in spite of his ill health could come all the way from his house to the B.S.S. Office and waited there right from morning until the afternoon, there was no reason why he should not have accompanied the contesting`respondent to the Taluk office.
P.W. 34 gives a lame excuse that he had some work at the Railway station and, therefore, he could not accompany the party to the Taluk office.
It seems to us that as the allegation regarding the offer of bribe was a totally untrue one and no independent witnesses would have been prepared to support this version, the contesting respondent hit upon a plan to prove this allegation through his supporters and friends by making two of them to overhear the alleged offer of bribe and the other two namely P.Ws. 22 & 34 to remain at the B.S.S. Office to hear the narration of the said offer and thereby produce a corroborative evidence.
` otherwise we do not see any earthly reason why P.W. 34 Mustafa who was playing a leading part in the drama enacted on February 4, 1972 and who was responsible for getting the programme from the contesting respondent and collecting his other friends at Gooty should not have accompanied the contesting respondent to the Taluk office in order to help him in getting the forms and stayed away on the lame excuse that he had some work at the Railway Station.
It appears to us that according 463 to the evidence of P.W. 16 as also the averments made by him in the election petition P.W. 34 Mustafa was taking a very prominent part in the affairs of the contesting respondent on his return to Hyderabad.
It was he who telephoned the contesting respondent, brought his companions to Gooty, stayed at Gooty and accompanied the contesting respondent and others to Anantapur, and yet he did not accompany the contesting respondent to the Taluk office.
It seems to us that P.Ws.
22 & 34 were deliberately made to stay at the B.S.S. Office so 4 as to corroborate the story put forward by P.Ws. 16, 29 and 33 being persons to whom the story was immediately narrated.
Apart from this there does not appear to be any object for keeping these two persons at the B.S.S. Office.
Finally the evidence shows that apart from P. Ws. 22 & 34 there were other persons present at the B.S.S. Office but none of them has been examined to support the version given by P.Ws. 22 & 34.
These two witnesses were close friends and supporters of P.W. 16 and their evidence would not inspire any confidence.
So far as P.W. 22 is concerned he admits that he worked for the election of Sultan at Gooty and supported the Congress party.
He further admits that he toured various villages with Sultan.
He was also the counting agent of Sultan having been appointed by him as per Ext.
He was also an employee of the B.S.S. and had been appointed by Sultan.
Sultan was the Managing Director of Brim Stone Rubber Products Ltd. The witness was a partner of the firm which had the sole agency for the products of the aforesaid firm.
Apart from that the witness admitted that he was a staunch supporter of the Congress.
Even the learned Judge has clearly observed that this witness was keenly interested in the future of Sultan and in this connection, while dealing with issue No. 8, the learned Judge observed as follows: "Because of the great enthusiasm shown by this witness (P.W. 22) in the witness box while giving evidence on be half of the petitioner, which is still fresh in my mind, I am unable to accept the evidence of this witness as disinterested evidence.
" The learned Judge, however, appears to Have readily believed the evidence of this witness on issue No. 7 forgetting the scathing remarks which he himself had made on the demeanour of this witness with regard to the issue No. 8.
Similarly P.W. 34 Mustafa is also an equally interested witness and admits that he worked for the Congress and he had been a friend of Sultan for ten years.
He also admits that he had worked for Sultan even in the 1962 elections.
In these circumstances, we are unable to place any reliance on the evidence of this witness.
In fact if the evidence of P.Ws. 16, 29 & 33 is disbeileve do the question of the offer of bribe, then the evidence of P.Ws. 32 & 34 also falls automatically, because if there was no offer of bribe there was nothing to be narrated to these witnesses.
Finally, the most important ground on which the evidence of these two witnesses has to be completely excluded is the fact that P.Ws. 29 & 33 narrated the incident 464 to these two witnesses which is undoubtedly a very material particular and it is conspicuous by its complete absence in paragraph 12 of the election petition where the facts on which issue No. 7 was framed have been pleaded.
The facts deposed to by P.Ws. 22 and 34 are not merely a matter of evidence but a very important material particular which seeks to corroborate the interested evidence of P.Ws. 16, 29 & 33 and it is difficult to believe that had this been true the contesting respondent would not have cared to mention this fact in his petition.
In This connection it may be interesting to note that P.W. 16 has admitted in his evidence at p. 303 of the Paper Book (Vol. II) that on 15th or 16th of March, 1972 the Returning officer had suggested to the contesting respondent to file an election petition if he was defeated and since then the witness was making enquiries to collect material for filing an election petition.
If this was really so and the contesting respondent was careful enough to gather the materials long before he filed his election petition, it is difficult to comprehend that he would make no mention of this important fact in his petition.
Lastly the contesting respondent states in his evidence at p. 304 of the Paper Book (Vol.
II) that in respect of the threats said to have been administered by the appellant on 5th or 6th of March, 1972, he had drawn the attention of the police officer and had contacted the Deputy Superintendent of Police of Guntakal.
Indeed if the contesting respondent was so vigilant would he not have drawn the attention of any police officer of Gooty to the offer of bribe made by the appellant or the threats or challenge thrown by him to the contesting respondent ? In view of the improbabilities and the compelling circumstances mentioned above, we are clearly of the opinion that the contesting respondent has not been able to prove his allegation regarding the offer of bribe made by the appellant to the contesting respondent at the Taluk office as alleged by him beyond any shadow of doubt.
The learned Judge has observed that as against the evidence produced by the contesting respondent there is a bare denial by the appellant.
The learned Judge seems to have laid stress on the words that the appellant alone has denied the allegation and seems to suggest that he has not examined any witnesses in support of the denial.
The learned Judge failed to appreciate that according to P.Ws. 16, 29 & 33 there was no one else at the time when the appellant had made the offer of bribe to the contesting respondent excepting four persons, namely, P.W. 16 Sultan, P.W. 29 Nabi Saheb, P.W. 33 Chinna Bheemanna and the appellant.
The three persons deposed in support of the story of the contesting respondent and the appellant was, therefore, left alone who denied the story completely.
It could not be expected of the appellant to concoct or procure witnesses when there could be none.
As the offer of bribe was an electoral offence amounting to a corrupt practice which partakes of a quasi criminal nature, the onus was initially on the contesting respondent to prove this fact.
As the contesting respondent has failed to prove this fact.
he must fail.
Indeed if such serious and momentous allegations made against successful candidate are allowed to be proved by interested and partisan evidence as in the present case without any corroboration and where 465 the evidence adduced is highly improbable and unworthy of credence, it would give an easy handle to any defeated candidate to unseat a duly elected candidate by collecting evidence of his friends and supporters which will undoubtedly destroy the very sanctity and purity of the electoral process.
Thus in view of the cumulative effect of the compelling circumstances, the inherent improbabilities me intrinsic infirmities and ;` the unnatural human conduct disclosed by the evidence produced by the contesting respondent leads us to the inescapable conclusion that the contesting respondent has failed to prove the allegation of the offer of bribe which is the subject matter of issue No. 7 beyond any shadow of doubt.
Therefore issue No. 7 is decided against the contesting respondent and the finding of the learned Judge in favour of the contesting respondent on issue No. 7 is set aside.
This bring us now to the discussion of issues Nos. 26 & 27, the only other issues which remain to be decided in the present appeal.
Issues Nos.
26 and 27 may be extracted thus: (26) "Whether the 1st respondent (the appellant) committed a corrupt practice under section 123 (3 A) of the Representation of the People Act by issuing a pamphlet dated 20 2 1.972 to create ill feelings among the voters on religious D grounds and if so, has it materially affected the result of the b election of the petitioner as stated in para 39 of the Election Petition ?" (27) "Whether the said persons distributed the pamphlet with the consent of the 1st respondent (the appellant) ?" The facts comprising issues Nos. 26 & 27 are mentioned in paragraph 39 of the election petition and relate to two separate and independent allegations (1) The distribution of objectionable pamphlets of the nature of Ext.
A l, which contained communal propaganda and sought to persuade the voters to vote on purely communal grounds, personally by the appellant to various persons in various villages; and (2) the distribution of such pamphlets by the workers and agents of the appellant with his consent to a number of persons belonging to a large number of villages.
It would, therefore, be seen that the two types of allegations are essentially different and cannot be said to form one composite allegation.
We have adverted to this aspect of tile matter because Mr. Basi Reddy for the appellant has vehemently con tended before us that no foundation has been laid by the contesting respondent in his election petition regarding the distribution of the pamphlets by the workers and agents of the appellant as indicated in item (2) supra.
It was further contended that this matter does not merely constitute a material particular of a specific fact which should have been mentioned in the petition but is a separate item of fact itself and as there is no allegation to this effect in the election petition the same should be excluded from consideration and the evidence given by the contesting respondent on this point must be completely ignored.
The learned counsel for the contesting respondent, how ever, sought to repel this argument on the ground that a broad construction of the petition filed by the contesting respondent would 466 clearly show that sufficient foundation has been laid in the petition for these allegations which were later amplified by giving the material particulars after the application for amendment of the petition was made by the contesting respondent before the High Court.
In these circumstances we would like to dispose of the contention of the parties on this point before proceeding to the merits of issues Nos. 26 & 27.
In paragraph 39 of the election petition, as it stood before the amendment, the contesting respondent alleged that the appellant had issued a pamphlet dated February 20, 1972 in furtherance of his election prospects and the pamphlet issued was distributed among the voters throughout the Gooty Assembly constituency which caused ill feelings among the voters on Religious grounds.
It was further alleged that by distributing the pamphlet the appellant indulged in creating hatred and ill feelings among the voters in the constituency and there fore committed corrupt practice.
In order to understand the import of the allegations made in paragraph 39 of the petition it may be necessary to extract the relevant part of it thus: "39.
The petitioner states that 1st respondent (the appellant) issued a pamphlet dated 20 2 72 for the furtherance of his election prospects and the pamphlet issued and distributed among the voters `throughout the Gooty Assembly.
Constituency has caused lot of set back and it created ill feelings among the voters on religious grounds.
He criticised the Muslim voters on religious and communal lines.
* * The petitioner received several complaints in the village that the pamphlet issued and distributed by 1st respondent has caused feelings of enmity, hatred between Hindus and Muslims and this has created disharmony among the voters.
* * The pamphlet issued and distributed by the Ist respondent is herewith enclosed as annexure No. 5.
" We have underlined the portions on which we propose to lay particular emphasis.
It would be seen from the perusal of the allegations made in paragraph 39 extracted above that there is absolutely no averment that the pamphlet issued by the appellant was distributed by the agents, workers of supporters or friends of the appellant.
The only fact averred in pagagraph 39 of the petition is that the pamphlet in question was distributed by the appellant alone.
This fact is clearly evident from the portions extracted and underlined by us.
In these circumstances it was rightly contended by the learned counsel for the appellant that there was no pleading at all by the contesting respondent that the pamphlet was distributed by his agents, workers or supporters and therefore the particulars supplied by the contesting respondent in his application for amendment on this point must be completely disregarded.
In order to appreciate this contention it may be necessary to examine the concerned provisions of the Act.
Section 81 of the Act clearly provides that the election petition shall be filed within forty five days from the date of election of the returned candidate and runs thus: 467 "81.
(1) An election petition calling in question any election may be presented on one or more of the grounds specified in sub section (1) of section 100 and section 101 to the High Court by any candidate at such election or any elector within forty five days from, but not earlier than, the date of election of the returned candidate, or if There are more than one returned candidate at the election and the dates or their election are different, the later of those two dates.
" It is obvious, therefore, that any allegation of corrupt practice which is not made in the election petition filed within the time allowed by the statute cannot be allowed by way of an amendment under section 86(5) of the Act, because that would amount to extending the period of limitation peremptorily fixed by the Act.
Power of amendment of the election petition as contained in section 86(5) of the Act is clearly confined to allowing the particulars of any corrupt practice which has been set out and clearly alleged and specified in the election petition.
Subsection (5) of section 86 of the Act runs thus: "The High Court may, upon such terms as to costs and otherwise as it may deem fit, allow the particulars of any corrupt practice alleged in the petition to be amended or amplified in such manner as may in its opinion be necessary for ensuring a fair and effective trial of the petition, but shall not allow any amendment of the petition which have the effect of introducing particulars of a corrupt practice not previously alleged in the petition".
It would be seen that the ambit of this statutory provision is extremely narrow so that the power of amendment or amplification is restricted only to amplify the material particulars of any corrupt practice which had been previously alleged in the election petition.
In other words, the sub section requires three essential conditions to be fulfilled before an amendment could be allowed (1) that the amendment seeks merely to amplify the particulars of a corrupt practice; (2) that the corrupt practice whose particulars are to be given must have been previously alleged in the election petition itself; and (3) that the amendment is, in the opinion of the Court, necessary For ensuring a fair and effective trial of the petition.
Thus the three conditions mentioned above are the sine qua non for the exercise of the power by the court under sub s (5) of section 86 of the Act.
It is, therefore, manifest that the Court has no power to allow the amendment by permitting the election petitioner to amplify a material particular of a corrupt practice which is not specifically pleaded in the election petition itself for that would amount to introducing a new corrupt practice after the expiry of the period of limitation a result which was never envisaged or contemplated by the statute.
This matter fell for determination of this Court in Samant N. Balakrishna etc.
vs George Fernandez and others etc.
,(1) where Hidayatullah, C.J., speaking for the Court observed as follows: (1) ; 468 The power of amendment is given in respect of particulars but there is a prohibition against an amendment which have the effect of introducing particulars of a corrupt practice not previously alleged in the petition.
One alleges the corrupt practice in the material facts and they must show a complete cause of action.
If a petitioner has omitted to allege a corrupt practice he cannot br permitted to give particulars of the corrupt practice.
* * * In the scheme of election law they are separate corrupt practices which cannot be said to grow out of the material facts related to another person.
Publication of false statements by an agent is one cause of action, publication of false statements by the candidate is quite a different cause of action.
Such a cause of action must be alleged in the material facts before particulars may be given.
One cannot under the cover of particulars of one corrupt practice give particulars of a new corrupt practice.
They constitute different causes of action.
Since a single corrupt practice committed by the candidate, by his election agent or by another person with the consent of the candidate or his election agent is fatal to the election, the case must be specifically pleaded and strictly proved.
if it has not been pleaded as part of the material facts, particulars of such corrupt practice cannot be supplied later on * * * * If the material facts of the corrupt practice are stated more or better particulars of the charge may be given later nut where the material facts themselves are missing if is impossible to think that the charge has been made or can be later amplified.
This is tantamount to the making of a fresh petition" In our opinion the facts of the present case and the nature of the averment contained in the election filed by the contesting respondent is clearly covered by the ratio of the decision cited above.
It may be pertinent to note that in this case also the question is whether publication of false statements was by the candidate himself or by his agents and since what has been pleaded is only the distribution of the pamphlet by the appellant/candidate alone and not by his agents or workers with his consent, the court had no jurisdiction to allow particulars to be given with respect to the fact that pamphlet was distributed by the agents and supporters of the appellant to various persons in various villages as given in the schedule.
The learned counsel for the contesting respondent conceded the central weakness in this part of the case but he tried to persuade us to hold that the words "pamphlet issued and distributed among the voters throughout the Gooty Assembly Constituency" tend to include not merely the distribution of the pamphlet by the appellant himself but also by his agents and workers.
We are, however, unable to agree with this contention because reading the averments contained in paragraph 39 as a whole, however the broadly or liberally the same may be construed, the irresistible 469 inference is that the contesting respondent has laid special stress on the fact of distribution of the pamphlet by the appellant alone.
At least at three places underlined by us in the extracted.
portion of the pleadings of the contesting respondent he has over emphasized the fact that the distribution of the pamphlet was made by the appellant him self.
Wherever the averment of distribution of the pamphlet is made in the election petition it is said that the same was done by the 1st n respondent before the High Court, namely the appellant.
In these circumstances, therefore, we are not in a position to agree with the r interpretation sought to be placed by Mr. Shiv Shankar learned counsel for the contesting respondent on the pleadings of the contesting respondent which in fact is not borne out by the allegations mentioned in paragraph 39 as extracted above.
The learned counsel for the con testing respondent with fairness and ingenuity did not pursue the matter further and submitted that if his contention regarding the wider interpretation which he sought to put is not accepted, then he would concede that the amendment in respect of issue No. 27 should not have been allowed and the particulars mentioned by the contesting respondent on this item must be disregarded and the evidence given by the contesting respondent should be excluded from consideration.
It appears, however, that as the attention of the learned Judge does not appear to have been drawn to this aspect of the matter he allowed 11 ' the amendment as also the evidence on issue No. 27 and also proceeded to give his finding thereon.
As, however, this is a pure question of law and amounts to violation of the statutory mandate contained ill section 86 (5) of the Act, this Court has to give effect to the violation of the statutory provision.
For those reasons, therefore, we hold that there is no pleading by the contesting respondent that the pamphlet was distributed by the agents or workers of the appellant with his consent to various persons.
The, order of the High Court, therefore, along with the particulars given by the contesting respondent in item 1A in the schedule to the application for amendment is set aside and the said amendment is deleted from the election petition.
As a legal consequence thereof the evidence given by the contesting respondent on issue NO.
27 has to be excluded from consideration and the finding of the learned Judge on issue No. 27 is hereby set aside and issue No. 27 is deleted.
This disposes of the finding of the High Court so far as issue No. 27 is concerned.
Before dealing with the facts comprising issue No. 26 it may be necessary to mention a few circumstances which may be extremely relevant for examining the probative value of the case of the contesting respondent on this issue.
The election petition was filed before the High Court on April 20, 1972 i.e. about a month and a few days after the results of the election were announced.
The contesting respondent has clearly admitted in his evidence at p. 303 of the Paper Book (Vol. II) that as far back as March 15, 1972 he had started making enquiries and collecting materials for filing the election petition.
The witness stated thus: "All this talk metween Ravindra Choudhary and myself took place at about 3 00 P.M. at the Gutti Bus Stand on 15th or 16th of March 1972.
It was on the very day when the 470 Returning officer suggested to me on phone to file an Election Petition that that idea entered into my mind to file an election petition in case I was defeated.
Since then I was making enquiries to get material for filing an election petition.
Whenever I used to get any information regarding the elections, I used to go to those places to make enquiry." To begin with, therefore, the contesting respondent had started making full and frantic preparations for filing election petition a month before he filed the same.
In these circumstances it can be safely presumed that before filling the election petition the contesting respondent must have collected all the materials which enabled him to give the necessary details and material particulars of the corrupt practices which he sought to allege against the appellant and which formed the bedrock of his case.
Against this background therefore we should have expected the contesting respondent to mention not only the corrupt practices committed by the appellant but also to give various particulars thereof without taking recourse to the necessity of having to amplify the particulars by virtue of an amendment and that too when reminded of the same by the appellant himself.
So far as the allegations in paragraph 39 are concerned it would appear that prior to the amendment no particulars or detail of distribution of the pamphlet had been mentioned by the contesting respondent at all.
All that was said was that the appellant had distributed the pamphlet of a communal nature in order to incite communal feelings between the Hindus and the Muslims.
It was not stated to whom the pamphlets were distributed by the appellant and on what dates were the pamphlets distributed by the appellant, to the villagers.
Neither the names of the villages nor of the persons to whom they were distributed were mentioned.
In fact when we deal with the evidence on this point it would appear that before filing the election petition the contesting respondent had been fully apprised of the fact that the pamphlets had been distributed to various persons in various villages and yet he failed to give any further particulars in the election petition.
Continuing the historical background of the election petition the position is that two days after the election petition was filed the High Court closed for vacation on April 22, 1972 and re opened on June 10, 1972.
Even after the re opening no attempt was made by the contesting respondent to file an application for amendment nor to amplify the material particulars of the corrupt practices which he alleged in paragraph 39 of the petition.
Strangely enough it was the appellant who filed an application on July 27, 1972, i.e. after about a month and a half later, where r ' in he prayed to the Court that the contesting respondent may be directed to file better particulars of the corrupt practice alleged by him.
Even after the contesting respondent was reminded by the appellant through his application the contesting respondent took full one month to file his application for amendment which was subsequently allowed by the Court.
By virtue of the amendment the only particulars that the contesting respondent gave were the names of the villages given in a schedule where the appellant distributed the pamphlet and the dates on which the pamphlet was distributed.
In spite of having been given a full and complete opportunity to disclose the essential details 471 and the material particulars of the distribution of the pamphlet by the A appellant the contesting respondent did not mention the name of a single person to whom the pamphlet had been distributed by the appellant, whereas the evidence led by him shows that some of the individuals to whom the pamphlet is alleged to have been given by the r appellant had actually informed the contesting respondent of this fact well before the election petition was filed and quite a few months before the amendment was asked for.
This belated conduct on the part of the contesting respondent speaks volumes against the credibility of the 'material particulars which appear to have been given by him through the amendment.
The learned Judge in approaching the veracity of the witnesses produced by the contesting respondent on this point has attached great importance to those witnesses who have themselves produced the pamphlet Ext.
A l and seems to be of the opinion that but for the evidence of such witnesses, the evidence of other witnesses who gene rally spoke about the pamphlet having been given to them by the appellant should not be accepted.
We are, however, of the opinion, , that the approach made by the learned Judge on this aspect of the matter is not legally sound.
The basic fact which had to be deter mined was whether the pamphlet was in existence before or during the elections, because there was no dispute that the pamphlet was undoubtedly printed somewhere.
If the test applied by the learned Judge was that the pamphlet should be produced by the witnesses to whom the same was given it would be very easy for the contesting respondent to hand over the pamphlet to the witnesses before they came to depose before the Court and ask them to produce the same in the Court.
This sort of a computerised approach cannot be a safe criterion for determining the truth of the allegation that the pamphlet was actually distributed by the appellant to the witnesses concerned.
Before going to the evidence, we would like to discuss the law on the subject.
Distribution of an objectionable pamphlet is undoubtedly a corrupt practice within the meaning of sub section
(4) of section 123 of the Act which runs thus: "(4).
The publication by a candidate or his agent or by any other person, with the consent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate, or in relation to the candidature, or withdrawal, of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidate 's election.
" In fact on the allegations of the contesting respondent, publication of the pamphlet containing communal propaganda would also attract sub section
(3A) of section 123 of the Act.
The allegation of publishing an objectionable pamphlet is indeed very easy to make but very difficult to rebut.
At the same time it puts the 'Court on the ' strictest possible scrutiny because objectionable pamphlet can be printed by any body in any Press with utmost secrecy and if a corrupt practice can be sought to 472 be proved merely by publication of a pamphlet then it will amount to giving a free licence to any defeated candidate to get an objectionable pamphlet published and circulated to his supporters and to make them say that such pamphlet was printed or published or circulated by the successful candidate.
In these circumstance therefore, the Court frowns on the evidence regarding the publication of the pamphlet which s comes from tainted or interested sources.
In Baburao Bagaji Karemore and others vs Govind & others(L) this Court laid down certain tests to judge the evidence regarding the publication or distribution of objectionable pamphlet and observed as follows: "It appears to us that when an election of a successful candidate is challenged, particularly on ground of corrupt practice, it is not unknown that attempts are made to manufacture or bring into being subsequent to the declaration of the result, documents or other material, which could be used for unseating a successful candidate.
At any rate, when any impugned document is hotly contested on that ground and it is the case of the respondent that it was brought into existence subsequently, the onus on the petitioner who challenges the election on that ground is all the more heavy.
" In the instant case the appellant has emphatically denied the publication of the pamphlet of the nature of Ext.
A l or the distribution of the same to any body.
Thus both the publication of the pamphlet and distribution thereof appears to be hotly contested by the appellant in this case.
In these circumstances, therefore, it was the bounden duty of the contesting respondent on whom lay the initial onus to prove that the pamphlet was published and distributed by the appellant.
There is absolutely no direct evidence to prove that the pamphlet concerned was in fact published, printed or caused to be published or printed through any agency of the appellant.
On the other.
hand there is evidence to show that the contesting respondent has a press of his own and the possibility that he might himself have got the pamphlet printed with a view to set at naught the election of the appellant cannot be reasonably excluded.
The High Court seems to think that as the pamphlet contained communal propaganda and incited the Hindus against the Muslims the same could not be printed by the contesting respondent who was a Muslim himself.
This argument fails to consider that if an unsuccessful candidate whatever be his caste or creed, files an election petition with the avowed object of unseating the successful candidate he generally stoops to all devices in order to show that the successful candidate was guilty of such corrupt practices which may lead the Court to unseat him.
If an unsuccessful candidate is motivated by this consideration, the religion or caste to which he belongs is wholly irrelevant for the purpose which is sought to be achieved.
We do not mean to suggest for a moment that the pamphlet in question was in fact printed or published by the contesting respondent but if the contesting respondent wanted to print such a pamphlet there as nothing to stop him from doing that since he had a press of his own and as he was the owner of the press the matter (1)[1947] 3 C.C. 719.
473 could have been kept absolutely secret.
On the other hand there is no evidence to show that the appellant owned any press at all.
The dominant fact in such a case which had to be proved was whether the pamphlet had come into existence either before or during the elections.
Unless we believe the evidence of the witnesses produced by the contesting respondent ' on this point in toto it will be difficult to hold that the pamphlet was published or distributed by the appellant.
the appellant has produced respectable witnesses to show that if such an objectionable pamphlet as Ext.
A l had been published and circulated, the witnesses would have know about it.
In other words, the appellant sought to prove the negative aspect of the existence of the pamphlet and that is all that he could have done.
The learned Judge appears to have brushed aside the evidence of these witnesses merely on the ground that their evidence does not exclude the possibility of there being a pamphlet like Ext.
A l which was not brought to their notice.
Indeed if this artificial approach is made to the evidence of such a nature, then it would be asking the successful candidate to prove the impossible.
We shall, however, advert to this aspect of the matter when we deal with the evidence produced by the appellant on this point.
With this preface we shall now proceed to consider the evidence produced by the contesting respondent in proof of issue No. 26.
By virtue of the application for amendment filed by the contesting respondent and allowed by the Court a schedule has been annexed giving the names of the villages and the dates of distribution of the pamphlet which mentions as many as 26 villages but at the trial the contesting respondent had adduced evidence only to show that the pamphlet was distributed by the appellant to various persons on various dates at four places namely, Gooty, Yadiki, Gundala and Guntakal.
There were some other villages mentioned where the workers of the appellant are alleged to have distributed the pamphlet but that has to be ignored in view of our finding on issue No. 27.
The evidence adduced by the parties on this question may be reduced in the form of the following chart.
In this chart the witnesses examined by the petitioner/contesting respondent are for short referred to as "P.Ws." and the witnesses examined by the appellant as "R.Ws.".
Name of Village Date Persons to whom Evidence of witnesses pamphlet distributed Gooty 27 2 72 PWs 21&22 BY p.
Ws 21 & 22 R.Ws.2,14,15,22 and 24.
Yadiki 28 2 72 P.Ws.27,28,35, By P.Ws. 27,28,35 37 and 40 37 & 40 R.Ws 11 12, 13,16, 17 & 32 Gundala 5 3 72 P.Ws 1, 2, 3, 4, By P.W.s 1 4 & 8 and 8.
R.Ws. 1 & 32 Guntakal 22 2 72 P.Ws. 24, 25, By P.Ws. 24, 25 33 & 36 33 & 36 R.Ws. 3, 5, 7,8,9,10, 25, 27, 28 & 30 474 Before taking up the evidence of the parties led on the allegations regarding the distribution of pamphlet by the appellant personally it may be necessary to set out a few important principles in the light of which the evidence has to be appreciated.
In the first place it may be necessary to extract the relevant portions of the pamphlet itself to show the offensive and objectionable nature of the same with a view to find out whether a person like the appellant could go to the extent of publishing such a clumsy pamphlet, which runs thus: "Everywhere Muslims are given importance by the congress and the Congress is ruining the future of Hindus.
In every election Muslims always vote for a Muslim candidate.
When that is the case, what is there wrong if all Hindus vote for me who is a Hindu candidate ? Muslims have committed many atrocities and still the Congress is giving importance to the Muslims.
For example, Mr. Baraktullah Khan is made Chief Minister in Rajasthan and Mr. Mohd. Ismail who is not well known in Andhra Pradesh is made the President of the Congress in the State.
* * * In Hyderabad Muslims are given too much importance.
The said Ismail in order to give representation and importance to his Muslim religion, has given in our State nearly 20 seats to Muslims.
This is an act of are to the Hindus.
Is it not atrocities of Pakistan, horrible incidents of Bangladesh, murders of Navakhali an insult to the Hindu race and religion for ever ?" A perusal of the recitals of the pamphlet would clearly reveal the fact that it is couched in a most offensive language which is bound not only to hurt and injure the sentiments of the Muslims of the constituency but has also the effect of inciting one community towards another on purely communal grounds.
The allegations made in the pamphlet are sufficient to alienate not only the sympathy of the Muslim community completely but also of a large number of Hindus who have a secular outlook which is the very fundamental feature of our Constitutional set up.
In the first place the evidence led by both the parties clearly disclosed that there was a considerable section of Muslim population whose votes could not have been ignored or over looked by any candidate who really wanted to succeed.
The first premise to start with, therefore, is whether the appellant could have taken the risk of offending the entire Muslim community and a sizable section of the Hindus also by publishing and circulating the pamphlet in question.
Secondly, the language of the pamphlet is so strong and conspicuous that it is difficult to believe that the Government officers who were posted on duty in order to prevent any communal propaganda by the candidates would have missed or failed to notice the pamphlet Ext.
A l if in fact it was published and widely circulated in many villages.
Thirdly, we must not forget that the appellant had been declared elected and by succeeding in the election there was a strong and compelling motive on the part of the unsuccessful candidate to reverse the election of the appellant by any possible means.
475 Finally, if the pamphlet like Ext.
A 1 was really distributed and circulated and the contesting respondent had come to know about the same, it is not at all probable to believe that he would have failed to give the names of the persons from whom he got the knowledge of The pamphlet in the material particulars which he has set out in support of his allegations in paragraph 39 of the election petition.
It is against the background of these admitted facts that we now come to the evidence led by the parties.
So far as the village Gooty is concerned the contesting respondent has examined only two witnesses to prove that the pamphlet Ext.
A l was distributed by the appellant personally.
These two witnesses are P.Ws.
21&22.
The evidence of P.W. 21 need not detain us because the learned Judge has disbelieved the evidence of this witness and has observed as follows: "In my opinion, the evidence of Kulleyappa (P.W. 21) is not trustworthy.
I do not, therefore, consider it proper to rely upon the evidence of this witness.
I, accordingly reject it.
" After having gone through the evidence of this witness, we find ourselves in complete agreement with the opinion of the learned Judge as disclosed above.
The only other witness who remains is P.W. 2 ', who, as we have already pointed out while dealing with the allegation of bribery, is the most interested witness and a staunch supporter of the contesting respondent.
Even the learned Judge has commented adversely on the interested nature of the evidence of this witness as indicated by us in our judgment while dealing with issue No. 7.
It would appear that P.W. 22 was not only a supporter of the Congress and of the contesting respondent but was also employed by Sultan in the B.S.S.
He acted as the counting argent of Sultan and was a partner in a firm which was the sole agent on Brim Stone Rubber Products a company belonging to Sultan.
The learned Judge while dealing with the evidence of this witness even on this point has clearly observed that he was prepared to fill in all the missing links in the case put forward by the contesting respondent.
In this connection the learned Judge observed as follows: "This witness has, no doubt, tried to plug in the loop holes, or come to the aid of the petitioner, Sultan, whenever there was none to offer the missing links in the evidence adduced on behalf e petitioner.
Y. Ramachandraiah was also a business partner and an employee of the B.S.S. (Bharat Sevak Samaj).
Those facts, in my opinion, show that he is an interested witness.
" Having made these comments, the learned Judge has still accepted the evidence`of this witness.
This would have been sufficient to dislodge the evidence of this witness completely.
But even on its intrinsic merits the evidence of this witness does not inspire confidence.
To begin with, the witness admits that the appellant had come to his house at 8 A.M.
On Sunday February 27, 1972 and requested him to help the appellant.
In the first place it is difficult to believe that the 476 appellant would of all persons try to enlist the help of P.W. 22 knowing fully well that he was an old friend and a staunch supporter and a close and intimate friend of the contesting respondent.
P.W. 22 narrates a most interesting and incredible story.
According to him when the appellant went to him and asked for his support the witness refused and despite his refusal the appellant was foolish enough to give him the pamphlet Ext.
A l although the witness told him clearly that he was supporting the Congress and that he was an important person of Gooty and, therefore, it was not good for him to ask for the witness 's support.
Thereafter the appellant is said to have made a communal appeal to the witness more or less on the same lines as mentioned in the pamphlet.
Thereafter the witness gave a sermon to r the appellant and advised him not to seek votes on the basis of religion and caste.
Even after all this happened, the appellant is said to have given the pamphlet to the witness.
This story appears to us to be wholly improbable and against normal human conduct.
Thus, in these circumstances the appellant would not have handed over the best evidence against him to his enemies, namely the pamphlet, knowing fully well that he was a staunch supporter of the contesting respondent.
Lastly the witness states thus: "On that evening I went to Guntakal, met Sultan and , narrated to him what all had transpired between Venkatareddy and myself.
I also showed to Sultan the pamphlet that was given to me by Venkatareddy.
I read the pamphlet carefully and I gave that pamphlet to Sultan.
" Indeed if what witness stated was true and the contesting respondent " was apprised of the entire story on the evening of February 27, 1972 i.e. about two months before the election petition was filed, would he have failed to mention the name of P.W. 22 and the story revealed by him in the allegations made in paragraph 39 of the petition regarding the distribution of the pamphlet ? Even if he had failed to do that; would the contesting respondent not gave at least mentioned the name of the witness as also the details narrated by him in the material particulars in support of the allegations in paragraph 39 which were inserted by virtue of the application for amendment ? All these facts are completely absent from the averments made in paragraph 39 either before or after the amendment.
All this shows that the witness has deposed to a cock and bull story which cannot be believed for a moment.
For these reasons, therefore, we are not at all impressed with the evidence P.W. 22 ? and we reject the same.
P.W. 21 having been disbelieved by the Court below and P.W. 22 by us there is absolutely no evidence left to prove the allegation that the pamphlet Ext.
A l was distributed by the appellant personally in the village Gooty.
Thus the contesting respondent initially failed to discharge the onus which lay on him to prove the distribution of the pamphlet by the appellant to P.Ws. 21 and 22.
In the above view of the matter it may not have been necessary to deal with the evidence led by the appellant which is more or less of a negative character.
Nevertheless we would only refer to the evidence r of four respectable witnesses who have been examined by the appellant which throws a flood of light on the question.
477 R.W. 2 was a sub Inspector of Police at Gooty and states that he had accompanied the procession taken out by the appellant.
The categorically states that no pamphlet like Ext.
A l was distributed.
The witness had made arrangements for the procession and it is obvious that if any pamphlet like Ext.
A l had been distributed, the same would have come to his notice.
The witness further deposes that many pamphlets were distributed by various contesting candidates and all the pamphlets coming to his notice were sent to the Superintendent of police.
The learned Judge has commented on the fact that the witness did not keep an account of the pamphlets distributed nor were the same called for from the office of the Superintendent of Police to whom they were forwarded.
When the witness has categorically stated that no pamphlet like Ext.
A l ever came to his notice, though he would have come to know of the same because he was making all the arrangements in the procession and was in charge of the election duty, that fact itself lends indirect sup port to the case of the appellant that no such pamphlet was ever distributed.
We do not mean to suggest that the evidence of this witness is conclusive but it is an important circumstantial evidence to support the case of the appellant particularly when the contesting respondent has not adduced satisfactory evidence to prove his plea.
R.W. 15 is a certified clerk of Shri Kona Venkata Reddy, Advocate of Gooty and was a worker of the appellant.
This witness states that a procession was taken out at Gooty in which the appellant had merely r asked the public to vote for the Cycle symbol and that the witness along with others had taken part in the procession.
The witness denied that any pamphlet like Ext.
A 1 was distributed to any body in the procession.
He has been subjected to a searching cross examination but nothing of much importance has been elicited.
It is true that the witness has denied the knowledge of other pamphlets like A 70 to A 78 but that by itself is not sufficient to throw out his evidence.
The next witness is R.W. 22 who is an Advocate practising at Gooty since 1921.
He appears to be a respectable witness and does not bear any animus against the contesting respondent.
He has, however, frankly admitted that he was working for the appellant and had participated in the procession which was taken out at Gooty.
The witness categorically states that the pamphlet like Ext.
A l was not distributed either during the procession or later on or at any time.
Although the witness was no doubt a support of the appellant, but being an Advocate he is a respected have must the strong reason to reject his evidence.
In cross examination nothing much of importance has been elieited.
The denied the suggestion that he was in any way related to the appellant.
The last witness on this point is R.W. 24 who was a Special Branch Headconstable with headquarters at Gooty.
According to him Gooty Police Circle was within his jurisdiction.
The witness has categorically stated that his duty was to cover political activities, agitations, movements and secret enquiries.
The witness further emphasised the fact that it was his duty to collect any pamphlets which related to political matters or contained objectionable language and pass on the same to his superior officers.
The witness was shown Ext.
A l and he has categorically stated that no such pamphlet ever came to his notice either 16 L522 SCI/76 478 during the election or afterwards, nor did any pamphlet distributed in Gooty by any candidate come to his notice.
This witness is undoubtedly an independent one and was not at all interested in any particular candidate.
The only comment against this witness was that he has not produced the daily reports about the existence of the pamphlet.
It is obvious that if no such pamphlet came to his notice there was no occasion for mentioning the same in his report.
The other comment made . ' > by the learned Judge was that although he had forwarded the pamphlets to his superior officers, no attempt was made by the appellant to call for the record from the superior officers.
That fact would not by itself falsify the evidence of this witness.
We have already observed that the or language of the pamphlet was so offensive and hurting that if such a pamphlet would have been in circulation, it would be impossible to be lieve that an officer like R.W. 24 who was deputed expressly for the purpose of finding out such pamphlets would not have been able to notice the same or would have missed the pamphlet if the same was 3 distributed in Gooty.
This circumstance, therefore, lends support to the case of the appellant that no such pamphlet was ever distributed by the appellant in Gooty and reinforces the case of the appellant particularly when we have seen that the two witnesses examined by the con testing respondent in support of his case have been disbelieved as unworthy of credence.
This brings us to the other limb of the corrupt practice alleged by the contesting respondent regarding distribution of the pamphlet by the appellant in village Yadiki.
The evidence led by the contesting respondent is a composite one consisting of the witnesses who speak not only about distribution of the pamphlet by the appellant alone but also by his workers.
We have already indicated above that due to want of proper pleadings the allegation about the pamphlet having been distributed by the appellant through is workers, agents supporters and friends has to be completely excluded from consideration.
In these circumstances we would only confine our assessment to that part of the evidence led by the parties which relates to the question af distribution of the pamphlet by`the appellant personally.
r The contesting respondent has examined P.Ws. 27, 28, 35 and 37 to prove (1) that a procession was taken out by the appellant in Yadiki on February 28, 1972; and (2) that the appellant personally distributed the pamphlet to various persons in the course of the procession.
So far as the appellant is concerned he has denied that he ever took out any procession in Yadiki on February 28, 1972.
It was further narrated that February 28, 1972 being Monday was a "Shandy Day" on which the village market fair was held and it was therefore, not possible to take out a procession on that day.
appellant 's further case was that he had merely gone from house to house in the village in order to solicit votes for him.
This is undoubtedly permissible under the election law.
In view of the unsatisfactory nature of the evidence led by the contesting respondent on this point, it is not necessary for us to enter into an arena of controversy regarding the question whether or not the appellant to ok out a procession.
Assuming that he did, the sole question is whether the appellant personally distributed any pamphlet to any body at Yadiki on February .
479 28, 1972 as alleged by the contesting respondent.
The evidence of A PWs.
27 & 28 is almost identical because both of them alleged to be paid workers of the appellant had participated in the procession and saw the appellant distributing the pamphlet.
The appellant however, seriously disputed the fact that these witnesses had ever been hired or engaged by him for doing his election work.
On the question of the issue relating to the expenses incurred by the appellant, the learned Judge clearly found that it was not proved that P.Ws.
27 & 28 had been appointed by the appellant.
Even, while considering the evidence of these two witnesses on this point, the learned Judge observed thus: "Since there were discrepancies in the matter of talking cf the terms and the place where they were talked over, and the person before whom such terms were talked over, I held that it was unsafe to include the salaries of those persons in the return of election expenses filed by Venkatareddy, i.e. Ext.
Though P.W. 27 and P.W. 28 did not prove that they were appointed by the 1st respondent, D. Vankatareddy, for the purposes of writing on the walls of various villages on behalf of respondent No. 1.
" The learned Judge, however, chose to act on the evidence of these witnesses because according to him P.Ws.
35 & 37 had corroborated the evidence of these witnesses.
We will deal with the evidence of P. Ws. 35 & 37 a little later, but the fact remains that as the appellant has emphatically denied having ever appointed these witnesses as his workers, and the Judge having himself held that this fact was not proved, it was not open to the learned Judge to have still speculated that they might have been the workers of the appellant.
Thus there can be only two possibilities: either these two witnesses were not employed by the appellant at all in which case there would be absolutely no occasion for their presence in the procession, which according to them was only in their capacity of being workers of the appellant.
If this is so then the entire evidence of these witnesses falls to the ground.
Assuming, however, that they worked for the appellant, then their evidence appears to be of a turn coat type which is interested and tained and cannot be acted upon without corroboration.
While commenting upon the credibility of a turn coat witness this Court in Rahim Khan vs Khurshil Ahmed and others(1) observed as follows: r "But more curious is the turn coat type of witnesses who claimed to be and often were the polling agents or workers of the appellant ti11 the election was over, but, in the post election period when the Respondent No. l 's party had formed a Government, quietly shifted their loyalty and gave evidence in proof of the averments in the petition.
it is conceivable that these persons who had collaborated with the appellant in the malpractices alleged were possessed of the urge to unburden their bosoms of the truth of their own evil doing and hurried into the witness box to swear veraciously to what took place actually.
But the (1) [1974] 2 S.C.S. 660 480 more probable explanation would be that these swivel chair witnesses with India rubber consciences came under the influence of Respondent No. 1 for invisible consideration and spoke dubiously in support of their present patron.
" Moreover it seems to us that even on its intrinsic merits the evidence of these two witnesses does not inspire confidence.
They have only in a general way stated that they had participated in the procession and that the pamphlet Ext.
A l was distributed by the appellant and a number of other persons.
They did not give any details as to whom the pamphlets were distributed and at what place.
So far as P.W. 27 is concerned he admits that he is an illiterate person and identifies the pamphlet only by colour and by alphabets.
This is, however, a very unconvincing identification and it is not safe to act on the same P. W. 27 further admits that 8 or 10 days after the election Sultan had come over to the house of Radhakrishna who had sent for both the P.Ws. 27 & 28 and they were asked to give evidence regarding the work they had done for the appellant.
The witness further stated that he accepted the offer and wrote down something on the paper He also admits that Radhakrishna had helped Sultan the contesting respondent in the elections.
It is, therefore, clear that both P.Ws.
27 & 28 were procured by P.W. 35 Radhakrishna who was a supporter of the contesting respondent in the election.
The witness (P.W. 27) had voluntarily worked for the appellant and appears to have readily accepted the offer of the contesting respondent to depose for him against the appellant without having any sense of decorum or decency and appears to have transferred his loyalty to the contesting respondent.
In these circumstances, the evidence of P.W. 27 is not worthy of credence.
The evidence of P. 28 also suffers from the same infirmity as that of P.W. 27.
Apart from that the evidence of P.W. 28 does not appear to be reliable, because he admits that he was brought to Hyderabad fol ' giving evidence and stayed there for 10 days.
He further admits that Sultan the contesting respondent was meeting his expenses.
In these circumstances, therefore, it is clear that the witness was fully tutored and then brought to give evidence for the contesting respondent.
In these circumstances we do not choose to place any reliance on the evidence of P.Ws. 27 & 28.
The next witness on the point is P.W. 35 who is undoubtedly an interested witness inasmuch he is a supporter of Sultan who had worked for him in the election and was also his polling and counting agent.
This witness states that a procession was taken out by the appellant at Yadiki on February 28, 1972 which was headed by drummers followed by a band set.
He says in a general manner that the appellant and his workers were distributing the pamphlets.
He identifies Ext.
A l as a pamphlet given to him.
But in cross examination at P. 561 of the Paper Book (Vol.
III) he clearly admits that the pamphlet was given to him by a worker of the appellant Venkata.
Reddy and not by Venkata Reddy himself.
As the evidence regarding distribution of the pamphlet by the workers has to be excluded from consideration his evidence clearly shows that the appellant himself did not give any pamphlet to him.
Thus his evidence does not appear to be of any assistance to the contesting respondent and we fail to understand how the learned Judge has read the 481 statement of this witness as corroborating the evidences of P.Ws.
27 1 and 28 which is the sole ground on which the evidence of this witness has been accepted by the learned Judge.
It seems to us that the learned Judge has completely overlooked the important admission made by P.W. 35 in his evidence which shatters the case of the contesting respondent regarding distribution of the pamphlet by the i` appellant to this witness.
The last witness on the point is P.W. 37.
He is also an interested witness and bears an animus against the appellant inasmuch .
as he is said to have filed a complaint against the appellant who is alleged to have beaten him during the election.
It appears that the police did not register any case on the basis of his complaint and according to the witness the matter is still pending in revision.
The witness further deposes that he knew the appellant since about 20 to 25 years although he gives his age as only 28 years.
This demonstrates the utter falsity of his statement.
He further admits that he was working for Sultan and that the appellant Venkata Reddy saw him working for Sultan even prior to the date when the procession was taken out at Yadiki.
According to the witness, the pamphlet was given to him by the appellant.
It is difficult to believe that the appellant after having known that the witness was working for Sultan would have given such an offensive pamphlet to him and create adverse evidence against him.
Lastly, the witness admits at pp.
577 578 of the Paper Book (Vol.
III) that five or six days after the procession was taken out by the appellant Sultan had come to Yadiki and he had told Sultan about the incident.
Thus, according to the witness, Sultan came to know about the distribution of the pamphlet Ext.
A l to the witness near about the end of February and yet it is astounding that he did not make any mention of this fact either in paragraph 39 of his petition or even in the material particulars which he gave by virtue of the amendment.
We have already indicated that the evidence discloses that Sultan was informed long before he filed the election petition that the pamphlet was distributed by the appellant to the named persons who were known to the appellant and yet this fact was not mentioned in the particulars given by the contesting respondent.
This conduct clearly shows that the entire story is purely a figment of imagination of the contesting.
respondent and his sup porters and has been bolstered upto unseat the appellant.
For these reasons, therefore we are not in a position to place implicit reliance on the testimony of this witness also.
It would thus appear that even in Yadiki the contesting respondent could not get hold of any independent witness to prove the distribution of the pamphlet by the appellant.
According to the P.Ws.
Yadiki is a big village and if a procession was taken out by the appellant there must have been a r. large number of persons present in the procession and it is impossible to believe that the appellant could not get hold of a single person who was in any way unconnected with him to prove that the pamphlet like Ext.
A l was distributed to any such person.
Both on the charge of the offer of bribe as also on the charge of distribution of objectionable pamphlet the contesting respondent has chosen to examine only those witnesses who are in some way or the other totally interested in the contesting respondent or connected with him.
Thus the evidence of the witnesses referred to above does not satis 482 factorily prive that the appellant had distributed the pamphlet Ext.
A l to any body in Yadiki on February 28, 1972 as alleged by the contesting respondent.
The contesting respondent has, therefore, failed to prove this part of his case.
In view of this finding it is not necessary to go to the evidence produced by the appellant.
Never theless R. Ws. 11, 16 and 17 have deposed on oath that no procession was taken out in Yadiki and that no pamphlet like Ext.
A l was ever distributed by the appellant.
Even if we ignore the evidence of these witnesses, as the contesting respondent has not proved his allegation c on this part of the case he must fail.
We will now deal with the allegation of the contesting respondent regarding distribution of the pamphlet by the appellant in village Gundala on March 5, 1972.
On this point the contesting respondent relies on the evidence of P.Ws. 1, 2, 3, 4 and 7.
Here also the evidence of these witnesses is a composite one seeking to prove the distribution of the pamphlet not only by the appellant but also by his workers, and we have got to ignore that part of the evidence which relates to the distribution of the pamphlet by the workers of the appellant.
To begin with, the evidence of P.Ws. 1 and 3 has been disbelieved by the learned Judge having regard to other items regarding payment of the bribe by the appellant to these witnesses and the Judge has held that they were in the nature of accomplices.
In this connection the learned Judge has observed, at pp.
1319 1320 of the Paper Book (Vol.
VI) as follows: "Since P.Ws. 1 and 3 also say that they had actively helped Venkatareddy in the distribution of the offensive pamphlets, and thus they helped the 1st respondent in committing a corrupt practice under section 123(3) and Section 123 (3 A) of the Representation of the People Act, even in regard to this corrupt practice, P.Ws. 1 and 3 can either be equated to "accomplices" or regarded as person who actively helped Venkatareddy in the commission of a corrupt practice.
Their evidence, even in this behalf, requires corroboration in material particulars by independent testimony.
" Indeed if this is the character and tenor of these witnesses it would be difficult to place any reliance on the evidence of these witnesses on any point.
Further more, according to the evidence of these two witnesses they had actively helped the appellant in the election and now they are coming forward against the appellant and in favour of the contesting respondent in order to unseat the appellant.
Their evidence is also of a turn coat type and therefore tainted.
In these circumstances no reliance can be placed on the evidence of such witnesses.
However.
even on merits they do not appear to be reliable witnesses.
P.W.l states that he belongs to Gundala and then ten days prior to the polling the contesting respondent Sultan had contacted him in the village and asked him and others to cast their votes in his favour.
The witness and others assured the contesting respondent that they had always been voting for the Congress and they will, therefore, vote for him.
After the contesting respondent had left the village the appellant Venkata Reddy came 483 to the village in a jeep and he asked the witness and other persons A to vote for him.
But the witness and other persons explained to the appellant that on earlier occasions all of them had voted for the Congress and so this time too they will do the same.
Thereupon the appellant is said to have made an appeal on communal grounds saying that the Congress is always in the habit of giving tickets to the Muslims and not to Hindus and tried to wean them away from the Congress fold.
There was thus an exchange of words between the witness and others and ultimately the appellant paid some money to the witness.
This allegation has been disbelieved by the learned Judge.
Therefore, to start with the very genesis on the basis of which the witness has deposed disappears, and there was no occasion for the appellant to have given any pamphlet to the witness.
The witness proceeds to state that after the exchange of these talks, the appellant gave the pamphlet to the witness and he took the pamphlets to village Ammenapalli and gave the pamphlets to the voters of that village.
We are, however, not concerned here with the distribution of the pamphlets by the workers of the appellant.
The witness identifies the pamphlet Ext.
A l as the one having been given to him.
According to the witness the appellant had gone to him ten days before the polling and the witness states thus at p. 125 of the Paper Book (Vol. II): D "It was for the first time that I came to know Venkata Reddi on the day when he visited our village i.e., ten days prior to the polling date.
" This would mean that the appellant had contacted the witness on or about February 20, 1972.
But the definite case made out by the contesting respondent in his petition is that so far as the village Gundala is concerned the pamphlet was distributed by the appellant on March 5, 1972 i.e. Only four days before the polling.
In these circumstances, therefore the evidence of this witness is falsified by the particulars given by the contesting respondent in his petition and on this ground alone his evidence has to be rejected as being contrary to the pleadings.
Further more, it appears that the witness is a staunch supporter of the Congress and on his own showing he had been voting for the Congress in all the elections.
The witness admits at p. 134 of the Paper Book (Vol. II) that in the previous election also the witness had worked for the Congress.
In these circumstances, therefore, the evidence of this witness does not appear to be creditworthy.
The next witness on the point is P.W. 2 who states that the con testing respondent Sultan had visited the locality and had asked him to vote for him.
Thereafter the appellant came to his village and was accompanied by P.W. 1.
The witness states that the appellant Venkata Reddy asked him to vote for the Swatantra Party.
This knocks the bottom out of the evidence of this witness because it is nobody 's case that the appellant was the candidate sponsored by the Swatantra Party and it is the admitted case that the appellant was an independent candidate.
This also reveals the falsity of the story narrated by the witness.
The witness then states that after having asked the witness to vote for the Swatantra Party the appellant gave 484 him a paper which contained the cycle symbol.
On seeing Ext; A l the witness identified it as the same paper which was given to him.
The witness further admits that he is illiterate and it is, therefore, not understandable how he identified the pamphlet Ext.
The witness did not show that paper to any body on that day and later on he showed it and got it read over to him and thereafter he decided to vote for the appellant as the Muslims were bad people.
In fact in an unguarded moment he has said that he decided to vote for the Congress and then changed his statement as appears from the endorsement made by the Court.
In cross examination the witness admits that ten days after the elections were over, Sultan had come to his village and asked him why he did not vote for the Congress.
There upon the witness told him that the appellant Venkata Reddy had distributed the pamphlet and asked him to vote for him.
The witness further categorically states that he showed the pamphlet given to him by the appellant to Sultan and he was asked by Sultan to preserve .
the pamphlet so that it may be used in the Court as and when necessary.
According to the witness this event took place only ten days after the election i.e. some time in the middle of March 1972 and well before the election petition was filed.
Indeed if what the witness says was absolutely true, then Sultan had come in possession of the most damaging evidence against the appellant long before the petition was filed and yet he did not choose to mention this fact either in his petition before amendment or after.
Even the pamphlet was not produced along with the documents as being the pamphlet shown to him by the witness but the appellant rest contented by asking the witness to keep the pamphlet with him.
It is not at all understand r able or intelligible as to why the pamphlet was not produced by the .
witness when he came to the witness box for his examination in chief and it was left only to the question to be put by the Court after lunch break when the pamphlet was produced.
Could the contesting respondent, having known those facts, take the risk that if the Court did not ask any question then the pamphlet would not be produced by the witness at all? All this, therefore, shows that the evidence of this witness is untrue and is a frame up in order to support the allegation made by the contesting respondent against the appellant.
This brings us to the evidence of P.W. 3.
The learned Judge has also seriously commented on the credibility of this witness, so far as other allegations were concerned, and therefore to begin with the evidence of this witness is tainted.
Further more, the evidence of 1` this witness is of a turn coat type because he is said to have worked for the appellant and after the election he deposed for the contesting respondent.
P.W. 3 also gives almost a similar story as P.W. 1 regarding the communal appeal said to have been made by the appellant.
He also states that the appellant paid him Rs. 500/ for working and helping him in the election.
This allegation has been disbelieved by the learned Judge.
Another factor which impairs the credit of this witness is his admission that at the time of the polling he was instrumental in getting the false votes cast.
In this connection the witness states at p. 149 of the Paper Book (Vol. II) thus: "Boya Nagamma and Venkatappa were residents of my village.
They were dead before the polling date.
The 485 votes were cast in their names.
Myself and P.W. 1 got the votes cast in their names.
Votes were cast in the names of persons who were not present on the polling date.
Myself and P.W. 1 got such votes cast in the names of the villagers who were absent from the village on the polling date.
" It would thus appear that the witness was of such low morals and characterless as he went to the extent of getting votes cast in the names of persons who were already dead or who were not at all present at the polling booths.
It is difficult to place any reliance on the evidence of a witness of such character.
For these reasons therefore we are not in a position to place any faith this witness.
According to P.W. 4 Sultan had come to his village in order to solicit votes in his favour and he was accompanied by P.Ws. 1 & 3 and P.W. 22.
In the presence of these witnesses Sultan asked the witness lo vote in favour of the Congress and he assured Sultan that all the villagers had decided to vote for the Congress.
It would thus be seen that when Sultan had gone to the witness 's residence P.Ws. 1 & 3 who had been the workers of the appellant had accompanied the adversary of the appellant even at that time.
Thereafter according to the witness when Venkata Reddy came to him and asked him to vote for him and here also the P.Ws. 1 & 3 had accompanied the appellant.
This shows the unreliable character of P.Ws.
I & 3.
The witness again narrates the same story that the appellant made a communal appeal to the witness and asked him on ground of religion to vote for him.
Thereafter the appellant give him the pamphlet.
It might be mentioned here that no case has been set out by the contesting respondent either in his petition or in the particulars given by him that the appellant had made any oral appeal of a communal nature to any person either before or after distributing the pamphlet Ext.
In these circumstances the evidence of P.Ws.
t to 4 on the point that the appellant had made an oral appeal cannot be accepted as being contrary to the pleadings and thus the most integral part of the evidence of these witnesses falls to the ground.
According to P.W. 4 the pamphlet was given by the appellant to the witness and thereafter he left.
We find it very difficult to believe that if the appellant was really serious in getting the votes of these persons he would just hand over the pamphlet and go away without trying to explain the purpose and the contents of the pamphlet, particularly when he knew that P.W. 5 and others had their inclination towards the Congress.
In the first place if he knew that P.W. 4 and other villagers had their inclination towards the Congress and had decided to vote for the Congress, he would not risk giving the pamphlets to such persons at all, and even if he did, it is difficult to believe that he will distribute the pamphlets in such a casual and cavalier manner.
Finally P.W. 4, just like other witnesses, also states that ten days after the elections were over, Sultan had come to his village and he was informed by the witness about the distribution of the offensive pamphlet and the Oral appeal made on communal grounds made by the appellant and yet we do not find the name of any of these witnesses including P.W. 4 in the petition as being the persons lo whom the pamphlets were distributed.
This appears to be a very substantial ground on which the evidence of these witnesses should 486 be rejected, because it proved the intrinsic falsity of the evidence.
There does not appear to be any earthly reason why, after having been informed by P.Ws.
l to 4 and others whose case has been discussed above, the contesting respondent would not mention these facts in his election petition when the same came to his knowledge well before filing of his election petition.
The learned Judge appears to have completely overlooked this aspect of the matter which introduces an intrinsic infirmity in the evidence of the witnesses.
For these reasons we reject the evidence of P.W. 4.
The last whitens on the point is P.W. 8.
His evidence is almost identical with that of P.W. 4.
According to the witness the contesting respondent Sultan came to the village ten days prior to the date of polling.
That would be near about February 28, 1972 and asked the witness to vote for the Congress.
The witness assured the contesting respondent that he would vote for the Congress.
Three days prior to the date of polling the appellant came to the village accompanied by P.Ws. 1 & 3 and the witness informed him that they had decided to vote for the Congress.
Thereupon the appellant again made a communal appeal to them, gave him a pamphlet and walked away.
Thus the evidence of this witness also suffers from the very same infirmities which we have pointed out in respect of P.W. 4.
At p. 231 of the Paper Book (Vol. II) the witness contradicts himself and states that the appellant merely gave him a pamphlet and asked him to vote for him.
He did not say anything more.
Thus the story of an oral appeal is given a complete go by in the later part of his evidence.
It is impossible to believe that the appellant would try to procure the vote of the witness knowing fully well that he had decided to vote for the Congress and quietly parted from the witness after giving him the most damaging evidence against him.
For these reasons, therefore, we are not in a position to place any reliance on the evidence of P.W. 8.
This is all the evidence that the contesting respondent has led in proof of the fact that the appellant had personally distributed the pamphlets in the village Gundala on March S, 1972.
After careful consideration of the evidence produced by the contesting respondent we are clearly of the opinion that the evidence is not worthy of credence and the contesting respondent has failed to prove by clear and cogent evidence that the pamphlets were distributed by the appellant personally to any person in Gundala or for that matter to P. Ws. 1, 2, 3, 4 and 8.
In view of our finding that the evidence led by the contesting respondent on this point is unsatisfactory it is not necessary for us to refer to the evidence given in rebuttal by the appellant which is necessarily of a negative nature.
The last limb of the case comprises the alleged distribution of the pamphlet Ext.
A l by the appellant.
to persons in village Guntakal on February 22.
P.W. 24 is Thirupathi Rao a registered medical practitioner Guntakal.
To start with the witness admits that he worked for the Congress.
The witness goes on to state that the appellant had come to his dispensary and had asked for his support, but P.W. 24 told him that he belonged to the Congress, and therefore he could not help others.
Thereafter the appellant is said to have given him the pam 487 phlet Ext.
A l and the witness pointed out that the pamphlet was very offensive.
Thereupon the appellant is said to have made some sort of a communal appeal to the witness and having left the pamphlet with him walked away.
The witness has categorically stated that after the oral communal appeal was made by the appellant, the witness told him that he saw no difference of religion, caste, creed and that he could not support him.
It is impossible to believe that the appellant knowing full well that the witness was an educated person and a Doctor practising at Guntakal and not a mere illiterate voter would make any communal appeal to him, much less when he was told in plain terms by the witness that he was a Congress worker.
In these circumstances, would the appellant still have given the pamphlet to this witness and created an unimpeachable evidence against him.
There is no doubt that the witness is not an independent witness but is an interested one, because not only he Cr was a Congress worker but also acted as a counting agent for Sultan as he admitted in his evidence.
Further more, the oral appeal said to have been made by the appellant is not at all mentioned in the election petition.
Apart from being a Congress worker he held an important position in the Congress party being the Vice President of the Town Congress Committee right from 1967.
The witness further admitted that being the Vice President of the Town Congress Committee he was an important member of the Congress party at Guntakal.
The witness further states that when Sultan came to Guntakal he showed the pamphlet to him and this happened even before the date of the polling.
In fact he showed the pamphlet to Sultan five or six days before the date of the polling.
It surpasses our imagination that if an important congressman like P.W. 24 would have informed Sultan four or five days before the polling that an offensive pamphlet like Ext.
A l was given to him by the appellant, the contesting respondent would take it lying down and would refrain from taking any action in the matter.
We have already pointed out that Sultan was not of a quiet type of men but had made several complaints to the police officers and it is impossible to believe that if he had known from, such an important source like P.W. 24 that an offensive pamphlet was being distributed during the election he would have taken no action against the appellant by moving the authorities concern ed or in informing the police and the congress circles.
Far from it he did not even mention this fact either in his election petition or in the particulars which he gave thereafter.
We fail to understand how the contesting respondent could have failed to mention such an important incident in his pleadings at any stage.
This clearly shows that the evidence bf P.W. 24 is not correct.
The appellant who appears to be a responsible man would not have been so foolish as to have left in the hands of P.W. 24 the pamphlet in question knowing full well his strong views in the matter.
The witness further admitted that he was deposing to this point for the first time in the Court and he had not told this fact to any one else.
How can we believe that P.W. 24 holding such an important post in the Congress organisation would have failed to draw the attention of the authorities in the Congress Party regarding the distribution of an offensive pamphlet by the appellant which may have seriously impaired the election prospects of the candidate of the Congress.
For these reasons, therefore, we are not in a position to place any reliance on the evidence of this witness.
488 The next witness is P.W. 25.
This witness admits that he voted for the Congress candidate Sultan and supported his candidature during the election.
According to him fifteen days prior to the date of polling he along with Sultan and others were moving in the ward canvassing for votes in favour of Sultan.
Eight days prior to the date of polling, which would mean near about the.
1st March the appellant Vankata Reddy along with others came to the house of the witness in a jeep and Ram chandra Gaud who was supporter of the appellant told the witness to > help Vellkata Reddy.
The witness, however, explained to them that he had always been supporting the Congress and stood committed to Sultan and therefore he could not support the appellant.
Thereafter Ramchandra Gaud threatened the witness that he would destroy the partner ship business in which he was a partner if he did not help the appellant.
In view of the threat given by Ramchandra Gaud the witness decided to work for the appellant.
Thereafter the appellant gave a bundle of pamphlets containing the cycle symbol to be distributed to various persons.
That is how, according to the witness, the pamphlet came in his pos session.
In order to prove that he was a worker of the appellant he produce Ext.
A 40 which is a polling agent form assigned by the appellant.
To begin with this witness also appears to be of a turn coat type and his evidence is tainted and cannot be accepted without any corroboration.
It is difficult to believe the story that it was because of duress that he agreed to work for the appellant because if that was so, then the partnership which is still continuing while the threat remains, the k witness would not have dared to depose against the appellant in order to help Sultan and yet he has done it.
The witness has clearly admitted that the partnership is still continuing and therefore the danger with which the witness was faced and which made him work for the appellant still continues and it is not understandable how the witness could suddenly change colours.
Further more the witness admits at p. 474 of the Paper Book (Vol.
III) that the appellant had given the pamphlet to the witness eight days prior to the date of polling which would mean near about February 28 or March 1, 1972, but according to the material particulars given by the contesting respondent in the election petition as amended the date of distribution of the pamphlet at Guntakal is mentioned as February 22" 1972.
Thus the evidence of this witness being contrary to the pleadings must be disregarded.
In these circumstances therefore we are not in a position to place any reliance on the evidence of this type.
This bring us to the evidence of P.W. 33.
We have fully discussed the evidence of this witness on issue No. 7 on the allegation of bribery and have disbelieved him.
We have also pointed out that P.W. 33 was a staunch supporter of the contesting respondent and appears to be an omnibus witness so as to support the contesting respondent on all points and supply the missing links.
The witness states that P.W. 18 and Venkata Reddy the appellant went from house to house in the ward soliciting votes.
Both these persons came to the house of the witness while he was standing in front of his house.
Both of them distributed pamphlets and went away.
The witness being a staunch supporter; of the con testing respondent it is most unlikely that the appellant would distribute the pamphlet of all persons, to him.
Further more the witness only deposed in a very general manner that both P.W. 18 and the appellant 489 gave the pamphlet to him.
The witness admits that he had read the pamphlet and yet he states that he did not complain to the police that the pamphlet may lead to communal trouble, particulary when the pamphlet was distributed, according to the witnes about fourteen or fifteen days prior to the date of polling.
The witness further admits that four or five days prior to the date of polling Sultan had come to Guntakal and the witness had informed him about the pamphlet and yet Sultan also did not mention this fact in the material particulars given in his election petition after the amendment.
For these reasons therefore, we are satisfied that this witness has merely tried to oblige the contesting respondent being his intimate friend and staunch supporter.
The last witness on this point is P.W. 36 Abdul Jabbar.
Having regard to the offensive contents of the pamphlet Ext.
A l it is impossible to believe that the appellant, even as a person of ordinary prudence, would have distributed the pamphlet to a Muslim and a person who had also worked for Sultan.
By distributing such a pamphlet to a Muslim he would not only hurt the feelings of such a Muslim but would alienate the entire sympathy of the Muslim community.
Only a mad person can do a thing like that or take such a suicidal step.
According to this witness, the appellant had come to Guntakal where the witness stayed, gave him the pamphlet and went away.
Thus the very short and summary manner in which the appellant handed over the pamphlet and went away clearly shows that the story of the distribution of the pamphlet by the appellant is a complete myth.
According to the witness he was i11iterate and he ' showed the pamphlet to P.W. 24 Thirupati Rao who read it out to him.
P.W. 24 does not say that P.W. 36 Abdul Jabbar had come to him with the pamphlet or that he had read out its, contents and explained the same to the witness.
It was suggested by Mr. Shiv Shankar for the contesting respondent that it is possible that the appellant may not have known that the witness was a Muslim.
We are, however, unable to accept this contention because according to the witness he was an Ayurvedic Medical Practitioner and an important person in Guntakal.
It is also difficult to believe that the appellant would distribute pamphlets indiscriminately without trying to find out whether the persons to whom the pamphlets were given were Muslims or not.
P.W. 36 is also a staunch supporter of the contesting respondent.
Thus the evidence of this witness does not appear to be worthy of credence.
Thus on a consideration of the evidence of the witnesses mentioned above, we are satisfied contesting respondent has not proved that any pamphlet was distributed by the appellant personally to P.Ws. 24, 25, 33 & 36 in Guntakal or to any other person for that matter.
In view of our finding that the contesting respondent has failed to prove this part of the case it is not necessary to refer to the evidence led by the appellant which is of a negative character.
Reference may be made to the evidence of R.W. 28 who is a Labour Leader and whose evidence shows that no such pamphlet was ever distributed by the appellant.
The witness states that he is a senior stenographer attached to the D.M.O., Southern Railway and is also the Assistant General Secretary of one of the Unions of the Railway employees at Guntakal.
The witness on being shown the pamphlet Ext.
A l emphatically denied that any such pamphlet was given to him or was distributed by or on behalf of the appel 490 lant in the whole of the railway colony which consists of as many as 6000 to 8000 voters.
Indeed if the appellant had distributed the pamphlets with a view to secure votes on communal grounds, he would not have missed to distribute the pamphlets to the voters in the Railway colony and if this was done the witness would have undoubtedly come to know about it.
This is undoubtedly an intrinsic circumstance which supports the case of the appellant that no pamphlet of the type of Ext.
A 1 was ever distributed in GuntakaI. Apart from this, we may overemphasize even at the risk of repetition that there are two important infirmities appearing in the evidence led by the contesting respondent on the charge of distributing the pamphlet Ext.
A l at various places which are sufficient to prove the falsity of the charge.
In the first place the evidence of P. Ws.
I to 4, 8, 22, 24, 33 and other witnesses discussed above clearly discloses that the contesting respondent had come to know not only during the election but even a few days before polling that such a pamphlet like Ext.
A l was in existence and was also shown to the contesting respondent by the witnesses mentioned above and he was also plainly told that this pamphlet was distributed by the appellant personally.
In spite of this neither the contesting respondent mentioned these facts in his petition giving the full details nor in the material particulars nor did he take any action against the appellant by reporting the matter about the pamphlet to the authorities concerned.
He did not disclose this fact even to his own Congress organization although this was a matter which on his own showing ruined his election prospects and in all probability the Congress should have been informed about this fact.
Mr. Shiv Shankar appearing for the contesting respondent realized the weight of this circumstance which went to falsify the case of the contesting respondent and submitted that the inaction on the part of Sultan was due to the fact that he was advised by his lawyers not to take any action in the matter.
Sultan as no doubt deposed to this effect in his evidence.
Indeed if this was a fact then we should have expected that the contesting respondent should have given this explanation in his election petition or should have examined the lawyer who had given him such an advice.
Secondly, even if this explanation be accepted there does not appear to be any reason why the contesting respondent should not have mentioned the names of the persons who had told him that an offensive pamphlet had been distributed to them by the appellant, in his petition or in the material particulars when Sultan was definitely informed of those facts.
These two infirmities, apart from other defects, are sufficient to dislodge the case of the contesting respondent on issue No. 26, and lead us to the inevitable inference that these facts were not true and were clearly an after thought and had been introduced for the first time in the evidence through the aid and support of purely partisan witnesses.
Lastly it was also urged by Mr. Shiv Shankar learned counsel for the contesting respondent that the evidence of P. W. 11 clearly shows that the pamphlet in question was in existence during the election.
The learned Judge has disbelieved the evidence of this witness as being based on hearsay.
The witness alleges to have received the pamphlet from his wife who was not examined as a witness.
Thus the very 491 source from which he is said to have got the pamphlet disappears and that being an integral part of his evidence we find it extremely unsafe to rely on the evidence of this witness and fully agree with the reasons given by the learned Judge for disbelieving this witness.
Mr. Shiv Shankar learned counsel for the contesting respondent submitted that the evidence shows that pamphlets like Exts.
A 70 to A 78 were undoubtedly printed by the contesting respondent and they contain the name of the Printing Press.
He argued that if the contesting respondent would have printed the pamphlet Ext.
A l then he would have mentioned the name of the Press.
We cannot accept this argument because the pamphlet is so offensive in nature that any person who printed the same would never try to disclose publicly the name of the Press lest action in law may be taken against the Press.
It was then contended that the contesting respondent being a Muslim is not likely to say such offensive and communal things against his own community.
This is also a matter of pure speculation.
Various persons react to different circumstances in different ways and if a person is motivated or animated by a particular purpose he can go to any length to achieve his end.
Therefore the mere fact that the contesting respondent belonged to the Muslim community cannot by itself exclude the possibility of his having circulated the pamphlet Ext.
A l and printing it so as to use it as a powerful instrument against the appellant by putting the blame on him.
The contesting respondent undoubtedly owns a Press and if he wanted to do such a thing there was nothing to prevent him from achieving his object.
These are speculative matters and in the view we take of the evidence led by the parties in this case, it is not necessary for us to give a clear finding.
as to who printed the pamphlet in question.
All that is necessary to be determined in view of the pleadings of the parties was whether the pamphlet in question was printed by the appellant or distributed by him personally.
The contesting respondent has not adduced any satisfactory evidence on this point whereas the appellant has through his evidence which is of a negative character shown that the probabilities were that the appellant had not distributed this pamphlet Ext.
On a careful consideration of the entire evidence and circumstances of the case, whether we apply the standard of proof by virtue of the benefit of doubt or that of preponderence of probabilities the conclusion is inescapable that the contesting respondent has failed to prove his allegations regarding the payment of bribe contained in issue No. 7 and the distribution of the pamphlet by the appellant personally comprised in issue No. 26.
The learned Judge in accepting the case of the contesting respondent overlooked certain fundamental features, inherent improbabilities, intrinsic infirmities, the weak and interested nature of the evidence and other facts, which we have fully elaborated in our judgment.
We, therefore, hold that the appellant Venkata Reddy was not guilty of any corrupt practices as alleged by the contesting respondent.
In these circumstances we are not in a position to allow the judgment of the High Court to stand.
492 The appeal is accordingly allowed and the order of the single Judge declaring the election of the appellant Venkata Reddy void and setting aside the same is hereby quashed.
The appellant would be 1 entitled to his costs throughout.
| The appellants bid at auction sales of some toddy shops.
The conditions of the sales, notified in pursuance of the statutory provisions, were: (a) It was incumbent upon the bidder to pay immediately 10% of the amount due; (b) The successful bidder had to deposit 30% of the amount payable, on demand by the Assistant Commissioner, and to execute agreements before getting the necessary licences; and (c) If the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold.
The appellants deposited the necessary amounts on demand and were allowed to start business even before agreements were executed or licences were issued.
But the appellants failed to pay the balance due to the State.
The amounts were sought to be recovered under section 28, and the proceedings were challenged, but the High Court held against the appellants.
In appeal to this Court, the appellants contended that as no agreement was executed between the appellants and the Government in the manner prescribed by article 299 of the Constitution, the appellants had not become the `grantees ' of any privilege and hence were not liable to pay the amounts sought to be recovered Dismissing the appeal, ^ HELD : The Government had to perform its duty of granting licences as soon as the appellants fulfilled the conditions by paying up the remainder of the amounts due.
In the present case, Government had performed its part by allowing the appellants to start selling liquor even before execution of the agreements and the grant of licences.
The appellants, therefore, became liable and bound to perform their corresponding obligations.
This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity.
[784G 785B] (1) It is not a condition precedent to recovery of an amount due and recoverable under the Act that it should be due under a formally drawn up and executed contract.
Under the notification, in the event of the non execution of a contract, even if due to the unwillingness or inability of a bidder to pay, the whole amount due could be forfeited.
[782C; 783E F] 2(a) The acquisition of the status of a grantee for the purpose of section 18A, does not depend on the actual receipt of a licence.
Section 18A(2) lays down that no grantee of any privilege under sub section
(I) shall exercise it until the has received a licence.
This provision contemplates the statutory status of a `grantee ' even before the successful bidder becomes entitled, as of right, to exercise the privileges of a grantee on receipt of a licence even before he receives his licence he is described as a grantee.
[783F G, H 784A] 781 (b) The word `grantee ' used in section 28 carries this wider connotation of persons who have been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of the receipt of licences, to exercise the privileges of grantees, and not necessarily only those who have executed the written contracts and received licences.
[784A C] Madhavan vs Assistant Excise Commissioner, Palghat I.L.R. [1969] 2 Kerala 71, approved.
|
Appeals Nos. 262 to 264 of 1964.
Appeals from the judgment and decrees dated January 5, and January 22, 1959, and 24th November 1960 of the Patna High Court in appeals from Original Decrees Nos. 401 of 1953, and 297 and 298 of 1954 respectively.
S.R. Ghosal and R.C. Prasad, for the appellant (in all the appeals).
D.P. Singh, R.K. Garg, S.C. Agarwala and M.K. Ramamurthi for the respondent (in all the appeals).
SUBBA RAO.
J. delivered a dissenting opinion.
The Judgment of SHAH, and BACHAWAT JJ. was delivered by SHAH J. Subba Rao, J. I regret my inability to agree with brother Shah, J., on one of the questions raised in the appeals, namely, whether the Land Acquisition Officer can, after making the award under section 12 of the Land Acquisition Act, 1894, hereinafter called the Act, fixing the compensation for the land acquired and apportioning the same among the persons interested in the land, refer the question of apportionment under section 30 of the Act to the decision of the Court.
Shah, J., held he could; but, with great respect to him, I take a different view.
The facts are fully stated in the judgment of Shah, J., and they need not, therefore, be restated here.
The answer to the problem raised falls to be decided on a conspectus of the relevant provisions of the Act.
Section 9 of the Act enjoins on the Collector to cause public notice to be given at convenient places on or near the land to be taken, stating that the Government intends to take possession of the land ', and that claims to compensation for all interests in such land may be made to him; under sub section
(2) thereof such notice shall state the particulars of the land so needed and shall require persons interested in the land to appear personally or by agent before the Collector at a time and place therein mentioned and to state the nature of their respective interests in the land and the amount and, particulars of 579 their claims to compensation for such interests, and their objections, if any, to the measurements made under section 8.
Under section 11, on the day fixed or on any other day to which the enquiry has been adjourned, the Collector shall proceed to make an enquiry and shall make an award under his hand of (i) the true area of the land; (ii) the compensation which in his opinion should be allowed for the land; and (iii) the apportionment of the said compensation among all the persons known or believed to be interested in the land, of whom, or of whose claims, he had information, whether or not they have respectively appeared before him.
Under section 12, "such award shall be filed in the Collector 's office and ' shall, except as hereinafter provided, be final and conclusive evidence, as between the Collector and the persons interested, whether they have respectively appeared before the Collector or not, of the true area and value of the land, and the apportionment of the compensation among the persons interested. ' ' The group of sections, viz, sections 9 to 15, describes the subject matter and the nature of the enquiry to be held by the Collector and ' provides for the making of the final award in respect of the said subject matter; ss.18 to 28 provide for reference to Court and the procedure to be followed therein in respect thereof.
Sections 29 and 30 fall under part IV of the Act under the heading "Apportionment of compensation".
As the decision mainly turns upon these provisions, it will be convenient to read them in full.
Section 29.
Particulars of apportionment to be specified Where there are several persons interested ', if such persons agree in the apportionment of the compensation, the particulars of such apportionment shall be specified in the award, and as between such persons the award shall be conclusive evidence of the correctness of the apportionment.
Section 30.
Dispute as to apportionment When the amount of compensation has been settled under Section 11, if any dispute arises as to the apportionment of the same or any part thereof, or as to the persons to whom the same or any part thereof is payable, the Collector may refer such dispute to the decision of the Court.
While section 11 imposes a statutory duty on the Collector to enquire in respect of the three matters mentioned therein, sections 29 and 30 deal with the manner of deciding the dispute in respect of one of the said matters, viz., apportionment of the compensation fixed; under section 29, if the claimants agree in the apportionment of the compensation, the agreed particulars shall be specified in the award and the said award is final as between them.
It is manifest that this agreement necessarily refers to the apportionment to be made under section 11 before the award is made, for the section in terms says that the agreed particulars shall be entered ' in the award.
If there is no such agreement, section 30 comes into play.
It also refers to a stage after the compensation has been settled and before the apportionment is made and included in the award.
If there was no agreed formula, the Land Acquisition Officer has the discretion, presumably when 580 there is a complicated question, to refer the dispute in respect of the apportionment to the Court.
But he need not do so if he thinks fit to decide the dispute for himself.
The Land Acquisition Act discloses a well knit scheme in the matter of making an award.
The Land Acquisition Officer, after issuing notice calling for objections, decides on the three matters prescribed in section 11, i.e., the true area of the land, the amount of compensation and the apportionment of the compensation.
Before making the apportionment of the compensation he can resort to any of the following three methods: (i) to accept an agreed formula; (ii) to decide for himself; and (iii) to refer to the Court if he thinks that the decision of the Court is necessary.
But once the award is made, it becomes final and it can be reopened only in the manner prescribed, i.e., by way of a reference under section 18 of the Act.
This construction makes for the smooth working of the provisions of the Act and does not lead to any anomalies.
It also does not affect the right of the aggrieved parties to proceed in the manner prescribed by the Act for getting the award vacated or modified ', as the case may be.
It is said that if this view be accepted, a person who acquires a right after the award by transfer inter vivos or by devolution of interest will be without a remedy.
I do not see any difficulty in that regard.
Under section 18 he may ask for a reference.
He may apply to be brought on record after the reference is made to the Court.
It may also be that he may proceed in a civil Court to recover the compensation from the persons who received ' it on the basis of his title.
On the other hand, the contrary view will lead to an incongruous position.
It enables the Land Acquisition Officer to reopen a final award in the teeth of the express provisions of section 12 of the Act.
It further enables him to make a reference without any period of limitation and thus to disturb the rights finally settled by the award.
I, therefore, hold that the Land Acquisition Officer cannot make a reference under section 30 of the Act in the matter of apportionment of compensation after the award has been made by him apportioning the compensation under section 11 and ' has been filed under section 12 thereof.
During the course of the arguments it was suggested that as the interest of Dr. Grant devolved on the Government it may be held that the Government was in substance brought on record in the place of Dr. Grant in the reference made under section 18 of the Act to the District Court.
But the point was not raised at any stage of the proceedings.
Indeed no application was filed in the District Court for bringing the Government on record in the place of Dr. Grant.
In the circumstances I am not justified ' in permitting the respondent to raise the said point for the first time before this Court.
In the result, I set aside the decision of the High Court and restore that of the District Court.
The appellant will have his costs throughout.
581 Shah, J. Dr. Gregor Hug Grant hereinafter called 'Dr. Grant ' was the proprietor of the Dumka Estate in the District of Santhai Parganas in the State of Bihar.
By a notification under section 4(1) of the Land Acquisition Act, 1894 published on June 8, 1949 the Government of Bihar notified for acquisition a larger area of land out of the estate of Dr. Grant for establishing "an agricultural farm.
" The Collector made on March 25, 1952 awards setting out the true area of the land notified for acquisition, compensation which in his opinion should ' be allowed for the land and apportionment of the compensation among all the persons known or believed to be interested in the land.
The awards were filed in the Collector 's office on the same day.
In respect of Plot No. 142, Rs. 575/14/were awarded by the Collector as compensation in equal shares to Dr. Grant and the members of the village community, who had also made a claim for compensation.
In respect of Plot No. 68, the Collector awarded Rs. 294/6/ as compensation.
In respect of acquisition of an area admeasuring 88.91 acres consisting of several plots, the Collector awarded Rs. 1,64,446/5/10 as compensation and directed apportionment in the manner set out in the award.
On May 5, 1952 Dr. Grant applied to the Collector under section 18 of the Land Acquisition Act that the three matters be referred for determination by the Court of the amount of compensation payable to the owners.
Similar applications were filed in respect of Plot Nos. 68 & 142 by the members of the village community.
In consequence of a notification issued under section 3 of the Bihar Land Reforms Act 30 of 1950 the Dumka Estate vested on May 22, 1952 in the State of Bihar.
In exercise of the power under section 16 of the Land Acquisition Act, the Government of Bihar took over possession on August 21, 1952 of the Lands notified for acquisition.
On October 15, 1952 the Government Pleader submitted a petition before the Collector claiming that the compensation money awarded to Dr. Grant had since the publication of the notification under the Bihar Land Reforms Act become payable to the State Government, and the dispute between Dr. Grant and the State Government regarding the right to payment may be referred to the Court under section 30 of the Land Acquisition Act.
The Collector made on November 5, 1952 three references to the District Court, Santhai Parganas.
Two out of those references were made in exercise of powers under sections 30 & 18 of the Land Acquisition Act, and the third under section 30.
The District Judge by his order dated April 9, 1954 held that the State of Bihar had no interest in the property notified for acquisition when the award was filed before the Collector under section 12 of the Land Acquisition Act, and the State could, lay no claim to the compensation money awarded.
The District Judge upheld the apportionment of compensation between Dr. Grant and the village community and enhanced the valuation of the land and directed that compensation at the enhanced rate be awarded.
582 Against the order of the District Judge in the references, three appeals Nos. 401 of 1953, 2c)7 of 1954 and 298 of 1954 were preferred by the State to the High Court of Judicature at Patna.
The High Court held that title of the owner to the land acquired under the Land Acquisition Act could not be extinguished under that Act till possession was taken under section 16 of the Act, and that since the title of Dr. Grant in the land acquired stood statutorily vested in the State by virtue of the notification issued under the Bihar Land Reforms Act, he was not entitled to receive the compensation money.
In the view of the High Court, title to the compensation money had vested in the State Government before possession was obtained by the State Government under section 16 of the Land Acquisition Act, and that it was open to the Collector, on a dispute raised by the State about the right to receive the compensation money, to make a reference to the Court under section 30 of the Act.
With certificate granted by the High Court, these three appeals have been preferred by Dr. Grant.
Three contentions have been urged in support of the appeals: (1) the Collector had no authority to refer the matter under section 30 after he had apportioned the amount of compensation under section 11 (2) since title to compensation is derived solely from and on the date of the award, the notification under section 3 of the Bihar Land Reforms Act did not deprive Dr. Grant of his right to receive compensation, and (3) the State Government was not "a person interested" within the meaning of the Land Acquisition Act, and could not apply for a reference under section 30.
After a notification is issued under section 6 of the Land Acquisition Act, the appropriate Government may acquire the land notified in the manner set out in sections 7 to 16.
Section 9 provides for an enquiry into the area of the land, into compensation which is payable and apportionment of compensation.
The Collector is by section 11 authorised to make an award setting out the true area of the land, the compensation which, in his opinion, should be allowed for the land and the apportionment of the said compensation among all the persons known or believed to be interested in the land, or of whose claims, he has information, whether or not they have respectively appeared before him.
The award when filed in the Collector 's office becomes final and conclusive evidence as between the Collector and the persons interested whether they have respectively appeared before the Collector or not, of the true area and value of the land and the apportionment of compensation among the persons interested.
The land vests absolutely in the Government, free from all encumbrances when possession is taken by the Collector under section 16.
By section 17 authority is conferred upon the Collector, when in cases of urgency the appropriate Government so directs, to take possession of waste or arable land even before making an award.
Section 48 authorises the Government to withdraw from the acquisition any land of which possession has not been taken.
583 By section 18 the Collector is enjoined to refer to the District Court for determination, objections as to the measurement of the land, the amount of compensation, the persons to whom it is payable, or the apportionment thereof among the persons interested.
Part IV deals with apportionment of compensation.
If the persons interested agree in the apportionment of the compensation, the particulars of such apportionment shall be specified in the award (section 29): if there be no such agreement, the Collector may, if a dispute arises as to the apportionment of the compensation or any part thereof or as to the persons to whom the same or any part thereof is payable, refer such dispute under section 30 for decision by the Court.
Part V of the Act which contains sections 31 to 34 deals with payment of compensation.
Under section 31 the Collector has to tender payment of the compensation awarded by him to the persons interested entitled thereto according to the award.
By the third proviso to sub section
(2) of section 31, liability of any person, who may receive the whole or any part of the compensation awarded under the Act, to pay the same to the person lawfully entitled thereto, is not affected.
Sections 32 & 33 deal with investment of money deposited in respect of land belonging to persons incompetent to alienate the land and ' in other cases, but with these we are not concerned.
Section 34 obliges the Collector to pay interest at the rate of six per centum per annum if compensation is not paid or deposited on or before taking possession of the land from the time of taking possession until it is so paid or deposited '.
There are two provisions sections 18(1) and 30 which invest the Collector with power to refer to the Court a dispute as to apportionment of compensation or as to the persons to whom it is payable.
By sub section
(1) of section 18 the Collector is enjoined to refer a dispute as to apportionment, or as to title to receive compensation, on the application within the time prescribed ' by sub section
(2) of that section of a person interested who has not accepted the award.
Section 30 authorises the Collector to refer to the Court after compensation is settled under section 11, any dispute arising as to apportionment of the same or any part thereof or as to the persons to whom the same or any part thereof is payable.
A person shown in that part of the award which relates to apportionment of compensation, who is present either personally or through a representative, or on whom a notice is served under sub section
(2) of section 12, must, if he does not accept the award, apply to the Collector within the time prescribed under section 18(2) to refer the matter to the Court.
But a person who has not appeared in the acquisition proceeding before the Collector may, if he is not served with notice of the filing, raise a dispute as to apportionment or as to the persons to whom it is payable, and apply to the Court for a reference under section 30, for determination of his right to compensation which may have existed before the award, or which may have develoved upon him since the award.
Whereas under section 18 an application made to the Collector must be made within the period prescribed by sub s.(2) cl.
(b), there is no such period 584 prescribed under section 30.
Again under section 18 the Collector is bound to make a reference on a petition filed by a person interested.
The Collector is under section 30 not enjoined to make a reference: he may relegate the person raising a dispute as to apportionment, or as to the person to whom compensation is payable, to agitate the dispute in a suit and pay the compensation in the manner declared.
by his award.
We are unable to agree with the view expressed by the Mysore High Court in Boregowda and another vs Subbaramiah and others that if the Collector has made apportionment of the compensation money by his award his power to refer a dispute under section 30 cannot be exercised.
Clause (iii) of section 11 enjoins the Collector to apportion the compensation money among persons known or believed to be interested in the land: he has ' no discretion in the matter.
Exercise of the power under section 30 to refer the dispute relating to apportionment or as to the persons to whom it is payable is, it is true, discretionary: the Collector may, but is not bound to exercise that power.
It is however not predicated of the exercise of that power that the Collector has not apportioned the compensation money by his award.
We are also unable to agree with the Mysore High Court that the power under section 30 of the Land Acquisition Act has to be exercised on a motion within the period prescribed by section 18(2) of the Land Acquisition Act.
In our judgment the powers exercisable by the Collector under section 18(1) and under section 30 are distinct and may be invoked in contingencies which do not overlap.
By virtue of the notification issued under the Bihar Land Reforms Act the right of Dr. Grant vested in the State of Bihar.
On March 25, 1952 when the Collector made an award under section 11, the only persons interested in the award were Dr. Grant and the members of the village community, but the title of Dr. Grant in the land notified for acquisition stood, by operation of the Bihar Land Reforms Act, transferred as from May 22, 1952 to the State of Bihar.
A dispute then arose between the State Government and Dr. Grant "as to the persons whom" compensation was payable.
The State had no right to the compensation payable for the land under a title existing before the date of the award of the Collector, and no application for reference could be made by the State, as a person interested within the meaning of section 18(1).
The title of the State to receive compensation arose only when in consequence of the notification under section 3 of the Bihar Land Reforms Act, the title of Dr. Grant to the Estate was divested.
An award by the Collector is strictly speaking an offer made to the person interested in the land notified for acquisition: the latter may accept the offer, but is not bound to accept it.
He may ask for a reference to the Court for adjudication of his claim for adequate compensation.
The person interested may even accept (1)A.I.R. 585 the compensation under protest as to the sufficiency of the amount and ask for a reference.
It is also open to the Government, even after the award is made, but before possession is taken, to withdraw from acquisition of any land in exercise of the powers conferred by section 48 of the Land Acquisition Act.
It is therefore not the award of the Collector which is the source of the right to compensation: the award quantifies the offer of the appropriate Government, which is made because the Government has taken over, or intends to take the land of the owner under the authority conferred by the Land Acquisition Act.
In Serju Prasad Sahu vs The State of Uttar Pradesh and Others(1) it was observed by this Court in considering the scheme of the Act that the right of the owner of the land is extinguished when Government takes possession of the land after an award of compensation is made.
This is also supported by the scheme of the Act.
Interest is made payable under section 28 on the additional amount of compensation awarded by the Court from the date on which the Collector had taken possession.
Similarly under section 34 interest is made payable on the compensation from the date on which the possession is taken, if the same be not paid or deposited on or before taking possession of the land.
The right of the State of Bihar arose on May 22, 1952 when the title to the land vested in it by virtue of the notification issued under the Bihar Land Reforms Act.
There is nothing in the Land Acquisition Act which prohibits the Collector from making a reference under section 30 for determination of the title of the person who has since the date of the award acquired a right to the compensation.
If after a reference is made to the Court, the person interested dies or his title devolves upon another person, because of inheritance, succession, insolvency, forfeiture, compulsory winding up or other form of statutory transfer, it would be open to the party upon whom the title has devolved to prosecute the claim which the person from whom the title has devolved could have prosecuted.
In Promotha Nath Mitra vs Rakhal Das Addy(2) it was held that a reference made by the Collector under section 30 of the Land Acquisition Act at the instance of a proprietor of land may be prosecuted by the purchaser of his rights after the award at a revenue auction.
If the right to prosecute a reference by a person on whom the title of the person interested has devolved be granted, there is no reason why the right to claim a reference of a dispute about the person entitled to compensation may not be exercised by the person on whom the title has devolved since the date of the award.
The scheme of the Land Acquisition Act is that all disputes about the quantum of compensation must be decided by resort to the procedure prescribed by the Act; it is also intended that disputes about the rights of owners to compensation being ancillary to the principal dispute should be decided by the Court to which power is entrusted.
Jurisdiction of the Court in this behalf is not restricted (1)A.I.R. (2) 586 to cases of apportionment, but extends to adjudication of disputes as to the persons who are entitled ' to receive compensation, and there is nothing in section 30 which excludes a reference to the Court of a dispute raised by a person on whom the title of the owner of land has, since the award, devolved.
It was strongly pressed that under section 31 of the Land Acquisition Act the Collector is bound to tender payment of compensation awarded by him to the persons entitled ' thereto according to the award and that implied that a right in the amount of compensation arises to the person to whom compensation is directed to be paid under the award, and therefore the only persons who can raise a dispute under section 30 are those whose names are set out in the award.
This contention stands refuted by the plain terms of section 30.
The Collector is not authorised to decide finally the conflicting rights of the persons interested in the amount of compensation: he is primarily concerned with the acquisition of the land.
In determining the amount of compensation which may be offered, he has, it is true, to apportion the amount of compensation between the persons known or believed to be interested in the land, of whom, or of whose claims, he has information, whether or not they have appeared before him.
But the scheme of apportionment by the Collector does not finally determine the rights of the persons interested in the amount of compensation: the award is only conclusive between the Collector and the persons interested and not among the persons interested.
The Collector has no power to finally adjudicate upon the title to compensation, that dispute has to be decided either in a reference under section 18 or under section 30 or in a separate suit.
Payment of compensation therefore under section 31 to the person declared by the award to be entitled thereto discharges the State of its liability to pay compensation (subject to any modification by the Court), leaving it open to the claimant to compensation to agitate his right in a reference under section 30 or by a separate suit.
The dispute between the State of Bihar and Dr. Grant has been expressly referred by the Collector to the Court for decision.
Under the Bihar Land Reforms Act, the title of Dr. Grant to the Land notified for acquisition became vested ' in the State, and there fore the right to compensation for the land acquired devolved upon the State.
A dispute between Dr. Grant and the State as to their conflicting claims to the compensation money was clearly a dispute which could be referred under section 30 of the Land Acquisition Act to the Court and was in fact referred to the Court.
We are unable to agree with counsel for Dr. Grant that the reference made by the Collector under section 30 was incompetent, because the State was not interested in the compensation money on the date when the award was made.
The right of the State of Bihar has undoubtedly arisen after the award was made, but once the title which was originally vested in Dr. Grant stood statutorily transferred to the State, it was open to the State to claim a reference, not because the 587 State was a person interested ' in the compensation money before the date of the award, but because of the right which has arisen since the award was made.
We therefore dismiss the appeals with costs There will be one hearing fee.
ORDER Following the judgment of the majority, the appeals are dismissed with costs.
There will be one hearing fee.
| A charge sheet was filed in the Special Court constituted under the West Bengal Criminal Law Amendment (Special Courts) Act, 1949, against the appellant for an offence under section 409, I.P.C.
After the examination of the prosecution witnesses a charge was framed.
Thereafter, the prosecution witnesses were cross examined and the accused was questioned under section 342 of the Criminal Procedure Code.
At the time of hearing arguments, the Public Prosecutor placed before the Special Judge two judgments of the High Court according to which the Special Court could not take cognizance upon a charge sheet and that therefore the entire proceedings were without jurisdiction.
Though the case was in fact allotted to the Special Judge by a Government notification, he held that he had no jurisdiction to proceed, and as the charge had already been framed, made an order a ,quitting the appellant.
A formal complaint against the appellant was then preferred by the Public Prosecutor before the successor in office of the Special Judge and a fresh proceeding was commenced against the appellant which ended in his conviction.
His appeal to the High Court was dismissed.
In his appeal to this Court, the appellant contended that since he was tried and acquitted upon the same facts by the former Special Judge, his trial over again for the same offence was barred.
by section 403 of the Code.
HELD: The trial and eventual conviction of the appellant were valid in law, because, the earlier order of the Special Judge did not amount to an order of acquittal as contemplated by section 403(1) It was merely an order putting a stop to the proceedings.
Section 403(1) can be successfully pleaded as a bar to a subsequent trial for the same offence or for an offence based on the same facts, where the accused had been (a) tried by a court (b) of competent jurisdiction and (e) acquitted.
It is only a court which is Competent to initiate proceedings or to carry them on that can properly make an order of acquittal which will have the effect of barring a subsequent trial upon the same facts and for the same offence.
It is true that in the instant case the former Special Judge could have properly taken cognizance of offence because of the allotment and, therefore, the proceedings before him were in fact not vitiated by reason of lack of jurisdiction.
But where a court says, though erroneously, that it was not competent to take cognizance of the offence, it has no power to acquit that person of the offence.
Therefore, the order a .quitting the appellant was in fact a nullity.
[470E; 471A B, H] Yusofalli Mulla Noorbboy vs The King, L.R. 76 I.A. 158, applied.
468 The fact that a charge had been framed Would not help the appellant.
A criminal court is precluded from determining the case before it in which a charge has been framed otherwise than by making an order of acquittal or conviction, only where the charge was framed by a competent court.
But in the present case, since the former Special Judge was, on his own view, not competent to take cognizance of the offence, he was incompetent to frame the charge.
Similarly, the provisions of section 494 of the Code could not be attracted, because, that provision also assumes the withdrawal by a Public Prosecutor of a charge competently made and before a court competent to entertain the withdrawal application.
[473C E].
Moreover, the earlier proceedings could not be deemed to be a trial at all, because, for proceedings to amount to a trial, they must be held before a court which is in fact competent to hold them and which is not of the opinion that it has no jurisdiction to hold them.
[473E F]
|
Appeal No. 324 of 1962.
Appeal from the judgment and decree dated August 8, 1960 of the Kerala High Court, in O. P. No. 97 of 1953.
G.B. Pai, J. B. Dadachanji, O. C. mathur and Ravinder Narain, for the appellant.
S.V. Gupte, Additional Solicitor General of India, R. Ganapathy lyer, P. D. Menon and R. H. Dhebar, for the respondent.
April 9.
The judgment of the Court was delivered by GAjENDRAGADKAR J.
The short question which arises in this appeal is whether the factory run by the appellant, the Associated Industries (P) Ltd., Qulion, falls within section 1 (3) of the employees ' Provident Funds Act, 1952 (No. 19 of 1952) (hereinafter called 'the Act ').
The appellant is a Company which runs a tile factory and an engineering works at Quilon.
The tile factory began its career in July, 1943, and the engineering works in 907 September, 1950.
It is common ground that these two industries are separate and distinct and that they are carried on by the same Company and on the same premises.
It is also common ground that a licence issued under the , has been issued to the appellant for the entire premises and it is under this licence that the said premises arc allowed to be used as one factory under the said Act and the rules framed thereunder.
It appears that the respondent, the Regional Provident Fund Commissioner, Vanchiyoor, Trivandrum, intimated to the appellant on March 10, 1953, that the Act as well as the scheme framed under it were applicable to the appellant 's factory, and so, the appellant was called upon to deposit in the SubOffice of the Imperial Bank of India the contribu tions and administrative charges as required by section 6 of the Act.
The same requisition was repeated on March 25, 1953 and April 24, 1953.
The appellant disputed the correctness of the view taken by the respondent that the appellant 's factory fell under the purview of the Act, and so, it refused to comply with the respondent 's requisition.
Thereupon, the respondent wrote to the appellant on June 16, 1953 informing it that appropriate action would be taken to compel the appellant to make the necessary deposit and submit returns as required by the Act in case it failed to comply with the notices issued in that behalf.
At this stage, the appellant moved the High Court of Kerala by a writ petition (O. P. No. 97/1953) in which it claimed a writ of certiorari quashing the notices issued by the respondent against it, and restraining the respondent from proceeding further in the matter and for other incidental reliefs.
The main contention raised by the appellant before the High Court was that the appellant 's factory was not an establishment to which section 1 (3) of the Act applied.
The High Court 908 has rejected this contention.
Then it was urged before the High Court on behalf of the appellant that the effect of the notices served on the appellant by the respondent was retrospective in character and it was urged that the said notices were illegal.
This argument was also rejected by the High Court. 'I he appellant further contended before the High Court that since for the relevant period the employees had not made their contributions, it would be inequitable to enforce the notices against the appellant.
The High Court noticed the fact that it had been conceded by the respondent that he did not propose to collect the employees ' share of the contribution to the fund for the relevant period from the appellant, and it held that the concession so made was proper and fair and so, there was no substance in the grievance made by the appellant that giving effect to the notices served on it by the respondent would be inequitable and unjust.
On these findings, the writ petition filed by the appellant was dismissed with costs, It is against this order that the appellant has come to this Court with a certificate granted by the High Court.
The principal point which is sought to be raised by Mr. Pai on behalf of the appellant in this appeal is concluded by a recent decision of this Court in The Regional Provident Fund Commissioner, Bombay vs (1) Shree Krishna Metal Manufacturing Co., Bhandra, and (2) Oudh Sugar Mills Ltd. (1).
It would be noticed that the relevant sections which fell to be construed in dealing with the appellant 's contention are section 1 (3), section 2 (g) and (i) and section 6 of the Act.
Section 1 (3) (a) provides, inter alia, that subject to the provisions contained in section 16, the Act applies to every establishment which is a factory engaged in any industry specified in Schedule I and in, which 50 or more persons are employed; the numerical requirement of 50 has been reduced to 20 by an Amending Act of 1960.
Section (2) (g) (1) A.1,R. 909 defines a 'factory ' as meaning any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power; and section 2 (i) defines an 'industry ' as meaning any industry specified in Schedule I, and includes any other industry added to the Schedule by notification under section 4.
Section 6 prescribes for the levy of contributions and deals with other matters which may be provided for in Schemes; and in accordance with the provisions of this section, the Employees ' Provident Fund Scheme of 1952 has been framed.
In the case of the Regional Provident Fund Commissioner, Bombay, (1) this Court has held that section 1 (3) (a) does not lend itself to the construction that it is confined to factories exclusively engaged in any industry specified in Schedule I.
It was observed in that connection that when the legislature has described factories as factories engaged in any industry, it did not intend that the said factories should be exclusively engaged in the industry specified in Sch.
I. Consistently with this view, this Court further observed that the word 'factory ' used in section 1 (3) (a) has a comprehensive meaning and it includes premises in which any manufacturing process is being carried on as described in the definition, and so the factory engaged in any industry specified in Sch.
I does not necessarily mean a factory exclusively engaged in the particular industry specified in the said Schedule.
in construing the scope of section 1 (3) (a) this Court held that composite factories came within its purview and that the fact that a factory is engaged in industrial activities some of which fall under the Schedule and some do not, will take the factory out of the purview of section 1 (3) (a) having dealt with this aspect of the matter, this Court proceeded to consider the question as to (1) A I. R. 910 whether numerical requirement of the employment of 50 persons, as the section then stood, applied to the factory or to the industry, and it held that the said test applied not to the industry but to the factory.
Thus, the conclusion was that in order that a factory should fall under section 1 (3) (a), it must be shown that it is engaged in any such industry as is specified in Sch.
I and the number of its employees should not be less than 50.
This decision makes it clear that section 1 (3) (a) is not confined only to factories which are exclusively engaged in industrial work to which Sch.
I applies,but it also takes in composite factories which run industries some of which fall under Sch.
I and some do not.
In order to make the position clear let us state the true legal position in respect of the scope of the application of section 1 (3) (a) in categorical terms.
If the factory carries on one industry which falls under Sch.
I and satisfies the requirement as to the number of employees prescribed by the section, it clearly falls under section 1 (3) (a).
If the factory carries on more than one industry all of which fell under Sch. 1 and its numerical strengh satisfies the test prescribed in that behalf, it is an establishment under section 1 (3) (a).
If a factory runs more industries than one, one of which is the primary and the dominant industry and the others are its feeders and can be regarded as subsidiary, minor, or incidental industries in that sense, then the character of the dominant and primary industry will determine the question as to whether the factory is an establishment under section 1 (3) (a) or not.
If the dominant and primary industry falls under Sch.
I, the fact that the subsidiary industries do not fall under Sch.
I will not help to exclude the application of section 1 (3) (a).
If the dominant and primary industry does not fall under Sch. 1, but one or more subsidiary, incidental, minor and feeding industries fall under Sch.
I, then section 1 (3) (a) will not apply.
If the factory runs more 911 industries than one all of which are independent of each other and constitute separate and distinct industries, section 1 (3) (a) will apply to the factory even if one or more.
, but not all, of the industries run by the factory fall under Sch.
The question about the subsidiary, minor, or feeding industries can legitimately arise only where it is shown that the factory is really started for the purpose of running one primary industry and has undertaken other subsidiary industries only for the purpose of subserving and feeding the purposes and objects of the primary industry ; in such a case, these minor industries merely serve as departments of the primary industry; otherwise if the industries run by a factory are independent, or are not so integrated as to be treated as part of the same industry, the question about the principal and the dominant character of one industry as against the minor or subsidiary character of another industry does not fall to be considered.
It is in the light of this position that we may revert to the actual decision in The Regional Provident Fund Commissioner, Bombay (1).
In that case, this Court was dealing with the cases of Shree Krishna Metal Manufacturing Co., and Oudh Sugar Mills Ltd. The Metal Company carried on four different kinds of activities and it was held that its industrial activity which fell under Sch.
I was neither minor, nor subsidiary, nor incidental to the other activities.
In other words, the industry which the company ran and which fell under Sch.
I was independent of the other industries conducted by the Company, and so, it was held that the question about one industry being subsidiary, minor, or incidental did not arise.
In the result, the Company 's factory was found to fall under section 1 (3) (a).
On the other hand, the case of the Oudh Sugar Mills stood on a different basis.
The primary activity (1) A. I. R. 912 of the mills was the manufacture of hydrogenated vegetable oil named 'Vanasada ' and its by products, such as soap, oil cakes, etc.
It appeared that a department of the Mills manufactured containers and this part of the industrial activity of the Mills fell under Sch.
I. Evidence, however, showed that the fabrication of the containers had been undertaken by the Mills only as a feeder activity which was integrally connected with its primary business of producing and marketing vegetable oil, and since the primary business was.
outside Sch. 1, the factory as a whole was held to be outside section 1 (3) (a).
It is true that since this Court dealt with the two respective cases of the Company and the, Mills in one judgment, the test as to the principal character of the industrial activity of one industry in relation to the character of the minor industry came to be considered ; but the application of the said test became necessary essentially because of the case of the Oudh Sugar Mills.
In the case of the Company, however, the several activities were not minor or subsidiary, but were independent , and it was held that the factory of the company fell under section 1 (3) (a).
Therefore, in our opinion, there is no scope for the argument in the present case that the engineering industry which the appellant runs is not the primary or dominant industry but the manufacture of tiles is.
Mr. Pai attempted to argue that though engineering industry run by the appellant 's factory falls under Sch.
I,it employs only 24 workers whereas the tiles industry employs more than 50.
He also relied on that fact that the tiles factory was started in 1943 and the engineering works in 1950, and his argument was that judged in the light of the fact that the tiles industry was started first, as well as considered by the application of the test of the strength of the employees working in the two industries,tiles industry should be treated to be the main, dominant and primary industry of the factory, and so, the factory, as a 913 whole, should be held to be outside section 1 (3) (a).
In our opinion, this argument is plainly untenable.
If the tiles industry and the engineering industry are independent of each other, then no question arises as to which is principal and which is subsidiary.
As soon as it is shown that the factory is carrying on two industries independent of each other one of which falls under Sch.
I, it becomes a composite factory to which section 1 (3) (a) applies.
When section 1 (3) (a) requires that the factory should be engaged in any industry specified in Sch.
I, considerations as to whether the industrial activity is major or minor can arise only where some activities are dominant and others are of the nature of feeding activities, but not otherwise.
Where the industrial activities are independent and the factory is running separate industries within the same premises and as part of the same establishment and under same licence, it is difficult to accept the argument that in dealing with such a factory, enquiry would be relevant as to which of the industries is dominant and primary, and which is not.
Therefore, in our opinion, the High Court was plainly right in rejecting the appellant 's case that its factory did not attract the provisions of section 1 (3) (a) of the Act.
Mr. Pai wanted to contend that if the appellant 's factory is treated as falling under section 1 (3) (a), complications may arise by reason of the fact that the rate of contribution initially prescribed by section 6 has been amended in 1962 by the Amending Act No. 48 of 1962.
Section 6 of the unamended Act provides, inter alia, that the contribution to be paid by the employer to the fund shall be 6 1/4% of the basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees, and the employees ' contribution shall be equal to the contribution payable by the employer in respect of him.
This section further provided that the employee was competent to 914 make a higher contribution not exceeding 8 and one third per cent of his emoluments specified in the said section.
By the amendment made in 1962, this rate has been enhanced to 8% in respect of any establishment or class of establishments which the Central Government, after making such enquiry as it deems fit, may by notification in the official Gazette specify.
We were told that in regard to the engineering industry.
, this amended sub section has been extended by a notification, and Mr. Pai 's apprehension is that if the factory of the appellant is held to be an establishment to which section 1 (3) (a) applies on the ground that it is a composite factory Which runs several industries one of which falls under Sch.
I, it is likely that the increased rate may be made applicable to the factory as a whole.
We ought to add that Mr. Pai conceded that subsequent to the decision of the appellant 's writ petition in the High Court, the tiles industry has also been included in Sch.
I. but the revised rate has been made applicable to it.
Mr. Pai contends that if the factory is treated as falling under section 1 (3) (1), a distinction should be made in the different industries run by the factory for the purpose of calculating the contribution of the employer to the Provident Fund.
We do not propose to deal with this contention in the present appeal.
That is a matter which may well have to be decided by the respondent, and it is not open to Mr. Pai to request this Court to decide such a hypothetical question in the present proceedings.
The result is,, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellant filed a suit on the Original Side of the Calcutta High Court against the respondent for the recovery of a certain amount representing the price of coal supplied to the respondent.
The appellant 's case was that if the contract under which the coal was supplied was illegal by, reason of it being in contravention of section 175 (3) of the Government of India Act, 1935, the respondent was liable to pay compensation under section 70 of the Indian Contract Act, since the Coal was not supplied gratuitously and the respondent had enjoyed the benefit thereof.
The respondent 's case was that the contract was illegal and section 70 of the Indian Contract Act was not attracted.
It was further alleged that the respondent had issued and sent bills to cover the amount and intimation cards in accordance with the usual practice and ordinary course of dealings.
The respondent, it was allowed paid the amount by a cheque to a person authorised by the appellant and on presentation of proper receipts.
It was therefore alternatively pleaded that the appellant 's claim having been satisfied, he had no cause of action.
It was established in the course of the trial that the appellant had not in fact authorised any person to issue the receipts but a certain person not connected with the appellant 860 firm, without the consent or knowledge of the appellant got hold of the intimation cards and bills addressed to the appellant forged the documents and fraudulently received the cheque from the respondent and appropriated the amount for himself.
The respondent had not pleaded in its written statement that it was due to the negligence of the appellant that the third person was able to get hold of the intimation card and perpetrate the fraud.
Neither was it proved in the case that the appellant was in fact negligent.
The Trial Judge found that the respondent was bound to pay compensation under section 70 of the Indian Contract Act and rejected the alleged payment of the bills and in the result decreed the amount prayed for by the appellant.
The respondent thereupon appealed to a Division Bench.
Both the judges agreed that the appeal should be allowed.
Regarding the invalidity of the agreement and the inapplicability of section 70 of the Contract Act both the Judges agreed in favour of the present respondent.
But while one of the Judges was not prepared to consider the plea of negligence which was raised by the present respondent for the first time in the appeal the other judge held that there was negligence on the part of the present appellant.
The present appeal was filed on a certificate granted by the High Court.
In this Court, apart from the questions of the invalidity of the contract under section 175 (3) of the Government of India Act and the applicability of s: 70 of the Contract Act, it was argued on behalf of the appellant that a plea of negligence should have been raised by the respondent in its pleadings and that the appellate court was in error in allowing such a plea to be raised for the first time in appeal.
It Was contended further that in support of the plea of negligence it must be shown that the party against whom the plea is raised owed a duty to the party who raises the plea and that the negligence must not be merely or indirectly connected with the misleading effect but must be the proximate cause of the result.
Held that the contract is illegal and void.
If in pursuance of the void contract, the appellant has performed his part and the respondent has received the benefit of the performance of the contract by the appellant, section 70 of the Contract Act would justify the claim made by the appellant against the respondent.
State of West Bengal v, B. K .
Mondal, [1962] Supp 1, section C. R. 876, referred to.
861 Since a plea of negligence was not raised by the respondent in the trial court the appellant is entitled to contend that it had no opportunity to meet this plea and dealing with it in appeal has, therefore, been unfair to it.
Before invoking a plea of estoppel on the ground of negligence, some duty must be shown to exist between the parties and negligence must be proved in relation to such duty.
The Arnold v, The Cheque Bank, , referred to.
The negligence alleged must be proved to be the proximate or the immediate cause of the loss.
Bexendale vs Bennett, , referred to.
The broad proposition "that whenever one of two innocent persons must suffer by the acts of a third, he who enables such third person to occasion the loss, must sustain it" laid down by Ashhurst, J., in Lickbarrow vs Mason, 2 T. R. 63, on which one of the,Judges of the Division Bench has based his decision cannot be sustained as valid in law.
Commonwealth Trust Ltd. vs Akotey, , Mercantile Bank of India Ltd. vs Central Bank of India Ltd. (1937) L. R. 65 I. A. 75, R. E. Jones Ltd. vs Waring & Gillow Ltd., and Farquharson Bros. & Co. vs King & Co., , referred to.
The appellant cannot be charged with negligence.
which, in turn, can be held to be the proximate cause of the loss caused to the respondent.
The appellant is entitled to be compensated under section 70 of the Contract Act.
|
Civil Appeal No. 1048 of 1979.
From the Judgment and order dated 15.12.
1978 of Patna High Court in Second Appeal No. 215 of 1978 L.N. Sinha, B.P. Singh, Ranjit Kumar and Ravi Prakash for the appellants.
D. Goburdhan for the respondents.
The Judgment of the Court was delivered by BALAKRISHNA ERADI J.
The short question that arises for consideration in this appeal by special leave concerns the true scope and application of Section 80 of the Civil Procedure Code.
The appellants herein are the plaintiffs in a suit instituted in the Munsiff 's Court, Bihar Sharif, seeking the reliefs of declaration of title and delivery of possession with mesne profits in respect of the properties described in the plaint.
The State of Bihar the 1st respondent herein is the main defendant in the suit.
Prior to the institution of the suit, the plaintiffs had issued a notice to the 1st 311 respondent State under section 80 C.P.C. on 18.2.1969 and Exhibit 2 is a copy of the said notice.
However, without waiting for the statutory period of two months, the plaintiffs instituted the suit on 2.4.1969.
In the written statement filed on behalf of the State of Bihar, it was contended, inter alia, that the suit was not maintainable for want of proper notice under Section 80 C.P.C.
This contention was upheld by the trial court which also recorded findings against the plaintiffs on the remaining issues concerning the title to the property and their entitlement to reliefs of declaration and delivery of possession.
The first appellate court which the matter was carried in appeal by the plaintiffs dismissed the appeal on the ground that the plaintiffs ' suit was not maintainable inasmuch as due notice under Section 80 C.P.C. had not been given.
A second appeal preferred by the appellants to the High Court at Patna did not meet with any success and it was dismissed in limine.
Hence this appeal by the plaintiffs.
We are concerned in this case with Section 80 C.P.C. as it stood prior to its amendment, by Act 104 of 1976 (Even under the amended provision, the position remains unaltered insofar as a suit of this nature is concerned).
We shall extract the Section as it stood at the material time: "80.
No suit shall be instituted against the Government (including the Government of the State of Jammu and Kashmir) or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of (a) in the case of a suit against the Central Government, except where it relates to a railway, a Secretary to that Government; (b) in the case of a suit against the Central Government where it relates to a railway, the General Manager of that railway; (c) in the case of a suit against the Government of the State of Jammu and Kashmir, the Secretary to that Government or any other officer authorised by that Government in this behalf; 312 (d) in the case of a suit against any other Government, a Secretary to that Government or the Collector of the district; * * * * * and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and relief which he claims; and plaint shall contain a statement that such notice has been so delivered or left.
" The effect of the Section is clearly to impose a bar against the institution of a suit against the Government or a public officer in respect of any act purported to be done by him in his official capacity until the expiration of two months after notice in writing has been delivered to or left at the office of the Secretary to Government or Collector of the concerned district and in the case of a public officer delivered to him or left at his office, stating the particulars enumerated in the last part of sub section (1) of the Section.
When we examine the scheme of the Section it becomes obvious that the Section has been enacted as a measure of public policy with the object of ensuring that before a suit is instituted against the Government or a public officer, the Government or the officer concerned is afforded an opportunity to scrutinise the claim in respect of which the suit is proposed to be filed and if it be found to be a just claim, to take immediate action and thereby avoid unnecessary litigation and save public time and money by settling the claim without driving the person, who has issued the notice, to institute the suit involving considerable expenditure and delay.
The Government, unlike private parties, is expected to consider the matter covered by the notice in a most objective manner, after obtaining such legal advice as they may think fit, and take a decision in public interest within the period of two months allowed by the Section as to whether the claim is just and reasonable and the contemplated suit should, therefore, be avoided by speedy negotiations and settlement or whether the claim should be resisted by fighting out the suit if and when it is instituted.
There is clearly a public purpose underlying the mandatory provision contained in the Section insisting on the issuance of a notice setting out the particulars of the proposed suit and giving two months time to Government or a public officer before a suit can be insti 313 tuted against them.
The object of the Section is the advancement of justice and the securing of public good by avoidance of unnecessary litigation.
When the language used in the Statute is clear and unambiguous, it is the plain duty of the Court to give effect to it and considerations of hardship will not be a legitimate ground for not faithfully implementing the mandate of the legislature.
The Judicial Committee of the Privy Council had occasion to consider the scope and effect of Section 80 C.P.C. in an almost similar situation in Bhagchand Dagadusa and ors.
vs Secretary of State for India in Council & Ors.(1) In that case, though a notice had been issued by the plaintiffs under Section 80 C.P.C. on 26th June 1922, the suit was instituted before the expiry of the period of two months from the said date.
It was contended before the Privy Council, relying on some early decisions of before the Privy Council, relying on some early decisions of High Court of Bombay, that because one of the reliefs claimed in the suit was the grant of a perpetual injunction and the claim for the said relief would have become infructuous if the plaintiffs were to wait for the statutory period of two months prescribed in Section 80 C.P.C. before they filed the suit, the rigour of the Section should be relaxed by implication of a suitable exception or a qualification in respect of a suit for emergent relief, such as one for injunction.
That contention did not find favour with the Privy Council and it was held that Section 80 is express, explicit and mandatory and it admits no implications or exceptions.
The Judicial Committee observed: "To argue as appellants did, that the plaintiffs had a right urgently calling for a remedy, while section 80 is mere procedure, is fallacious, for section 80 imposes a statutory and unqualified obligation upon the Court." This decision was subsequently followed by the Judicial Committee in Vellayan vs Madras Proince.(7) The dictum laid down by the Judicial Committee in Bhagchand Dagadusa vs Secretary of State for India.(3) was cited with approval and followed by a Bench 314 of five Judges of this Court in Sawai Singhai Nirmal Chand vs Union of India.(1) It must now be regarded as settled law that a suit against the Government or a public officer, to which the requirement of a prior notice under Section 80 C.P.C. is attracted, can not be validly instituted until the expiration of the period of two months next after the notice in writing has been delivered to the authorities concerned in the manner prescribed for in the Section and if filed before the expiry of the said period, the suit has to be dismissed as not maintainable.
On behalf of the appellants, strong reliance was placed on the decision of a learned Single Judge of the High Court of Kerala in Nani Amma Nannini Amma vs State of Kerala.(2) Therein the learned Judge has expressed the view that Sec. 80 is not a provision of public policy and there is nothing in the Section expressly affecting the jurisdiction of the Court to try a suit instituted before the expiry of the period prescribed therein.
The reasons stated by the learned Judge in justification of his taking the said view despite the clear pronouncement of the Judicial Committee of the Privy Council in Bhagchand 's case do not appeal to us as correct or sound.
In the light of the conclusion expressed by us in the foregoing paragraphs about the true scope and effect of Section 80 C.P.C., the aforecited decision of the learned Single Judge of the Kerala High Court cannot be accepted as laying down good law.
In the result, we confirm the judgment and decree of the High Court and dismiss this appeal.
The parties will bear the respective costs in this appeal.
| The Petitioner in a writ petition sought relief in respect of Veterinary Assistant Surgeons working in the Delhi Administration, alleging that the Veterinary Assistant Surgeons have been denied the benefit of the principle of`equal pay for equal work ' incorporated in Article 39 (d) of the Constitution and that there has been violation of the fundamental rights guaranteed under Articles 14 and 16, because their scale of salary (Rs. 550 990) was lower than the pay scale of Veterinary Assistant Surgeons employed by the Union Territory of Chandigarh (850 1700), or by the Central Government in the Indo Tibetan Boarder Police and by the Border Security Force (Rs. 650 1200).
The writ petition was opposed by the Union of India denying many of the allegations in the petition, while the Development Commissioner, while the Delhi Administration contested the writ petition by justifying the impugned pay scale and also by pleading that the matter should be allowed to be examined by the Fourth Pay Commission.
Dismissing the writ petition, ^ HELD: 1.
The question of the fixation of pay scale for Veterinary Assistant Surgeons should be left to be decided by the Government on the basis of the recommendation of the Fourth Pay Commission.
The question of discrimination cannot be decided in isolation.
Having regard to the long delay in approaching this Court after the fixation of the pay scale, no relief can be granted in respect of the period between 1973 and 1984.
The petitioner is at liberty to make its representation before the Fourth Pay Commission.
[434 H E] 430 2.
In addition to the principle of `equal pay for equal work ', the pay structure of the employees of the Government should reflect many other social values.
Apart from being the dominant employer, the Government is also expected to be a model employer.
It has, therefore, to follow certain, basic principles in fixing the pay scales of various posts and cadres.
The degree of skill, strain of work, experience involved, training required, responsibility undertaken, mental and physical requirements disagreeableness of the task, hazard attendant on work and fatigue involved are some of the factors which should be taken into consideration in fixing pay scales.
The method of recruitment, the level at which the initial recruitment is made in the hierarchy of service or cadre, minimum educational and technical qualification prescribed for the post, the nature of dealings with the public, avenues of promotion available and horizontal and vertical relativity with other jobs in the same service or outside are also relevant factors.
[432F H; 433A] 3.
Wile fixing the pay scales, the paying capacity of the Government, the total financial burden which has to be borne by the general public, the disparity between the incomes of the Government employees and the incomes of those who are not in government service and the net amount available for government at the current taxation level, after paying the salaries and allowances to the Government servants have also to be borne in mind.
[433B C] 4.
It is imperative that there should be an evolution and implementation of a scientific national policy of incomes, wages and prices which would be applicable not merely to Government services but also to the other sectors of the national economy.
As far as possible the needs of a family unit have to be borne in mind in fixing the wage scales.
The `needs ' are not static.
They include adequate nutrition, medical facilities, clothing, housing, education, cultural, activities etc.
Care should also be taken to see that what is fixed today as an adequate pay scale does not become inadequate within a about period by providing an automatic mechanism for the modification of the pay scale.
[433E G]
|
Civil Appeal No. 2463 of 1982.
From the Judgment and order dated 31.
1981 of the Orissa High Court in First Appeal No. 184 of 1977.
Veenu Bhagat for the Appellants.
A.P. Mohanty and A.K. Mahapatra for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
The appellants filed a suit for partition of the properties detailed in the plaint claiming 1/3rd share.
A preliminary decree was passed by the trial court which was challenged by the defendant No. 9 (original respondent No. 1 in the present appeal) before the Orissa High Court in First appeal No. 184 of 1972.
The appeal was disposed of on compromise whereby the plaintiffs ' claim to 1/3rd share was accepted as correct.
The terms of the compromise are set out in paragraph 2 of the order dated 27.3.79.
It was, however, further agreed that half of the share of the plaintiffs, i.e. 1/6th share, would go to the defendant No. 9 provided he paid a sum of Rs.40,000 290 to the plaintiffs by a particular date, failing payment within time, the decree passed by the trial court would stand confirmed as per term of the compromise.
The compromise was recorded on 27.3.1979.
According to the compromise the sum of Rs.40,000 was to be paid in two instalments; the first instalment of Rs.10,000 by 31 7 1979 and the remaining amount of Rs.30,000 by 28.2.1980.
The first instalment was paid within time but the remaining amount was not paid.
In the meantime, the decree by the High Court was formally drawn up on 6.9.1979.
In view of the default in payment of the second instalment the plaintiffs appellants deposited the sum of Rs. 10,000 received by them as the first instalment to the credit of the defendant No. 9 with the permission of the Court.
The defendant No. 9, thereafter, made an application before the High Court on 28.8.1981 for extension of the period for payment of the second instalment of Rs.30,000.
The application was allowed by the order dated 31.8.1981 which is under challenge in the present appeal.
Before proceeding to the points involved in the present appeal it will be useful to briefly state the facts.
The parties are close relations, the defendant No. 9 (original respondent No. 1) being the uncle of the plaintiffs appellants.
He died during the pendency of the appeal here and his heirs and legal representatives have been substituted as respondents.
The father of the plaintiffs Nityagopal, defendant No. 9 (original respondent No. 1) Ghosta Gopal and Brajgopal were brothers.
Nityagopal died in 1953 leaving behind the plaintiffs and their mother who also died in 1962.
According to their case, they thus became entitled to 1/3rd share in the properties belonging to the family.
The appellants were very young girls and lived with Gostha Gopal for some time after the death of their parents.
But, according to their case, they had to leave for their maternal grandmother 's place in 1964 due to the ill treatment by their uncle.
In 1965, a collusive suit for partition was commenced by both the uncles Gostha Gopal and Brajgopal, in which although the plaintiffs were impleaded as parties, their address was wrongly mentioned in the plaint.
Consequently no summons could be served on them nor did they have any information about the suit and the decree passed therein.
No share was allotted to the appellants at all.
After they learnt about the collusive suit and the decree, they filed the present suit being T.S. 32 of 1967, for setting aside the earlier decree and for partition.
The trial court accepted the plaintiffs case that the earlier decree was obtained by fraud.
The plaintiffs were awarded 1/3rd share as claimed by them.
Brajgopal became reconciled to the situation but Gostha Gopal challenged the decision in the aforementioned First Appeal No. 184 of 1972.
291 3.
The parties reached an amicable settlement and the appeal was disposed of on 27.3.1979.
Accordingly the heirs of Brajgopal (who was dead by then) got their 1/3rd share in accordance with the trial court 's decision and the suit so far as the other two branches, that is, the plaintiffs and Gostha Gopal were concerned, was disposed of on the terms as mentioned in paragraph 1 above.
According to the case of the plaintiffs appellants they had no information of the application dated 28.8.1981, filed by the defendant No. 9 for extension of the period for payment of the second instalment of Rs.30,000 and when a copy of the application was offered to their advocate he did not accept the same making an endorsement thereon that notice should be served directly on the plaintiffs as he did not continue to hold any authority on their behalf.
Despite this stand of their learned counsel in the High Court, no notice was sent to the plaintiffs and the case was listed only after two days on 31.8.1981.
The plaintiffs ' advocate although he did not represent them on that date was present in Court when the case was called out, and pointed out that there was no justification for excusing the long delay.
Earlier the court by its order dated 17.8.1981, after taking into consideration the conduct of the defendant No. 9 in not complying with the terms of the compromise, had permitted the plaintiffs to refund the sum of Rs.10,000 paid to them as the first instalment.
The plaintiffs ' counsel pointed out that the aforesaid order had finally closed the matter.
The court, however, allowed the prayer of the defendant and permitted him to pay the remaining money along with an additional sum of Rs.6,000 by way of compliance of the terms of the compromise.
The counsel who was representing the plaintiffs earlier, refused to accept the money when offered, and the court permitted the defendant to deposit the amount with the Registrar of the court observing that the same would be available to be withdrawn by the plaintiffs.
When the petitioners learnt about the order they took a copy of the same and approached this Court under Article 136 of the Constitution.
While hearing the Special Leave Petition this Court directed the Subordinate Judge, Baripada to ascertain the market value of the 1/6th share of the property in question.
The Subordinate Judge in his report to this Court stated that the value of the entire properties would be Rs.13,90,000 and the value of 1/6th share would accordingly be Rs.2,31,716.
After the parties filed a number of affidavits, special leave was granted on 30.7.1982.
Mr. Bhagat, appearing in support of the appeal, contended that an order based on the consent of the parties can be modified only 292 with further consent and it is not open to the court to alter the terms otherwise.
It was further argued that assuming the court to be so empowered, the jurisdiction has to be exercised in exceptional circumstances and only in the ends of justice.
If the High Court had directed notice to be issued to the plaintiffs, they would have placed before the court the circumstances showing that it was against the cause of justice to allow the prayer of defendant No. 9 and specially so after such a long delay.
The plaintiffs were shabbily treated by their uncle after the death of their father when they were very young and had to take refuge at their deceased mother 's parental home.
Out of the two sisters only one could be married, and the younger one could not be married as the sum of Rs.30,000 promised by the respondent No. 1 to be paid by 28.2.1980 was not actually paid.
According to the affidavit filed before this Court by way of rejoinder to the respondents ' supplementary affidavit she was not married till then.
The learned counsel, therefore, argued that there was no justification whatsoever for the High Court to condone the delay and extend the period for deposit of the money by the respondent after more than 1 1/2 years of default.
Mr. Mohanty, the learned counsel representing the contesting respondents, who have been substituted in place of the original respondent No. 1 Gostha Gopal, contended that the 6th term of the compromise dealing with the consequence of default in payment of the instalments is penal in nature and must, therefore, be held illegal.
He urged that the clause being severable from the other terms of the compromise should be ignored and the other terms of the compromise ought to be given effect to.
As a result the clause that on the nonpayment of the agreed sum by the time indicated therein the decree of the trial court would become final, must be rejected as illegal.
Reliance was placed on Section 74 of the Indian Contract Act.
It was further argued that the position with respect to an order of a court of law made on the basis of consent of parties is also the same and it is not correct to suggest that in the circumstances of the present case the court had no power to permit the respondent No. 1 to make the deposit later.
The learned counsel relied on the observations made in Charles Hubert Kinch vs Edward Keith Walcott & Ors., AIR 1929 P.C. 289, Banku Behari Dhur vs J.C. Galstaun & Anr., AIR 1922 P.C. 339 and Jagat Singh & Ors.
vs Sangat Singh & Ors., AIR 1940 P.C. 70 and the decision of this Court in Smt.
Periyakkal & Ors.
vs Smt.
Dakshyani; , It was argued that it is not right to assume that the decree of the trial court was unassailable in appeal.
The respondent No. 1 had a substantial defence which he could have suc 293 cessfully pressed if the dispute had not been amicably settled.
We do not find any merit in the argument that the impugned clause 6 of the agreement is illegal being penal in nature and has, therefore, to be ignored.
It has to be noted that the plaintiffs had in the trial court obtained a decree for partition for 1/3rd share in the suit properties and there was presumption in favour of correctness of the decree.
At the appellate stage one of the three branches represented by the heirs of Brajgopal was satisfied with the share allotted to them and the interest of Gostha Gopal (defendant No. 9) was identical to their interest.
The situation was acceptable to the defendant No. 9 also but he wanted to acquire half the share of the plaintiffs on payment of consideration.
The plaintiffs agreed and the sum of Rs.40,000 was fixed as the price.
In clause 2 of the agreement, as mentioned below, it was expressly stated thus: "The sum of Rs.40,000 agreed to be paid by defendant No. 9 to the plaintiffs as compensation for the 1/6th share shall be paid in two instalments: . " (Emphasis added) The amount was to be paid by way of price was reiterated by the use of the word "consideration" in clause 3.
It is significant to note that the defendant No. 9 in the court below or his heirs (after his death) before us have not suggested that the entire compromise should be ignored on account of the impugned clause 6.
They have been relying upon the compromise except the default clause which alone is sought to be ignored.
They insist that under the compromise the shares allotted to the different branches should be treated as final and further half of the share of the plaintiffs, i.e. 1/6th share in the suit properties should have gone to the defendant No. 9 (and after him, to them, i.e. his heirs) for Rs.40,000.
This part of the compromise is in substance an agreement for transfer by the plaintiffs of half their share for a sum of Rs.40,000 to be paid within the time indicated.
It is true that the market price of the property was higher, and a beneficial right was bestowed on the defendant No. 9 to acquire the same for an amount considerably low.
In this background the defendant was subjected to the condition that if he had to take the advantage of the bargain he was under a duty to pay the stipulated amount by the time mentioned in the agreement.
On failure to do so within time, he was to be deprived of this special benefit.
Such a clause cannot be considered to be a penalty clause.
The expression 'penalty ' is an elastic term with many different shades of meaning but it always involves an idea of 294 punishment.
The impugned clause in the present case does not involve A infliction of any punishment; it merely deprives the defendant No. 9 of a special advantage in case of default.
Coming to the next question as to whether the High Court acted rightly in extending the period for payment of the second instalment, the learned counsel for the parties have placed all the facts and circumstances of the case in detail in support of their respective arguments, and we have considered them closely and do not have any hesitation in holding that the High Court, assuming that it had the power to do so, was not justified in allowing the prayer of the defendant No. 9 permitting him to make a grossly belated payment.
Even where such a power exists it is not to be exercised liberally.
In Smt.
Periyakkal and Ors.
vs Smt.
Dakshyani; , , relied upon by the respondents, this Court thus observed: "Of course, time would not be extended ordinarily, nor for the mere asking.
It would be granted in rare cases to prevent manifest injustice.
True the court would not rewrite a contract between the parties but the court would relieve against a forfeiture clause . " In the present case, justice is manifestly in favour of the plaintiffs and against the contesting respondents and further the clause in question was not a forfeiture clause.
Even the High Court had to observe as follows: "The conduct of the appellant (i.e. the defendant No. 9) is indeed very reprehensible.
Though extensions were obtain ed from us, he did not comply with the directions and suffered order No. 72 dated 17.8.1981 to be passed.
Only when his rights were taken away did he realise the real effect of what he had lost." In view of our conclusion it is not necessary to decide the abstract question of the general power of the court in this regard.
The grievance of the plaintiffs that they were not afforded reasonable opportunity to contest the defendants ' prayer is also well founded.
The appeal in the High Court had been disposed of earlier.
After the default in payment of the second instalment occurred the present appellants placed the circumstances before the court and prayed for permission to refund the first instalment of Rs.10,000, 295 received by them so that they could take full advantage of the compromise decree.
The matter was fully considered and decided by the order dated 17.8.1981 as mentioned by the High Court in the above quoted passage.
In the situation the counsel who represented the plaintiffs in the appeal could not have been held to have continued to represent them specially when they informed the court that he had no further authority and that notice should be directly sent to the plaintiffs.
However, we do not consider it necessary to remand the matter to the High Court for fresh consideration as we have considered all the relevant materials and have come to a final conclusion on merits in favour of the plaintiffs.
For the reasons mentioned above, the order dated 31.8.1981 passed by the Orissa High Court in First Appeal No. 184 of 1972 is set aside and the application filed by Gostha Gopal Dey for extension of time is rejected.
The appeal is accordingly allowed with costs payable to the appellants by the contesting respondents.
S.L. Appeal allowed.
| % The petitioner in this application under Article 136 of the Constitution entered into a contract with the respondent State for construction work.
The contract could not be completed within the stipulated time because of alleged gross delay on the part of the State in allotment of work and discharge of its obligations under the contract.
The petitioner incurred unforeseen expenditure and approached the Superintending Engineer for payment.
Upon refusal of the Superintending Engineer to pay and also to refer the matter to arbitration, the petitioner moved the District Judge under Section 20 of the Arbitration Act, ( 'the Act ') for the filing of the arbitration agreement and for reference of the dispute to arbitration.
The District Judge directed the respondent State to file the agreement, and made a reference for specific question to the arbitration.
The High Court dismissed the State 's appeal against the order of the District Judge.
Thereafter, an arbitrator was appointed, who made an award partly allowing the petitioner 's claim.
The award was filed in the Court of the District judge, who made the award a rule of the court.
The respondent appealed to the High Court.
The High Court remanded the matter to the District Judge for a fresh decision.
The District Judge accepted the respondent 's objections and set aside the award.
The High Court dismissed the appeal of the petitioner.
The petitioner then moved this Court for relief by this petition for special leave.
Dismissing the petition, the Court, ^ HELD: The District Judge rightly found that the question regarding extra cost was a general question and not a specific legal question and the decision of the arbitrator was not final.
The arbitrator 104 misconducted himself in allowing the claim without deciding the objection of the State.
In view of the specific clauses, the petitioner was not legally entitled to claim for extra cost.
The decision of this Court in Seth Thawardas vs Union of India, was of no avail on this point.
If no specific question of law is referred, the decision of the arbitrator on that question is not final however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally.
The arbitrator is not a conciliator and cannot ignore the law or mis apply it in order to do what he thinks is just and reasonable.
The arbitrator is a Tribunal selected by the parties to decide their disputes according to law and so he is bound to follow and apply the law, and if he does not, he can be set right by the Court provided his error appears on the face of the award.
In this case, the contractor having contracted, could not go back to the agreement simply because it did not suit him to abide by it.
[111C F] The petitioner had argued that since specific issues had been framed and referred by the District Judge to the arbitrator, the same had been answered by a non speaking award and there was no mistake of law apparent on the face of the record, and the District Judge had erred in setting aside the award by looking into the terms of the contract which neither formed part of the award nor were appended to it.
The Court did not agree.
This being a general question, the District Judge rightly examined the question and found that the petitioner was not entitled to claim for extra cost in view of the terms of the contract, and the arbitrator misdirected himself by not considering this objection of the State before giving the award.
[112B C] The limits of the jurisdiction of the Court to challenge the award are well settled.
While considering the objection under section 30 of the Act, the Court does not act as an appellate Court; it can only interfere with the award if the arbitrator misconducts himself or the proceedings or if the award has been made after the issue of an order by the Court superseding the arbitration or if the arbitration proceedings have become invalid under section 35(c) of the Act, or the award has been improperly procured or is otherwise invalid.
If, a specific question is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law, does not make the award bad on its face so as to permit it being set aside.
[112E F; 1l3A] The High Court was right that the District Judge was entitled to examine the contract in order to find out the legality of the claim of the petitioner regarding extra cost towards rise in prices of material and 105 labour.
Clauses 2.16 and 2.4 stipulated that the contractor had to complete the work inspite of rise in prices of materials and also rise in labour charges at the rates stipulated in the contract.
There was a clear finding of the arbitrator that the contract was not rendered ineffective in terms of section 56 of the Contract Act due to the abnormal rise in prices of materials and labour.
This being so and the contractor having completed the work, it was not open to him to claim extra cost towards rise in prices of material and labour.
The arbitrator misdirected himself in not deciding this specific objection raised by the State regarding the legality of the extra claims of the petitioner.
It has to be born in mind that there were specific clauses which barred consideration of extra claims in the event of price escalation.
[113D F; 114B] The award was properly set aside by the District Judge and the High Court was right in the view it took and there was no ground to interfere.
[113G] Seth Thawardas vs Union of India, ; M/s Alopi Parshad vs Union of India, ; ; Kapoor Nilokheri Co operative Dairy Farm Society Ltd. vs Union of India, ; Champsey Bhara and Co. vs Jivraj Balloo Spinning and Weaving Co. Ltd., A.I.R. 1923 P.C. 66; Re.
King and Duveen, ; Government of Kelantan vs Duff Development Co. Ltd., ; Bungo Steel Furniture vs Union of India, ; ; Saleh Mohd. vs Nathoo Mal, 54 I.A. 427; Abosalom Ltd. vs Great Western, ; Allen Berry & Co. vs Union of India, ; and Tarapare and Company vs Cochin Shipyard Ltd., Cochin and Anr.
,[1984] 2 S.C.C. 680, referred to.
|
Civil Appeal No. 1314 of 1978.
Appeal by special leave from the judgment and order dated the 23rd March, 1978 of the Allahabad High Court in Civil Revision No. 1906 for 1976.
WITH CIVIL APPEAL No. 2436 OF 1981 Appeal by special leave from the judgment and order dated the 20th August, 1981 of the Allahabad High Court in Civil Writ Petition No. 6909 of 1979.
AND CIVIL APPEAL No. 1710 OF 1981 From the judgment and Decree dated the 13th March, 1981 of the Allahabad High Court in Writ Petition No. 6167 of 1979.
AND SPECIAL LEAVE PETITION (CIVIL) NO.
3573 OF 1979 494 From the judgment and order dated the 3rd January, 1979 of the Allahabad High Court in Civil Revision No. 3714 of 1978.
G.L.Sanghi, Mrs. A. Verma and D.N. Mishra for the Appellant in CA.
No. 1314 of 1978.
J.P. Goyal, S.Markandeya and C.K.Ratnaparkhi for the Respondent in CA.
1314 of 1978.
A.K. Srivastava for the Appellant in CA.
1710/80.
R.B. Mehrotra for Respondent in CA.
1710/80.
Pramod Swarup and Mrs. section Markandeya for the appellant in CA.
2436 of 1980.
S.N. Kacker and K.K Gupta for the Respondent in CA.
2436 of 1980.
P.R.Mridul, Praveen Jain and K.B. Rohatgi for the Petitioner in SLP (Civil) No. 3573 of 1979 R.H. Dhebar for the Respondent.
The Judgment of the Court was delivered by MISRA J.
The first two appeals by special leave and the third by certificate and the special leave petition raise a common question of law and, therefore, we propose to dispose of them by a common judgment.
The pattern of facts in all these cases is similar.
We, therefore set out the facts of Civil Appeal No. 1314 of 1978 to bring out the point for consideration in these matters.
The appellant Om Prakash Gupta is a tenant of a shop on a monthly rent of Rs. 150/ .The respondent landlord filed a suit for the eviction of the tenant on the ground that the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (Act 13 of 1972 and hereinafter referred to as 'the Act ') did not apply to the shop and the tenant was liable to eviction.
The Judge, Small Causes Court, Mainpuri decreed the suit on the finding inter alia that the construction of the shop in suit was completed in the year 1967 and 495 that ten years having not elapsed since then, the provisions of the Act did not apply to the case.
The defendant went up in revision under section 25 of the Provincial Small Causes Courts Act against the judgment and decree of the trial Court but the same was substantially dismissed.
The defendant thereupon filed a revision under section 115 of the Civil Procedure Code in the High Court which came up for hearing before a learned Single Judge who remitted the following issue to the trial court: "On what date was the construction of the building in dispute completed within the meaning of section 2 (2) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, and deemed to have been completed as contemplated by Explanation I (a) thereto.
" The Judge Small Causes Court by his order dated 26th of November 1977 returned the following finding: "The construction of the disputed shop will be deemed to have been completed on the date of the first assessment i.e. 1.4.68 within the meaning of section 2 (2) of the U.P. Urban Buildings Act, 1972.
" The finding returned by the trial court was sought to be challenged on behalf of the tenant on the ground that the date of occupation should be taken to be the date of completion of the construction of the shop and not the date of the first assessment.
In Tilak Raj vs Sardar Devendra Singh,(1) a learned Single Judge of the same High Court had the occasion to consider section 2 (2) of the Act.
He held: "It is apparent from this provision that for purposes of this Act, a building is to be deemed to be constructed, if it is subject to assessment, on the date with effect from which the first assessment is made.
It is immaterial whether the building was constructed actually prior to that date or it had come into occupation prior to that date.
The law recognised for the purposes of this Act, the date of assessment as the date of the completion of the building.
There is thus no error in the judgment of the court below.
" 496 The learned Single Judge before whom the revision in the instant case came up for hearing doubted the correctness of the above decision.
He, therefore, referred the case to a Division Bench.
There is no dispute that the first assessment of the shop took place on 1st of April, 1968.
It is also not in dispute that the shop in question was occupied by the defendant on 16th of June, 1967, and prior to his occupation the shop was in occupation of another tenant for about a month and a half.
The appellant sought the benefit of section 39 of the Act on the ground that if the date of occupation was taken to be the date of the completion of the construction of the shop, then ten years having elapsed during the pendency of the revision before the High Court, the Act would be applicable.
The Division Bench, however, over ruled the contention of the appellant and held that the construction of the shop in question would be deemed to have been completed on 1st of April 1968 and, therefore, the Act would not be applicable to the building till the date of the decision of the revision on March 23, 1968.
The defendant undaunted by the failure came to this Court to challenge the judgment of the High Court.
Mr. G.L. Sanghi, senior counsel.
appearing for the appellant strongly contended that on a correct interpretation of sub section (2) of section 2, the Act would be applicable to the shop in question.
It would be appropriate at this stage to extract sub section (2) of section 2 of the Act insofar as it is material for the purposes of the case: "Except as provided in sub section (5) of section 12, sub section (1 A) of section 21, sub section (2) of section 24, sections 24A, 24B, 24C or sub section (3) of section 29, nothing in this Act shall apply to a building during a period of ten years from the date on which its construction is completed: Explanation I.
For the purposes of this sub section: (a) the construction of a building shall be deemed to have been completed on the date on which the completion thereof is reported to or otherwise recorded by the local authority having jurisdiction and in the case of a building subject to assessment the date on which the first assessment thereof 497 comes into effect, and where the said dates are different, the earliest of the said dates, and in the absence of any such report, record or assessment, the date on which it is actually occupied (not including occupation merely for the purposes of supervising the construction or guarding the building under construction) for the first time :. " The precise contention on behalf of the appellant is that the exemption created by this sub section does not embrace buildings constructed prior to the enforcement of the Act.
In support of his contention, Mr. Sanghi, relied upon Rattan Lal Shinghal vs Smt.
Murti Devi.(1) The same contention was raised by him in that case also and a Division Bench of this Court accepted the contention and held that Act 13 of 1972 was prospective and applied only to buildings brought into being de novo after the Act came into force.
In that case there is no discussion except this bald observation.
This Court in a subsequent case Ram Saroop Rai vs Lilavati(2) held to the contrary.
It is on this account that the present appeals were referred to a larger Bench.
There is no ambiguity in the language of sub section (2) of section 2 and in the absence of any ambiguity there is no question of taking any external aid for the interpretation of the sub section.
In plain words the sub section contemplates that the Act shall not apply to a building during a period of ten years from the date on which its construction is completed.
It nowhere says that the building should have been constructed after the enforcement of the Act and to interpret it in the way the learned counsel for the appellant seeks to interpret it, we would be adding words to the sub section, which is not permissible.
Primarily the language employed is the determining factor of the intention of the legislature.
The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself.
The question of interpretation arises only when the language is ambiguous and, therefore, capable of two interpretations.
In the present case the language of sub section (2) of section 2 of the Act is explicit and unambiguous and it is not capable of two interpretations.
498 As a second limb to the first argument, it is contended that the building will be deemed to have been constructed on the date of occupation on 16th of June, 1967 and not on the date of the first assessment, and that if this be so, the appellant would be entitled to the benefit of section 39 of the Act on the date when the revision came to be decided by the High Court on 23rd of March, 1978.
In order to appreciate this argument it will be expedient to refer to Explanation I to sub section (2) of section 2 which has already been extracted.
Explanation I provides that the building shall be deemed to have been completed on the date on which completion thereof is reported to or otherwise recorded by the local authorities having jurisdiction, and in case of a building subject to assessment the date on which the first assessment thereof comes into effect and where the said dates are different, the earliest of the said dates, and in the absence of any such report, record or assessment, the date on which it is actually occupied for the first time.
A perusal of Explanation I makes it abundantly clear that the date of occupation would be taken to be the date of completion of the construction only when there is no report or record of the completion of the construction or no assessment, thereof.
If there is an assessment, as in the present case it is, it will be the date of the first assessment which will be deemed to be the date of completion of the construction and in that view of the matter the building had not become more than ten years ' old on the date when the revision came to be decided by the High Court, and therefore there was no question of giving the benefit of section 39 of the Act to the appellant.
Further, in order to attract section 39 the suit must be pending on the date of commencement of the Act which is 15th of July, 1972 but the suit giving rise to the present appeal was filed on 23rd of March, 1974 long after the commencement of the Act.
There is yet another reason why section 39 will have no application to the present case.
In view of sub section (2) of section 2 of the Act the Act is not applicable to a building which has not a standing of ten years and if the Act itself was not applicable, it would be absurd to say that section 39 thereof would be applicable.
Considered from any angle the Act has no application to the present case and the appellant could not be given the benefit of section 39.
The suit has, therefore, been rightly decreed by the courts below.
We find no force in either of the contentions raised by Mr. Sanghi.
The counsel for the appellants in the other appeals and 499 the petitioner in the special leave petition, adopted the arguments of Mr. Sanghi.
For the foregoing discussion the appeals and the special leave petition are dismissed.
There shall, however, be no order as to costs.
We, however, direct that the order of eviction in each case shall not be executed before 30th of June, 1982 on condition that each of the appellants in the appeals and the petitioner in the special leave petition files an undertaking in this Court within four weeks from today to the following effect: 1. that he will hand over vacant and peaceful possession of the suit premises to the landlord respondent on or before 30th of June, 1982; 2.
that he will pay to the respondent arrears of rent, if any, within a month from today; 3. that he will pay to the respondent future compensation for use and occupation of the suit premises for each calendar month by the 10th of the succeeding month; and 4. that he will not induct any other person in the suit premises as a sub tenant or licensee or in any other capacity whatsoever.
We further direct that in default of compliance with any one or more of the conditions of the undertaking or if the undertaking is not filed within the stipulated time, the decree of eviction shall become executable forthwith.
N.V.K. Appeal dismissed.
| The five accused Ram Karan, his sons Sunil Kumar, Ved Prakash, Anil Kumar, Satish Kumar and deceased son Chhoteylal filed a Civil Suit 34 of 1967 against the decased Prakash Chandra, his brother Gopi Chandra and one Krishan Devi, alleging that while constructing their new house Prakash Chandra had encroached upon a portion of their land.
In that suit appellant Ram Karan got Commissioners appointed by the court on five or six occasions for taking measurements of the properties with the object of proving his case of encroachment by Prakash Chandra, the deceased.
But these Commissioners ' reports were set aside on the objection raised by Prakash Chandra and the other defendants.
The last Advocate Commissioner Mr. Mathur (C.W. 1) visited the spot on 6 9 1970, the day of occurrence, accompanied by Mr. Zafar Hussain (C.W. 2) who appeared for deceased Prakash Chandra and Mr. Mahesh Chandra (C.W. 3) who appeared for Ram Karan.
After the completion of the survey work and measurements at about 1 P.M. when all the three lawyers were standing and talking in front of the house of the appellants deceased Prakash Chandra and Umesh Chandra came there to talk to the Commissioner, which interference was not liked by the appellants.
This resulted in a sudden quarrel, exchange of hot words later followed by assault with knife etc., on the appellants which, according to prosecution, was in the exercise of right of self defence by the prosecution party, particularly Dinesh Chandra (P.W. 11).
On the side of the appellants Ram Karan 's son Chhotey Lal (accused) died and on the side of the prosecution Prakash Chandra and his son Umesh Chandra died and Dinesh Chandra (P.W. 11) was grievously injured.
All the five accused were tried and convicted by the Sessions Judge for offences under sections 302/149 I.P.C. (two counts) and 307/149 I.P.C. and were sentenced to imprisonment for life and rigorous imprisonment for four years respectively.
Ram Karan was also convicted under section 147 and sentenced to undergo rigorous imprisonment for one year and his four sons were convicted under section 148 and sentenced to rigorous imprisonment for two years.
In appeal the 396 High Court acquitted Anil Kumar and Satish Kumar, set aside the conviction and sentence under sections 147 and 148 I.P.C. in respect of the rest and confirmed (a) their sentence of life imprisonment by altering the conviction one under sections 302/34 I.P.C. and (b) their sentence of four years rigorous imprisonment to one under sections 307/34 I.P.C. Hence the appeal by special leave by Ram Karan and his two sons.
Acquitting Ram Karan and allowing the appeal of the other two in part, the Court ^ HELD: Having regard to the age of the appellant Ram Karan who was about 70 years old at the time of the occurrence, there is a reasonable doubt as to whether he would have caught hold of the young man Dinesh Chandra (P.W. 11) by his waist and whether he would have asked all his sons to attack and kill Prakash Chandra and his sons.
The appellant Ram Karan is entitled to be set at liberty.
[409 D E] BY MAJORITY Per Fazal Ali, J. (and on behalf of D.A. Desai, J.) 1:1.
Exception 4 to section 300 I.P.C. provides that culpable homicide is not murder if it is committed without pre meditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offenders having taken undue advantage or acted in a cruel or unusual manner.
[399 D] 1:2.
In this case, the incident occurred upon a sudden quarrel and no one took undue advantage or acted in a cruel or unusual manner on either side.
Prakash Chandra and Umesh Chandra on the side of the prosecution died and Chhotey Lal on the side of the accused died and each of them met a homicidal death.
Therefore exception 4 to section 300 Indian Penal Code is clearly attracted and the offence of murder would be reduced to culpable homicide in respect of Sushil Kumar and Ved Prakash and, therefore, they would be guilty of committing on offence under section 304(1)/34 I.P.C. A sentence of rigorous imprisonment for seven years would be appropriate; conviction and sentence under sections 307/34 I.P.C. being in order would run con currently.
[399 B C, G H, 400 A] Per Varadarajan, J. (contra).
Sunil Kumar and Ved Prakash were the aggressors and they have been rightly convicted under section 302 read with section 34 I.P.C. for the offence of murder of Prakash Chandra land Umesh Chandra and under sections 307/34 I.P.C. with reference to P.W. 11.
Neither Exception 2 nor Exception 4 to section 300 I.P.C. would apply to the facts of the case and the offence cannot be brought under section 304 (Part I) I.P.C.
The evidence of P.Ws. 1, 10 and 11 proves beyond reasonable doubt that these two appellants Sunil Kumar and Ved Prakash attacked the deceased Prakash Chandra and Umesh Chandra with knives as a result of which both of them, who had no weapons died on the spot and these two appellants attacked P.W. 11 with knives with such intention that if he had died as a result of the injuries sustained by him they would be guilty of murder in furtherance of their common intention to murder.
Their conviction under section 307/34 is proper.
[408 F H, 409 C D] 397
|
Civil Appeal No. 185 of 1973.
Appeal by special leave from the judgment and order dated the 25th April, 1972 of the Calcutta High Court in Second Appeal being appeal No. 859 of 1969.
Sachendra Chowdhary, section K. Dholakia and R. C. Bhatia for the appellant.
P. Chatterjee and Rathim Das, for the respondent.
The Judgment of the Court was delivered by Goswami, J.
In this appeal by special leave directed against the Judgment of the Calcutta High Court the only question that arises for 106 consideration is whether the respondent is a thika tenant under section 2(5) of the Calcutta Thika Tenancy Act 1949.
On June 1, 1956, the predecessor in interest of the appellants (the latter, hereinafter to be described as the landlord) gave the land with which we are concerned in this appeal to the respondent (hereinafter to be described as the tenant) for occupation as a tenant on a monthly rent of Rs. 75/ for one year.
One of the conditions of the tenancy was that "the premises shall not be used for any purpose other than keeping of the lorries as garage." Another condition of the tenancy was that "the lessee will on the expiration of one year peacefully surrender and yield up vacant possession to the lessor.
" on July 29, 1958, the landlord 's advocate sent a notice of eviction to the tenant to vacate and deliver possession of the land on the expire of August 1958.
The tenant through his advocate by a letter of August 29, 1958, denied liability for eviction asserting that there was no violation of any terms and conditions of the tenancy and since there was refusal to accept the rent by the landlord the tenant had been depositing the rent every month from March 1958 under the provisions of the Calcutta Thika Tenancy Act 1949 (briefly the Act) by which the tenancy was claimed to be governed.
Thereafter a suit was filed by the landlord in the court of the 4th Munsif at Alipore on January 15, 1959.
It is not necessary to trace the history of the litigation covering this long period.
it is sufficient to state that the High Court by its judgment on April 25, 1972, allowed the tenant 's second appeal holding that he is a thika tenant within the meaning of section 2(5) of the Act.
According to the High Court the tenant does not require any consent of the landlord to erect a structure on the land.
The result was that the court of Munsif had no jurisdiction to entertain the suit, the matter being within the cognizance of the Controller appointed under the Act: Mr. Sachin Chowdhary appearing on behalf of the appellants fairly and, if we may say so, rightly confined his argument to the principal question of law as set out above Is the tenant a thika tenant under the Act ? If the answer is yes, the landlord is out of court.
Before we proceed further we may briefly note that the tenant constructed certain structures on the land prior to the institution of the suit in 1959.
Mr. Chowdhary, however, drew our attention to an observation in the judgment of the High Court to the effect that "admittedly the defendant (respondent herein) at his own cost constructed in 1962 structures upon the bare land which he took for the purpose of his business." Since the year of construction had not been particularly agitated in the courts below and there is evidence to show that the construction had commenced from 1957, we are not prepared to give undue importance to this observation about the year of construction mentioned in the judgment.
This is particularly so in view of the fact that the tenant through his lawyer in reply to the notice of eviction asserted in August 1958 that 107 "my client has constructed the structures and has done such other things as are needful for the purpose of the keep in lorries and other vehicles in the garages and making of necessary repairs of the same as well as upkeep and main tenance of the same for carrying on his business in transport service ." Further, even so, although there is a reference to this reply of the advocate of August 29, 1958, in para 8 of the plaint, there is no denial of the construction of the structures as asserted in the said reply.
Being: faced with this factual position Mr. Chowdhary strenuously contended that under section 2(5) of the Act erection of structures by the tenant must be with the permission of the landlord.
In other words, says Mr. Chowdhary the erection should be lawfully done and if the tenant does not establish permission or consent of the landlord in the matter there is no erection in the eye of law within the meaning of section: 2(5) .
We will, therefore, read that section.
2(5): " 'thika tenant ' means any person who holds whether under a written lease or otherwise, land under another person, and is or but for a special contract would be liable to pay rent, at a monthly or at any other periodical rate, for that land to that another person and has erected or acquired by purchase or gift any structure on such land for a residential, manufacturing or business purpose and includes the successors in interest of such person, but does not include a person . " As the definition shows (1) a thika tenant must be a person who holds land under another person; (2) it may be under a written lease or otherwise; (3) there is a liability to pay rent to the landlord but for a special contract to the contrary; and (4) he has erected or acquired by purchase or gift any structure on such land for a residential, manufacturing or business purpose.
The tenant here fulfils the requisite ingredients of the above definition clause.
There is no reference to landlord 's permission or consent for erection of structure by the tenant in the definition clause.
Mr. Chowdhary submits that it is implicit in the definition that in order to be lawful erection of structure the tenant must take prior permission from the landlord.
Counsel further submits that whatever is silent in the Act should be supplemented by reference to the Transfer of Property 108 Act (briefly the T.P. Act).
In this context Mr. Chowdhary draws our attention to section 108(0) of the T.P. Act which may be set.
Out: "the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell or sell timber, pull down or damage buildings belonging to the lessor or work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto." According to Mr. Chowdhary the purpose of the tenancy being that the premises shall not be used for any purpose other than keeping of lorries as garage, construction of structures for the purpose of running a workshop, which is the admitted factual position, would attract section 108(0) of the T.P. Act.
He, therefore, submits that the case is squarely governed by the provisions of the Transfer of Property Act and the court of Munsif had jurisdiction to entertain and decree the suit.
We may, however, note in passing that one of the grounds on which a thika tenant may be ejected under unmended section 3(ii) is that the tenant has used the land in a manner which renders it unfit for any of the purposes mentioned in clause (5) of section 2 or that he has broken a condition consistent with this Act on breach of which he is under the terms of the contract liable to be ejected.
We are unable to agree that the particular condition of the tenancy referred to by Mr. Chowdhary militates against the construction of structures and the use of the land for the purpose of workshop for maintenance of the lorries by the` tenant.
Without being too hypertechnical, ordinarily keeping of lorries as garage would connote the concept of construction of some structures for garaging the lorries.
The Chambers Dictionary gives the meaning of garage as "the building where motor vehicles are housed or tended.
" The Shorter oxford English Dictionary gives the meaning of garage as "a building for the storage or refitting of motor vehicles.
" We are, therefore, unable to accept the submission that even on the terms of the tenancy, as pointed out, the tenant has used the land for a purpose other than that for which it was leased to attract the inhibition of section 108(0) of the T.P. Act.
We are also unable to accede to the contention that section 2(5) of the Act requires a thika tenant under the law to secure prior permission of the landlord for erection of structures on the land.
As the preamble shows the Act is for making better provision relating to the law of landlord and tenant in respect of thika tenancies in Calcutta.
it is a piece of beneficial legislative conferring certain rights upon the tenants.
In dealing with such provision of law we cannot read into the definition some thing which is not already there and the introduction of which will lead to imposing a restriction upon the rights of this class of tenants by judicial interpretation.
This is not permissible in absence of express words to that effect or necessary manifest intendment.
Besides, we do not find any vagueness or uncertainty.
in the definition clause.
The submission is, therefore, of no avail.
109 We are not required to deal with the question whether the structures which stand on the land are permanent or not as this point had not been agitated in the courts below.
But we may in passing notice that in view of section 108(p) of the T.P. Act since the lessee must not, without the lessor 's consent, erect on the property any permanent structure, except for agricultural purposes, the State Legislature has by amending the Act by Act No. 29 of 1969 inserted section 10A conferring a right upon a thika tenant to erect a pucca structure for a residential purpose with the previous permission of the Controller.
We are, however, not required to consider such a question in this appeal.
Mr. Chowdhary also relied upon a contemporaneous letter written by the landlord to the tenant on June 1, 1956, which was found by the courts below to contain interpolation by the tenant with regard to the according of permission to construct structures on the land.
We however, do not think that this would have any bearing on our.
interpretation of section 2(5) .
In the result the appeal fails and is dismissed with costs.
P.H.P. Appeal dismissed.
| The petitioner was carrying on business in diesel oil, an essential commodity, in two places.
He was detained under section 3(1)(a)(iii) of the , on the basis of allegations in two grounds that as had committed sets prejudicial to the maintenance of supplies and services essential to the community.
The allegation in the first ground was that he had stocked a large quantity of light diesel oil in one of the places without waiting for the licence to be cleared by the Chief Controller of Explosives in violation of the provisions of the Petroleum Act.
It was also stated in the ground that a complaint had been lodged in the Magistrate 's court for the offence.
The allegation in the second ground was that the petitioner violated the U.P. Sale of Motor Taxation Act and the rules made thereunder, in that the names and addresses of customers who had purchased light diesel from tho petitioner, had not been given in the cash memos.
Allowing The petition, ^ HELD: (1)(a) There is no allegation by the detaining authority in the first ground that by storing the huge quantity of light diesel oil the petitioner had in any way affected the distribution or sale of that commodity; nor is there any allegation to show that the petitioner had refused to sell the oil to anybody who required it.
Also there is no suggestion, far less any allegation, that the petitioner had tried to divert his ' stocks from one place to the other and thereby deprived the people of one place of their share of the oil.
Therefore, there is absolutely no correlation between the act of the petitioner and the disruption of distribution of essential supplies to the community.
[20D E, F G] (b) From the violation of the mandatory provisions of the Petroleum Act and the Rules made thereunder, no presumption can be drawn that there was disruption of supply of the essential commodity.
[20G H] (c) The commission of an offence at a private place or a violation of a provision or a law by itself does not attract the unless, by the Act committed, the supply or an essential commodity to the community is disrupted or the even flow of the life of the community is disrupted.
[21B] Manu Bhushan Roy Prodhan vs State of Bengal and others, A. I. R. , referred to.
(2) The second Ground does disclose a clear overt act from which an inference can be drawn that the petitioner had made a number of fictitious sales.
But, in view of the finding that the first ground is irrelevant it is not possible to determine to what extent the subjective satisfaction of the detaining authority was influenced or affected by the first ground.
When out of 2 grounds one is ague or irrelevant, then the entire order of detention falls to the ground.
[22C, F G] (3) The Court cannot go behind the subjective satisfaction the detaining authority but such satisfaction does not confer a blanket power which may authorise the detaining authority to act in a ruthless or arbitrary fashion.
Judicial decisions have carved out an area though limited, within which, the subjective satisfaction of the detaining authority, which is a sine qua non for the exercise of the power, can be tested on the touchstone of objectivity.
[24F G] 17 (a) The words "make an order directing that such person be detained" in Section 3 (1) of the Act postulates three conditions: (i) that the order must be made by the authority in the section; (ii) The order must be duly signed by the said authority; and (iii) that only one authority and one authority alone can pass the order of detention.
Therefore, unless the order made and the grounds prepared are signed by the authority concerned, the order is not made as contemplated by the section.
[25F G] (b) Further, since the order is based on grounds to be served on the detenu, he order of detention could be passed only if the grounds are in existence and are prepared contemporaneously, otherwise the order of detention becomes illusory.
[25H 26A] In the present case, the District Magistrate who filed the counter affidavit was acting in place of the permanent District Magistrate.
In the High (court which was moved in the first instance for a writ of habeas corpus, the District Magistrate stated that the order of detention was passed by him after being satisfied of the grounds of detention, that he also framed the draft of the grounds and that the permanent District Magistrate, who took over from him merely signed and served those grounds on the detenu.
But, in this Court he stated that the order of detention was passed by the two detaining authorities, namely, both the District Magistrates, after they had fully satisfied themselves about the existence of the grounds.
It is, therefore.
not possible to determine as to who in fact made the order of detention.
and in view of the contradictory stand taken in the counter affidavits filed by the detaining authorities, the exercise of the jurisdiction to detain the petitioner has not been made with due care and caution or in a proper and fair manner.
[23B 24F] Khudiram Das vs The state of West Bengal and Other, A. 1.
R. 1975 section C. 550, referred to.
The Court also expressed strong disapproval of the careless and irresponsible manner in which the counter affidavit had been filed by the District Magistrate because the date on which reference was made to the advisory Board was in correctly stated in the counter affidavit which created unnecessary confusion and controversy over a simple issue] [18F G]
|
N: Criminal Appeal No. 116 of 1971.
Appeal by special leave from the Judgement and order dated the 27th November, 1970 of the Delhi High Court in Crl.
Appeal No. 35 of 197().
Uma Datta, for the appellant.
Govind Das and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by special leave is directed against a judgment of the High Court of Delhi upholding the conviction of the appellant under section 5(2) read with section 5(1) (d) of the Prevention of Corruption Act and section 161, Penal Code, recorded by the Special Judge, Delhi.
The facts of the prosecution case are as follows: The complainant, section K. Jain, manufactures rubber motor parts in his factory at Shahdara.
On his application, the Delhi Electric Supply Undertaking at Gandhinagar sanctioned a power connection for his factory. 'l` 'he complainant deposited the estimate of expenses under the 9 L839 Sup.
CI/75 350 terms of the sanction.
In spite of it, for a period of four months, no A steps were taken by the employees of the Undertaking to instal the poles and give the connection.
section P. Gupta, an Inspector of the Undertaking approached the complainant and solicited a bribe of Rs. 125/ in consideration of giving the connection.
lt was settled that Rs. 25/ would be paid on June 2(), 1968 and the balance of Rs. 100/ after the electric connection.
The complainant had no intention to pay the bribe.
Consequently, he contacted section K. Katoch, Deputy Superintendent of the Anti Corruption Police on June 20, 1968 at about 1 p.m. and apprised the latter about the demand of the bribe by Inspector Gupta.
The Deputy Superintendent recorded the complainant 's statement, exhibit P.W. l/A.
He then co opted Daya Nand Dua (PW2) and Bharat Prakash Khurana (PW 3), two clerks from the office of the Deputy Commissioner, and formulated a scheme for entrapping Gupta. 'the Police party reached the factory of the complainant at about 3.05 p.m.
The complainant and the Panch witnesses went inside while the Police officers waited outside.
The complainant received a message from Gupta through a Lineman that instead(l of the 20th, he would be coming on the following, day, that the installation of poles at the site had commenced and the complainant would be required to pay more amount.
The complainant conveyed this information to D.S.P. Katoch.
On June 21, 1968, at about 10.15 a.m., Gupta came to the factory, along with his gang of labourers and started the installation work.
Gupta informed the complainant that he would return to the factory either personally or send somebody else to collect the amount of Rs. 100/ at about 2 p.m.
The complainant passed on this information also, to the D.S.P. Thereafter the D.S.P. along with the aforesaid witnesses and others came to the complainant at about 11.30 a.m. and settled the details of the trap.
The complainant produced one currency note of the denomination of Rs. 100/ .
The D.S.P. noted its No. and.returned it to the complainant with the direction that he should pay it to Gupta.
Gupta however did not turn up at 2 p.m.
Instead, the appellant, a permanent labourer working under Gupta, came to the factory and told the complainant that he had been sent by Inspector Gupta and that the money be given to him.
The complainant said that the appellant should send Gupta to receive the money.
The appellant reiterated that he had been deputed by Gupta to collect the money and the same be given to him.
Thereupon the complainant handed over the currency Note of Rs. 100/ (exhibit P l) to the appellant in the immediate presence of P.Ws. 2 and 3.
The appellant put the note in the pocket of his pants.
On receiving the agreed signal, the D.S.P. and his companions rushed in and recovered the currency note (exhibit P l) from the person of the appellant.
The D.S.P. then sent a report to the Police Station on the basis of which a case was registered.
The appellant was arrested.
Subsequently, on 22 6 1968, Gupta was also arrested.
After obtaining the necessary sanction, the appellant and Gupta both were sent up for trial before the Special Judge, Delhi who acquitted Gupta but convicted the appellant and sentenced him to one year 's rigorous imprisonment.
Examined under section 342, Cr.
P.C. the appellant admitted that at the material time he was a permanent labourer (Mazdoor) of the D.E.S.U. 351 working in Shahdara Zone.
He gave this account of the circumstances in which he had received the currency note (exhibit Pl) from the complainant: "At about 12 30, I had come down from the first floor of my office and was going to my house to take my meal in the Hotel.
I was called by Gupta.
He was standing near the boundary wall.
He inquired from mc as to where I was going.
l told him that l was going to take my food.
He directed me that after taking my food I should visit the complainant s factory where the labour was working and told me to ask Jain to pay the money which Guptaji had demanded.
I did not know what sort of money it was and for what purpose it was to be paid by section K. Jain and to be taken by Gupta.
accused.
One Mitter Sell was also present at that time when this talk took place between me and Gupta accused.
I accordingly, after taking my food went to the complainant s factory and checked the work of the labour and then went to the complainant and asked him to pay me the money which had been demanded by Guptaji.
Complainant told me to send Guptaji but I told him that he had asked me to bring the money.
He therefore paid me a, currency note of Rs. 100/ without disclosing anything that this was bribe money to be paid to Gupta co accused.
" He further admitted that soon after the collection of this amount from the complainant, the D.S.P. came there with his party and recovered the same currency note from his possession.
He added that he was only a labourer and was not in a position to show any favour, whatever, to the complainant.
He did not know that the note was bribe money.
He claimed to be all innocent carrier.
In defence, he examined Mitter Sen (DW 1) who corroborated the appellant 's version as to how Gupta had instructed the appellant to collect and bring the money from the complainant.
Two charges, one under section 5(1) (d) read with section 5(2) of the Prevention of Corruption Act and the other under section 161, Penal Code were framed against the appellant.
The charges were in the alternative and it was stated therein that the money was obtained by him either for him self or for Gupta, or for both.
The courts below have convicted the appellant mainly on the ground that proof of receipt of Rs. 100/ (currency note) by the appellant from the complainant raises a presumption under section 4(1) of the Prevention of Corruption Act against him and the appellant has not been able to rebut that presumption.
Section 4(1) of the Prevention of Corruption Act reads: "Wherein any trial of an offence punishable under section 161 or section 165 of the Indian PenaI Code (or of an offence referred to in clause (a) or clause (b) of sub section (1) of section 5 of this Act punishable under sub section
(2) thereof, it is proved that an accused person has accepted or obtained, or 352 has agreed to accept or attempt to obtain, for himself or for A any other person, any gratification (other than legal remuneration or any valuable thing from any person, it shall be presumed unless the contrary is proved that he accepted or obtained, or agreed to accept or attempted to obtain, that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161 or, as the case may be, without consideration or for a consideration which he knows to be inadequate.
" From a reading of the above provision it is clear that its operation, in terms, is confined to any trial of an offence punishable under section 161 or section 165, Penal Code or under clause (a) or (b) of section 5(1) read with sub section (2) of that section of the Act.
If at such a trial, the prosecution proves that the accused has accepted or obtained gratification other than legal remuneration, the court has to presume the existence of the further fact in support of the prosecution case, viz., that the gratification was accepted or obtained by the accused as a motive or reward such as mentioned in section 161, Penal Code.
The presumption however, is not absolute.
It is rebuttable.
The accused can prove the contrary.
The quantum and the nature of proof required to displace this presumption may vary according to the circumstances of each case.
Such proof may partake the shape of defence evidence led by the accused, or it may consist of circumstances appearing in the prosecution evidence itself, as a result of cross examination or otherwise.
But the degree and the character of the burden of proof which section 4(1) casts on an accused person to rebut the presumption raised thereunder, cannot be equated with the degree and character of proof which under section 101, Evidence Act rests on the prosecution.
While the mere plausibility of an explanation given by the accused in his examination under section 342, Cr.
P.C. may not be enough, the burden on him to negate the presumption may stand discharged, if the effect of the material brought on the record, in its totality, renders the existence of the fact presumed, improbable.
In other words, the accused may rebut the presumption by showing a mere preponderence of probability in his favour; it is not necessary for him lo establish his case beyond a reasonable doubt see Mahesh Prasad Gupta vs State of Rajasthan(1).
Another aspect of the matter which has to be borne in mind is that the sole purpose of the presumption under section 4(1) is to relieve the prosecution of the burden of proving a fact which is an essential ingredient of the offences under section S (1) (2) of the Prevention of Corruption Act and section 161, Penal Code.
The presumption therefore can be used in furtherance of the prosecution case and not in derogation of it.
If the story set up by the prosecution inherently militates against or is inconsistent with the fact presumed, the presumption will be rendered sterile from its very inception, if out of judicial courtesy it cannot be rejected out of hand as still born.
Let us now consider the facts of the present case in the light of the principles enunciated above.
The testimony of its star witness, section K. (1) A. I. R. 353 Jain (P.W. 1) is that it was Inspector Gupta who had demanded that money as a motive or reward tor expediting the installation of the power connection and that the money was handed over to the appellant only for transmission to Gupta in pursuance of the latter 's instructions given to the complainant earlier in the morning.
It is not the case of the complainant that the appellant had ever demanded any bribe from the complainant, or that the appellant was present on any occasion on which Gupta had demanded the bribe.
Nor has it been shown by the prosecution that the appellant was in any way officially concerned with the installation of the poles or the giving of the electric connection.
At the material time according to the appellant he was working as a mere labourer or Mazdoor in the first floor of the D.E.S.U. Office at Shahdara.
This fact is not controverted by the prosecution.
Of course, it is in evidence that on coming to the factory of the complainant at about 2 P.M., the appellant first went to see the labour working at the installation site and then went to the complainant to receive the money saving that he has been sent by Gupta to fetch it.
Mr. Gobind Das, the learned Counsel for the State contends that this conduct of the appellant in checking the labour, showed that he was not an innocent carrier of the money for Gupta but knew that it was being obtained as a bribe in connection with the installation of the power connection.
In any case, maintains the Counsel the appellant was guilty of abetment of an offence under sec, 161 Penal Code and section 5 of the Act.
We are unable to accede to this contention.
In our opinion, this Act of the appellant was a neutral circumstance.
It was not indicative of a guilty mind.
The appellant explained that he had checked the labour working at site because he had been asked to do so by Inspector Gupta.
This conduct of the appellant, therefore, was no ground to hold that he had received the G.C. Note of Rs. 100/ with the requisite mens rea.
Evidently in collecting this currency note from the complainant he was Acting only as an innocent tool of Gupta.
He was a mere labourer.
Even in that humble position, he was not a member of the gang working at the installation site in the factory of the complainant.
He was not concerned ill his official capacity with the installation work or the giving of power connection.
Being an unconcerned menial, he was incapable of showing any favour or rendering any service to the complainant in connection with his official duties.
One of the essential ingredients of the offence under section 161, I.P.C. with which the appellant stands charged is, that the gratification must have been received by the accused as "a motive or reward" for committing an act or omission in connection with his official functions.
lt must be shown that there was an understanding that the bribe was given in consideration to some official act or conduct.
It is true that in law the incapacity of the government servant to show any favour or render any service in connection with his official duties does not necessarily take the case out of the mischief of these penal provisions.
Nevertheless, it is an important factor bearing on the question as to whether the accused had received the gratification as a motive or reward for doing or for hearing to do any official act or for showing any favour or disfavour in the exercise of his official functions.
This question as to whether the government servant receiving the money 354 had the requisite incriminatory motive is one of fact.
Could it be reasonably said in the circumstances of the instant case that the money was handed over to the appellant or received by him as a motive or reward such as mentioned in section 161, Penal Code ? It is nobody 's case that while collecting the sum of Rs, 100/ , the appellant made any representation, claim or promise, whatever, that he would either himself or through Gupta get an official act done for the complainant.
Indeed, a prudent businessman like Jain would never pay such a substantial amount as a bribe to a mere Class IV servant in consideration of any promise of favour or service held out by the latter.
Such a tall claim or promise to do favour or service by a menial would be manifestly quixotic.
It would not pass muster.
Indeed the complainant did not hand over the money till he after repeated enquiry, was convinced that the appellant was asking for money not for himself but for Gupta and had been sent by the latter to collect an(l fetch it from the complainant.
The conduct attributed by P.W. 1 to the appellant was not incompatible with the role of an innocent carrier.
Thus, paradoxical as it may seem, the very story propounded by the complainant (P.W. 1) negates the presumption, nipping it as it were in the bud.
Be that as it may this statutory presumption being antithetical to the prosecution story, could not be availed of by the prosecution.
This being the position, the appellant could not be held guilty of the charge with the aid of section 4(1) of the Act.
Nor can the appellant be held guilty of abetting the alleged attempt made by Gupta to obtain the illegal gratification.
Intention to aid The commission of the crime, is the gist of the offence of abetment by aid.
Such intention, on the part of the appellant was lacking in this case.
Moreover, Gupta, the principal, has been acquitted and exonerated of committing the offending act, the commission of which is alleged to have been aided by the small fry, the appellant.
The charge under section S (1) (d) of the Act also cannot be sustained for the reason that in the peculiar circumstances or the case, it could not be reasonably said that the appellant had obtained the currency note by using some corrupt or illegal means or otherwise abusing his official position as a public servant.
This point was canvassed on behalf of the appellant before the High Court but was negatived by it in these terms: "In this case the appellant had told the complainant that he had been sent by Inspector Gupta and that he should pay the money.
It has been held by the Special Judge while acquitting Inspector Gupta that he was not the person who had sent the appellant to collect any money from the complainant.
Before contacting the complainant the appellant had checked the labour which was working in the factory for installation of the lines for electricity.
All this showed that he represented himself to the complainant as a person connected with the Department concerned.
He also used corrupt means to ask the money on behalf of Inspector Gupta and thus this ingredient was satisfied.
" We find ourselves unable to agree with this reasoning.
We have already noticed above that this was not the case of the prosecution? as 355 put in evidence, that the appellant had demanded the money on his own account by any express or implied representation to get any favour or service done to the complainant.
Rather, the positive case set up by the prosecution in evidence was that the money was demanded by Gupta and was received by the appellant on his behalf pursuant to the instructions of Gupta given to the complainant earlier.
Therefore, if the prosecution has failed to prove that the money had not been paid to the appellant pursuant to any demand of bribe made by Gupta, the court cannot make out a new case for the prosecution to hold that the amount had been received by the appellant on his own or for some person other.
than Gupta.
We have already held that the appellant was a mere labourer who was not concerned with the installation work at the site or with the giving of the power connection to the complainant.
In view of the categorical position taken by the prosecution in evidence, it does not now lie in their month to may that the appellant must have received the money for himself or for some other person; much less can it be said that the appellant has abused his official position or has used any illegal means in acting as an innocent carrier for Gupta.
Thus, the essential ingredient of the offence under section 5(1) (d) was lacking in this case.
We are therefore of the opinion that on the facts of this case, the prosecution had failed to bring home the charges to the appellant beyond a reasonable doubt.
Accordingly we allow this appeal, set aside the conviction of the appellant and acquit him of the charges levelled against him.
V.P.S. Appeal allowed.
| The respondents were small land owners within the meaning of Punjab Securrity of ' Land Tenures Act, 1953.
The respondents, later on inherited certain lands which together with the lands already held by them exceeded the ceiling area.
The respondents, therefore, ceased to be small land owners.
The respondents thereafter divested themselves of the excess lands by executing gift deed, mortgage with possession and pursuant to decrees passed in favour of their near relations.
The Collector after investigating into the matter declared the lands in excess of the ceiling area as surplus lands and ignored the subsequent transfers.
An appeal filed by the respondents was rejected by the Commissioner.
Respondents Revision Applications to the Financial Commissioner were also rejected.
The respondents thereafter filed Writ Petitions in the High Court.
The High Court allowed the Writ Petitions holding that section 19B read with section 10A did not affect the transfers made by the respondents.
According to High Court the transfers affected during the period prescribed for filing returns are valid since they were consistent with the scheme of ' the act which requires that no one should hold land in excess of permissible limits.
Section 2(2) of the Act defines small land owner as a person owning less than certain area of land.
Permissible area is defined limiting the maximum permissible extent a person may hold land.
So long as a person does not hold lands in excess of permissible area he is a small land holder.
He can evict his tenants from the holding and be in actual enjoyment as provided by the Act.
If any person has lands beyond the permissible area he becomes a large land owner and he has to surrender the excess land after choosing the best area he desires to keep.
Such excess land goes to the surplus pool which is distributed for the rehabilitation of ejected tenants and landless persons.
The Act was amended by inserting section 10A and Section 19B with retrospective effect.
Section 10A provides that for the purpose of determining the surplus area of any person any judgment, decree or order of a Court or authority contained after the commencement of the Act and having the effect of diminishing the area of such person which could have been declared as his surplus area shall be ignored.
Section 19B provides that if after the commencement, of the Act any person whether as land owner or tenant acquires by inheritance or by bequest or gift from a person to whom he is an heir or if any person after the commencement of the Act acquires in any other manner any land and which with or without the lands already owned or.
held by him exceeds in the aggregate the permissible area such a person is required to file a return with the Collector in the prescribed form giving the necessary particulars and selecting the land not exceeding the permissible area which he desires to retain.
The section further provides that the surplus land in excess of the permissible area would be distributed among the tenants who are evicted or landless persons.
On an appeal by certificate under Article 133(1)(c) in one appeal and in an appeal by Special Leave in another allowing the appeals held ^ 1.
Land reform is so strategic that special constitutional concern has been shown for this programme.
The State naturally enacted the Act whereby ceiling on land ownership was set.
surplus lands were taken over for settling ejected tenants and others.
If constitutionally envisioned socio economic revolution is 627 not to be a paper tiger, agrarian lands have to be meaningfully enacted, interpreted and executed and the Court is not the anti hero of the Drama of limping land reform.
The decision of this Court in Amar Singh 's case A.I.R. , 996 followed.
[628 B C 631 A] 2.
It is settled law that Courts should favour an interpretation that promotes the general purpose of an Act rather than one that does not.
[634 E] 3.
The agrarian reform laws with special constitutional status, as it were warrant interpretative skills which, will stiffle the evasive attempts, specialty by way of gifts and bequests and suspect transfers.
[635 C D] 4.
The profound concern of the law to preserve the surplus stock is manifest from the obligation cast by section 19B to declare and deliver excess lands.
The agrarian policy is equitable ownership and the reform philosophy is redistributive justice, the rural goal being small peasant proprietorship.
What difference does it make as to how you came by a large holding from the standpoint above outline ? The thrust of section 19B is that even if the source of the excess area is inheritance.
bequest or gift the capacity to own is conditioned by the permissible limit.
Section 10A does not militate against the mandate of section 19B.
Section 19B had to be enacted because the High Court took the view that the area which became surplus subsequent to the commencement of the Act was not hit by the ceiling and land acquired by an heir by inheritance is saved from utilisation by the State.
[633H 634A C] 5.
The reasoning of the High Court that the scheme of the Act was that no one should held land in excess of the permissible area and since after the transfers the land held by the respondent was within permissible limits there was no frustration of the policy of the law is repugnant to the basic scheme because the Surplus pool would be adversely affected if gifts and other transfers which would skim off surplus were to be allowed.
A legislation which has provided for ignoring decrees diminishing surplus lands and has otherwise prevented the escape of excess area by voluntary transfers cannot conceivably be intended to permit inherited excesses.
[634 F G] 6.
The further reasoning of the High Court that since section 19B gives to the owner who by inheritance comes to own an excess area.
a certain time for making a declaration, that during this period land owner can effect transfers, is obviously absurd.
What is intended to give some time to the heir to ascertain the assets he has inherited, make the choice of his reserved area which he likes to keep and make the necessary declaration.
The processual facility cannot be converted into an opportunity to prevert and thwart the substantive object of the law.
After all courts faced with special case situations, have creatively to interpret legislation [634 H; 635 A B]
|
94 of 1955.
Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights.
643 Bishan Narain, Rameshwarnath, section N. Andley and P. L. Vohra, for the petitioner.
H. N. Sanyal, Additional Solicitor General of India, N. section Bindra and P. D. Menon, for the col respondents.
August 20.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is a petition under article 32 of the Constitution challenging the imposition of Excise Duty on the petitioner by virtue of item No. 17 "Footwear" of the First Schedule to the (1 of 1944) with effect from February 28, 1954, and the calculation of the duty advaloram by including in the price, charges for freight, packing and distribution.
The petitioner, the British India corporation Ltd. is a public limited company which was formed to take over other companies and to amalgamate them.
Among the companies which the petitioner took over were Cooper Allan & Company Ltd., and the North West Tannery Company Ltd., b )that Kanpur.
These two Companies manufature shoes and other leather goods and operate as a single unit manufacturing the well known brand of "F L E X" shoes.
As a result of the financial proposals of the Central Government for the financial year 1952 55, a bill (No. 9 of 1954) was introduced in parliament on February 27,1954.
Under el. 8 of the Bill foot wear were proposed to be taxed at 10% advaloram if produced in any factory as defined in the factories Act, 1948 (63 of 1948).
When the Finance Act, 1954 (17 of 1954) was enacted, the Central Excises and Salt Act, 1954, was amended by the inclusion of item 17 in the Schedule, though in a slightly different form.
The item as finally enacted read as follows: 644 "17.
FOOTWEAR, produced in any factory including the precints thereof whereon fifty or more workers are working or were working on any day, of the preceding twelve months, and in any part of which manufacturing process is being carried on with the aid of power or is ordinarily so carried on, the total equivalent of such power exceeding two horse power.
"Footwear" includes all varieties of footwear,whether known boots shoes, sandals, chappals, or by any other name." {Ten percent "advalorem"} Under the provisions of the , (XVIof 1931), the duty was leviable from February 28, 1954, by virtue of a declaration in the Bill to that effect.
On the preceding day the Superintendent of Central Excise., Kanpur, deputed an Inspector of his department to obtain from the petitioner a declaration of all stock of footwear and requested that the Inspector be permitted to verify the stocks with a view to levying the Excise Duty on and from February 28, 1954.
As a ' result of the position of Excise Duty on footwear the petitioner was required to pay during the remaining ten months of 1954 a sum of RE;.
9,47,630/ as Excise Duty.
The petitioner produces in the two units above named, footwear for sale to the public and for supplies to the Government for the use of the Army and the Police.
The petitioner contends that though the Excise Duty paid by it was capable of being passed on to the consumer, it could not include it in the price at which shoes were sold to the public because of heavy competition by those free from such duty , though it did include the Excise Duty in the price of the footwear supplied to Government.
Thus Rs. 2 lacs odd were passed on to Government but Rs. 7 lacs odd were born 645 by the Company itself.
The petitioner contended before the Collector of Central Excise, Allahabad, that the calculation of the duty advalorem should not be, based on price including freight, packing and distribution charges paid to it, by its distributors in the outlying parts of India.
This contention of the petitioner was not accepted by the Collector.
The petitioner then took an appeal to the Central Board of Revenue but before the appeal could be disposed of, the petitioner filed this petition under Art, 32 of the Constitution praying for writ or writs to quash the order of the Collector of Central Excise, Allahabad, and writ or writs to prohibit Union Government.
The Central Board of Revenue and the Collector and Superintendent of Central Excise from enforcing the provisions of item 17 against petitioner and collecting the Excise Duty therein levied.
According to the petitioner, a distinction has been made in Item 17 above quoted between manufacturers of footwear employing more than 50 workers .or carrying on the manufacturing process with the aid of power exceeding 2 H.P. and other manufacturers.
According to the petitioner this amounts to discrimination because there is no reasonable basis for differentiating between manufacturers on the basis of number of workers or the employment of power above 2 H.P.
The petitioner contends that the essentials of the manufacture of footwear are the same whether one employs 50 or more workers or less.
The larger number of workers is merely needed because the out turn has to be greater but the number does not change the nature of the operations or the method of production.
Similarly, the need for than 2 H.P. arises if a larger number of mechanical units have to be worked and there is no essential difference between a large manufacturer 646 and a small manufacturer by reason of the employment of more power or less.
It is, therefore, contended that the imposition of Excise Duty on bigger manufacturers creates a discrimination in the trade which is neither just nor discernible and amounts to a violation of article 14 of the Constitution.
The levy of the Excise Duty in such circumstances is said to be both illegal and unconstitutional.
As a corrolary to this it is contended that the petitioner, which was already carrying on its business at a loss in view of the competition, is now further handicapped by having to bear a heavy Excise Duty which it cannot pass on to the consumer due to competition by those not paying the duty and is likely to go out of its business and that the levy of the Excise Duty in these circumstances amounts to a breach also of Art . 19 (1) (f) and (g) and 31 of the Constitution.
It is further contended that the duty advalorem ought to be calculated on the ex factory price and not on the price charged to the distributors which includes within itself the cost of packing and charges for freight and distribution commission.
It is contended that this is an error apparent on the face of the order of the Collector of Excise and the order deserves to be quashed by the issue of ' writ of certiorari or other appropriate writ.
Lastly, it is contended that the Finance Act, 1954 received the assent of the president on April 27, 1954, and must be deemed to have become law ,from that date.
The collection of Excise Duty from March, 1954, before the Finance Bill became law, is said to be illegal.
We shall deal only brie fly with these arguments as most of them have by now been considered and decided in other cases of this Court.
647 The contention that this duty does not amount to a duty of excise because it cannot be passed on by the petitioner to the consumer was not raised before us.
It was mentioned in the petition.
An Excise Duty is a duty on production and though according to the economists, it is an indirect tax capable of being passed on to the consumer as part of the price yet the mere passing on of the duty is not its essential Even if borne.
by the producer characteristic.
or manufacturer it does not cease to be a duty of excise.
The nature of such a duty was explained in the very first case of the Federal Court and subsequently in others of the Federal Court, the Privy Council and this Court, but this ground continues to be taken and we are surprised that it was raised again.
The contentions that the duty could not be collected before the passing of the Finance Act, 1954, has been the subject of an elaborate discussion in the recently decided case of this Court, M/s. Chotabhai Jethabhai Patel and Co. vs Union of India (1).
It is conceded that in view of the above decision the point is no longer open.
It is also conceded that the question whether in calculating the duty advalorem, the Collector of Excise was justified in including in the price the cost of packing, charges for freight and commission for distribution, or not, is a matter for the decision of the authorities constituted under the Act subject to such appeals and revisions as might lie but not a matter for consideration directly under article 32 of the constitution, in view of the recent decision of this Court in Smt.
Ujjam Bai vs State of U.P. (Civil Misc.
Petition No. 79 of 1959) decided on April 10, 1962.
It may be pointed out that the present petition was filed at a time when the appeal before the (1) (1962) Supp. 2 S.C.R. 1.
648 Board of Revenue was pending and there was a further right of revision to the Central Government.
This leaves over for consideration true challenge under article 14, 19 and 31 of the constitution.
The argument under each of these Articles is based on precisely the same facts viewed from different angles.
It is.
contended that there is a discrimination between big manufacturers of footwear and small manufacturers which is not based on any differential.
This discrimination, it is said, leads to the imposition of a heavy tax on the big manufacturers with a corresponding exemption in favour of the small manufacturers giving rise to a competition sufficient to put the big manufacturers out of the market.
The tax being illegal the levy amounts to a confiscation of the property of the petitioner.
It will thus be seen that the imposition of the duty is first challenged article 14 as a discrimination, next it is challenged under Article 19 as a deprivation of the right to acquire, hold and dispose of property or to carry on a business or trade and lastly the collection 'of duty is characterised as a confiscation of property without the authority of law under article 31.
The argument suffers from a fundamental fallacy in that it assumes that there can be no classification of manufacturers on the basis of the number of workers or the employment of power above a particular horse power.
Manufacturers who employ 50 or more workers can be said to form a well defined class.
Manufacturers whose manufacturing process is being carried on with the aid of power exceeding 2 H.P. are also a well defined class.
Legislation of this type depending upon the number of workers or the extent of power employed, is frequently to be found.
The most obvious example is the Factories Act which defines a factory with reference to the employment of a certain number of 649 workers or the employment of power.
The contention that size makes no difference is not valid.
It is well known that the bigger manufacturers are able to effect economics in their manufacturing process and their out turn being both large and rapid they are able to undersell am all manufacturers.
If this were not so mass production would lose all its advantages.
No doubt the manufacturers are now required to bear burdens which previously did not exist, like bonus, expenses on labour welfare etc.
but still the manufacturers, provided the business is well ran, can by mass production offer the same commodity at a competitive price as against small ' manufacturers and bear the burden as well.
Therefore, in imposing the Excise Duty, there was a definite desire to make an exemption in favour of the small manufacturer who is unable to pay the duty as easily, if at all, as the big manufacturer.
Such a classification in the interests of co operative societies, cottage industries and small manufacturers has often to be made to give an Impetus to them and save them from annihilation in competition with large industry.
It has never been successfully assailed on the ground of discrimination.
Recently, this Court in the Orient Weaving Mills (P) Ltd. vs The Union of India(1) considered a similar argument in relation to an exemption granted to societies working a few looms on co operative basis as against big companies working hundreds of looms.
exemption was held to be constitutional and the classification of co operative societies was held to be reasonable.
A similar consideration applies in the present case, where the exemption operates in respect of very small manufacturers employing not more than 50 workers and carrying on their manufacturing process with power not in excess of 2 H.P. This affords a protection to small concerns who, if they were made to pay the duty, would have to go out of business.
(1) (1962) Supp.
3 S.C.R. 481.
650 In our judgment the Schedule which is characterised as discriminative is based upon a reasonable classification and is validly enacted.
If the law is held to be valid the attack under articles 19 and 31 must also fail.
In view of what we have said above the petition must fail.
It will be dismissed with costs.
Petition dismissed.
| Under item No.17 of the Schedule to the , excise duty was levied on footwear produced in any factory employing 50 or more workmen and using power exceeding 2 H.P.
The petitioner contended that the imposition of duty on larger manufacturers only was dis criminatory and there was no reasonable basis for differentiating between manufacturers on the basis of number of workers or the employment of power above 2 H.P. and that the im. position of the heavy duty gave rise to a competition sufficient to put the big manufacturers out of business.
Held, that item 17 of the Schedule is based upon a reasonable classification and is validly enacted.
Manufacturers who employed 50 or more workers form a well defined class, so also manufacturers who.
use power exceeding 2 H.P.
In imposing the excise duty there is a definite desire to make an exemption in favoui of the small manufacturer who is unable to pay the duty as easily, if at all, as the big manufacturer, Such a classification in the interests of co operative societies cottage industries and small 'manufacturers has often the made to give an impetus to them and save them from annihilation in competition with large industry.
Orient Weaving Mills (P) Ltd. vs Union of India, (1962) Supp.
3 S.C.R .
481 referred to.
|
ivil Appeal No. 2842 of 1982.
From the Judgment and Order dated 1.10.1981 of the Madras High Court in Appeal No. 516 of 1977.
C. Seetharamiah, P. Krishna Rao and K.R. Nagaraja for the Appellant.
section Balakrishnan for the Respondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This defendant 's appeal by special leave is from the Judgment of the High Court of Judicature at Madras dated 1.10.1981 passed in Appeal No. 516 of 1977 dismissing the appeal and affirming the decree in O.S. No. 7667 of 1975.
The respondent Industrial Chain Concern as plaintiff filed Original Suit No. 7667 of 1975 in the City Civil Court, Madras for recovery of Rs.26,383.49p.
together with interest and costs, being the total amount of loss sustained by it on account of the alleged negligence and conversion on the part of the defendant Indian overseas Bank having its central office at 151, Mount Road, Madras 2, hereinafter referred as 'the Bank ', by negligently allowing one Sethura man, Manager of the plaintiff firm at Madras to open a 'fictitious account ' in the name of 'Industrial Chain Con cern ' as its proprietor and helping him to pay in stolen drafts and cheques drawn in favour of the plaintiff and collecting the same and paying to Sethuraman the proceeds thereof and closing the account thereafter.
It was the case of the plaintiff that it was doing extensive business in Steel Roller Chains and Sprockets with leading industries and Government undertakings.
Its head office was situate at 36, Linghi Chetti Street, Madras 1.
It had supplied goods to seven parties who sent to it drafts and cheques in its 31 name amounting to Rs.26,383.49 and those drafts and cheques had been received by Sethuraman, its Manager, who after opening the 'fictitious account ' in the Bank 's Nungambakkam Branch paid in the stolen drafts and cheques and the Bank collected those and allowed Sethuraman to withdraw the same defrauding the plaintiff.
The plaintiff averred that the Bank was negligent and guilty of conversion in opening of the account, collection of the cheques and drafts and allow ing Sethuraman to withdraw the same and therefore, it was liable to make good the plaintiff 's loss.
The appellant Bank as defendant resisted the suit con tending, inter alia, that it was not negligent in allowing Sethuraman to open the account inasmuch as approaching the Bank Sethuraman represented that he, as proprietor, had started a firm under the name and style of "Industrial Chain Concern" and proposed to open an account in that name.
Since the Manager of the Bank at Nungambakkam Branch was erstwhile classmate of Sethuraman he (the Manager) knew him and gave the introduction relying on which the current account was opened and after opening the account, which was a real account and not a 'fictitious account ' as alleged, various cheques and drafts had been paid into the account by the customer for collection and the Bank in good faith and without negligence, in course of its business, collected them and credited the account and Sethuraman as customer withdrew money from his account, and that neither at the time of opening the account for at the time of paying in and collection of the cheques, nor at the time of allowing money to be withdrawn there was anything to arouse any suspicion regarding the bona fides of the representation made by Sethuraman.
Later on the customer having expressed a desire to close the account because, as he said, he was winding up his business, the account was closed.
There was, therefore, no negligence on the part of the Bank acting in good faith and it was not liable for conversion.
At the trial the plaintiff firm examined its Manager D.R. Murthy (PW 1) while the defendant Bank also examined its Manager S.P. Muthukrishnan (DW 1).
The trial court decreeing the suit held that the defendant Bank had acted in good faith but not without negligence in opening the account and operating the same and in the process of collection of the cheques and drafts and it was not entitled to invoke the protection of section 131 of the Negotiable Instruments Act and, consequently, it was liable to make good the loss with interest as claimed by the plaintiff.
The Bank having ap pealed therefrom, the High Court agreed with the findings of the trial court and dismissed the appeal.
32 Mr. C. Seetharamiah, the learned counsel for the appel lant submits, inter alia, that the finding of the courts below that the defendant Bank was negligent in opening the account is contrary to law inasmuch as there were no circum stances antecedent or present to arouse any suspicion and there was no obligation on the part of the Bank to compare and verify the name and address given by Sethuraman as proprietor, industrial Chain Concern with the address of the then existing plaintiff 's firm of the same name; that the High Court 's finding that tile Bank was negligent in clear ing the amounts of the cheques is equally contrary to law inasmuch as there was nothing ex facie to put the Bank on guard and there was no warning or indication of defective title on the race of the cheques and drafts to arouse suspi cion of the Bank and it was not necessary for it to make thorough enquiry about the cheques and drafts to have been entitled to invoke the protection of section 131 of the Negotiable Instruments Act: and that even assuming, but not admitting that the Bank was negligent, the plaintiff itself contributed to it by entrusting Sethuraman to receive the cheques and drafts and to deal with them for a long time and that even when the complaint was made to Deputy Commissioner of Police on 19.2.1975 it was about two cheques only, and there was still no complaint about other cheques and drafts.
The first question to be decided, therefore, is whether the Bank was negligent in opening the account in the name of Sethurarman, as proprietor, Industrial Chain Concern.
Mr. section Balakrishnan, for the respondent, defends the High Court 's Judgment.
Evidence of DW 1 Muthukrishnan, Manager of the Bank at the relevant time is that the account was opened by Ext.
B 1, the Account Opening From, on 3.10.1974 by Sethuraman under the title Industrial Chain Concern, the sole proprie tary concern.
It was signed by Sethuraman for Industrial Chain Concern with a rubber stamp as proprietor.
Muthukrish nan, DW 1 deposed: "This account was opened by R. Sethuraman under the title Industrial Chain Concern sole proprietary concern.
Sethuraman is the sole proprietor.
Before that date I knew Sethura man.
He was my college mate in 1955 57 in Vivekananda College.
I was meeting him in social gathering.
When he went to open an account, he represented that he had just started as commission agent under the name and style of Industrial Chain Concern as sole proprietary concern.
He wanted to open an account with Overdraft facility.
I declined his request for overdraft because he himself stated that he had just started commission business.
I 33 was able to identify him as the college mate and to open his account I have signed the introduction in my personal capac ity . . .
It was an ordinary current deposit account.
The introduction given by me was in the normal course of bank ing business.
Before opening account, he showed me some business correspondence and orders.
Some of the orders were placed by India Sugars and Refineries and Madras Ferti lisers.
At that time there was nothing to show that the Industrial Chain Concern was not a proprietary concern or that Sethuraman was an employee of the firm.
He opened an account with cash deposit of Rs. 100 as he described himself as a proprietary concern and as he just then started the business and as I did not grant loan facility there was no occasion for calling credit reports from other bankers.
There was normal operation of the account.
Cheques given in the name of the concern were deposited in the account and after realisation they were withdrawn.
" Comparing the statement of Account and Ext.
B1 with the above evidence there is nothing to doubt this witness.
He denied that at any stage the Bank had acted with negligence or without good faith or that there was no proper introduc tion for opening an account.
He clearly said that the ad dress given in Ext.
B1 was Nallathambi Mudali Chetti Street and that he knew the location and it was far away from Nungambakkam.
That was the place of business of Sethuraman mentioned at the opening of account and the Mount Road Branch of the defendant Bank was the nearest Branch for that place.
Opening of an account by Sethuraman with a trading place at Nallathambi Street with Nungambakkam Branch oc curred to him as unusual but it did not create any suspicion as he asked Sethuraman why he wanted to open an account in Nungambakkam Branch and Sethuraman replied: "I am a commis sion Agent.
I want overdraft facility.
Your are the only agent known to me and that is why I have come to Nungambak kam Branch.
" DW 1 also said that in opening the Current Account he glanced through the order and correspondence shown to him by Sethuraman regarding supplies but he did not check up the address given in the correspondence by these companies in the name of the Industrial Chain Concern.
He denied that he had not checked up the business credentials for the account to be opened in the name of the business concern and that he was negligent in that aspect.
He said: "I declined overdraft facility.
That itself shows that I was not negligent.
Once I declined overdraft facility it did not strike me to refer Sethuraman to the nearest branch from his trading place.
I did not refer him to the 34 Mount Road Branch.
I suggested he can go to the Mount Road Branch.
He came with another request that his overdraft application might be considered after the period of about one year, after his business had improved.
Therefore, he wanted to open an account in Nungambakkam Branch.
" Both Courts below held that the Bank acted in good faith.
We agree.
The question is whether the Bank could be held to have been negligent while opening the account.
It is, however, necessary to bear in mind that this question is often associated with the question of negligence in collecting cheques, etc.
for the customers paid into the account.
This is because till an account is opened no bank er customer relationship exists between the bank and the person proposing to open an account.
Once the account is opened, that relationship is created and with it mutual rights and obligation between the banker and the customer are created under law.
Opening an account by cash is a little different from opening an account by a cheque as in that case the Bank has to act according to the tenor of that instrument and its collection and payment involves the Bank 's duty owed to its real owner if the proposer happens not to be its real owner.
Even when an account is opened by depositing cash but so soon after the opening of the account any cheque is paid into it as to make it part of the same transaction with the opening, the same duty may be implied by law.
What is the standard of care to be taken by a Bank in opening an account? In the Practice and Law of Banking by H.P. Sheldon, 11th Edition, in Chapter five at page 64 it is said: "Before opening an account for a customer who is not already known to him, a banker should make proper preliminary inquiries.
In particu lar, he should obtain references from respon sible persons with regard to the identity, integrity and reliability of the proposed customer.
If a banker does not act prudently and in accordance with current banking prac tice when obtaining references concerning a proposed customer, he may later have cause for regret.
" M.L. Tannan in Banking Law and Practice in India, 18th Edition at page 198 says: "Before opening a new account, a banker should take certain precautions and must ascertain by inquiring from the person wishing to open the account, if such person is unknown to the banker, as to his profession or trade as well as the nature of the account he proposes to open.
By mak 35 ing necessary inquiries from the references furnished by the new customer, the banker can easily verify such information and judge whether or not the person wishing to open an account is a desirable customer.
It is neces sary for a bank to inquire, from responsible parties, given as references by the customer, as to the latter 's integrity and respectabili ty, an omission of which may result in serious consequences not only for the banker con cerned, but also for other bankers and the general public.
" One of the tests of deciding whether the Bank was negli gent, though not always conclusive, is to see whether the Rules or instructions of the Banks were followed or not.
We may accordingly consult those instructions.
B6 contains the general instructions regarding constituent accounts for bank.
Mark II deals with opening of accounts.
It says: "Except at large branches where the sub agent or accountant may be authorised to open Cur rent Accounts, no new Current Account shall be opened without the authority of the agent manager who is solely responsible for all Current Accounts being opened in the proper manner.
A written application on the appropri ate form must be submitted and will be init ialled by the agent at the top left corner after he has satisfied himself of the respect ability of the applicant(s).
It is important that every party must be introduced to the Bank by a respectable person known to the Bank, who must normally call at the Bank and sign in the column specially provided for the purpose in the account opening form.
In all cases his signature must be verified with the specimen lodged and attested.
The agent or accountant may introduce constituents to the Bank provided they are known to him personally and in such cases he should sign the applica tion form at the appropriate place in his personal capacity.
When the introduction of any other member of the staff is accepted, the agent must invariably make independent inquiry and record his findings on the account opening form for future reference if the need arises . . " Mark IV deals with accounts of proprietary concerns.
It says: "An individual trading in the name of concern should fill in form F.S. 5 and sign it in his personal name and also affix his signature on behalf of the concern as proprietor in the space provided.
" 36 if the Banker was negligent in following up the references given at opening of account and subsequently cheques etc. are collected for the customer paid into that account and those happened to be of someone else the Bank may be liable for conversion, unless protected by law.
In the instant case, Sethuraman having been known to the Manager who gave the introduction, there was no violation of any instruction or Rules.
It was held in Commissioner of Taxation vs English Scottish and Australian Bank, , that a negli gence in collection is not a question of negligence in opening an account, though the circumstances connected with the opening of an account may shed light on the question whether there was negligence in collecting a cheque.
In Ladbroke & Co. vs Todd, , the plain tiff drew a cheque and sent it to the payee by post.
The letter was stolen and the thief took it to the defendant, a banker, and used it for the purpose of opening an account for the purpose of which he forged the payee 's endorsement.
The defendant accepted believing him to be the payee.
He was not introduced to the Bank and no references were obtained.
The defendant opened the account and the cheque was special ly cleared at the request of the thief, and he drew out the proceeds on the next day.
On the discovery of the fraud the plaintiff brought an action against the defendant for con version.
One of the main questions raised was whether the account having been opened by payment in all the cheques to be collected the defendant could be properly regarded as having received payment for a customer.
It was held that as account was already opened when the cheque was collected, payment had been received for a customer.
The drawer there upon sent another cheque to the real payee and took an assignment of his rights in the stolen cheque and, as hold ers of the cheque or alternatively as assignees, brought an action against the bank to recover the proceeds collected by the bank as money had and received to their use.
Evidence was given that it was the general practice of bankers to obtain a satisfactory introduction or reference.
It was held that the banker had acted in good faith, but was guilty of negligence in not taking reasonable precautions to safeguard the interests of the true owner of the cheque and that therefore he had put himself outside the protection of section 82 of the Bills of Exchange Act, 1882.
Bailbache, J. also said that the banker would have been entitled to the protection of the section as having received payment for a customer, but had lost it owing to his want of due care.
It was also held that the relation of banker and customer began as soon as the first cheque was handed in to the banker for collection, and not when it was paid.
37 In Turner vs London and Provincial Bank, [1903] 2 Legal Decisions Affecting Bankers 33, evidence was admitted as proof of negligence, that the customer had given a reference on opening the account and that this was not followed up.
In the instant case there was no question of a reference inasmuch as the Manager himself knew Sethuraman and gave the introduction.
The account was not opened by depositing any cheque but by depositing case of Rs. 100.
The first cheque was paid into the account later and there is nothing to show that it formed part of the same transaction.
No particulars have been proved as to the tenor of that cheque.
The Manager made several inquiries which in the facts and circumstances of the case, in our view, were sufficient, for it is an accepted rule that the banker may refrain from "making inquiries which it is improbable will lead to detection of the potential customer 's purpose if he is dishonest and which are calculated to offend him and may drive away his customer if he is honest," Marfani & Co. vs Midland Bank, (582).
Except when circumstances of a case so justifies, in making inquiries the banker 's attitude may be solicitous and not detective.
Sethuraman was believed when he said that he was the proprietor of Industrial Chain Concern which he recently started.
He showed some orders and references in proof of his business.
The banker believed in existence of his business but did not meticulously examine the addresses.
Sethuraman was asked as to why he wanted to come to that branch and his reply was that he expected there to have overdraft facility and when that was refused he expressed that after his business improved he would expect to be granted overdraft facilities after one year.
There is no doubt that Sethuraman was a rogue, but he prepared the plan intelligently and the banker in good faith believed in his statements.
We, therefore, find it difficult to hold that the Bank was negligent in opening the account accepting the deposit of cash by a person known to the Manager of the Bank under the above circumstances.
Mr. Balakrishnan has argued that a cheque for Rs.2,800 was paid in on the same date which was a stolen cheque and it ought to have aroused suspicion of the banker.
But there is nothing to show that it formed part of the same transac tion.
As we have already observed, once an account is opened the relationship of banker and customer begins.
Duration is not of the essence.
As was held in Ladbroke & Co. (supra) the mere opening of an account without the actual transac tion was sufficient to constitute the relationship and this view was followed in Commissioner of Taxation vs English Scottish and Australian Bank (supra) and it was stated that the word 'customer ' signifies a relationship of which dura tion is not of the essence.
The contract is not bet 38 ween a habitue and a newcomer, but between a person for whom the bank performs a casual service . . . and a person who has an account of his own at the bank.
Lord Chorley has even expressed the view that for the purpose of establishing the relationship of banker and customer there appears to be no logic in the actual opening of the account, and when the banker agrees to accept the customer the rela tionship comes into existence at that time though the ac count may not be opened until later.
According to the author "the relationship being contractual should be subjected to the normal rules of contract law and the making of the contract depends on the acceptance of the offer.
This con tract could clearly be effected before an account had actu ally been opened though it would state that there must be an agreement to open an account before the banker and customer relationship can exist.
" In the instant case there is, therefore, no doubt that the first cheque was subsequently paid in by Sethuraman as a customer and the Bank was to collect it on account of the customer.
The Bank, therefore, in collecting the cheque and paying the proceed to Sethura man acted as a Collecting Banker and can be held negligent, if at all, only as such as it was to collect it on account of the customer.
In fact, from the statement of account it is clear that the account was opened on October 3, 1974 and was closed on February 1, 1975 and there were a number of transactions of deposits and withdrawals.
The detailed particulars of the cheques paid into the account are not in evidence, it is, therefore, difficult to know whether each individual cheque or draft should have aroused suspicion in the mind of the Banker before accepting the same for collec tion from its customer.
The High Court did not analyse the legal position and did not consider the facts and circumstances in this regard in proper perspective.
We are not inclined to hold the Bank negligent in opening the account considered alone.
The next question is whether the Bank was negligent in collecting the cheques.
In collecting a cheque on account of a customer the banker is protected by section 131 of the Negotiable Instruments Act, 188 1 (26 of 1881) hereinafter referred to as 'the Act ' which reads: "131.
Non liability of banker receiving payment of cheque A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such pay ment.
Explanation A banker receives payment of a cros 39 sed cheque for a customer within the meaning of this section notwithstanding that he cred its his customer 's account with the amount of the cheque before receiving payment thereof.
" In the section the words 'a cheque crossed generally or specially to himself ' are important to be noted.
Section 131 corresponded to section 82 of the Bills of Exchange Act, 1882 of England which was repealed by the Cheques Act, 1957 and the protection there is now given by section 4 of the Cheques Act, 1957.
English decisions can, therefore, be guide in this regard.
In Lloyds Bank Ltd. vs E.B. Savory and Company, 1, the bank was held to be negligent (depriving it of the protection of section 82) not to ask a customer though respectively introduced the name of his employer and in the case of a married woman the name of her husband 's employer.
This is a case where a fraud had arisen through an employee stealing cheques from his employer and placing them into the credit of his account.
Had the bank known his employer, enquiries would have been made.
The request for special collection as in case of Lad broke & Co. (supra) was absent in this case as the account continued for quite some time.
Even in case of special collection it was held that it was desired for the purpose of learning quickly whether or not the cheques will be paid.
This case was mentioned in Marfani and Co. Ltd. vs Midland Bank Ltd., (supra) where the Midland Bank had make a special collection without being asked by their customer.
It was decided that this did not indicate that the bank 's suspi cions were aroused which would require further inquiry.
It was found that the bank took upon a special collection for the reasons (a) that the cheque was for a large sum, so that it was in their interest to collect quickly and (b) that the customer about to buy a restaurant might require the pro ceeds quickly.
In the Court of Appeal, Diplock LJ said that the 'significance ' of the special clearance depends upon the Judge 's assessment of the credibility of the bank officials who gave evidence; and he saw no reason to differ from him.
In the instant case we have no reason to disbelieve what was said by the Manager, DW 1.
In the instant case in the absence of any evidence giving the details of the cheques and their tenor, we are unable to hold that there were notices and circumstances which ought to arouse suspicion on the part of the bank.
The bank normally has an obligation to collect the customer 's cheques paid into his account.
In Halsbury Laws of England, 4th Edn., Vol. 3 at para 46 we read: 40 "46.
Customer 's title to money paid in.
In the absence of notice, express or implied the banker is not concerned to question the cus tomer 's title to money paid in by him.
al though if a person entrusted with a cheque wrongfully pays it to the bank to the credit of someone who is not entitled to it, the true owner, if he has given notice to the bank of his title while the credit remains, may recov er the amount from the bank as money had and received; or as damages for conversion . . .
A banker should be very cautious in accepting for a customer 's account any cheque drawn by him as agent upon his principal 's account, however broad may be the authority to draw.
If the court detects circumstances which should arouse suspicion that the agent was abusing his authority, the banker will be liable to the principal even though the cheque was crossed.
" This is because in every case of opening an account bank takes a mandate and, until changed, controls the operation of the account.
In the instant case, having already opened the account the Bank was not concerned to question the customer 's title to money paid in by him, when a cheque was drawn in favour of Industrial Chain Concern.
In Capital and Counties Bank vs Gordon, [1903] AC 240, the House of Lords accepted the position that a bank acts basically as a mere agent or conduit pipe to receive payment of the cheques from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer.
Unless crossed the banker himself is the holder for value.
He may be a sum collecting agent or he may take as holder for value or as holder in due course.
As an agent of the customer for collection he is bound to exercise diligence in the presen tation of the cheques for payment within reasonable time.
If a banker fails to present a cheque within a reasonable time after it reaches him, he is liable to his customer for loss arising from the delay.
A banker receiving instruments paid in for collection and credit to a customer 's account may collect solely for a customer or for himself or both.
Where he collects for the customer he will be liable in conversion if the customer has no title.
However, if he collects in good faith and without negligence he may plead statutory protection under section 131 of the Act.
In the instant case in the absence of evidence on record we find it difficult to ascertain whether the bank was collecting the cheques merely as agent of the customer or as holder for value or as holder in due course.
Some of the entries in the statement do show deposits and 41 withdrawals of lesser amounts on the same date, but that is not enough for arriving at any conclusion whether the bank was collecting as a holder for value and not merely as an agent of the customer.
To enable a bank to avail the immunity under section 131 as a collecting banker he has to bring himself within the conditions formulated by the section.
Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title.
The conditions are: (a) that the banker should act in good faith and with out negligence in receiving a payment, that is, in the process of collection, (b) that the banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder (c) that the person for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself.
The receipt of payment contemplated by the section is one from the drawee bank.
It is settled law that the onus of bringing himself within the section rests on the banker.
In Capital and Counties Bank vs Gordon, (supra) as we have seen, the conception of a col lecting banker was that of "receiving the cheque from the customer, presenting it and receiving the money for the customer, and then, and not till then, placing it to the customer 's credit, exercising functions strictly analogous to those of a clerk of the customer sent to a bank to cash an open cheque for his employer.
" If the banker performs these functions in course of his business, in good faith and without negligence he will be within section 131 of the Act.
We have already observed that the principle enunciated in the Commissioners of Taxation vs English Scottish and Australian Bank, (supra) is that the opening of the account is material as shedding light on the question whether there was negligence in collecting a cheque does bring out the true position that there must be sufficient connection established between the opening of the account and the collection of the cheque before a defence under section 131 could be held to be barred.
The question would then be one of facts as to how far the two stages can be regarded as so intimately associated as to be considered as one transac tion.
We have already found that in the instant case there was no evidence to show that the opening of the account and the collection of the cheques and drafts formed part of the same transaction.
Where a banker in good faith and without negligence receives payment for a customer of a cheque and the customer has no title or a defective title to the cheque, the banker does not incur any liability to the true owner of the cheque by reason only of having received such payment.
The banker is not to be treated for purposes of the protective 42 section as having been negligent by reason only of his failure to concern himself with absence of, or irregularity in, endorsement of the cheque or other instrument to which the section applies.
This has to be so because the drawer of the cheque is not a customer of the bank while the payee is.
Where the protection attaches, it covers the receipt of the cheque and every step taken in the ordinary course of busi ness and intended to lead up to the receipt of payment.
Even if there was negligence in opening of the account that act ipso facto would not result in loss to the true owner of the cheque collected.
While collecting the cheque for a customer the bank is under obligation to present it promptly so as to avoid any loss due to change of position.
When it receives the money collected then also there is no direct loss to the true owner.
It is only when the amount is paid or withdrawn by the customer that the loss results.
During this period what is important to note is that at every step in collec tion of the money and making payment the banker is bound by the banker customer relationship and rights and obligations flowing therefrom.
Even so, if there was anything to rouse suspicion regarding the cheque and ownership of the customer the banker may find itself beyond the protection of section 131.
The scope or ambit of possible suspicion will depend on various situations that may have prevailed between the drawer of the cheque and the customer.
In the instant case Sethuraman having been believed to have been the proprietor of Industrial Chain Concern the cheques payable to Industri al Chain Concern left little scope to have aroused any suspicion in the minds of the Bank.
The position may have been different if Sethuraman was known as acting as an employee of Industrial Chain Concern and the cheques were payable to that concern, but were deposited into personal account of the employee which was not the case here.
The requirement of receiving payment for a customer enunciated clearly in Capital and Counties Bank Ltd. vs Gordon, (supra) was extended in Barclays Bank Ltd. vs Astley Industrial Trust Ltd., wherein it was held that the banker may receive payment for himself and yet be enti tled to the protection where, acting in a purely collecting capacity, he has nevertheless a lien or is otherwise a holder for value.
There can be no doubt that the existence of a Current Account created relationship of banker and customer in this case.
Sethuraman would be a customer even if his account was over drawn until that account was closed.
In Halsbury 's Laws of England, 4th Edn., Vol. 3 at para 103 it is said: "If the banker wishes to plead the statutory protection, his dealings throughout must be in good faith and without negligence.
The alter native liability arising from negligence 43 renders the question of good faith practically superfluous, and it is seldom, if ever, raised.
Negligence in this connection is breach of a duty to the possible true owner, not the customer, created by the statute itself, the duty being not to disregard the interests of the true owner.
" It is a settled law that the test of negligence for the purpose of section 131 of the Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arouse doubts in the banker 's mind and cause him to make inquiries.
Lloyds Bank Ltd. vs E.B. Savory and Co., (supra), Marfani & Co. Ltd. vs Midland Bank Ltd., (supra), Arab Bank Ltd. vs Ross, and Karak Rubber Co. Ltd. vs Burden, (No. 2) are some of the authorities laying down the above rule.
The banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customer 's account.
However, the banker is not called upon to be abnormally suspicious, as was held in Penmount Estates Ltd. vs National Provincial Bank Ltd., It was held in Motor Traders Guarantee Corpn.
vs Midland Bank Ltd., , that disregard of the bank 's own regulations may be evidence of negligence.
In the instant case no such regulation of the bank has been produced so as to establish that in collecting the cheque and allowing the customer to withdraw the bank violated its own regulations.
Nor has the plaintiff been able to show that the transactions in paying in the drafts and cheques coupled with the circumstances antecedent and present were so out of the ordinary that it ought to arouse doubts in the Banker 's mind and cause him make inquiries.
As we have observed that the Bank 's negligence in not making inquiries as to the customer upon opening an account if there was any, could shed light in its negligence in col lecting the cheques for him.
But we have found that there was no such negligence in this case.
Mr. Balakrishnan 's submission that in this case while opening the account, the appellant should have inquired of the plaintiff 's firm does not reasonably follow in view of the fact that what Sethura man said was that he was the proprietor off the newly estab lished firm "Industrial Chain Concern" and if that was the name of the payee in the cheques, Sethuraman having been accepted as its proprietor there would be no room for suspi cion that the firm 's cheques were being paid into the pro prietor 's personal account.
There is no allegation and proof that the collection and payment were made contrary to the tenors of the instruments.
Carelessness could occur at the time of collection especially if there was failure to pay due attention to the actual terms of the mandate.
The actual circumstances at the time of 44 paying in for collection, if the amount was very large one might raise suspicion.
But in this case the first cheque paid in was of 2,800.17p.
which could not be regarded as such a large amount to have aroused suspicion considering the fact that the firm was 'Industrial Chain Concern ', dealing in industrial chains and pulleys.
Bharat Bank Ltd. vs Kishanchand Chellaram, AIR 1955 Madras 402; Sanyasilingam vs Exchange Bank of India, AIR 1948 Bombay 1; Woodbrier vs Catholic Bank, AIR 1958 Kerala 316, applied the accepted principles to the facts.
In Orbit Mining & Trading Co. vs Westminister Bank, [1962] 3 All E.R. 565, Harm LJ said: "It cannot at any rate be the duty of a bank continually to keep itself upto date as to the identity of a customer 's employer", though he is presumably required to know the identity of the employer.
That case is distin guishable on facts.
Underwood vs Bank of Liverpool, , was a case of a Director paying into his own pri vate account cheques in favour of the company duly endorsed by himself as sole Director and as such distinguishable on facts.
In Bapulal Premchand vs Nath Bank Ltd., AIR 1946 Bom.
482, Chagla J, as he then was, in the facts of that case expressed that in his opinion, there was no absolute and unqualified obligation on a bank to make inquiries about a proposed customer and that modern banking practice required that a customer should be properly introduced or the bank should act on the reference of some one whom it could trust.
Therefore, perhaps in most cases it would be wiser and more prudent for a bank not to accept a customer without some reference.
But he was not prepared to go so far as to sug gest that after a bank had been given a proper reference with regard to a proposed customer and although there was no suspicious circumstances attendant upon the opening of the account, it was still incumbent upon the bank to make fur ther inquiries with regard to the customer.
In that case the manager of the defendant bank accepted.the reference of the cashier Modi and also in fact made certain inquiries of Modi as to the position and status of the customer.
It was held that it was not obligatory upon the defendant bank to make any further inquiries about his customer and in having failed to make any such further inquiries in his Judgment they were not guilty of negligence.
In the instant case the Manager himself gave the introduction.
As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by section 131 of the Act but 'reasonable care ' will 45 depend on the facts and circumstances of the case.
The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.
The "type of necessary inquiry at the opening of an account seems to be less stringent at present than it was a generation ago, and it is difficult to spell out from the cases any hard and fast rules.
" This is so because, in the words of Lord Chorley, the use of banking facilities at the present day "has become so wide spread and has penetrated so far into social strata where banking accounts were previously unknown, that precautions at one time considered necessary are now difficult in the press of business to apply.
One of the obvious problems is that of the dishonest employee who may wish to open a bank account for the purpose of getting cheques collected for which he has stolen from his employer.
If the banker is aware of his employment he will naturally watch that those cheques of which the employer is payee, or in which he is otherwise interested, do not pass through the account.
But how far can he be expected to keep himself informed of the employment of all his customers? This is typical of the problems which have faced the judges, and on which their views have tended to vary from time to time, and indeed from judge to judge.
" The above problem has been realised by the courts in England and India.
In Marfani & Co. vs Midland Bank (supra) a man called Kureshy who was minded to cheat his employers, the plaintiffs in the case went to a branch of the defendant bank and asked to open an account giving the name of Sheik Eliaszade and also those of the referees.
He was allowed to do so immediately, before the references had been taken up, and paid Pound 50 the same day.
The next day he paid in a further Pound 35 in cash and the plaintiffs ' cheque for Pound 3,000 made payable to one Eliaszade which he had stolen from them.
His object in opening the account was to get this cheque collected by the defendant bank.
The defendants in fact had this cheque collected spe cially on the day it was paid in, and on the same day wrote to the referees.
On the next day the defendants received the proceeds of the cheque, and one of the officers of the bank on same day had an interview with one of the referees who was a customer at the same branch and who gave a favourable account of Eliaszade which satisfied the manager the other referee never replied.
During the following days Kureshy drew out the whole of the Pound 3,000; indeed he tried to draw out substantially more.
On discovering the fraud the plaintiffs sued the defendant bank for the conversion of their cheque.
When the defendants pleaded section 4 of the Cheques Act, 1957, the plaintiffs contended that they had been negligent under four heads: 46 (i) They had taken no steps to identify the proposed custom er, without which the referee 's good opinion was valueless.
(ii) No inquiry was made as to the antecedents of Kureshy.
(iii) Only one referee responded to the bank 's inquiry (iv) The cheque was in fact collected before the references had been taken up.
The defendants called evidence that they had done all that was usual in such a case, and claimed that this proved that they had acted with due care.
It was held that the defence succeeded.
It is thus clear that the question of negligence or no negligence depends entirely on the facts of each individual case and thus makes it difficult to judge in advance how any particular litigation involving allegations of negligence will go.
In the instant case Sethuraman had in effect opened another account in the name of the plaintiff firm and oper ated it himself as its proprietor.
As we have already observed, carelessness on the part of the bank is most likely to occur at the time of collection of cheques especially in failure to pay due attention to the actual terms of the mandate.
It is not here a case of play ing the detective but of a careful examination of everything which appears on the front and back of the instrument.
Each set of circumstances produces its own requirements.
The instruments, crossing, type of crossing, per pro, pay cash or order etc.
are important.
The banker may be negligent in acting contrary to such mandate under appropriate circum stances.
In the instant case, however, no details regarding such mandates on the alleged cheques are available.
The High Court took the view that if the Manager of the Bank gave the introduction of Sethuraman to open the account in the plaintiff 's name showing him is its proprietor with out making any enquiry as to its true relationship with the concern then he was taking a risk and when it transpired that Sethuraman had made fraudulent representation then the Manager should be taken to have acted negligently.
We are not inclined to agree inasmuch as while dealing with a customer for collecting a cheque, there is no contractual relation between the collecting banker and the true owner.
The duty is implied by law.
A conduct beneficial to the customer at the expense of the true owner when the Bank acts in good faith and without negligence, is no 47 breach of that duty.
It is from this position of the true owner that question of negligence under section 131 of the Act has to be viewed.
The formula approved in Lloyds Bank Ltd. vs Chartered Bank of India, Australia and China, , is that broadly speaking, the banker must exer cise the same care and forethought in the interest of the true owner, with regard to cheques paid in by customer, as a reasonable man would bring on similar business of his own.
Lord Dunedin in Commissioner of Taxation (supra) said that the bank 's action must be in accordance with the ordinary practice of banking and bank cannot be held liable merely because they have not subjected an account to a 'microscopic examination '.
In Ross vs London County, Westminister and Parr 's Bank Ltd., , Bailhache J. took the view that the clerks and cashiers of the defendant bank would be attribut ed the degree of intelligent and knowledge ordinarily re quired of a person in their position to fit them for the discharge of their duties but that no microscopic examina tion of cheques paid in for collection was necessary and that it was not expected that officials of banks should also be 'amateur detectives '.
It could not be said that before opening an account in the name of a firm the Bank would be required to enquiry always whether any firm of the same name was already in existence or not.
What facts ought to be known to the Bank, what inquiries he should have made and what facts were sufficient to cause the Bank reasonably to suspect that Sethuraman was not the true owner in the facts and circumstances of the case would depend on current bank ing practice.
What was the practice long time back when the use of banking facilities by the general public was much less widespread may not be a proper guide.
It should also be noted that the duty of care owed by the Bank to the plain tiff as owner of the cheque did not arise until the cheque was delivered to the Bank by the customer Sethuraman.
It was then only that duty to make inquiries about the cheque arose.
Those inquiries would depend on the apparent tenor of the cheque and the knowledge of facts that earlier inquiries ascertained.
What we have to do is to look at all the cir cumstances at the time of the paying in of the cheque by Sethuraman and to see whether those circumstances were such as would cause a reasonable banker possessed of the informa tion gathered about Sethuraman to suspect that he was not the true owner of the cheque.
There is very little evidence relating to the deposit and particulars of the cheques deposited and hence it is difficult to hold that the Bank ignored obvious indications and was negligent at that time.
It is difficult to accept so speculative a proposition as what would have happened if inquiries had been made which were not made.
It does not constitute any lack of reasonable care to refrain from making 48 such inquiries which it was improbable to have led to detec tion of the customer 's fraud.
While arriving at the above conclusion we have borne in mind the standard of reasonable care and the banking prac tices and its trend in a developing banking system in the country.
Any stricter liability may not be conducive.
It will also be observed that expansion of the banker 's liabil ity and corresponding narrowing down of the banker 's protec tion under the provision of section 131 of the Act may make the banker 's position so vulnerable as to be disadvantageous to the expansion of banking business under the ever expand ing banking system.
This is because a commercial bank, as distinguished from a Central bank, has the following charac teristics, namely (a) that they accept money from, and collect cheques for, their customers and place them to their credit; (2) that they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly; and (3) that they keep current account in their books in which the credits and debits are entered.
The receipt of money by banker from or on account of his customer constitute it the debtor of the customer.
The bank borrows the money and undertakes to repay it or any part of it at the branch of the bank where the account is kept during banking hours and upon payment being demanded.
The banker has to discharge this obligation and normally the banker would not question the customer 's title to the money paid in.
Applying the above principles of law to the facts of the instant case we are not inclined to hold that the Bank was negligent either in collecting the cheques and drafts or allowing Sethuraman to withdraw the proceeds.
As we have taken the view that the bank was not negli gent, it is not necessary to deal with the question of contributory negligence.
Let the loss lie where it falls.
In the result, this appeal succeeds.
The impugned judg ments are set aside and the appeal is allowed, but without any order as to costs.
Y. Lal Appeal allowed.
| The criminal complaint instituted by the appellant was taken cognizance of by the Magistrate for offences under sections 494, 496,498 A, 112, 114, 120, 120 B and 34 IPC.
It was alleged that the first respondent had married the second respondent while the proceedings for decree of divorce were still pending, and that the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
The High Court, however, on the application of the first respondent quashed the proceedings before the Magistrate.
Allowing the appeal by special leave, HELD: The High Court was in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
[167C D] In proceedings instituted on complaint exercise of the inherent power under section 482 of the Code of Criminal Proce dure by the High Court to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
It is not necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not.
The complaint has to be read as a whole.
[166G; 167A] In the instant case, there were specific allegations in the complaint disclosing the ingredients of the offence taken cognizance of.
It was for the complainant to substan tiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the com plaint was frivolous there was no jurisdiction for the High Court to interfere.
[167D E] Sharda Prasad Sinha vs State of Bihar, ; ; Trilok 166 Singh & Ors.
vs Satya Deo Tripathi, AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala
|
APPEAL NO. 691 of 1976.
(From the Judgment & Order dated the 16th December 1975 of the Gujarat High Court in Special Civil Appln.
No. 572 of 1975).
G.L. Sanghi and Girish Chandra, for the Appellants.
480 V.M. Tarkunde, K.L. Hathi and Mrs. P.C. Kapur, for respondent No. 1.
The Judgment of the Court was delivered by GOSWAMI, J.
This appeal on certificate is from the judgment of the High Court of Gujarat.
The appellants 1 and 2 are respectively the Union of India and the Regional Provident Fund Commissioner.
Dhrangadhra Chemical Works Kamdar Sangh (hereinafter to be described as the union) is the first respondent.
The second respondent is Dhrangadhra Chemical Works (hereinafter to be described as the employer).
With respect to the dearness allowance (D.A.) of the workers under the employer there was a reference No. 70/70 before the Industrial Tribunal at Ahmedabad.
The parties arrived at a settlement of the said industrial dispute and an award was passed in terms of the settlement.
According to the award the employer was to pay D.A. to its employees at the rate of the quarterly average cost of living index as settled by the Simla Bureau, popularly known as "All India Consumers Price Index" for the relevant quarter.
Thus for the 'months of January, February and March, 1974, the rate of D.A. was on the basis of the average cost of living index for the months of July, August and September 1973 as pub lished by the said Bureau and this was to follow for every quarter.
It is the accepted position that for the months of April, May and June 1974 the D.A. worked out at Rs. 78/ per month, but for the quarter.
commencing on 1st July, 1974, and ending on 30th September, 1974, it worked out at Rs. 88.50 per month.
In other words, it was an agreed position between the union and the employer that the rate of D.A. payable to all the workers from 1st July, 1974, was at the rate of Rs. 88.50 per month.
With effect from 6th July, 1974, The Additional Emolu ments (Compulsory Deposit) Ordinance 1974 came into force.
This Ordinance was replaced by The .
(Act No. 37 of 1974) (briefly the Act) and the Act is deemed to have come into force on the 6th day of July 1974.
We have already made a detailed reference to the aim and object of the Act and also dealt with the material provi sions thereof in dealing with a similar question in Civil Appeal No. 690 of 1976 in which we have delivered our judg ment to day(1).
It is, therefore, not necessary to repeat those observations here.
The short question that arises in this particular appeal turns on the Explanation I to section 2(b) of the Act.
We will, therefore, read that provision: "2(b) 'additional dearness allowance ' means such dearness allowance as may be sanc tioned from time to time, after the appointed day, over and above the amount of dearness allowance payable in accordance with the rate in force immediately before the date from which such sanction of additional dearness allowance is to take effect.
(1) [1977] 2 S.C.R.472.
481 Explanation I.
Where payment of dearness allowance is linked to a cost of living index or any other factor, any automatic payment, after the appointed day, of dearness allowance in consequence of any rise in such cost of living index or in consequence of any change in such other factor shall, notwithstanding the provisions of this clause, be deemed to be the additional dearness allowance.
" It is clear under section 2(b) that additional D.A. has to be sanctioned after the appointed day. "Sanctioned" is the heart of the definition clause.
Since additional D.A. is defined to mean such D.A. as may be sanctioned from time to time after the appointed day, Explanation I 'to the definition is inserted to.
deal with a situation to avoid any controversy about the sanction while there is an auto matic rise in D.A. linked to a cost of living index.
Where D.A. is linked to a cost of living index any automatic payment, after the appointed day, of D.A. in consequence of any rise in such cost of living index shall be deemed to be the additional D.A.
In the absence of Explanation I there would have been scope for controversy whether additional D.A. which is paid automatically with the rise in the cost of living index, as agreed upon, can be said to be D.A. sanctioned from time to time.
Such a controversy is set at rest by insertion of Explanation I which is a deeming clause.
The question that arises for consideration in this appeal is whether the rise in the cost of living index has also got to be after the appointed day.
The union contends that the D.A. of Rs. 88.50 which is payable from 1st of July, 1974, for the quarter 1st July, 1974 to 30th Septem ber, 1974 is an pursuance of the rise of cost of living index between January to March 1974 which is prior to the appointed day, namely, 6th July, 1974.
It is, therefore, submitted that no additional D.A. is deductible under the Act.
The High Court has accepted the contention of the union and allowed the application under Article 226 of the.
Con stitution granting a Mandamus restraining the employer from deducting additional D.A. from the emoluments of the em ployees.
The High Court also granted certificate to appeal to this Court.
it is common knowledge that when D.A. is linked to a cost of living index, actual determination of the D.A. takes place after the index is published and known.
The index, therefore, is always of a past period by the yardstick of which D.A. is adjusted.
This being the concept about link age of D.A. to cost of living index, Explanation I makes it clear that when payment of D.A. is linked to a cost of living index any automatic payment after the appointed day of D.A. in consequence of any rise in the cost of living index shall.
notwithstanding the provisions of this clause, be deemed to be the additional D.A.
The non obstante clause in the Explanation takes note of the definition clause where sanction after the appointed day has been mentioned.
Explanation I therefore, plays its role, not withstanding whatever is stated in section 2(b), the definition clause.
We do not find anything in Explana tion I to warrant the conclusion that rise of the cost of living index should be after the appointed day.
What is to be after the appointed day is "any automatic payment of D.A. in consequence of any 482 rise . "and not that any rise in the cost of living index should be after the appointed day.
We are, therefore, unable to agree with the High Court that the rise of cost of living index also should be after the appointed day.
It is sufficient for the purpose of Explanation I if payment of D.A., in consequence of rise of cost of living index, takes place after the appointed day on account of rise in the cost of living index even prior to the appointed day.
The nexus for the purpose of Explana tion I is with the payment after the appointed day and not with the rise in the cost of living index.
The specified percentage of additional D.A. which is 50% of the rise, being the difference, between Rs. 78/ and Rs. 88.50 is, therefore, deductible under section 6(2)(b) of the Act and the High Court was not correct in holding to the contrary.
The appeal is allowed and the judgment of the High Court is set aside.
There will be, however, no order as to costs.
P.B.R. Appeal allowed.
| 100(1) (d)(iii) of the Jammu & Kashmir Representation of the People Act, 1957 provides that if the High Court is of opinion that the result of the election in so far as it concerns a returned candidate, has been materially affected by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, the High Court shall declare the election of the returned candidates to be void.
The appellant was declared elected to the State Assembly in the General Elections.
In his election petition the respondent, a defeated candidate, contended that improper rejection at the time of counting of votes cast in his favour and improper reception of votes at the time of poll ing in favour of the appellant had materially affected the result and that therefore the appellant 's election should be declared void.
The High Court held that certain votes had been improp erly received in favour of the appellant, certain votes validly polled in favour of the respondent were improperly rejected at the time of counting; and in respect of 550 votes which were found to have been improperly received, the High Court held that the appellant was the greatest benefi ciary of those votes although the precise number by which he was benefited could not be easily ascertained.
In appeal, this Court directed the Registrar to scruti nise the 550 ballot papers to find out as to how many of those votes were cast in favour of the appellant and the other candidates.
The result of the investigation showed that the appellant had a lead of 38 votes over the respond ent.
Allowing the appeal HELD: There is no escape from the conclusion that the election of the appellant should be upheld.
[303H] (1) In an election petition founded upon the ground that the result of the election was materially affected by the improper reception or rejection of votes, the Court has first to decide whether certain ballot papers were improperly received or were improperly rejected.
Once that controversy is resolved, the rest is purely a matter of arithmetical calculation.
If the result of arithmetical calculation is that the returned candidate has still a lead over his nearest rival, his election would not be declared to be void on the ground of improper reception or improper rejection of votes.
Improper reception or improper rejec tion of votes can result in invalidating the election only if such improper reception or improper rejection materially affects the result of the election.
[303H] In the instant case, even after excluding all the votes found to have been improperly received by the appellant and also giving credit to the respondent for the votes found by the High Court to have been improperly rejected at the time of counting, the net result still was that the appellant had a lead over the respondent.
(2) As it is not permissible to widen the scope of an election petition, the respondent could not seek relief on grounds which were not taken by him in the election peti tion.
The respondent could not derive any benefit on the irregularities committed in the conduct of election.
The election was not challenged on the ground of any irregulari ty or non compliance with the provisions of the Constitution or of the Representation of the People Act nor was the election assailed on the ground of corrupt practice.
[304D & C] 298 (3) The contention of the respondent that if the ballot papers which bore the initials and not the full signatures of the presiding officer are rejected, the appellant 's election should be declared void, is without force.
The ballot papers bore the distinguishing marks as required by r. 38(1).
The fact that the returning officer did not reject the ballot papers on the ground that they bore only the initials and not the full signatures of the presiding officer showed that the returning officer was satisfied that the alleged defect was caused by the mistake or failure on the part of the presiding officer.
There can be no doubt that the mistake occurred because of the mistake or failure of the presiding officer.
The first proviso to r. 56(2) of the Rules provides that where the returning officer is satisfied that any defect mentioned in cl.
(g) or cl.
(h) of this Rule has been caused by any mistake or failure on the part of a presiding officer or polling officer, the ballot paper shall not be rejected merely on the ground of such defect.
[305B C]
|
Appeal No. 1109 of 1966.
Appeal by special leave from the judgment and order dated December 17, 1964 of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision No. 159 D of 1963.
M. C. Setalvad, Veda Vyasa and K. K. Jain.
for the appellants.
section G. Patwardhan, K. L. Hathi and R. H. Dhebar, for the respondent.
844 The Judgment of the Court was delivered by Wanchoo, J.
This is an appeal by special leave against the judgment of the Punjab High Court and arises in the following circumstances.
The appellant entered into a contract with the Union of India, respondent herein, for construction of certain highway bridges.
In connection with the execution of the contract, some disputes arose between the parties and were referred to the joint arbitration of Sri B. K. Guha and Sri N. P. Gurjar.
As there was difference of opinion between the two arbitrators, the matter was referred to an umpire, namely, Sri Dildar Hussain, retired Chief Engineer, Hyderabad.
The umpire recorded evidence of the parties and gave his award on May 27, 1961.
It appears that the award was made in duplicate and one copy was sent to each party.
On August 4, 1961, the appellant made a petition before the Subordinate Judge First Class, Delhi under sections 14 and 17 of the , No. 10 of 1940, (hereinafter referred to as the Act).
it was prayed that the umpire be directed by the court to cause the award or a signed copy thereof together with any depositions and documents which might have been taken and proved before him to be filed in court (section 14).
It was further prayed that a judgment be passed in terms of the award (section 17).
It appears that on this petition the court issued notice to the umpire to file the award and the arbitration proceedings.
On September 13, 1961, the umpire wrote to the court that he was forwarding along with that letter the award in the case duly signed and certified by him.
On November 1, 1961, an objection was taken on behalf of the respondent that the award said to have been filed by the umpire had not been validly and legally filed under section 14 and as such no proceedings in pursuance of the said filing could be taken in court.
This objection was considered as a preliminary objection by the Subordinate Judge.
He came to the conclusion that the document filed in court was neither the original award nor a signed copy thereof, and as such the court could not take any action on that document.
He therefore allowed the objection and dismissed the application under section 17 for passing a judgment in terms of the award.
The appellant then went in revision to the High Court.
The High Court dismissed the revision application holding that the document filed in court was admittedly not the original award and that it was clear from a perusal of the document itself that it was not a signed copy thereof.
Certain alternative arguments were submitted to the High Court which were rejected and the revision application thus failed.
Thereupon the appellant obtained special leave, and that is how the matter has come up before us.
The main question that has been argued on behalf of the ap pellant is that the document in question is a signed copy of the 845 award within the meaning of those words in section 14(2) and therefore further proceedings should have been taken under section 17 of the Act.
Now the relevant part of section 14 (2) reads thus : "(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the court. cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in court. . ." Therefore when a notice is issued by a court to the arbitrators or umpire it is their duty to file in court either the award in original or a signed copy thereof as directed by the court.
It is not in dispute that in the present case the original award has not been filed.
The dispute is whether the document filed is a signed copy of the award.
The main contention on behalf of the appellant is that the document is a signed copy of the award within the meaning of those words in section 14(2), and thus should have been acted upon by the court.
On the other hand, it is contended on behalf of the respondent that what has been filed is a certified copy of the award and not a signed copy thereof, and therefore it cannot be acted upon.
The High Court has accepted the contention of the respondent and all that it has said in that behalf is that it is clear from a perusal of the award that it is not a signed copy of the award but it is certified as correct copy of the award dated the 27th May, 1961.
Unfortunately, the High Court has not considered what exactly the words "signed copy of the award" mean, and it is to this problem that we must now turn.
Now the word "copy" as such is not defined in the Indian Evidence Act, of 1872.
But we get an idea of what a copy is from the provisions of section 63 of the Evidence Act.
That section inter alia defines what secondary evidence means and includes namely (i) certified copies as provided, in section 76 of the Evidence Act, (ii) copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies, and (iii) copies made from or compared with the original.
Obviously, therefore a copy means a document prepared from the original which is an accurate or true copy of the original.
In Webster 's New World Dictionary, the word "copy" means "a thing made just like another ; full reproduction or transcription".
What the word "copy" in section 14(2) therefore requires is that it must be a full reproduction of the original and that it should be accurate or true.
When a document is an accurate or true and full reproduction of the original it would be a copy.
In the present case it is not in dispute that what was produced by Sri Dildar Hussain was a true or accurate and full reproduction of the original.
It was therefore a copy of the original, and the 846 only question that remains is whether it was signed, for if it was signed, it would be a signed copy.
This brings us to the meaning of the word "sign" as used in the expression "signed copy".
In Webster 's New World Dictionary, the word "sign" means "to write one 's name on, as in acknowledging authorship, authorising action etc.
" To write one 's name is signature.
Section 3(56) of the General Clauses Act, No. 10 of 1897, has not defined the word "sign" but has extended its meaning with reference to a person who is unable to write his name to include "mark" with its grammatical variations and cognate expressions.
This provision indicates that signing means writing one 's name on some document or paper.
In Mohesh Lal vs Busunt Kumaree(1), a question arose as to what "signature" meant in connection with section 20 of the Limitation Act, No. IX of 1871.
It was observed that "where a party to a contract signs his name in any part of it in such a way as to acknowledge that he is the party contracting, that is a sufficient signature".
It was further observed that the document must be signed in such a way as to make it appear that the person signing it is the author of it, and if that appears it does not matter what the form of the instrument is, or in what part of it the signature occurs.
or?,, We accept these observations and are of the opinion that so long as there is the signature of the arbitrator or umpire on the copy of the award filed in court and it shows that the person signing authenticated the accuracy or correctness of the copy of the document would be a signed copy of the award.
It would in such circumstances be immaterial whether the arbitrator or umpire put down the words "certified to be true copy" before signing the copy of the award.
If anything, the addition of these words (namely, certified to be true copy) would be the clearest indication of the authentication of the copy as a true copy of the award, which is what section 14(2) requires, so long as the authentication is under the signature of the arbitrator or the umpire himself.
In the present case, the document was sent by the umpire along with a letter forwarding it to the court.
In the letter it was stated that he was sending the award only signed and certified by him.
Then turning to the document we find that it begins with the words "now I hereby reproduce a true copy of the said award which is as follows" and this is signed by Sri Dildar Hussain, the umpire.
Then follows the copy of the award, at the end we find the words "certified as correct copy of the award dated the 27th May, 1961 ".
Underneath appears the signature of Sri Dildar Hussain, the umpire.
Clearly therefore the document filed is a true or accurate and full reproduction of the original award and it bears the signature of the umpire, Sri Dildar Hussain, and thus is a signed copy of the award.
(1)(1881)1.L.R.6Cal.340.
847 The fact that the umpire wrote the words "certified as correct copy of the award dated the 27th May, 1961" above his signatures does not in our opinion make any difference and the document it still a signed copy of the award.
If anything, these words show that document filed is a true copy of the award and as it bears the signature of the umpire, it is a signed copy thereof.
It may be added that the words "now I hereby reproduce a true copy of the said award which is as follows" which appear at the beginning of the document and which are signed by the umpire Sri Dildar Hussain also in our opinion are sufficient to show that what was produced in court was a signed copy of the award as required by section 14(2).
In this view of the matter, it is unnecessary to consider the alternative argument raised on behalf of the appellant.
We therefore allow the appeal and set aside the orders of the courts below and, holding that a signed copy of the award has been filed as required by section 14(2), direct that further proceedings will be taken in the matter as required by law by the Subordinate Judge in whose court the signed copy of the award was filed.
Costs of this Court will abide the final result.
| S took a loan from the appellant bank on the strength of an arrange merit whereby the State Government of Jammu and Kashmir would repay it in instalments out of the land revenue to be collected by it from S 's lands.
Such payments on behalf of the Government were mistakenly made each year both by the Accountant General and by the Treasury so that the amount credited by the bank in S 's account represented an over payment by the State.
When the Accountant General realised the mistake he asked the bank to reverse the relevant entries in S 's account so as to cancel the over payment, which the bank after initial objection, did.
Thereafter, on the basis of the reversed entries the bank filed a suit for the recovery of its debt.
It was objected by the respondents (successors in interest to S) that it was not open to the bank to reverse the credit entries in the account of S after they had been made in the manner it was done.
The trial Court held that the amount was paid twice over by mistake and therefore the bank was entitled to reverse the entries at the instance of the Ac countant General without reference to section The High Court however, in appeal, rejected the argument on behalf of the bank that section 72 of the Indian Contract Act allowed it to reverse the entries.
In appeal to this Court, HELD : Section 72 of the Indian Contract Act will only apply when it is a case of two persons one paying the money and the other receiving the money on behalf of the person paying it.
The section has no application where money is paid by a person to a bank with instructions that it should be deposited in the account of a third person who is a constituent of the bank.
[795 G] In the present case, for the purpose of payment, Government was the agent of S and whatever money was paid to be credited to the account of S,, even though it was paid through Government, became his money and it could not be paid out of his account which was in substance the effect of reversing the entries, without his consent.
[796 C] Imperial Bank of Canada vs Bank of Hamilton, , distinguished.
|
Civil Appeal No. 530 of 1963.
14 Appeal from the judgment and order dated February 14, 1963, of the Madhya Pradesh High Court in First Appeal No. 34 of 1962.
U.M. Trivedi, Malik Arjun Das, Shanti Swarup Khanduja and Ganpat Rai, for the appellant.
G.S. Pathak, U.N. Bhachawat, Rameshwar Nath and S.N. Andley, for respondent No. 1.
October 3, 1963.
The Judgment of the Court was delivered by SHAH J.
Eight candidates (including the appellant Mohan Singh and the first respondent Bhanwarlal) filed nomination papers for election to the Madhya Pradesh Legislative Assembly from the Sitamau constituency.
The nomination of one Hussain Khan was rejected by the Returning Officer at the initial scrutiny and another candidate Himmat Singh withdrew his candidature before the date of polling, which took place on February 24, 1962.
On the counting of the votes Mohan Singh was found to have secured the largest number of votes at the election, and he was declared elected.
Bhanwarlal applied under section 80 read with sections 100 and 101 of the Representation of the People Act (43 of 1951), to the Election Commission of India for an order declaring the election of Mohan Singh void, and Mohan Singh disqualified because of committing corrupt practices detailed in the petition and for an order declaring the applicant Bhanwarlal elected.
Among the many grounds of corrupt practices alleged in the petition, two grounds set out in cls.
(c) & (d) of para 11 of the petition survive for consideration in this appeal.
It was averred in these clauses that Mohan Singh the successful candidate had shortly before the polling of votes published two leaflets in Hindi containing statements of fact with regard to the personal character or conduct of the applicant Bhanwarlal which were false and which Mohan Singh believed to be false or did not believe to be true and that the statements were calculated 15 to prejudice the prospects of Bhanwarlal at the election.
Copies of the two leaflets were annexed to the petition, and were marked annexures 'D ' & 'E '.
The petition was referred for trial by the Election Commission to the Election Tribunal, Ratlam, under section 86 of the Representation of the People Act.
Mohan Singh by his written statement denied that he had published the leaflets and submitted that the leaflets which appeared to have been published by the electorate contained "a factual and fair criticism of the public; activities" of Bhanwarlal and that they were not calculated to prejudice his prospects at the election.
Mohan Singh applied to the Tribunal for an order dismissing the petition in limine on the ground, among others, that there was non compliance with section 82 of the Act, because one of the candidates at the election named Himmat Singh against whom allegations of corrupt practice in regard to the withdrawal of his candidature were made was not joined as a respondent.
The Tribunal rejected the application for dismissal of the petition and held that it was established on the evidence that Mohan Singh and his agents did commit, amongst others, the corrupt practice defined in section 123(4) of the Act by publishing the leaflets, annexures 'D '& 'E ', containing statements which were false, to the knowledge and belief of Mohan Singh, and made with the knowledge that they would reasonably prejudice the election chances of Bhanwarlal.
In coming to that conclusion the Tribunal primarily relied upon the testimony of one Rameshchandra, a compositor in the Maheshwari Printing Press, Mandsaur, and upon certain corroborative circumstances.
In appeal by Mohan Singh against the order, the High Court of Madhya Pradesh on a review of the evidence agreed with the Tribunal that Mohan Singh was instrumental in getting printed leaflets annexures 'D ' & 'E ' and the leaflets were distributed in certain villages in the constituency by Mohan Singh and his agents Satyanarayan and Kailash.
16 In this appeal with special leave it was urged that the election petition filed by Bhanwarlal was liable to be dismissed in limine, as it did not comply with the requirements of section 82 of the Representation of the People Act.
On the merits it was urged that Mohan Singh did not publish the leaflets annexures 'D ' & 'E ' and that in any event the publication did not constitute a corrupt practice within the meaning of section 123 (4) of the Act.
Whether for alleged non compliance with the requirements of section ,82 of the Act, the petition by Bhanwarlal was not maintainable must first be determined, for if the petition did not comply with the mandatory provisions of the statute, irrespective of whether a corrupt practice was committed by Mohan Singh, the petition must stand dismissed without further investigation.
In paragraph 11(b) of the petition it was averred that on January 20, 1962, Mohan Singh, "offered at Nahargarh to Shri Himmat Singh an independent candidate to help him in procuring a job for him in Dalauda Sugar Factory or elsewhere to withdraw his candidature from the election.
That as a consequence of this offer of illegal gratification Himmat Singh withdrew his candidature from the Sitamau Assembly constituency.
" The language used is somewhat ungrammatical, but the purport is clear that Mohan Singh with a view to persuade Himmat Singh to withdraw from the election offered to help him to secure employment with the Dalauda Sugar Factory, or with some other employer, and in consequence of this offer which amounted to illegal gratification Himmat Singh had withdrawn himself from being candidate at the election for the Sitamau constituency.
Section 123 (1) defines the corrupt practice of "bribery" and by el.
(B) receipt of, or agreement to receive, any gratification, whether as a motive or a reward (a) by a person for standing or not standing as, or for withdrawing from being, a candidate; or 17 (b) by any person whomsoever for himself or any other person for voting or refraining from voting, or inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to withdraw his.
candidature, constitutes the corrupt practice of bribery by a person other than the candidate.
It is submitted that by para 11 (b) it was averted that Himmat Singh who had filed his nomination paper had agreed to receive gratification, as a motive or a reward for withdrawing from being a candidate, and that it was necessary in view of section 82 of the Act to implied Himmat Singh as ?.
party to the petition, and failure to implied him would involve dismissal of the petition.
To appreciate the argument it is necessary to refer to certain relevant provisions of the Act.
By section 80 no election is liable to be called in question except by an election petition presented in accordance with the provisions of Part VI of the Act.
Section 81 prescribes the g. rounds on which, the persons by whom and the period during which an election petition may be presented, and also the procedure for presentation of the petition.
By section 82 it is enacted that all contesting candidates shall be joined as party respondents where the petitioner, in addition to claiming a declaration that the election of all or any of the returned candidates is void, claims a further declaration that he himself or any other candidate has been duly elected, and where no such further declaration is claimed, all the returned candidates shall be joined.
Again where allegations of corrupt practice are made against another candidate, such other candidate shall be joined as a respondent.
Section 79 which is the interpretation section in respect of Parts VI, VII and VIII (and section 82 occurs in Part VI) defines the expression "candidate" as meaning a person who has been or claims to have been duly nominated as a candidate at any election, and any such person shall be deemed to have been a candidate as from the time when, with the election in prospect, he began to hold himself out as a prospective candidate.
If the provisions, among others, 1/SCI/64 2 18 of sections 81 or 82 have not been complied with, the Election Commissioner must dismiss the petition (section 85), and if the Commission does not so order the Tribunal is enjoined by section 90(3) to dismiss the petition which does not comply with the provisions of sections 81 or 82.
Himmat Singh had filed his nomination paper, and on that account by virtue of the definition of section 79 he was a candidate for the purposes of Parts VI, VII & VIII, and did not cease to be a candidate merely because he withdrew his candidature.
If therefore the petition contained any imputation of corrupt practice made against Himmat Singh, it could not be regarded as properly constituted unless he was impleaded as a respondent, for, by the definition of "candidate" in section 79(b), the expression "any other candidate" in s, 82(b) must include a candidate who had withdrawn his candidature.
But in our judgment in para 11 (b) there is no allegation of corrupt practice against Himmat Singh.
What is alleged is that Mohan Singh had offered to help Himmat Singh "in procuring a job in Dalauda Sugar Factory or elsewhere" and that as a consequence of that offer Himmat Singh had withdrawn his candidature from the election.
There is no express averment in the petition about the acceptance of the offer by Himmat Singh, but it would border upon supererogation to insist that even if offer to help to procure a job amounted to offer of gratification, an allegation that in consequence of this offer Himmat Singh had withdrawn his candidature from the election did not amount to a plea of acceptance of that offer unless it was so expressly averred.
However in our view a mere offer of help to secure employment without more is not offer of gratification within the meaning of section 123 (1) (B) of the Act.
The expression "gratification" is not defined in the Act but the Explanation to sub section
(1) of section 123 furnishes an indication as to what in the view of the Parliament amounts to gratification.
The Explanation states: "For the purposes of this clause the term 'gratification ' is not restricted to pecuniary graft 19 fications or gratifications estimable in money and it includes all forms of entertainment and all forms of employment for reward but it does not include the payment of any expenses bonafide incurred at, or for the purpose of, any election and duly entered in the account of election expenses referred to in section 78.
" The Explanation extends the expression "gratification" to include all forms of entertainment and all forms of employment for reward but not payment of bona fide expenditure incurred at or for the purpose of election if duly entered in the account of election expenses.
Gratification in its ordinary connotation means satisfaction.
In the context in which the expression is used and its delimitation by the Explanation, it must mean something valuable which is calculated to satisfy a person 's aim, object or desire, whether or not that thing is estimable in terms of money; but a mere offer to help in securing employment to a person with a named or unnamed employer would not amount to such gratification.
There is no plea that Mohan Singh had offered employment to Himmat Singh with the Dalauda Sugar Factory or with another employer; it was merely alleged that Mohan Singh had offered to assist or help Himmat Singh in obtaining employment with the "Dalauda Sugar Factory or else where".
The acceptance of offer which constitutes a motive or reward for withdrawing from the candidature must be acceptance of gratification; and if gratification does not include all offers and acceptances of mere promises, but requires, to constitute it, an offer and acceptance relating to a thing of some value, though not necessarily estimable in terms of money, a mere offer to help in getting employment is not such offer of gratification within the meaning of section 123(1)(B) as to constitute it a corrupt practice.
It was in the circumstances not necessary on the allegations made in para 11(b) of the petition to implead Himmat Singh as a respondent to the petition.
We therefore agree 20 with the High Court, though for different reasons, that the petition filed by Bhanwarlal was not defective.
Counsel for Mohan Singh challenged the finding of the High Court that Mohan Singh was instrumental in publishing the leaflets annexures 'D ' & 'E '.
He urged that in the trial of an election petition approach to the evidence must be as in a criminal trial and no fact may be held proved unless it is established beyond reasonable doubt.
The onus of establishing a corrupt practice is undoubtedly on the person who sets it up, and the onus is not discharged on proof of mere preponderance of probability, as in the trial of a civil suit: the corrupt practice must be established beyond reasonable doubt by evidence which is clear and unambiguous.
But the testimony of Rameshchandra corroborated by the circumstances set out in detail in the judgments of the Tribunal and the High Court was accepted and the testimony of witnesses for Mohan Singh who claimed that other persons without his consent or connivance were responsible for getting the leaflets printed was disbelieved.
The evidence about the distribution of the leaflets in question by the appellant and his agents was also accepted by the Tribunal and the High Court.
It was also found that these leaflets were distributed simultaneously.
In recording their conclusions the Tribunal and the High Court did not proceed on mere grounds of probability.
The findings recorded by the Tribunal and the High Court are therefore concurrent findings of fact rounded on appreciation of oral evidence and no ground is made out for departing from the settled practice of the Court against interference with those concurrent findings of fact.
The next question to be considered is whether the publication of the leaflets amounts to commission of a corrupt practice within the terms of section 123 (4) of the Representation of the People Act, 1951.
Section 123 sets out what the diverse corrupt practices recognised by the Act are.
Clause (4) defines a corrupt practice by publication of false statements calculated 21 to prejudice the prospects of a candidate 's election.
To bring a corrupt practice within the purview of el.
(4) there must be a publication by a candidate or his agent or by another person with the consent of the candidate or his election agent: the publication must contain a statement of fact which is false, and which the candidate or his agent believes to be false or does not believe to be true, the statement must be in relation to the personal character or conduct of the candidate; and it must be reasonably calculated to prejudice the prospects of the candidates election.
The expression "statement of fact" in section 123 (4) includes not only an express imputation but also an innuendo if one such may reasonably be raised from the language in which it is couched and the manner of its publication Annexure 'D ' is in Hindi.
The caption of that leaflet is "The surety (security) of Shri Nahata has to be forfeited because he has defrauded the public and has shown his face after five years to take votes.
" Counsel for Mohan Singh submitted that the expression "defrauded" is not a correct rendering into English of the Hindi expression "dhoka diya"; it means "misled".
The caption is followed by a photograph of Mohan Singh together with his election symbol and it is stated that the ballot paper of Mohan Singh is of pink colour and that the election symbol is the picture of a tamp It then proceeds to state that "Sitamau constituency has awakened.
Nahata (Bhanwarlal) has run away.
Shinde, Kishen Gupta Patil Patel, you may safeguard the interests of your Bhanwarlal Nahata as much as you like but his surety (security) is sure to be forfeited.
" Then follow nine paragraphs the third of which alone is material.
That para graph reads: "We have heard that your friend has collected 28 thousand rupees from several villages in the name of opium.
The agriculturists did not get the licenses and those agriculturists who got them had to spend a lot of money and time and the licenses for opium were received on execution of bonds for 8 seers.
" 22 The leaflet concludes by a note which reads: "Every voter will get ' two ballot papers one is of pink colour for Legislative Assembly for Thakur Mohan Singh .
Put the seal on the symbols of lamp on both the ballots pink and white.
You read this pamphlet and give it to your friends to spread the message from house to house.
Submitted by Nahata Virodhi Morcha Sitamau Constituency.
" Annexure 'E ' bears the caption: "The Bureaucrats of yesterday Congressmen of to day".
It consists of two parts the first relates to certain allegations against one Dr. Raghubir Singh who it appears was a candidate from the constituency for Parliament and the second relates to Bhanwarlal.
The portion dealing with Bhanwarlal Nahata states: "Let Sriman Shri 1008 of Shri Nahata tell? (1) Did you not defraud the agriculturists with respect to the licences of opium ? (the other six questions are not relevant, and need not be reproduced) Public has already decided and now it is not going to fall prey to your fraud and greed.
On all sides "the public has decided to put seal on lamp and make it victorious.
Therefore the congressmen should not be misled while making propaganda.
Submitted by Goswami Mahant Ratnagir.
" It is said that the last paragraph is not correctly rendered into English: it merely stated, it is urged, that the public have already known the truth and they are not going to fall a prey to the misleading promises and inducements etc.
No authorised translation of the two leaflets is furnished, but we will proceed to ascertain the purport of the relevant parts of the two leaflets as incorporated in the printed book, with the modifications suggested by counsel for Mohan Singh.
Paragraph 3 of annexure 'D ' as it stands rendered into English is not very clear in its import.
To a person completely unacquainted with the local conditions the expression "in the name of opium" may convey no meaning.
But in considering whether a 23 publication amounts to a corrupt practice within the meaning of section 123(4) the Tribunal would be entitled to take into account matters of common knowledge among the electorate and read the publication in that background, for one of the ingredients of the particular corrupt practice is the tendency of the statement in the publication to be reasonably calculated to prejudice the prospects of that candidate 's election.
The test in cases under section 123(4) is whether the imputation beside being false in fact, is it published with the object of lowering the candidate in the estimation of the electorate and calculated to prejudice his prospects at the election? And in ascertaining whether the candidate is lowered in the estimation of the electorate, the imputation made must be viewed in the light of matters generally known to them.
It is common ground that in the territory which forms the Sitamau constituency, licences for cultivation of opium are granted by the authorities to agriculturists, and the statement made in paragraph 3 apparently is that Bhanwarlal had collected Rs. 28,000 from the agriculturists in the constituency for securing licences for cultivation of opium but the agriculturists did not get the licences and even those who obtained the licences had to spend considerable sums of money.
The innuendo in the statement cannot be mistaken: it is that a large amount of money was collected from agriculturists by Bhanwarlal on the 'representation that he would obtain licences for opium cultivation, but he did nothing in that behalf and misappropriated the amount.
That is further made clear by paragraph 1 in annexure 'E ' relating to Bhanwarlal.
The form in which that allegation is made is in the interrogative form.
By annexure 'E ' certain questions were addressed to Bhanwarlal and one of the questions was whether he had not defrauded the agriculturists with respect to the licences of opium? The interrogative form is often employed not with a view to secure information but to make and emphasize an assertion.
The use of the interrogative form would not make the statement any the less an imputation if it is fairly capable of being 24 so read.
As we have already observed the evidence establishes that the leaflets annexures 'D ' & 'E ' were published simultaneously and annexure 'D ' contains an allegation about the collection of Rs. 28,000 by Bhanwarlal Nahata "in the name of opium", and in annexure 'E ' an express imputation of defrauding the agriculturists in the matter of licences for opium cultivation is made.
On a reasonable reading of these two leaflets there was no doubt that the person responsible for the publication of these two leaflets intended to convey that Bhanwarlal had deceived the agriculturists into parting with the sum of Rs. 28,000 on the representation that licences for cultivation of opium would be obtained for them.
The two leaflets also clearly imply that he misappropriated the fund collected by him.
Bhanwarlal denied that he had utilised any fund collected from the agriculturists for his own purposes.
He stated that some amounts of money were collected from cultivators of opium by the District Congress Committee, and receipts were given by the District Congress Committee in respect of those collections on behalf of the District Congress Committee.
He denied that he had misled the agriculturists or that he had misappropriated any amount collected from the agriculturists.
He asserted that the amounts collected from the agriculturists were for the District Congress Committee, and did in fact go to that body.
The imputation is undoubtedly in relation to the personal conduct of Bhanwarlal, and if the testimony of Bhanwarlal be accepted, the imputation must be held to be false.
No attempt was made at the trial to prove the truth of the imputations.
Even in the written statement filed by Mohan Singh it was not his plea that the imputations against Bhanwarlal were true or that he believed them to be true.
From the manner in which and the time when the leaflets annexures 'D ' and 'E ' were published, there can be no doubt that those leaflets were published as a part of a political campaign to injure the prospects of Bhanwarlal at the election, and if without making an 25 enquiry about the collection of the amount of Rs. 28,000 and the destination therefore, it was imputed against Bhanwarlal that he had defrauded the agriculturists and misappropriated the amount collected, the inference that the statement made was to the knowledge of the maker false or was not believed by him to be true, would readily be made.
The imputation was on the face of it one reasonably calculated to prejudice the prospects of the candidate Bhanwarlal at the election.
The High Court was therefore right in holding that the corrupt practice charged against the appellant Mohan Singh under section 123 (4) was established.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellant was declared elected to the Madhya Pradesh Legislative Assembly.
Another candidate Himmat Singh withdrew his candidature before the date of polling.
Respondent 1 one of the defeated candidates, challenged the election by a petition under the Representation of the People Act alleging that the appellant had disqualified himself by committing corrupt practices.
It was alleged that he had shortly before the polling of votes published two leaflets in Hindi containing statements of fact with regard to the personal character or conduct of respondent 1 which were false and which the appellant believed to be false or did not believe to be true and that the statements were calculated to prejudice the prospects of respondent 1 at the election.
The appellant denied 13 the said allegations and applied to the Election Tribunal for dismissing the petition in limine because Himmat Singh against whom allegations of corrupt practice in regard to the withdrawal of candidature were made, was not joined as a respondent.
The Tribunal rejected the application and held that it was established on the evidence that the appellant did commit corrupt practice by publishing the two leaflets.
In appeal the High Court agreed with the Tribunal.
It was urged on behalf of the appellant that the election petition was liable to be dismissed in limine, as it did not comply with the requirements of s.82 of the Act, that the appellant did not publish the leaflets, and that in any event the publication did not constitute a corrupt practice within the meaning section 123(4) of the Act.
Held: (i) The election petition was not detective.
There was no allegation of corrupt practice against Himmat Singh.
It was merely alleged that the appellant had offered to assist or help Himmat Singh in obtaining employment with "Dalauda Sugar Factory or elsewhere".
The acceptance of offer which constitutes a motive or reward for withdrawing from the candidature must be acceptance of gratification.
Gratification does not include offers and acceptances of mere promises, but requires ,an offer and acceptance relating to a thing of some value, though not necessarily estimable in terms of money.
A mere offer to help in getting employment is not such offer of gratification within the meaning of section 123(1)(B) as to constitute it a corrupt practice.
On the allegations therefore, it was not necessary to implead Himmat Singh as a respondent to the petition.
(ii) The onus of establishing a corrupt practice is undoubtedly on the person who sets it up, and the onus is not discharged on proof of mere preponderance of probability, as in the trial of a civil suit; the corrupt practice must be established beyond reasonable doubt by evidence which is clear and unambiguous.
(iii) In considering whether a publication amounts to a corrupt practice within the meaning of section 123(4) the Tribunal would be entitled to take into account matters of common knowledge among the electorate and read the publication in that background, for one of the ingredients of the particular corrupt practice is the tendency of the statement in the publication to be reasonably calculated to prejudice the prospects of that candidate 's election.
The test in cases under section 123(4) is whether the imputation, besides being false in fact, is published with the object of lowering the candidate in the estimation of the electorate and calculated to prejudice his prospects at the election.
In ascertaining whether the candidate is lowered in the estimation of the electorate, the imputation made must be viewed in the light of matters generally known to them.
|
ON: Civil Appeal No. 1945 of 1984.
From the Judgment and Order dated 16.12.1983 of the Bombay High Court in W.P No 4356 of 1983.
R. Karanjawala.
Mrs. Manik Karanjawala and Ejaz Maqbool for the Appellants.
PG NO 62 T.S. Krishnamurthy, R.N. Keshwani, Dilip Jhangiani, V.K. Punwani and M.K.D. Namboodiri for the Respondents.
The Judgment of the Court was delivered by SEN, J.
This appeal by special leave is directed against the judgment and order of the High Court of Bombay dated 16th December 1983 declining to interfere with the judgment and order of the Maharashtra State Cooperative Appellate Court, Bombay dated 31st October, 1983.
By the impugned judgment the Appellate Court up held the judgment and order passed by the Judge, First Cooperative Court, Bombay dated 28th August, 1981 directing the appellants to vacate and hand over possession of Flat No. 16 on First Floor of Block No. 8 in the housing colony known as Shyam Niwas, situate at Warden Road, now called Bhulabhai Desai Road, Bombay and to pay mesne profits @ Rs.450 per month and a further amount of Rs.42.50 towards maintenance, car parking and water charges w.e.f.
Ist August 1981.
The facts of the case are as follows.
By an agreement in writing dated 1st January 1964, the disputant the late Smt.
Devibai H. Advani, who was a tenant co partner member, permitted the appellants ' father Rajpal Bhatia, user of her Flat No. 16 for a period of 11 months as from that date on the terms and conditions stated in the said agreement.
Both the parties made a joint application for admission of the said Rajpal Bhatia as a nominal member of the society and the society granted the requisite permission for his occupying the flat in dispute on terms of leave and licence.
At the request of Rajpal Bhatia, the said agreement for leave and licence was renewed for 11 months each by further agreements and thereafter the period was further extended 11 months by an endorsement.
The late Smt.
Devibai Advani by her lawyer 's notice dated 21st May 1969 terminated the agreement for leave and licence.
On 30th June 1969 she made a claim under section 91 of the Maharashtra Cooperative Societies Act, 196() (for short the Act ') before the District Deputy Registrar for the eviction of the said Rajpal Bhatia alleging him to be in unauthorised occupation of her flat.
The claim as laid by her was that she was a 'tenant member ' of the society and that Rajpal Bhatia was in unauthorised occupation.
Her claim for eviction was however register by Rajpal Bhatia inter alia on the ground that the transaction between the parties was one of lease and not of licence and therefore the Registrar had no jurisdiction to enter upon the reference under section 91 of the Act inasmuch as his jurisdiction to enter upon such claim was barred under section 28 of the Bombay Rents, Hotel & Lodging House Rates Control Act, 1947 (Bombay Rent Act for short).
That objection of his PG NO 63 was sustained by the Officer on Special Duty by his judgment and award dated 16th November 1972.
The learned Officer on Special Duty held that the parties stood in the jural relationship of landlord and tenant and further that the dispute in question did not touch upon the business of the society within the meaning of section 9 1 of the Act.
Aggrieved, the disputant the late Smt.
Devibai Advani carried an appeal to the Maharashtra State Cooperative Appellate Tribunal.
The Tribunal by its judgment and order dated 8th February 1974 allowed the appeal and remanded the case for a decision afresh on the question whether the disputant the late Smt.
Devibai Advani was a tenant co partner member or a tenant owner member.
It is however necessary to mention that the Tribunal held that the society was a mixed type of society having both tenant co partner members and tenant owner members but since the disputant described herself as a tenant member, and particularly having regard to the fact that Rajpal Bhatia get himself admitted as a nominal member queried: If she was an owner member where was the necessity of taking permission of the society for letting the flat? Nor was there any necessity for Rajpal Bhatia to seek admission as a nominal member which made him subject to the bye laws of the society.
According to the Tribunal, these circumstances were more in consonance with the status of the disputant being a tenant member.
It went on to say that there was no evidence led to establish that the flat in question was sold to the disputant and accordingly remitted the aforesaid issue for a decision afresh.
During the tendency of the appeal, the late Smt.
Devibai Advani made an application praying that the society be transposed as disputant No. 2.
Despite the opposition of Rajpal Bhatia.
the application for transposition was ultimately allowed.
Initially when the society was registered, it was really governed by the regulation in Form 'A '.
It however appears that by mistake, as is evident from the affidavit sworn by Atmaram Jhangiani, Chairman of the society, regulation in Form 'P ' which relates to tenant owner members was adopted.
This mistake was detected in the year 1949 and accordingly at the Annual General Meeting of the society held on 3rd September 1949 it was declared that Form 'B ' was inapplicable and therefore the mistake was rectified by a unanimously carried resolution that regulation in Form 'A ' be adopted instead of regulation in Form 'B '.
The District Deputy Registrar, Cooperative Societies, Surat by order dated 10th July 1950 approved of the amendment and accordingly Form 'A ' was adopted and Form 'B ' deleted.
The PG NO 64 modification in the byelaws was approved by a resolution carried at the General Body Meeting of the society held on 26th November 1950 and forwarded to the District Deputy Registrar for approval.
After the adoption of Form 'A ', byelaw 10(a) pro tanto stood amended.
Due to sheer inadvertence, however, byelaw 10(a) remained in the form it was framed and this has given rise to an endless argument before us.
In the certificate to incorporation issued by the Registrar, Cooperative Societies the society is classified as a tenant co partnership society consisting of tenant co partner members.
The mistake in allowing the byelaw 10(a) as originally framed making reference to tenant owner members, came to the notice of the society in 1974 when the said byelaw was deleted and substituted by a fresh byelaw 10(a) which made no reference to the admission of membership of any owner member to the society or to the regulation in Form 'B '.
On remand, the only contention advanced before the Judge, First Cooperative Court, Bombay was that the society was a tenant co ownership type of society and not tenant co partnership type.
The learned Judge by his order dated 8th September 1976 recorded a finding that the society, in fact, was a tenant co partnership type of society and therefore the disputant was only a tenant co partner member.
Against his order Rajpal Bhatia went up in revision to the Maharashtra State Cooperative Appellate Court which by its order dated Ist July 1977 dismissed the revision as not pressed.
Thereafter, the dispute came up for adjudication before the learned Judge, First Cooperative Court, Bombay who framed five issues in all.
The learned Judge allowed the parties to adduce their evidence thereon.
After considering the evidence on record, the learned Judge by his judgment dated 28th August 1981 came to a definitive finding that the claim of the disputant was a claim touching the business of the society under section 91 of the Act: that the society is a co partnership type of society and not of co ownership; that the real nature of the transaction between the parties was that embodied in the formal agreement for leave and licence dated 1st January 1964 and further that after termination of the licence the possession of the said Rajpal Bhatia was wrongful.
According, the learned Judge rendered an award directing the said Rajpal Bhatia to vacate and hand over possession of the flat in question.
The appellants ' father Rajpal Bhatia went up in appeal before the Maharashtra State Cooperative Appellate Court but without any avail.
It held inter alia that in view of the letter addressed by the District Deputy Registrar, Cooperative Societies, Bombay dated 22nd November 1978 intimating the Court that Form 'B ' had been deleted after PG NO 65 the resolution passed at the Annual General Meeting held on 3rd September 1949 and the amendment of the byelaws effected by order of the District Deputy Registrar dated 10th July 1950, and particularly in view of the fact that in the latest copy of the bye laws there is no reference to Form 'B ', the conclusion was inescapable that the society is a tenant co partnership housing society and Form 'B ' as was originally appended to the byelaws was no longer applicable.
It observed that in view of its earlier judgment in Appeal No. 236/78 Messrs Bharat Sales Service & Anr.
vs Smt.
Rukibai Naraindas Bhavnani & Anr., decided on 12th January, 1979 taking that view upon investigation into the facts, which was upheld by the High Court in O.N. Bhatnagar vs Smt.
Rukibai Naraindas Bhavnani & Anr., in Miscellaneous Petition No. 271/79, decided on 21st April 1981, and later by this Court in O.N. Bhatnagar vs Smt.
Rukibai Naraindas, ; , it was no longer possible to contend that Shyam Cooperative Housing Society Limited was a tenant ownership housing society and not a tenant co partnership housing society.
It further observed that in view of the decision of this Court in O. N. Bhatnagar s case, learned counsel appearing for the appellants conceded the legal position but contended that the decision in O.N. Bhatnagar was distinguishable on facts.
It observed: "It has to be noted that Form A ' was made applicable to all the buildings of the society and not to a particular block or building.
No doubt, the byelaws of the society were amended much later i.e., in the year i976 though the resolution proposing the amendment was passed in the meeting held on 25.12.1974.
It appears that, though Form 'A ' was made applicable in the year 195() to the society corresponding amendment was made on 25th December, 1974 and thereafter it was approved on 28th April, 1976.
That will not make any difference because once Form 'A ' is made applicable and once Form 'B ' is deleted from the bye laws the intention of the society was to convert the society to a Tenant Co partnership type of society.
Moreover, it has to be noted that the present appellant was inducted in the said premises on 1st January, 1964, i e. much after the Form 'A ' was adopted.
As mentioned above, it is not open to the present appellant to challenge the status of the respondent No. I Devibai because, as mentioned above, the respondent No. I had surrendered her status as tenant owner and had become tenant copartner member of the society.
Under these circumstances, there is no other alternative but to hold PG NO 66 that the society is not a mixed type of society but it is a tenant co partnership type of Society." Further, the Appellate Court held that merely because the disputant described herself as the owner of the flat was not decisive of the question as to whether she was a tenant co partner member or a tenant owner member, and added: "Even though the respondent No. 1 described herself as the owner of the flat, we feel that as she has purchased the flat from the society she might have described herself as the owner.
In common parlance the flats which are purchased from the society or from the builders are called as ownership flats and very often we find that even a member in a tenant co partnership type of society describes himself or herself as owner of the flat, either because he has purchased the flat or he has contributed towards the cost of the construction.
In the light of the principles laid down by this Court in Associated Hotels of India Ltd. vs R.N. Kapoor, [1960] I SCR 368 the Appellate Court further held on a consideration of the evidence adduced by the parties that the parties intended by the agreement to create a licence and not a lease.
It also held that the dispute was a dispute touching the business of the society.
Shri R.F. Nariman, learned counsel for the appellants argued the appeal with great clarity, much resource and learning we heard him with considerable interest.
It was contended, firstly, that the intention Of the disputant the late Smt.
Devibai Advani was to demise the flat in question and therefore the real transaction was one of lease though camouflaged in the form of an agreement for leave and licence and therefore the jurisdiction of the Registrar under section 91 of the Act to adjudicate upon the reference was barred by section 28 of the Bombay Rent Act; and secondly, that neither of the two resolutions subsequently adopted by the Annual General Meeting or the General Body Meeting nor the order of the District Deputy Registrar could change the intrinsic character of the real status of the disputant who was admittedly a tenant owner member, and the finding of the Appellate Court that she must be deemed to have relinquished her status as tenant owner member and became a tenant co partner member of the society is patently erroneous.
Learned counsel very candidly accepted that he does not rely upon section PG NO 67 15A of the Bombay Rent Act.
That had to be so because in the first place his entire submission proceeds on the basis that the transaction between the parties was one of lease and not of licence and secondly, even otherwise, the licence having admittedly been terminated by the disputant 's notice dated 2Ist May 1969, there was no subsisting licence existing as on 1st February 1973 and section 15A interms would be inapplicable.
We are afraid, in view of the decision of this Court in O.N. Bhatnagar s case, the contentions advanced by the learned counsel cannot prevail.
There can be no doubt whatever from the terms of the agreement dated Ist January 1964 as well as the overwhelming evidence on record taken in conjunction with the facts and circumstances appearing, coupled with the course of conduct of the parties that the real transaction was one of lease and not of licence.
The agreement between the parties is embodied in the usual standard form of an agreement for leave and licence.
The parties being executants thereof are bound by the terms of the agreement.
There is nothing to suggest that the agreement for leave and licence was merely a device to camouflage the real nature of the transaction viz. creation of a tenancy, which would clearly be against the bye laws of the society.
The disputant the late Smt.
Devibai Advani, the licensor, was only a tenant co partner member and all that she could do under the terms of the bye laws was to create a licence with the permission of the society by making the licensee to be a nominal member thereof.
The evidence adduced by the disputant clearly shows that the flat in question was taken on a licence for a term of 11 months which was renewed from time to time at the request of the late Rajpal Bhatia till the disputant terminated the licence by notice dated 21st May 1969.
We also find no merit in the contention that the jurisdiction of the Cooperative Courts to adjudicate upon the dispute under section 91 of the Act was barred by section 28 of the Bombay Rent Act.
The matter is directly covered by the decision of this Court in O.N. Bhatnagar 's case.
In rejecting the contention that a dispute of this nature was not a dispute touching the business of the society within the meaning of section 91(1) of the Maharashtra Cooperative Societies Act.
it was observed: "In the present case, the society is a tenant co partnership type housing society formed with the object of providing residential accommodation to its co partner tenant members.
Now, the nature of business which a society carries PG NO 68 on has necessarily to be ascertained from the object for which the society is constituted, and it logically follows that whatever the society does in the normal course of its activities such as by initiating proceedings for removing an act of trespass by a stranger, from a flat allotted to one of its members, cannot but be part of its business.
It is as much the concern of the society formed with the object of providing residential accommodation to its members, which normally is its business, to ensure that the flats are in occupation of its members, in accordance with the bye laws framed by it, rather than of a person in an unauthorised occupation, as it is the concern of the member, who lets it out to another under an agreement of leave and licence and wants to secure possession of the premises for his own use after the termination of the licence.
It must, therefore, follow that a claim by the society together with such members for ejectment of a person who was permitted to occupy having become a nominal member thereof, upon revocation of licence, is a dispute falling within the purview of section 91(1) of the Act.
" In dealing with the inter relation between the non obstante clause in section 91(1) of the Act and that in section 28 of the Rent Act, it was observed: "It seems to us that the two Acts can be best harmonised by holding that in matters covered by the Rent Act, its provisions, rather the provisions of the Act, should apply.
But where the parties admittedly do not stand in the jural relationship of landlord and tenant, as here.
the dispute would be governed by section 91(1) of the Act.
No doubt, the appellant acquired a right to occupy the flat as a licensee, by virtue of his being a nominal member, but in the very nature of things, his rights were inchoate.
In view of these considerations, we are of the opinion that the proceedings under section 91(1) of the Act were not barred by the provisions of section 28 of the Rent Act. ' ' It is quite evident from the affidavit sworn by Atmaram Jhangiani, Chairman of the Shyam Cooperative Housing Society Limited, that the society is purely a tenant co partnership type of Housing society consisting only of tenant co partner members and there are no tenant owner members in the society; nor are there any tenant owner members in block No. X where the flat in question is located.
As H already stated, while framing the bye laws regulation in Form 'B 'was PG NO 69 by mistake adopted.
This mistake was realised in 1949 and at the Annual General Meeting of the society held on 3rd September 1949 it was decided that the regulation in Form 'B ' was inapplicable and therefore the mistake was rectified by deleting Form 'B ' and substituting Form 'A '.
This amendment was duly approved by the District Deputy Registrar, Bombay by his order dated 10th July 1950.
The aforesaid resolution was duly ratified at the General Body Meeting of the society.
That being so, bye law 10(a) making a reference to tenant owner members became a mere superfluity and was wholly redundant.
The rights of the parties cannot be spelled out from the terms of the bye law 10(a) as originally framed.
Nor would the mere description by the disputant the late Smt.
Devibai Advani describing herself to be the owner of the society, affect the classification of the society because she was, in fact and in law, nothing but a tenant co partner member.
It also appears from the certificate of registration issued by the Registrar, Cooperative Societies that the society was classified as a tenant co partnership housing society.
The erroneous description in bye law 10(a) of the society having tenant owner members came to be rectified when the said bye law was replaced in l974 by a new bye law 10(a).
In view of the subsequent change brought about by the amendment of the bye laws, there was no question of the disputant being regarded as a tenant owner member.
The Appellate Court as well as the learned Judge of the First Cooperative Court have rightly held her to be a tenant co partner member.
The appellants ' father Rajpal! Bhatia having been inducted into the premises under the terms of the agreement for leave and licence dated 1st January 1964, cannot be heard to say that disputant was a tenant owner member and not a tenant co partner member or that the transaction was one of lease and not of licence.
These aspects are concluded by the concurrent finding of fact based on appreciation of evidence recorded by the Courts below.
There is no reason for us to come to a contrary conclusion.
We cannot but briefly refer to a few of the decisions cited.
As explained in the affidavit sworn by Atmaram Jhangiani.
Chairman of the society, the decision in Sabharwal Brothers vs Smt Guna Amrit Thandani, [1973] I SCR 53 proceeds on the assumption that Smt.
Guna Amrit Thandani was an owner member.
It appears that the true and correct factual position was not placed before the Court that under the changed bye laws of the society, particularly after the deletion of Form 'B ', she could only he a tenant co partner member.
It follows that the ultimate conclusion arrived at was based upon inaccurate facts.
Be that as it may, a decision based upon a statement of inaccurate facts which has no semblance of reality would not change the actual PG NO 70 legal status of the society as a tenant co partnership type of housing society, nor the classification made by the Registrar, Cooperative Societies in his certificate of incorporation issued by him, classifying the society as a tenant co partnership society consisting only of tenant co partner members.
In view of the real factual position now brought out, it is difficult to come to the conclusion that the society was a mixed type of society or that the building in question where the flat in dispute is situate, was a multi storeyed building consisting of residential flats of both types viz. tenant owner flats and tenant co partnership flats.
In any event, the decision in Sabharwal Brothers case is clearly distinguishable on facts.
The contention of Shri Nariman that the society was a mixed type of society must therefore fail.
The decision of this Court in Ramesh Himmatlal Shah vs Harsukh Jadhavji Joshi, [ is also distinguishable.
In that case, the question was whether a flat in a tenant co partnership housing society was liable to attachment and sale in execution of a decree.
The Court laid down that the right to occupy the flat owned by a cooperative housing society is a species of property.
It was further held that there was nothing in the language of section 31 of the Maharashtra Cooperative Societies Act to indicate that the right to occupation of such a flat which was the right sought to be sold by auction, was not attachable in execution of the decree.
Nor was there anything in the section to even remotely include a prohibition against attachment or sale of the aforesaid right to occupation of the flat.
The only restrictions under section 29(2) of the Act are that the member may not transfer his interest in the property prior to one year and the transfer is made to an existing member of the society or to a person whose application for membership has been accepted by the society.
As regards bye law 710 the Court observed that any contravention of the bye law would not make the assignment invalid under the Act unlike in the case of a transfer being void under section 47(3).
Further, that section 29 read with r. 24 shows that there is no prohibition as such against transfer of a share to a member or even to a non member if he consents to be a member and makes an application for membership, by purchasing five shares as provided under bye law 9.
The ultimate decision of the Court was that the right to occupation ot ' a flat is property both attachable and sale able, inasmuch as section 60 of the Code of Civil Procedure, l908, is not exhaustive as such.
It also refers to any other sale able property, movable or immovable, whether the same be held in the name of the judgment debtor or by another person on his behalf.
The right to occupation of a flat is property both attachable and sale able.
Specific non inclusion of a particular species of property under section 60 is PG NO 71 therefore not of any consequence if it is sale able otherwise.
the decision in Ramesh Himmatlal Shah 's case is therefore of little or no assistance.
Chainani, CJ speaking for himself and V.M. Tarkunde, J. in Dr. Manohar Ramchandra Sarfare vs The Konkan Co operative Housing Society Ltd. & Ors., brought out the true concept of a tenant co partner housing at p. 157 in these words: "(T)he property in the whole estate remains absolutely with the society as a whole.
The member contributes in the first instance by shares and then pays rent so calculated as to cover not only the economic rent of his tenant or house, but also an amortization or sinking fund payment, which at the end of 25 years or 40 yars, as the case may be, repays the whole value of the building.
At the end of that period, he is credited with further shares in the society equivalent to the value that he has paid up and the normal interest on these shares is equal to the economic rent which he has to pay.
At the end of the period he is therefore in the position of occupying the building free of rent Or merely so as a tenant of the society of which he is himself a member and therefore a controlling authority.
" See also: I.R. Hingorani vs Pravinchandra, ; Contessa Knit Wear vs Udyog Mandir Cooperative Housing Society.
and Bandra Green Park Co operative Housing Society Ltd. & Anr.
vs Mrs. Dayadasi Kalia & Ors.
These cases more or less reflect the different views that have prevailed in the High Court but the law is now governed by the principles laid down by this Court in O. N. Bhatnagar 's case .
The result therefore is that the appeal must fail and is dismissed(l with costs.
The appellants are however given six months ' time to vacate the disputed premises on their furnishing the usual undertaking to the Registrar of this Court within four weeks from today in the form of affidavits sworn by each one of them that they shall deliver vacant and peaceful possession to respondents nos.
i and 2 on or after 31st March 1989 and shall not in the meanwhile part with, assign or otherwise encumber the premises in any manner.
S.L. Appeal dismissed.
| The respondent had acquired the building being premises No. 1.1.249 Chikkadpalli, Hyderabad, constructed two storeys over this building and utilised the upper floors for his residence and the ground floor for his business.
Subsequently, he had purchased the adjacent building being premises No. 1 1 250.
The appellant was a tenant in the suit premises No. 1.1.250 even before the respondent purchased it, and was running his shop in the front room and residing in the rear portion.
The respondent sought eviction of the appellant inter alia on the ground of requirement of additional space under section 10(3)(r) of the Andhra Pradesh Buildings (I,ease, Rent and Eviction) Control Act, 1960, under which .
landlord occupying only a part of a building was entitled to seek the eviction of a tenant occupying another portion or the remaining portion of the building if the landlord required additional accommodation for residential purpose or for carrying on his business.
The Rent Controller held that the respondent was not entitled to an order of eviction under section 10(3)(c) because the leased premises was a separate building and did not form part of the building in which the respondent was carrying on his business.
The Appellate Authority however held that even though the leased premises had a separate municipal door number it could be treated as forming part of the building in the respondent 's occupation because both ' the buildings were owned by the respondent and were separated only by a single wall.
PG NO 433 PG NO 434 The High Court in revision held that if the respondent wanted the premises bona fide as an additional accommodation it did not matter whether it was a separate building or a portion of the same building.
Before this Court, the appellant contended that section 10(3)(c) would not apply to a case where the landlord and the tenant were occupying different buildings even though the two buildings were owned by the same landlord.
The respondent, on the other hand, contended that the two buildings could not be treated as independent and separate buildings because both the buildings were owned by the respondent and were separated only by a single wall.
Allowing the appeal, it was, HELD: (I) From a reading of clause (c) of section 10(3) it is obvious that provision has been made under that clause only to seek the eviction of a tenant occupying another portion or the remaining portion of the building in which the landlord is also residing or carrying on his business in one portion.
[437F] (2) What section 11)(3)(c envisages is the oneness of the building and not the oneness of ownership of two different buildings, one occupied by the landlord and the other by the tenant.
[438G H] (3) The significant words used in section 10(3)(c) are "the landlord who is occupying only a part of a building" and "any tenant occupying the whole or an portion of the remaining part of the building." [438H; 439A] (4) A practical test which can be applied o find out if two adjoining buildings form part of the same building or two different buildings would be to see whether one of the two buildings can be sold by the landlord and the purchaser inducted into possession of the premises sold without the landlord 's possession and enjoyment of the premises in his occupation being affected.
[439B C] (5) The identity of two separate building is not to be judged on the basis of the buildings being separated by a single wall or by two separate walls with intervening space in between them.
[439E] (6) There is no room or scope for the respondent to invoke section 2(iii), defining the word "building", to contend that two different premises should be treated as a single and integrated building for the purposes of the Act if the two buildings adjoin each other and are owned by the PG NO 435 same person but under different occupation i.e. one by the landlord and the other by the tenant.
[440C D] (7) If the hardship experienced by landlords similar to the respondent is to be alleviated, then it is for the legislature to remedy the situation by making suitable amendments to the Act and it is not for the Court to read section 10(3)(c) beyond its terms, oblivious to the limitations contained therein and hold that a separate tenanted building adjoining the building in the owner 's occupation would also form part of the latter building.
[44lA B] Balaiah vs Lachaiah, AIR 1965 A.P. 435; Balaganesan Metals vs M.N. Shanmugham Chetty, JT and N. Ramaswamy Naidu vs P. Venkateshwarlu, Vol.
Il 1961 1 A.W.R. page 400, referred to.
|
iminal Appeal No. 12 of 1957.
Appeal from the judgment and order dated September 5, 1956, of the Calcutta High Court in Government Appeal No. 7 of 1954, arising out of the judgment and order dated April 3, 1954, of the Court of 1st Class Magistrate at Alipore.
Ishwar Lal C. Dalal and 1.
N. Shroff, for the appellant.
H. J. Umrigar, and R. H. Dhebar, for the respondent.
May 7.
This is an appeal on a certificate granted by the Calcutta High Court.
Two points have been urged before the Bench of the High Court which granted the certificate.
The first was that the search conducted by the Customs officials which had resulted in the detection of the currency notes on the person of the appellant had not been a legal search and consequently no proceedings could be based on the purported detection made.
This point was rejected by the Bench.
The second point urged on behalf of the appellant was that on September 16, 1952, when the 95 Magistrate issued the warrant of arrest against the appellant he could not have done so without having previously taken cognizance of the offence.
Since, however, the authorization required under section 23(3) of the Foreign Exchange Regulation Act (VII of 1947) was not obtained till January 27, 1953, the cognizance taken by the Magistrate on September 16, 1952, was without jurisdiction.
If the initiation of the proceedings was without jurisdiction, the conviction could not stand.
The High Court thought that the contention of the appellant raised a question of law and granted the requisite certificate for appeal to this Court.
The prosecution case was that on September 7, 1952, the appellant went to Dum Dum Aerodrome with a view to boarding a plane for Hong Kong.
The plane was due to leave the airport at 8 30 a.m.
The appellant had to go through the customs formalities before he could board the plane.
On an enquiry by the Customs Officers as to whether he had any other articles besides what he had declared in the declara tion form, the appellant answered in the negative.
His baggage was then examined but no objectionable article was detected therein.
The Customs Officers, however, noticed a pouch of somewhat unusual size which aroused their suspicion.
Thereafter, the appellant was subjected to personal search.
When they were about to search his person he let drop his trousers.
The appellant was requested to lift up the trousers and wear them again which he did.
On the search of the trousers a sum of Rs. 25,000 in Indian currency notes was discovered in two secret pockets.
They were concealed from below the surface and opened from the inside.
On September 11, 1952, the Reserve Bank of India authorized Inspector section B. Mitra of the Special Police Establishment, Calcutta, to make a representation to the Additional District Magistrate, 24 Parganas (hereinafter referred to as the Additional District Magistrate) for permission to proceed against the appellant as required under section 19(3) of the Foreign Exchange Regulation Act, 1947.
Mitra thereupon applied to the Additional District, Magistrate on September 16, 1952, for a search warrant 96 to be issued which was allowed.
Mitra on the same date also applied to the same Magistrate that a warrant of arrest might be issued against the appellant.
This was also allowed and a warrant of arrest was issued by the Additional District Magistrate and appellant was thereafter arrested and released on bail with a direction to appear before the Additional District Magistrate on September 19.
On September 19, he was released on bail by the Additional District Magistrate in the sum of Rs. 50,000 with 10 sureties of Rs. 5,000 each.
On November 19, the appellant asked for exemption from attending the court on the succes sive dates fixed for the case but the application was refused.
On January 27, 1953, the Reserve Bank of India authorized Mitra to file a complaint against the appellant.
On February 2,1953, a complaint was filed against the appellant charging him with an offence under section 8(2) of the Foreign Exchange Regulation Act read with section 19 of the Sea Customs Act and notification No. FERA 105/55 RB, dated February 27, 1951.
Thereafter, the appellant was tried by another Magistrate, Mr. Sinha, who acquitted him under section 258 of the Code of Criminal Procedure.
The currency notes which had been seized by the Customs Officials were directed to be relassed.
Against the appellant 's acquittal the State of West Bengal preferred an appeal to the High Court.
The High Court allowed the appeal and convicted the appellant of the offence with which he had been charged.
He was sentenced to pay a fine of Rs. 1,000, in default to suffer rigorous imprisonment for three months.
The order of the Magistrate directing the release of the currency notes was set aside.
The main submission made on behalf of the appellant before us has been that the Additional District Magistrate having taken cognizance of the offence on September 16, 1952, and as the provisions of section 23(3) of the Foreign Exchange Regulation Act had not been complied with, the entire proceedings before him and the Magistrate who tried the case were without jurisdiction.
The subsequent authorization by the Reserve Bank on January 27, 1953, and the filing of 97 the complaint on February 2,1953 could not make legal proceedings which had already commenced without jurisdiction.
It was also urged that the facts found did not attract the provisions of section 19 of the Sea Customs Act (8 of 1878) as it could not be said that at the moment the appellant was searched by the Customs Officials, he was taking out of India across any customs frontier as defined by the Central Government the currency notes in question.
It was also urged that explanation offered by the appellant was accepted by the trying Magistrate and the High Court ought not to have set aside the acquittal of the appellant, there being no good ground why his explanation should not have been accepted.
The version of the appellant as to how the sum of Rs. 25,000 in currency notes was with him was that he was not searched at all at the Customs barrier.
had taken out the currency notes in question from his trouser pocket and handed over the same to the Customs Officers stating the circumstances under which he was carrying the same on his person and asked for a receipt.
The Customs Officers instead of giving him a receipt falsely charged him with smuggling the currency notes out of India without any permit.
According to the appellant, he had applied to the Reserve Bank of India at Calcutta for a permit and had sent an application for that purpose to one Joshi in Calcutta.
He failed to receive the permit upto the last moment.
His intention was to hand over the money to the Customs Officers for safe custody.
In other words, the appellant 's version, in substance, was that as he had failed to get the permit upto the last moment he voluntarily handed over the currency notes in question to the Customs Officers at the customs barrier for safe keeping.
He had at no time any intention to carry out of India the said currency notes without a permit.
This version of the appellant was accepted by the trying Magistrate who acquitted him.
The High Court, however, did not accept his version.
It was urged that the appeal is before us on a certificate and as the High Court had come to a different 13 98 finding on a question of fact to what the trying Magistrate had found, it was open to the appellant to urge that he was entitled to question the findings of the High Court.
It is true that the High Court has taken a different view to that taken by the trying Magistrate and has rejected the appellant 's case that he had voluntarily handed over the currency notes in question to the Customs Officers in the circumstances mentioned by him and that he had no intention to take that money out of India without a permit.
Nonetheless, the finding of the High Court is on a question of fact.
We can see no particular reason in this case to go be.
hind the findings of fact arrived at by the High Court.
The High Court gave very good reasons for accepting the evidence of the prosecution witnesses as to the circumstances in which the currency notes in question were recovered from the appellant when his person was searched.
An important circumstance which might have supported the appellant 's case, namely whether he had applied to the Reserve Bank of India for a permit to take out of India currency notes to the extent of Rs. 25,000 was considered by the High Court.
It found, on the evidence of the Superintendent of the Reserve Bank, that the Reserve Bank received no application from the appellant before September 7, 1952, nor had the Reserve Bank granted the permission to the appellant to take any currency notes out of India.
It was on September 16, that the Reserve Bank had received an application of the appellant forwarded by one G.C. Joshi by his letter dated September 15, 1952.
The application of the appellant bore the date September 2, 1952.
The High Court thought that there were grounds for suspecting that this application was antedated.
The High Court came to the conclusion that there was no evidence to show that any such application was written or submitted on September 2, 1952.
It does seem extraordinary that if the appellant had sent the application to Joshi on September 2, 1952, that Joshi should not have sent on that application to the Reserve Bank till September 15, 1952.
It is to be remembered that the incident had already taken place on September 7, 1952, and in that 99 connection on September 15 and 16, 1952, Inspector Mitra of the Special Police Establishment, Calcutta had applied for a search warrant and a warrant of arrest respectively against the appellant.
On arrest, under the terms of that warrant he was released on bail by the police with a direction to appear before the court on September 19.
The appellant had therefore ample opportunity to concoct an application for a permit after September 7, and to antedate it getting Joshi on September 15, 1952, to forward the same to the Reserve Bank.
It is inconceivable that a person who was leaving for Hong Kong and wished to carry such a large sum of money as Rs. 25,000 in currency notes would have applied on September 2, when he was actually to fly on September 7, 1952.
Further it would not be unreasonable to suppose that the appellant would have so timed his arrival at Calcutta as would have enabled him to make the necessary enquiries from Joshi or the Reserve Bank whether the permit asked for had, been granted.
It is impossible to believe that he had arrived at Calcutta and had gone direct to the Dum Dum Aero drome without making any enquiry from Joshi at least whether the permit asked for had been granted.
Normally one would expect the appellant to reach Calcutta in sufficient time to make the necessary enquiries and in the absence of a permit having been granted to have left the currency notes for safe custody with Joshi or some other trusted person.
It is an entirely unacceptable story which the appellant put forward that he waited upto the last moment at the aerodrome for the necessary permit and not having got it requested the Customs Officers to keep the currency notes for safe custody.
It is significant that the appellant did not examine Joshi as a witness in support of his case.
It is not unlikely that if he had done so some inconvenient results would have followed in consequence of close questioning of Joshi regarding the entire transaction.
We have, therefore, no reason to think that the High Court had erred in suspecting that the application to the Reserve Bank was antedated.
On this finding it is apparent that the very foundation of the defence of the appellant is false.
That the appellant did not hand 100 over the currency notes of Rs. 25,000, at the customs barrier but was searched when the customs formalities were gone through is not only deposed to by a number of 'Witnesses holding responsible positions but is deposed to by P.W. 4, Panna Lal Dey, Money Exchanger of Dum Dum Airport.
Panna Lal Dey 's evidence was accepted by the High Court and after having examined his evidence we are satisfied that there is no reason to distrust his testimony.
Reference has been made to some of the evidence on a question of fact in order to ' satisfy ourselves whether the finding of the High Court was correct.
We are satisfied that the finding of the High Court is the only view which could reasonably be taken in a case like this.
It is true that the appellant had not taken the currency notes in question out of India across any customs frontier as defined by the Central Government.
He had, however, clearly attempted to take the same out of India.
In such a case no question of his crossing the customs frontier arises.
That an attempt to take out the currency notes in question is an offence punishable under the Sea Customs Act is clear from the provisions of section 167, Item 8.
The Foreign Exchange Regulation (Amendment) Act 1952 (VIII of 1952), came into force in February 1952.
By this Act section 23B was introduced into the Foreign Exchange Regulation Act.
Section 23B makes punishable an attempt to contravene the provisions of the Foreign Exchange Regulation Act or any rule, direction or order made thereunder.
Furthermore, this point was not taken before the Bench which granted the certificate of fitness for appeal to this Court.
Be that as it may, the facts found clearly established that the appellant attempted to take out of India the currency notes in question.
He had entered the customs enclosure and had signed the declaration form.
He had been questioned as to whether he had any other article than those mentioned in the declaration form which he wished to declare and he had answered in the negative.
On his personal search he dropped his trousers on the ground.
He was asked to pick up his trousers and wear them again.
On search of the trousers Rs. 25,000, 101 in currency notes were found concealed in the inner pockets.
The appellant had his ticket to proceed to Hong Kong by a plane which was due to leave Dum Dum Airport at 8 30 a.m. and the customs formalities were done in connection with that flight.
If the appellant had successfully cleared himself from the customs formalities all that was left for him to do was to board the plane which would take him out of India.
These circumstances establish beyond all reasonable doubt that the act of the appellant had gone beyond the stage of preparation and was clearly an attempt to carry the sum of Rs. 25,000, in currency notes out of India without a permit from the Reserve Bank.
We cannot accept the argument made on his behalf that the act of the appellant, on the facts found, amounted merely to preparation and not an attempt.
The main submission on behalf of the appellant was directed towards establishing that the entire proceedings before the Additional District Magistrate and the trying Magistrate were without jurisdiction as cognizance of the offence had been taken on September 16, 1952, in contravention of the provisions of section 23(3) of the Foreign Exchange Regulation Act, there being on that date no complaint in writing made by an officer authorised in that behalf by the Central Government or the Reserve Bank of India by a general or a special order.
It is, therefore, necessary to see, in the circumstances of the present case, on what date cognizance of the offence was taken.
In order to ascertain this certain provisions of the Foreign Exchange Regulation Act and the Code of Criminal Procedure will require con sideration.
Under section 19(3) of the Foreign Exchange Regulation Act a District Magistrate or Magistrate of the first class may, on a representation in writing made by a person authorized in this behalf by the Central Government or the Reserve Bank and having reasons to believe that there had been contravention of any of the revisions of that Act, issue a search warrant.
Inspector Mitra was so authorized by the Reserve Bank on September 11, 1952, and in pursuance of that authorization applied to the Additional District Magistrate for the issue of a search warrant.
Under 102 this section the search warrant is issued for the purposes of conducting investigation under that Act.
On September 16, Mitra applied for a warrant of arrest against the appellant.
This application was obviously made under the Criminal Procedure Code, The offence which the appellant is alleged to have committed was a non cognizable offence.
Under section 155(2) of the Code of Criminal Procedure, no police officer shall investigate a non cognizable offence without the order of a Magistrate of the first or second class having power to try such a case or commit the same for trial, or of a Presidency Magistrate.
Inspector Mitra 's application definitely states that he in asking for permission to investigate a non cognizable offence under section 155, Cr.
The order of the Additional District Magistrate directing the issue of a search warrant and the word " permitted " contained therein we consider, in the context of the application, to mean that he granted the sanction for investigation as asked for.
Under section 155(3) of the Code a police officer being permitted to investigate a non cognizable offence may exercise the same powers in respect of the investigation as an officer incharge of a police station may exercise in a cognizable case, except that he has not the power to arrest without a warrant.
It was necessary therefore for Inspector Mitra to obtain from the Additional District Magistrate a warrant of arrest.
It is clear, therefore, that upto September 16, 1952, the Additional District Magistrate had not taken cognizance of any offence.
On September 19, 1952, the appellant appeared before the Additional District Magistrate who recorded the following order: " He is to give bail of Rs. 50,000 with ten sureties of Rs. 5,000 each.
Seen Police report.
Time allowed till 19th November, 1952, for completing investigation.
" On November 19, 1952, on perusal of the police report the Magistrate allowed further time for investigation until January 2, 1953, and on that date time was further extended to February 2, 1953.
in the meantime, on January 27, 1953, Inspector Mitra had been authorized under section 23(3)(b) of the Foreign Exchange Regulation Act to file a complaint.
Accordingly, a 103 complaint was filed on February 2,1953.
The Additional District Magistrate thereon recorded the following order: " Seen the complaint filed to day against the accused Narayandas Bhagwandas Madhavdas under section 8(2) of the Foreign Exchange Regulation Act read with Section 23B thereof read with Section 19 of the Sea Customs Act and Notification No. F.E.R.A. 105/51 dated the 27th February, 1951, as amended, issued by the Reserve Bank of India under Section 8(2) of the Foreign Exchange Regulation Act.
Seen the letter of authority.
To Sri M. N. Sinha, S.D.M. (Sadar), Magistrate 1st class (spl.
empowered) for favour of disposal according to law.
Accused to appear before him.
" Accordingly, on the same date Mr. Sinha then recorded the following order: " Accused present.
Petition filed for reduction of bail.
Considering all facts, bail granted for Rs. 25,000 with 5 sureties.
To 26th March, 1952 and 27th March, 1952 for evidence.
" It is clear from these orders that on September 19, 1952, the Additional District Magistrate had not taken cognizance of the offence because he had allowed the police time till November 19, 1952, for completing the investigation.
By his subsequent orders time for investigation was further extended until February 2, 1953.
On that date the complaint was filed and the order of the Additional District Magistrate clearly indicated that he took cognizance of the offence and sent the case for trial to Mr. Sinha.
It would also appear from the order of Mr. Sinha that if the Ad ditional District Magistrate did not take cognizance, he certainly did because he considered whether the bail should be reduced and fixed the 26th and 27th of March, for evidence.
It was, however, argued that when Mitra applied for a search warrant on September, 16, 1952, the Additional District Magistrate had recorded an order thereon, " Permitted.
Issue search warrant.
" It was on this date that the Additional District Magistrate took cognizance of the offence.
We cannot agree with this submission because the petition of Inspector Mitra clearly states that " As this is non cognizable offence, I pray that you will kindly permit 104 me to investigate the case under section 155 Cr. P. C." That is to say, that the Additional District Magistrate was not being asked to take cognizance of the offence.
He was merely requested to grant permission to the police officer to investigate a non cognizable offence.
The petition requesting the Additional District Magistrate to issue a warrant of arrest and his order directing the issue of such a warrant cannot also be regarded as orders which indicate that the Additional District Magistrate thereby took cognizance of the offence.
It was clearly stated in the petition that for the purposes of investigation his presence was necessary.
The step taken by Inspector Mitra was merely a step in the investigation of the case.
He had not himself the power to make an arrest having regard to the provisions of section 155(3) of the Code of Criminal Procedure.
In order to facilitate his investigation it was necessary for him to arrest the appellant and that he could not do without a warrant of arrest from the Additional District Magistrate.
As already stated, the order of the Additional District Magistrate of September 19, 1952, makes it quite clear that he was still regarding the matter as one under investigation.
It could not be said with any good reason that the Additional District Magistrate had either on September 16, or at any subsequent date upto February 2, 1953, applied his mind to the case with a view to issuing a process against the appellant.
The appellant had appeared before the Magistrate on February 2, 1953, and the, question of issuing summons to him did not arise.
The Additional District Magistrate, however, must be regarded as having taken cognizance on this date because he sent the case to Mr. Sinha for trial.
There was no legal bar to the Additional District Magistrate taking cognizance of the offence on February 2, 1953, as on that date Inspector Mitra 's complaint was one which he was authorized to make by the Reserve Bank under section 23(3)(b) of the Foreign Exchange Regulation Act.
It is thus clear to us, that on a proper reading of the various orders made by the Additional District Magistrate no cognizance of the offence was taken until February 2, 1953.
The argument that he took cogniz ance of the offence on September 16, 1952, is without 105 foundation.
The orders passed by the Additional District Magistrate on September 16, 1952, September 19, 1952, November 19, 1952, and January 2, 1953, were orders passed while the investigation by the police into a non cognizable offence was in progress.
If at the end of the investigation no complaint had been filed against the appellant the police could have under the provisions of section 169 of the Code released him on his executing a bond with or without sureties to appear if and when so required before the Additional District Magistrate empowered to take cognizance of the offence on a police report and to try the accused or commit him for trial.
The Magistrate would not be required to pass any further orders in the matter.
If, on the other hand, after completing the investigation a complaint was filed, as in this case, it would be the duty of the Additional District Magistrate then to enquire whether the complaint had been filed with the requisite authority of the Reserve Bank as required by section 23(3)(b) of the Foreign Exchange Regulation Act.
It is only at this stage that the Additional District Magistrate would be called upon to make up his mind whether he would take cognizance of the offence.
If the complaint Was filed with the authority of the Reserve Bank, as aforesaid, there would be no legal bar to the Magistrate taking cognizance.
On the other hand, if there was no proper authorization to file the complaint as required by section 23 the Magistrate concerned would be prohibited from taking cognizance.
In the present case, as the requisite authority had been granted by the Reserve Bank on January 27, 1953, to file a complaint, the complaint filed on February 2, was one which complied with the provisions of section 23 of the Foreign Exchange Regulation Act and the Additional District Magistrate could take cognizance of the offence which, indeed, he did on that date.
The following observation by Das Gupta, J., in the case of Superintendent and Remembrancer of Legal Affairs, West Bengal vs Abani Kumar Banerji (1) was approved by this Court in the case of R. R. Chari vs The State of Uttar Pradesh (2) : (1) A.I.R. (1950) Cal 437.
14 (2) ; 106 "What is taking cognizance has not been defined in the Criminal Procedure Code and I have no desire to attempt to define it.
It seems to me clear however that before it can be said that any magistrate has taken cognizance of any offence under section 190(1)(a) Criminal Procedure Code, he must not only have applied his mind to the contents of the petition but must have done so for the purpose of proceeding in a particular way as indicated in the subsequent provi sions of this Chapter proceeding under section 200 and thereafter sending it for inquiry and report under section 202.
When the magistrate applies his mind not for the purpose of proceeding under the subsequent sections of this Chapter, but for taking action of some other kind, e.g., ordering investigation under section ' 156(3), or issuing a search warrant for the purpose of the investigation, he cannot be said to have taken cognizance of the offence.
" It is, however, argued that in Chari 's case this Court was dealing with a matter which came under the Prevention of Corruption Act.
It seems to us, however, that makes no difference.
It is the principle which was enunciated by Das Gupta, J., which was approved.
As to when cognizance is taken of an offence will depend upon the facts and circumstances of each case and it is impossible to attempt to define what is meant by taking cognizance.
Issuing of a search warrant for the purpose of an investigation or of a warrant of arrest for that purpose cannot by themselves be regarded as acts by which cognizance was taken of an offence.
Obviously, it is only when a Magistrate applies his mind for the purpose of proceeding under section 200 and subsequent sections of Chapter XVI of the Code of Criminal Procedure or under section 204 of Chapter XVII of the Code that it can be positively stated that he had applied his mind and therefore had taken cognizance.
In our opinion, the proceedings before the Additional District Magistrate and the trying Magistrate were with jurisdiction and the trial of the appellant was legal.
The appeal is accordingly dismissed.
| On September 7, 1952, the appellant went to Dum Dum Aerodrome to board a plane for Hong Kong.
On his search by the customs authorities a sum of RS.
25,000 was recovered from him which he had not declared in his declaration form and for which he had no permit from the Reserve Bank of India for taking out of India.
On September II, 1952, the Reserve Bank authorised Inspector Mitra to move the Additional District Magistrate, 24 Parganas under section 19(3) Of the Foreign Exchange Regulation Act, for permission to proceed against the appellant.
On September 16, 1952, Mitra applied to the Magistrate for a search warrant and for a warrant of arrest and both warrants were issued.
The appellant was arrested and released on bail with a direction to appear before the Magistrate on September 19 On September 19, the Magistrate granted bail to the appellant but refused him exemption from personal attendance before the Court and granted time till November 19, 1952, for completing the investigation.
This time was extended upto January 2, 1953 and then upto February 2, 1953.
In the meantime on January 27, 1953, Mitra was authorised under section 23(3)(b)) Of the Act to file a complaint against the appellant.
The complaint was filed on February 2, 1953, before the Additional District Magistrate who transferred the case to a Magistrate I Class for trial.
On the same day the Magistrate I Class recorded the presence of the appellant, allowed his application for reduction of security and fixed March 26, and 27, 1953, for evidence.
Upon conclusion of the trial the Magistrate acquitted the appellant but on appeal the Calcutta High Court convicted him.
The appellant contended that the entire trial was without jurisdiction as the Magistrate had taken cognizance of the offence on September 16, 1952, without there being a complaint in writing by a person authorised as required by section 23(3) of the Act.
Held, that cognizance of the offence was taken by the Additional District Magistrate on February 2, 1953, after the complaint had been filed and the trial was valid.
As to when cognizance is taken of an offence will depend upon the facts and circumstances of each case.
Mere issuing of a search warrant or warrant of arrest for the purposes of investigation did not, by 94 themselves, amount to taking of cognizance.
Cognizance was taken when a Magistrate applied his mind for the purpose of proceeding under section 200 and subsequent sections of Ch.
XVI of the Code of Criminal Procedure or under section 204 Of Ch.
XVII of the Code.
In the present case cognizance was taken when on February 2, 1053, the Additional District Magistrate applied his mind to the case with a view to issuing a process and sent the case for trial to another magistrate.
Superintendent and Remembrancer of Legal Affairs, West Bengal vs Abani Kumar Banerji, and R. R. Chari vs The State of Uttar Pradesh, ; , applied.
The facts found clearly established that the appellant attempted to take out of India the currency notes in question, and such attempt was also an offence.
The High Court had rightly rejected his explanation that he had applied to the Reserve Bank for a permit to take the currency notes out of India and that as the permit had not been received he had handed over the notes to the customs authorities for safe custody.
|
Civil Appeal Nos.
1062 1066 (NT) of 1970.
From the Judgment and Order dated the 31st January/1st February 1968 of the High Court of Judicature at Bombay in Income Tax Reference No. 5 of 1961.
section T. Desai, A. K. Verma (Mrs), and J. B. Dadachanji for the Appellant.
B. Sen and section P. Nayar; for the Respondent.
The Judgment of the Court was delivered by KHANNA, J.
This judgment would dispose of five civil appeals No. 1062 to 1066 which arise out of references under section 66(1) of the Indian Income tax Act, 1922 made at the instance of the assessee appellant.
The assessee appellant, Hukam Chand Mills Ltd. Indore, is a public limited company.
It owns a textile mill at Indore and carries on the business of manufacture and sale of textiles.
These appeals have a long history and are concerned with the income of the appellant during the calendar years 1941, 1942, 1944, 1945 and 1946, the relevant assessment years for which were 1942 43, 1943 44, 1945 46, 1946 47 and 1947 48.
In those years the assessee effected sales of textiles to merchants in the then British India.
Question which arose for consideration was as to what part of the income arising out of those sale transactions accrued or arose in British India.
As the questions of law involved in each of the appeals were identical, the facts relating to the assessment year 1942 43 only were taken into consideration.
According to the finding of the Income tax Officer in that year the price of the textiles sold by the assessee in British India aggregated to Rs. 14,80,059.
This amount consisted of the following four categories: (a) Sales in pursuance of business canvassed by company 's represen tatives in British India, also described as item (3) Rs. 6,46,028 (b) Sales to British Indian merchants through brokers and agents in British India, also described as item (4) Rs. 2,91,891 (c) Sales to British Indian merchants and brokers during their visit to Indore, also described as item (5) Rs. 2,86,224 (d) Sales to British Indian merchants at the time of their own or their broker 's visit at Indore, also described as item (9) Rs. 2,55,916 _____________ TOTAL Rs. 14,80,059 Profits from those sales were held at 31.12 per cent to amount to Rs. 4,60,560.
Profits attributable to operations carried out in British India were held by the Appellate Assistant Commissioner to be one third of Rs. 4,60,560, i.e. Rs. 1,53,520.
In doing so the Appellate Assistant Commissioner acted upon the analogy of rule 33 of the 714 Indian Income tax Rules, 1922.
We need not set out the finding of the Income tax Officer.
The Tribunal substantially agreed with the Appellate Assistant Commissioner.
At the instance of the assessee the following two questions were inter alia referred to the High Court: "(2) Whether on the facts and in the circumstances of the applicants ' case, the Tribunal was right in holding that in respect of sales of Rs. 14,80,059/ the profit was correctly determined by application of rule 33 and one third of the profits so determined could be said to accrue or arise in British India ? (3) Whether on the facts and in the circumstances of the applicants ' case, the Tribunal was right in holding that a proportionate part of the profits determined on sales grouped under items 3, 4, 5 and 9 in the assessment order by the application of rule 33 was assessable to income tax?" The High Court answered question No. (3) in favour of the assessee.
In view of its finding on question No. (3), the High Court did not answer question No. (2).
The Commissioner of Income tax then came up in appeal to this Court, and the decision of this Court is reported in = ; This Court held that the answer to question No. (3) should be in the negative as the property in goods passed to the purchaser in British India and proportionate part of the profits of these sales accrued in British India and as such was assessable to Indian income tax.
The case was remitted to the High Court to answer question No. (2) in accordance with law.
On remand the High Court held that the profits were correctly determined by the application of rule 33 and one third of the profits so determined could be said to arise or accrue in British India.
When the matter came up in appeal before this Court, it was found that the High Court had not taken into account the relevant circumstances for answering question No. (2).
It was also stated by counsel for both the parties that rule 33 was not applicable to the facts of the case.
This Court accordingly directed the Appellate Tribunal to submit a supplementary statement of the case to this Court.
Supplementary statement of the case has now been received.
The Tribunal found that in respect of the sales in categories (a) and (b) amounting to Rs. 9,37,919, it was just and equitable to apportion 15 per cent of the profits said to have arisen and accrued in British India.
Regarding sales in categories (c) and (d) for a total amount of Rs. 5,42,140, the Tribunal held that 7 1/2 per cent of the profits could be said to have accrued and arisen in British India.
As the profits were found to represent 31.12 per cent of the turnover, the profits in respect of the turnover of Rs. 9,37,919 comprised in categories (a) and (b) were calculated at the rate of 4 1/2 per cent (i.e. 15 per cent of 31.12 per cent).
The profits in British India were thus found to be Rs. 42,200.
Profits accuring 715 and arising in British India in respect of sales turnover of Rs. 5,42,140 comprised in categories (c) and (d) at the rate of 2 1/4 per cent (7 1/2 per cent of 31.12 per cent) were found to be Rs. 12,200.
The total profits accruing or arising in British India to the assessee company in the assessment year 1942 43 were thus worked out to be Rs. 54,400.
The above finding of the Tribunal has been arrived at on consideration of the facts of the case.
The modus operandi in respect of the sales of various categories was found by the Tribunal to be as under: "(a) Sales of Rs. 6,46,028 (i) The assessee 's paid representatives at Bombay canvassed the sales, on behalf of the assessee, to merchants in British India.
(ii) The orders were sent by British Indian merchants to the assessee at Indore.
(iii)The assessee accepted the orders at Indore, prepared the contracts and signed them at Indore and forwarded the same to customers in British India.
(iv) The customers signed the contracts in British India.
(v) The contracts were signed on company 's forms.
(vi) The contracts bore British Indian stamps.
(b) Sales of Rs. 2,91,891 (i) The brokers in British India, described as freelance brokers, transmitted the offers to the company at Indore.
(ii) The offers were made to the company on the brokers ' own forms.
(iii)The brokers were not engaged by the assessee company and such orders were placed by the brokers in the normal course of their business.
(iv) The customers signed the contracts in British India.
(c) Sales of Rs. 2,86,224 (i) These sales were made to British Indian merchants who went to Indore to negotiate and place orders.
(ii) The orders were accepted at Indore.
(iii)The contracts bore British Indian stamps.
(iv) The customers signed the contracts in British India.
(d) Sales of Rs. 2,55,916 (i) These sales were made to British Indian merchants on their or their brokers ' personal visits to Indore.
716 (ii) The offers were taken direct at Indore.
(iii)Contracts for such sales were made in the same manner as stated hereinbefore.
" The Tribunal also gave a finding that the assessee maintained an organisation in British India, that that organisation was interested in bringing to the notice of the British Indian merchants, brokers and consuming public the goods manufactured by the assessee company and that the ground work for sales effected in these groups was done in British India.
Nothing has been urged before us either on behalf of the assessee appellant or on behalf of the revenue respondent to assail the finding of the Tribunal in the supplementary statement of case.
The question as to what proportion of the profits of the sales in categories (a), (b), (c) and (d) arose or accrued in British India is essentially one of fact depending upon the circumstances of the case.
In the absence of some statutory or other fixed formula, any finding on the question of proportion involves some element of guess work.
The endeavour can only be to be approximate and there cannot in the very nature of things be great precision and exactness in the matter.
As long as the proportion fixed by the Tribunal is based upon the relevant material, it should not be disturbed.
We accordingly accept the appeals, discharge the answer given to question No. (2) by the High Court and hold that the profit which arose and accrued in British India to the assessee appellant for the assessment year 1942 43 was Rs. 54,400.
We also hold that it is just and equitable to apportion 15 per cent of the profits of sales in categories (a) and (b) as accruing or arising in British India and 7 1/2 per cent of the profits of sales in categories (c) and (d) as accruing or arising in British India.
The parties in the circumstances shall bear their own costs.
S.R. Appeals allowed.
| The respondent by virtue of the sanad granted to his ancestors by the British Government, claimed, in respect of certain lands situated in village Shiramba Taluka Koregaon, District North Satara, compensation under section 6(2) of the Bombay Paragana and Kulkarni Watans (Abolition) Act.
1950, for the resumption of the lands by the appellant.
The suit claim of Rs. 15,074 4 0 being "a sum equal to ten times the amount of such land revenue" was decreed by the trial court.
On appeal by the State, the High Court affirmed the same.
after construing the sanad granted by the British Government in favour of the respondents ' ancestors and other relevant records, as it was a watan of land revenue and not in respect of the soil.
Dismissing the State 's appeal by special leave to this Court, ^ HELD: (1) The High Court was right in holding that the grant in favour of the ancestors of the respondent was a grant of land revenue only and not a grant of the soil and since the watan held by the respondent at the date of the coming into force of the Act was a watan of land revenue the respondent was entitled to compensation in the sum of Rs. 15,074 4 0 under section 6(2) of the Bombay Paragana and Kulkarni Watan (Abolition) Act, 1950.
[982B C] (2) The sanad undoubtedly used the words "lands" to describe the subject matter of the grant, but the word "land" is defined in Bombay Act II of 1863 [The Exemption From Land Revenue (No. 1 ) Act 1863], to include share of land revenue and this meaning would apply in the construction of the word "land" in the sanad since the sanad was apparently granted pursuant to the enquiry made under Bombay Act II of 1863.
The description of the subject matter would not, therefore, necessarily indicate that it was a grant of the soil.
In fact, this description standing alone would rather indicate that it was a grant of land revenue only, since grant of the soil would ordinarily be accompanied by words such as 'Darobast ' or 'Jal ', 'Taru ', 'Truna ', 'Kastha ' and 'Pashan '.
[981F H] [Their lordships deprecated the litigious approach adopted by the State Government and observed "State Governments which have public accountability in respect of their actions should not lightly rush to this Court to challenge a judgment of the High Court which is plainly and manifestly correct and drag the opposite party in unnecessary expense.]
|
ence No. 1 of 1991.
(Under Article 143 of the Constitution of India).
G. Ramaswamy, Attorney General, V.R. Reddy, Addl.
Solic itor General, F.S. Nariman, T.R. Andhyarujina, Dr. Y.S. Chitale, S.S. Javali, K. Parasaran, A.K. Ganguli, K.K. Venugopal, A.S. Nambiar, Shanti Bhushan, P.P. Rao, P.P. Muthanna, K. Subramanian, Curiae Joseph, N.N.Gangadeb, Ms. A. Subhashini, Ms. Niranjana Singh, M.Veerappa, Subhash Sharma.
Mohan Katarki, Atul Chitale, K.H. Nobin Singh, Subbanna, A. Subba Rao, G. Umapathy, E.C. Agarwala, P.N. Ramalingam, Smt.
Shante Vasudevan, P. Krishnamurthy, P.K. Manohar, K.V. Viswanathan, Shalid Rizvi, Ashok Mukhoty, Mrs. Sangeeta Garg, Jayant Bhushan, T.T. Kunhikanan, M.D.B. Raju, G. Prabhakar, N. Ganpathi, S.R. Bhat, P. Mahale and P.R. Pamasesh for the appearing parties.
A.K. Sen, Venkataraman and C.S. Vaidyanathan for the Inter vener.
The Report of the Court was delivered by SAWANT, J. On July 27, 1991 the President, under Article 143 of the Constitution, referred to this Court three ques tions for its opinion.
The Reference reads 'as follows.
: "Whereas, in exercise of the powers conferred by Section 4 of the (hereinafter referred to as "the Act").
the Central Government constituted a Water Disputes Tribunal Called "the Cauvery Water Disputes Tribunal" (hereinafter called "the Tribunal") by a notification dated 2 June, 1990, a copy where of is annexed here to, for the adjudi 516 cation of the Water Dispute regarding the Inter State River Cauvery; WHEREAS on 25 June 1991, the Tribunal passed an interim Order (hereinafter referred to as "the Order"), a copy whereof is annexed here to; WHEREAS, differences have arisen with regard to certain aspects of the Order; WHEREAS, on 25 July 1991, the Governor of Karnataka promulgated the Kamataka Cauvery Basin Irrigation Protection Ordinance, 1991 (hereinafter referred to as "the Ordinance"), a copy whereof is annexed hereto; WHEREAS, doubts have been expressed with regard to the constitutional validity of the Ordinance and its provisions; WHEREAS, there is likelihood of the constitu tional validity of the provisions of the Ordinance, and any action taken thereunder, being challenged in Courts of law involving protracted and avoidable litigation; WHEREAS, the said differences and doubts have given rise to a public controversy which may lead to undesirable consequences; AND WHEREAS, in view of what is hereinbefore stated, it appears to me that the following questions of law have arisen and are of such nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court of India thereon; NOW, THEREFORE, in exercise of the powers conferred upon me by clause (1) of Article 143 of the Constitution of India, I, Ramaswamy Venkataraman, President of India, hereby refer the following question to the Supreme Court of India for consideration and report thereon, namely: (1) Whether the Ordinance and the provi sions thereof are in accordance with the provisions of the Constitution; (2) (i) Whether the Order of the Tribunal constitutes a report and a decision within the meaning of section 5 (2) of the Act; and (ii) Whether the Order of the Tribunal is required to be published by the Central Gov ernment in order to make it effective; 517 (3) Whether the Water Disputes Tribunal constituted under the Act is competent to grant any interim relief to the parties to the dispute.
" To appreciate the significance of the questions referred and our answers to them, it is necessary to understand the factual background which has led to the Reference.
The river Cauvery is an inter State river and is one of the major rivers of the Southern Peninsula.
The basin area of the river and its tributaries has substantial spread over within the territories of the two States, namely.
Karnataka and Tamil Nadu, Karnataka being the upper riparian State and Tamil Nadu being the lower riparian State.
The other areas which are the beneficiaries of the river water are the territories comprised in the State of Kerala and in the Union Territory of Pondicherry.
The total length of the river from its head to its outflow into the Bay of Bengal is about 802 kms.
It travels about 381 kms.
in Southern East ernly direction before it reaches the border of Karnataka and Tamil Nadu.
It also constitutes boundary between the said two States to an extent about 64 kms.
and then tra verses a distance of about 357 kms.
in Tamil Nadu before joining the sea.
There were two agreements of 1892 and 1924 for sharing the water of the river between the areas which are predomi nantly today comprised in the State of Karnataka and Tamil Nadu, and which were at the time of the agreements comprised in the then Presidency of Madras on the one hand and the State of Mysore on the other.
The last agreement expired in 1974.
The river presently covers three States of Karnataka, Tamil Nadu and Kerala and the Union Territory of Pondicher ry.
The present State of Tamil Nadu has an area of about 43,868 sq.
of the Cauvery River basin, reducing the basin area which at the time of the agreement was about 49,136 sq.
As against this the basin area of the said river which was about 28,887 sq.
in the State of Mysore has increased to about 34,273 sq.
in the present State of Karnataka.
The contributions made to the flows of the Cauvery River by Karnataka.
Tamil Nadu and Kerala, according to the State of Karnataka is 425 TMC, 252 TMC and 113 TMC respectively together amounting to 790 TMC According to the State of Tamil Nadu, the contributions of the three States respec tively are 392 TMC, 222 TMC and 126 TMC respectively togeth er amounting to 740 TMC.
The Study Team appointed by the Central Government in 1974 worked out the appropriations of the respective States as follows: Karnataka 177 TMC, Tamil Nadu including Pondicherry 489 TMC and Kerala 5 TMC.
518 In 1956 the Parliament enacted the for the purpose of regulation and development of inter State rivers and river valleys find also the Inter State Water Disputes Act, 1956 for adjudication of disputes with regard to the use, distribution or control etc.
of the said waters.
In 1970 Tamil Nadu invoked the provisions of Section 3 of the and requested the Central Government for reference of the dis pute between the two States, viz. Tamil Nadu and Karnataka to a Tribunal under the Act.
The Central Government initiat ed negotiations between the two States.
Simultaneously, Tamil Nadu moved this Court by means of a suit under Article 131 of the Constitution being Suit No.1 of 1971 seeking a direction to the Union Government to constitute a Tribunal and to refer the dispute to it.
In the said suit, Tamil Nadu applied for an interim order to restrain the S;ate of Karna taka from proceeding with and executing the projects men tioned therein.
This Court by its Order of 25th January, 1971 dismissed the application for interim relief.
It appears that the negotiations between the two states which were going on in the meanwhile, resulted in the con stitution of a Fact Finding Committee in June 1972 which was set up to ascertain facts, amongst others as to the avail ability of water resources, the extent of utilisation and the nature of the areas in the respective States within the river basin, and their requirements.
In view of the consti tution of the Committee, Tamil Nadu withdrew its suit.
The Fact Finding Committee submitted its Reports in December, 1972, and August 1973.
A Central Study Team headed by Shri CC.
Patel, then Addl.
Secretary to Government of India, in the Ministry of Irrigation was also set up to examine the question of assessing the savings of water in the existing and planned projects of the three States in the Cauvery basin.
The recommendation of the Study Team on improvement and modernisation of the irrigation system including the strengthening of the works and the lining of channels, integrated operations of the reservoirs within the Cauvery basin, scientific assessment of water requirement in the command area and for monitoring the releases from the reservoirs for an efficient tie up between the rain fall and command, water requirement and release were announced at the Inter State Conference of June 1974.
Further negotiations resulted in what is known as "the 1976 Understanding".
This Understanding envisaged the appor tionment of the surplus water in the ratio of 30:53:17 amongest the States of Tamil Nadu, Karnataka and Kerala respectively.
In the case of savings, the Study Team pro posed the apportionment in the ratio of 87 TMC to Karnataka, 4 TMC to Tamil Nadu and 34 TMC to Kerala.
519 It appears that in spite of the information gathered through the Fact Finding Committee and the Study Team set up by the Union Government, the negotiations were not fruitful.
In 1983, Tamil Nadu Ryots Association presented a petition to this Court under Article 32 of the Constitution being Writ Petition No. 13347 of 1983.
The petition sought issue of a writ of mandamus to the Central Government requiring it to refer the dispute to a Tribunal under the Act.
The peti tion was also accompanied by an application seeking interim relief.
The State of Tamil Nadu supported the Writ Petition.
Notices were issued to the respondents including the Union Government and the State of Karanataka.
The petition re mained pending in this Court for nearly seven years.
No application for interim relief was moved during this period.
Although the inter State meetings continued to be held during this period, nothing worthwhile emerged out of them.
Hence, in June 1986, the State of Tamii Nadu lodged a Letter of Request under Section 3 of the Act with the Central Government for the Constitution of a Tribunal and for refer ence of the water dispute for adjudication to it.
In the said letter, Tamil Nadu primarily made a grievance against the construction of works in the Karnataka area and the appropriaion of water upstream so as to prejudice the inter ests down stream in the State of Tamil Nadu.
It also sought the implementation of the agreements of 1892 and 1924 which had expired in 1974.
At the hearing of the Writ Petition filed by the Tamil Nadu Ryots Association, the Central Government left the matter to the Court.
This Court taking into consideration the course of negotiations and the length of time which had passed, by its judgment dated May 4, 1990 held that the negotiations between the two States had failed and directed the Union Government to constitute a Tribunal under Section 4 of the Act.
In pursuance of the directions given by this Court, the Union Government by its notification dated June 2, 1990, constituted the Cauvery Water Disputes Tribunal and by another Notification of the even date referred to it the water dispute emerging from Tamil Nadu 's Letter of Request dated July 6, 1986.
The Cauvery Water Disputes Tribunal (hereinafter re ferred to as the "Tribunal") commenced its first sitting on 20th July, 1990.
On that day, Tamil Nadu submitted a letter before the Tribunal seeking interim reliefs.
The Tribunal directed Tamil Nadu to submit a proper application.
There upon Tamil Nadu and the Union Territory of Pondicherry submitted two separate applications for interim reliefs being CMP Nos. 4 and 5 of 1990.
520 The interim relief claimed by Tamii Nadu was that Karna taka be directed not to impound or utilise water of Cauvery river beyond the extent impounded or utilised by them as on 31 5 1972.
as agreed to by the Chief Ministers of the basin States and the Union Minister for Irrigation and Powers.
It further sought passing of an order restraining Karnataka from undertaking any new projects, dams, reservoirs, canals and/or from proceeding further with the construction of projects, dams, reservoirs.
canals etc.
in the Cauvery basin.
In its application for interim relief Pondicharry sought a direction from the Tribunal both to Karnataka and Tamil Nadu to release the water already agreed to i.e., 9.355 TMC during the months of September to March.
The Tribunal considered simultaneously both the applica tions for interim reliefs as well as the procedure governing the trial of the main dispute.
It directed the disputant States to file their pleading by way of statements of cases and also required the States of Karnataka and Kerala to submit their replies to the applications for interim reliefs made by Tamil Nadu and Pondicherry.
By September 1990, all the disputant States submitted their first round of plead ings or statements of cases.
By November 1990, Karnataka and Kerala also submitted their replies to the applications for interim reliefs.
The Tribunal gave time to the States to submit their respective counter statements in reply to the Statements of cases filed earlier in the main dispute.
It appears that before the disputant states submitted their counter statements in the main dispute, the Tribunal heard the applications for interim reliefs since Tamil Nadu had, in the meanwhile, filed an application being CMP No.9 of 1990 as an urgent petition to direct Karnataka as an emergent measure to release at least 20 TMC of water as the first instalment, pending final orders on their interim application CMP No.4/ 90.it appears that this application was filed on the ground that the samba crop could not he sustained without additional supplies at Mettur reservoir in the Tamil Nadu State" Besides contesting the application on merits, both Karnataka and Kerala raised a preliminary ' objection to the jurisdiction of the Tribunal to entertain the said application and to grant any interim relief.
The preliminary objection was that the Tribunal constituted under Act, had a limited jurisdiction.
It had no inherent powers as 'an ordinary Civil Court has, and there was no provision of law which authorised or conferred jurisdiction on the Tribunal to grant any interim relief.
The Tribunal heard the parties both on the preliminary objection as well 521 as on merits, and by its Order of January 5, 1991.
among other things, as follows : ".
This Act is a complete code in so far as the reference of a dispute is concerned.
In the circumstances.
in our opinion, the Tribu nal is authorised to decide only the 'water dispute ' or disputes which have been referred to it.
If the Central Government is of the opinion that there is any other matter con nected with or relevant to the 'water dispute ' which h,ks already been referred to the Tribu nal.
it is always open to the Central Govern ment to refer also the said matter as a dis pute to the Tribunal constituted under Section 4 of the Act.
Further, no water dispute can be referred by the Central Government unless the Central Government is of the opinion that the said dispute cannot be settled by negotia tions.
In fact, no water dispute can be adju dicated without its reference to the Tribunal.
The interim reliefs which have been sought for even if the same are connected with or rele vant to the water dispute already referred, cannot be considered because the disputes in respect of the said matters have not been referred by the Central Government to the Tribunal.
Further, neither there is any aver ment in these petitions that the dispute related to interim relief cannot be settled by negotiations and that the Central Government has already formed the opinion that it shall be referred to the tribunal.
In case the petitioners of CMP Nos. 4,5 and 9 of 1990 are aggrieved by the conduct of the State of Karnataka and an emergent situation had ari sen, as claimed.
they could have raised a dispute before the Central Government and in case the Central Government was of the opinion that the said dispute could not be settled by negotiations, the said dispute could also have been referred by the Central Government to the Tribunal.
In case such a dispute had been referred then it would have been open to the Tribunal to decide the said dispute which decision would then be final and binding on the parties.
X X X X X From the letter dated 6.7.
1986, which was the request made on behalf of the State of Tamil Nadu to the Central Government referring the dispute to the Tribunal.
it is clear that the dispute which has been referred to this Tribunal in regard to the executive action taken by the Karnataka State in construct 522 ing Kabini, Hemavathi, Harangi, Swarnavathi and other projects and expanding the ayacuts and the failure of the Karnataka Government to implement the agreements of 1892 and 1924 relating to the use, distribution and the control of Cauvery waters.
No interim dispute in regard to the release of waters by the Karnataka Government from year to year subse quent to the date of the request made by the State of Tamil Nadu was at all referred to the Tribunal.
The Tribunal has been called upon to decide the main water dispute, which, when adjudicated upon, would undoubtedly be binding on the parties.
In view of the above, we are of the opinion that the Tribunal cannot enter tain the prayer for interim relief unless the dispute relating to the same is specifically referred to the Tribunal.
X X X X X X X X X The observations made by Hon 'ble Supreme Court in Union of India vs Paras Lamines (P) Ltd., ; were in relation to the Appellate Tribunal constituted under the .
It was held that the Tribu nal functions is a court within the limits of its jurisdiction.
Its area of jurisdiction is defined but within the bounds of its jurisdic tion it has all the powers expressly and impliedly granted.
The Supreme Court while discussing the extent of the power of the Tribunal in respect of the grant made by a particular Statute held that the Tribunal will have all incidental and ancillary powers for doing of such acts or employing all such means as are reasonably necessary to make the grant effective.
The import of the decision of the Hon 'ble Supreme Court is that the Tribunal will have incidental and ancillary powers while exercising the powers expressly con ferred.
These incidental and ancillary powers must relate to the actual dispute referred and not to any other matter including granting of interim reliefs which are not at all subject matter of reference.
In our opinion what the Supreme Court intended to hold was that the Tribunal has incidental and ancillary powers to pass orders in respect of a reference for adjudication of which it has been constituted.
It has not, however, further laid (sic.) that it has also inciden tal and ancillary powers to grant relief in respect of a dispute which has not at all been referred.
In the instant case, the water dispute which has been referred to us is that which emerges from the letter of the State of 522 Tamil Nadu dated 6th July, 1986.
The Tribunal will have the power to pass such consequential orders as are required to be made while decid ing the said dispute and will also have inci dental and ancillary powers which will make the decision of the reference effective but these powers are to be exercised only to enable it to decide the reference effectively but not to decide disputes not referred in cluding a dispute in regard to grant of inter im relief/interim reliefs.
X X X X X X X X X.
The Second submission raised by the learned counsel for Tamil Nadu namely to the effect that the Tribunal alone could exercise juris diction in respect of a water dispute by virtue of Article 262 of the Constitution of India and in case Tribunal holds otherwise the State of Tamil Nadu will be left with no remedy available to it, it may be stated that since we have taken the view that in case a water dispute really arises and such water dispute could not be resolved by negotiations then it will be open to the Central Government to refer the said dispute to the Tribunal for adjudication, the question of not having a remedy for a wrong does not arise before the Tribunal.
The Central Government if it finds that the dispute is connected with or related to the water dispute already referred to the Tribunal, it is open to it to refer the said dispute also to the Tribunal in regard to the granting of an interim relief.
" In the view that it took, as above, the Tribunal held that it could not entertain the said applications for grant of interim reliefs as they were not maintainable in law, and dismissed the same.
Being aggrieved, the State of Tamil Nadu approached this Hon 'ble Court by means of special leave petitions under Article 136 of the Constitution against the orders passed both in the original application for interim relief being CMP No.4 of 1990 as well as in the application for urgent interim relief being CMP No.9 of 1990.
So did the Union Territory of Pondicherry against the order passed by the Tribunal in its application for interim relief being CMP No.5 of 1990.
These special leave petitions which were later on converted into Civil Appeals Nos.303 04 of 1991 and Civil Appeal No. 2036 of 1991 respectively, were heard together and disposed of by this Court by its judgment dated April 26.1991.
While allowing the appeals this Court held as follows: 524 "Thus, we hold that this Court is the ultimate interpreter of the provisions of the Inter State Water Disputes Act, 1956 and has an authority to decide the limits, powers and the jurisdiction of the Tribunal constituted under the Act.
This Court has not only the power but obligation to decide as to whether the Tribu nal has any jurisdiction or not under the Act, to entertain any interim application till it finally decides the dispute referred to it.
X X X X X X X X X A perusal of the order of reference dated 2.6.90 as already extracted above clearly goes to show that the Central Government had re ferred the water disputes regarding the inter State river Cauvery and the river valley thereof, emerging from letter dated 6th July, 1986 from the Government of Tamilnadu.
Thus all the disputes emerging from letter dated 6th July, 1986 had been referred to the Tribu nal.
The Tribunal committed a serious error in omitting to read the following important paragraph contained in the aforesaid letter dated 6,7.86." This Court then quoted the said paragraph from the said letter of 6.7. 1986 which reads as follows: "REQUEST FOR EXPEDITIOUS ACTION IN REFERRING TIlE DISPUTE TO TRIBUNAL. ' From 1974 75 onwards, the Government of Karna taka has been impounding all the flows in their reservoirs.
Only after their reservoirs are filled up, the surplus flows are let down.
The injury inflicted on this State in the past decade due to the unilateral action of Karna taka and the suffering we had in running around for a few TMC of water every time and crops reached the withering stage has been briefly stated in note (Enclosure XXVIII).
It is patent that the Government of Karnataka have badly violated the inter State agreements and caused irreparable harm to the age old irrigation in this State.
Year after year, the realisation at Mettur is failing fast and thousands of acres in our ayacut in the basin are forced to remain fallow.
The bulk of the existing ayacut in Tamil Nadu concentrated mainly in Thanjavur and Thiruchirappalli districts is already gravely affected in that the cultivation operations are getting long delayed, traditional double crop lands are getting reduced to single crop lands and crops even in the single crop lands are withering and falling for want of adequate wettings 525 at crucial times.
We are convinced that the in ordinate delay in solving the dispute is taken advantage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay in adding to the injury caused to our existing irrigation.
" The Court then proceeded to observe as fol lows: "The above passage clearly goes to show that the State of Tamilnadu was claiming for an immediate relief as year after year.
the realisation of Mettur was failing fast and thousands of acres in their ayacut in the basin were forced to remain fallow.
It was specifically mentioned that the inordinate delay in solving the dispute is taken advan tage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay is adding to the injury caused to their existing irrigation.
The Tribunal was thus clearly wrong in holding that the Central Government had not made any reference for granting any interim relief.
We are not concerned, whether the appellants are entitled or not, for any interim relief on merits, but we are clearly of the view that the reliefs prayed by the appellants in their C.M.P. Nos. 4, 5 and 9 of 1990 clearly come within the purview of the dispute referred by the Central Government under Section 5 of the Act.
The Tribunal has not held that it had not incidental and ancil lary powers for granting an interim relief, but it has refused to entertain the C.M.P. Nos.4,5 and 9 on the ground that the reliefs prayed in these applications had not been referred by the Central Government.
In view of the above circumstances we think it is not necessary for us to decide in this case, the larger question whether the Tribunal consti tuted under the Water Disputes Act has any power or not to grant any interim relief.
In the present case the appellants become enti tled to succeed on the basis of the finding recorded by us in their favour that the re liefs prayed by them in their C.M.P. Nos. 4,5 and 9 of 1990 are covered in the reference made by the Central Government.
It may also be noted that at the fag end of the arguments it was submitted before us on behalf of the State of Karnataka that they were agreeable to proceed with the C.M.P.s on merits before the Tribunal on the terms that all party States agreed that all questions arising out of or connected with or relevant to the water dis pute (set out in the respective pleadings of the respective parties), including all 526 applications for interim directions/reliefs by party States be determined by the Tribunal on merits.
However, the above terms were not agreeable to the State of Tamilnadu as such we have decided the appeals on merits.
" In view of its findings as above, this court by the said order directed the Tribunal to decide CMPs Nos. 4, 5 and 9 of 1990 on merits.
In pursuance of these directions, the Tribunal heard the said applications of Tamil Nadu and Pondicherry.
It appears that before the Tribunal, objections were again raised on behalf of the State of Karnataka with regard to the maintainability of the applications filed by Tamil Nadu and Pondicherry for interim reliefs.
The Tribunal did not countenance the said objections holding that the direction given by this Court was binding on it.
The Tribu nal then proceeded to decide the applications on merits and by its order dated June 25, 1991 held as follows: "When we are deliberating whether any emergent order ought to be passed, our prime considera tion ought to be to preserve, as far as possi ble, pending final adjudication the rights of the panics and also to ensure that by unilat eral action of one party, other party is not prejudiced from getting appropriate relief at the time of the passing of the final orders.
We ought to also endeavour to prevent the commission of any act by the panics which might impede the Tribunal from making final orders in conformity with the principles of fair and equitable distribution of the waters of this inter State river.
x x x x x x x x x .
At this stage it would be neither feasible nor reasonable to determine how to satisfy the needs of the each State to the greatest extent possible with a minimum of detriment to others.
We do not also propose at this stage to enter into the question whether the present use of water of the river Cauvery either by the State of Tamil Nadu or the State of Karnataka is the most beneficial use to which the water could be put to.
x x x x x x x x x .
We do not propose to examine at this stage the legality or justifiability of erec tion of these reservoirs, dams, canals, etc.
The said matters may be gone into if found necessary at the appropriate stage.
In this case it would be in accordance with justice to fix the annual releases into Mettur Dam by making average of the same for a number of normal years in the immediate past.
X X X X X X X X X 527 .
We have already mentioned that at the present stage we would be guided by considera tion of balance of convenience and maintenance of the existing utilisation so that rights of the parties may be preserved tilt the final adjudication. ".
The Tribunal then directed the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. The Tribunal further directed Karnataka to regulate the release of water every year in the manner stated in the order.
The monthly quota of the water was to be released in four equal instal ments every week, and if there was not sufficient water available in any week the deficit was directed to be made good in the subsequent week.
The Tribunal also directed Tamil Nadu to deliver to Pondicherry 6 TMC water for its Karaikal region in a regulated manner.
In addition, the Tribunal directed Karnataka not to increase its area under irrigation by the waters of Cauvery, beyond the existing 11.2 lakh acres.
The Tribunal then observed that its said order would remain operative till the final adjudication of the dispute referred to it.
Thereafter on July 25, 1991 the Governor of Karnataka issued an Ordinance named "the Karnataka ,Cauvery Basin Irrigation Protection Ordinance, 1991" which reads as fol lows: "An Ordinance to provide in the interest of the general public for the protection and preservation of irrigation in irrigable areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tribu taries.
Whereas the karnataka Legislative Council is not in Session and the Governor of Karnataka is satisfied that circumstances exists which render it necessary for him to take immediate action for the protection and preservation of irrigation in irrigable areas office Cauvery basin in Karnataka dependent on the water of Cauvery river and its tributaries.
Now, therefore, in exercise of the power conferred under clause (1) of Article 213 of Constitution of India, I, Khurshed Alam Khan.
Governor of Karnataka am pleased to promulgate the following Ordinance, namely: 1.Short title, extent and commencement: (1) This Ordinance may be called the Karnataka Cauvery Basin Irrigation Protection Ordinance, 1991.
528 (2) It extends to the whole of the State of Karnataka.
(3) It shall come into force at once.
Definition: Unless the context other wise requires: (a) "Cauvery basin" me,ms the basin area of the Cauvery river and its tributaries lying within the territory of the State of Karnata ka.
(b) "Irrigable area" means the areas specified in the Schedule.
(c) "Schedule" means the Schedule annexed to this Ordinance.
(d) "Water year" means the year commenc ing with the 1st of June of a Calendar year and ending with the 31st of May of the next Calendar year.
Protection of Irrigation in irrigable area: (1) It shall be the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the irrigable area under the various projects specified in the Schedule.
(2) For the purpose of giving effect to sub section (1) the State Government may abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite.
from the flows of the Cauvery river and its tributaries.
in such manner and during such intervals as the State Government or ,my Officer, not below the rank of an Engineer in Chief designated by it, may deem fit ,red proper.
Overriding effect of the Ordinance: The provisions of this Ordinance.
(,red of ,my Rules and Orders made thereunder), shall have effect not with standing anything contained in any order, report or decision of any Court or Tribunal (whether made before or after the commencement of this Ordinance), save and except a final decision under the provisions of sub section (2) of section 5 read with section 6 of the . 5.
Power to remove difficulties: If any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion 529 requires, do anything (not inconsistent with the provisions of this Ordinance) which ap pears to be necessary for purpose of removing the difficulty.
Power to make rules: (1) The State Government may, by Notifi cation in the Official Gazette make rules to carry out the purpose of this Ordinance.
(2) Every rule made under this Ordinance shall be laid as may be after it is made, before each House of the State Legislature while it is in Session for a total period of thirty days which may be comprised in one Session or in two or more Sessions and if before the expiry of the said period, either House of the State Legislature makes any modification in any rule or order directs that any rule or order shall not have effect, and if the modification or direction is agreed to by the other House, such rule or order shall thereafter have effect only in such modified form or be no effect, as the case may be." The Schedule mentioned in the Notification refers to the irrigable areas in Cauvery basin of karnataka under various projects including minor irrigation works.
Hot on the heels of this Ordinance, the State of Karna taka instituted a suit under Article 131 against the State of Tamil Nadu and others for a declaration that the Tribu nal 's order granting interim relief was without jurisdiction and, therefore, null and void etc.
Another development which may be noticed is that the Ordinance has since been replaced by Act No.27 of 1991.
The provisions of the Act are a verbatim reproduction of the provisions of the Ordinance except that in Section 4 of the Act the words "any court or" are omitted and Section 7 is added repealing the Ordinance.
The omission of the above words excludes this court 's order dated April 26, 1991 from the overriding effect of the said provision.
Reference to the Ordinance hereafter will include reference to the Act also unless the context otherwise requires.
It is in the context of these developments that the President has made the Reference which is set out in the beginning.
Before us are arraigned the State of Tamil Nadu and the Union Territory of Pondicherry on the one hand the States of Karnataka and Kerala on 530 the other with the Union of Indian taking no side on the issues arising out of the Reference.
There are also inter veners on both sides.
The contentions of the parties are summarised hereafter.
The contentions also include a plea on both sides not to answer either all or one or the other question raised in the Reference for reasons differently advanced.
These pleas will also be dealt with at their proper places.
Before we deal with the contentions, it is necessary to note certain features of the Reference which are also alluded to in the contentions of the parties.
The Reference is made under Article 143 (1) of the Constitution of India seeking opinion of this Court under its advisory jurisdiction.
As has been stated in the preamble of the Reference and is also not disputed before us, the first two questions are obviously the outcome of the dispute relating to the sharing of waters between Tamil Nadu and Pondicherry on the one hand and Karnataka and Kerala on the other and the developments that took place in the said dispute till the date of Reference.
As has been contended on behalf of Tamil Nadu and Pondicherry, even the third question has a relation to the dispute and the said events, and is not general in nature though it is couched in general terms.
According to them, the question has been posed with an oblique motive of getting over the judgement of this Court dated April 26, 1991 and the consequent order of the Tribu nal dated June 25, 1991.
Hence the said question should not be answered.
Their other contention is that if the question is general in nature, it requires no answer at all.
The contentions of the parties on the questions referred may now be summarised.
With reference to Question 1 the State of Karnataka contends, in the light of the presumption of constitutional validity which ordinarily attaches to a legislation, that the onus lies heavily on the party challenging the same to show that the impugned Ordinance (now Act) is ultra vires the Constitution.
The impugned legislation clearly falls within the competence of the State legislature under Entry 17 as well as Entries 14 and 18 of List II in the Seventh Shedule of the Constitution.
Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power fall within Entry 17 of List II (hereinafter referred to as 'Entry 17 ') and the State Legislature has every right to legislate on the subject and this legislative power is subject only to Entry 56 of List I (hereinafter referred to as 'Entry 56 ').
That Entry deals with regulation and development of inter State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.
This Entry, it is contended, does not denude the States of the power to 531 legislate under Entry 17, since it merely empowers the Union, if Parliament has by law declared it to be in public interest, that the 'regulation and development of inter State rivers and river valleys should, to the extent the declaration permits, be taken under the control of the Union.
On a plain reading of the said Entry it is evident that barring regulation and development ' of an inter State river, subject to the declaration, the Central Government is not conferred with the power to legislate on water, etc., which is within the exclusive domain of the State legisla tures.
The being the only legislation made by Parliament under Entry 56, and the scope of the declaration in section 2 thereof being limited 'to the extent hereinafter provided ', that is to say provided by that statute, and no River Board having been constituted thus far in respect of and inter State river under the said law, the power to legislate under Entry 17 is not whittled down or restricted.
Thus, contends the State of Karnataka, the merely authorises the Union to set up a River Board with a view to take under its control the regu lation and development of inter State rivers without in any manner restricting or controlling the legislative power under Entry 17.
But in the absence of the constitution of a River Board for Cauvery, it is contended that the State of Karnataka retains full legislative power to make laws as if Entry 17 has remained untouched.
Further, the executive power of the Union under Article 73 cannot extend to any State with respect to matters on which the State alone can legislate in view of the field having been covered by Arti cle 162 of the Constitution.
Since the Act enacted under Article 262 of the Constitution does not attract any Entry in list 1, it is a law essentially meant to provide for the adjudication of a dispute with respect to the use, distribu tion or control of waters of, or in, any inter .State river or river valley and does not, therefore, step on the toe of Entry 17.
What the Ordinance (now Act) seeks to do is to impose by section 3 a duty on the State Government to pro tect, preserve and maintain irrigation from Cauvery waters in the irrigable areas failing within the various projects specified in the Schedule to the said legislation.
The State of Karnataka, therefore, contends that the impugned legisla tion is clearly within the scope of the State 's power to legislate and is, therefore, intra vires the Constitution.
A forteriori, the power to legislate conferred on the State legislature by Entries 14, 17 and 18 of List II, cannot be inhibited by an interim order of the Tribunal since the scheme of the Act envisages only one final report or deci sion of the Tribunal under section 5 (2) which would have to be gazetted under section 6 thereof.
Until a final adjudica tion is made by the Tribunal determining the shares of the respective StaLes in the waters of an inter State river, the States would be free to make optimum use of water within the State and the Tribunal cannot interfere with such use under the guise of an interim order.
Consequently it was open to the 532 Karnataka Legislature to make a law ignoring or overriding the interim order of the Tribunal.
With regard to Question 2 (i) of the Reference, the State of Karnataka contends that the scheme of the Act does not envisage the making of an interim order by the Tribunal.
Section 5 of the Act provides that after a Tribunal has been constituted under section 4, the Central Government shall refer the water dispute and any matter appearing to be connected with, or relevant to, the water dispute to the Tribunal for adjudication.
On such Reference the Tribunal must investigate the matters referred to it and forward a report setting out the facts found by it and giving its decision on the matters referred to it.
If upon considera tion of the decision, the Central Government or any State Government is of opinion that anything contained therein requires explanation or that guidance is needed upon any point not originally referred to the Tribunal, such Govern ment may within three months from to decision again refer the matter for further consideration, and on such reference, the Tribunal may forward a further report giving such expla nation and guidance as it deems fit and thereupon the deci sion of the Tribunal shall be deemed to be modified accord ingly.
Section 6 then enjoins upon the Central Government to publish the decision of the Tribunal in the Official Gazette and on such publication 'the decision shall be final and binding on the parties to the dispute and shall be given effect to by them '.
It is contended by the State of Karnata ka that the scheme of the aforestated provisions clearly envisages that once a water dispute is referred to the Tribunal ' the Tribunal must 'investigate ' the matters re ferred to it and forward a report to the Central Government 'setting out the facts found by it ' and 'giving its deci sion ' on the matters referred to it.
It is this decision which the Central Government must publish in the Official Gazette to make it final and binding on the parties to the dispute.
The State of Karnataka, therefore, contends that the scheme of the Act contemplates only one final report made after full investigation in which findings of fact would be set out along with the Tribunal 's decision on the matters referred to it for adjudication, and does not con template an interim report based on half baked information.
Finality is attached to that report which records findings of facts based on investigation and not an ad hoc:, tenta tive and prima facie view based on no investigation or cursory investigation.
The State of Karnataka, therefore, contends that since the interim order was not preceded by an investigation of the type contemplated by the Act, the said order of 25th June, 1991 could not be described as 'a re port ' or 'a decision ' under section 5(2) of the Act and hence there could be no question of publishing it in the gazette.
It is, therefore, contended that no finality can attach to such an order which is neither a report nor a decision and even if published in the 533 gazette it cannot bind the parties to the dispute and can have no efficacy in law/. On Question 2(ii), it is, there fore, contended that since there was no investigation, no findings on facts, no report and no decision, the Central Government is under no obligation to publish the interim order of the Tribunal.
With reference to Question 3, the State of Karnataka reiterates that the scheme of the Act clearly envisages a final report to be given by the Tribunal on conclusion of the investigation and after the Tribunal has reached firm conclusions on disputed questions of fact raised before it by the contesting parties.
It is only thereafter that it can in its report record its decision which on being gazetted becomes final and binding on the parties.
The words 'any matter appearing to be connected with or relevant to water dispute ' employed in section 5(1) of the Act, do not contem plate reference of an interim relief matter nor can the same empower the Tribunal to make an interim order pendente lite.
The Act has deliberately not conferred any power on the Tribunal to make an interim order for the simple reason that a water dispute has many ramifications, social, economic and political, and involves questions of equitable distribution of water which cannot be done without a full fledged inves tigation of the relevant data material including, statisti cal information.
In the very nature of things, therefore, it is impossible to think that the Act envisaged the making of an interim order.
While conceding that certain kinds of interlocutory orders which are processual in nature can be made by the Tribunal to effectuate the purpose of the Act, namely, adjudication of a water dispute, no interim relief or order can be granted which will affect the existing rights of the parties because that would in effect deprive the concerned State of the power to legislate in respect of water under Entry 7 and/or make executive orders in that behalf under Article 162 of the Constitution.
The jurisdic tion conferred on the Tribunal under the Act to adjudicate upon a water dispute does not extend to grant of interim relief.
The State of Karnataka, therefore, contends that having regard to the purpose, scope and intendment of the Act, the Tribunal constituted thereunder has no power or authority to grant any interim relief which would have the effect of adversely interfering with its existing rights, although while finally adjudicating the dispute it can override any executive or legislative action taken by the State.
Since the allocation of flow waters between the con cerned States is generally based on the principle of 'equi table apportionment ', it is incumbent on the Tribunal to investigate the facts and all relevant materials before deciding on the shares of the concerned States which is not possible at the interim stage and hence the legislature has advisedly not conferred any power on the Tribunal to make an interim order affecting the existing rights of the concerned parties.
The 534 State of Karnataka, therefore, urges that this question deserves to be answered in the negative.
The State of Kerala has in its written submissions of 10th August, 1991 by and large supported the stand taken by the State of Karnataka.
It contends that the provisions of the Act enacted under Article 262 of the Constitution con stitute a complete Code and the Tribunal has been conferred the powers of a civil court under the Civil Procedure Code only in respect of matters enumerated in section 9(1) of the Act.
The power to grant interim relief is conspicuously absent and in the absence of an express provision in this behalf, the Tribunal, which is a creation of the Act, can have no jurisdiction to grant interim relief.
It would be advantageous to state the contention of the State of Kerala in its own words: ". .Tribunal has no jurisdiction or power to make an interim award or grant any interim relief to a party unless the dispute relating to the interim relief has itself been referred to the Tribunal." (Paragraph 1.5) This is further amplified in paragraph 3.3 of its submissions as under.
: "Such a relief can be granted to a party if that forms the subject matter of a separate reference to the Tribunal by the Central Government.
In such a situation, the order of the Tribunal, would constitute a separate report and decision within section 5(2) of the Act which would then be published by the Central Government and would, therefore, be binding on the parties.
" It is, however, the stand of Kerala that no specific refer ence for grant of interim relief w,ks made to the Tribunal and hence the interim order of 25th June, 1991 does not constitute a report and a decision within the meaning of section 5(2) and hence the Central Government is not expect ed to gazette the same.
Unless the same is gazetted finality cannot attach to it nor can it bind the parties.
Therefore, contends the State of Kerala, the Tribunal had no jurisdic tion to grant interim relief which it h,ks granted by its aforesaid interim order.
Hence the said order has no effica cy in law and can be ignored.
On the question of issuance of the Ordinance, the State of Kerala contends, that such a legislation falls within the scope and ambit of Entry 17 and is, therefore, perfectly legal and constitutional and is not in any manner inconsist ent with Entry 56 nor does it trench upon any part of the 535 declaration in section 2 of the or any of the provisions thereof.
Thus according to Kerala, the legis lative competence to pass such a statute vests in the State legislature under Entry 17 and, therefore, the Governor of Karnataka was competent to issue the Ordinance under Article 213 of the Constitution.
However, in the course of his submissions before this Court, Mr. Shanti Bhushan, counsel for the State of Kerala departed from the stand taken in the written submission and contended that the scheme of the Act does not confer any power whatsoever on the Tribunal to make an interim order and, therefore, the only remedy available to a State which apprehends any action by the upper riparian State likely to adversely affect its right, i.e. the rights of its people, is to move the Supreme Court under Article 131 of the Con stitution notwithstanding the provisions of Article 262 and section 11 of the Act.
According to the learned counsel since the scope of Article 262 read with the scheme of the Act does not contemplate a Reference regarding the grant of interim relief to the Tribunal constituted under the Act, the field is left open for a suit to be instituted under Article 131 of the Constitution.
Mr. Shanti Bhushan went so far as to contend that even if the Act had invested power in the Central Government such a provision would have been hit by Article 262 itself as the scope of that Article is limit ed while Article 131 is wider in scope.
Thus according to counsel, this Court 's majority view expressed by Kasliwal, J.in Civil Appeals Nos. 303,304 & 2036 of 1991 which held that there was a reference to the Tribunal for grant of interim relief is not consistent with the true meaning and sope of Article 262 and the provisions of the Act and this Court should not feel bound by it if it agrees with coun sel 's interpretation for to do so would be to render wrong advice to the President.
It is thus manifest that counsel 's submissions are a clear departure from the written submis sion filed by the State on 10th August, 1991.
The State of Tamil Nadu contends that ordinarily a dispute between (i) the Government of India and one or more States or (ii) between the Government of India and any State or States on one side and one or more other States on the other or (iii) between two or more States would be governed by Article 131 of the Constitution and, subject to the provisions of the Constitution, the Supreme Court alone would have jurisdiction if and insofar as the dispute in volves any question (whether of law or fact) on which the existence or extent of a legal right depends.
Article 131 begins with the words 'subject to the provisions of the Constitution ' and hence it must be read subject to Article 262 of the Constitution.
Article 262 enables Parliament to provide by law for the adjudication of any dispute or com plaint with respect to the use, distribution or control of the 536 waters of, or in, any inter State river or river valley.
That law may, notwithstanding anything contained in the Constitution, provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to above.
In exer cise of power conferred by this provision., the Parliament enacted the Act and by section 11 provided as under: "Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdic tion in respect of any water dispute which may be referred to a Tribunal under this Act." While Article 262(2) begins with the words 'notwith standing anything in this constitution ', section II begins with the words 'Notwithstanding anything contained in any other law ' which conveys that all courts including the Supreme Court are debarred from exercising jurisdiction in respect of any water dispute which may be referred to the tribunal for adjudication.
It is, therefore, contended that the Tribunal required to perform a purely judicial function which but for Article 262 and section 11 of the Act would have been performed by a Court of law.
An independent high level machinery consisting of a Chairman and two other members nominated by the Chief Justice of India from amongst sitting Judges of the Supreme Court or of a High Court is to constitute the Tribunal for adjudicating the water dispute.
As the Tribunal is invested with the State 's judicial function it has all the trappings of a civil court and it is inconceivable that such a high powered judicial body would not be empowered to make interim orders or grant interim relief, particularly when it is empowered even to override an existing legislation or inter fere with a future legislation.
Since the Tribunal is a substitute for the Supreme Court (but for Article 262 and section 11 of the Act, Article 131 would have applied) it is reasonable to infer that all the powers which the Supreme Court under Article 131 can be exercised by the Tribunal while adjudicating a water dispute and, therefore, the power to grant interim relief inheres in such a Tribunal without the need for an express provision in that behalf.
A Tribunal on which is conferred a jurisdiction to adjudicate as to the prejudicial effect of a future legislation or executive action must of necessity possess the power to make interim orders interdicting a prejudicial act.
The State of Tamil Nadu, therefore, contends that a high powered Tribunal like the present one which is a substitute for this Court must be presumed to have jurisdiction to grant an appropriate inter im relief.
Such an ancillary and incidental power always inheres in a Tribunal which discharges judicial 537 functions.
It is, therefore, contended that Question 3 must be answered in the affirmative.
Without prejudice to the generality of the above submis sion, the State of Tamil Nadu contends that insofar as the question of jurisdiction to grant interim relief concerning the Cauvery water dispute is concerned, the decision of this Court dated 26th April, 1991 in Civil Appeals Nos. 303, 304 and 2036 of 1991 operates as resjudicata and is binding on the contesting parties regardless of the view that this Court may take on the generality of the question referred for decision.
It must be recalled that this Court in its judgment of 26th April, 1991 came to the conclusion that the reference made to the Tribunal included the question of grant of interim relief and this conclusion based on the interpretation of the terms of the reference dated 2nd June, 1990 read with letter dated 6th July, 1991 was clearly binding on the concerned parties and the Tribunal 's interim order on the merits of the matter made in pursuance of this Court 's directive to decide on merits is equally binding and cannot be disturbed in proceedings arising out of a Refer ence under Article 143 (1) of the Constitution.
If the question of grant of interim relief forms part of the Refer ence, the Tribunal is duty bound to decide the same and such decision would constitute a report under Section 5(2) of the Act which the Central Government would be duty bound to publish as required by section 6 of the Act.
It is further contended that in the view of the State of Tamil Nadu a Tribunal constituted under the Act has inherent jurisdiction to grant interim relief as pointed out earlier, whether or not the question regarding grant of interim relief is spe cifically referred, and its decision thereon would consti tute a report under section 5(2) of the Act liable to be published in the official Gazette as required by section 6 thereof.
If there is any ambiguity in the interim order the same can be taken care of under section 5(3) of the Act.
The State of Tamil Nadu, therefore, contends that both parts of Question 2 deserve to be answered in the affirmative.
So far as Question 1 of the Reference is concerned, the State of Tamil Nadu contends that the Karnataka Ordinance (now Act) is ultra vires the Constitution for diverse rea sons.
It is contended that the real object and purpose of the legislation is to unilaterally nullify the Tribunal 's interim order after having failed in the first round of litigation.
It is contended that the State of Karnataka had and has no right to unilaterally decide the quantum of water it will appropriate or the extent to which it will diminish the flow of Cauvery waters to the State of Tamil Nadu and thereby deny to the people of Tamil Nadu their rightful share in the Cauvery waters.
The right to just and reasona ble use of water being a matter for adjudication by the Tribunal, no single State can by the use of 538 its legislative power arrogate upto itself the judicial function of equitable apportionment and decide for itself the quantum of water it will use from the inter State river regardless of the prejudice it would cause to the other State by its unilateral action.
Such a power cannot be read in entry 17 as it will be destructive of the principle that such water disputes are justiciable and must be left for adjudication by an independent and impartial special forum to which it is referred, namely, the Tribunal constituted for resolving the dispute, and not by unilateral executive or legislative interference.
It is, therefore, contended that the object of the legislation not being bona fide, the same cannot be allowed to stand as it has the effect of overruling a judicial order passed by a Tribunal specially appointed to adjudicate on the water dispute between the parties thereto.
On the question of legislative competence, the State of Tamil Nadu contends that the statute is ultra vires the Constitution for the following reasons: (a) the Ordinance (now Act) is ultra vires the Constitution as it seeks to override or neutralise the law enacted by Parliament in exercise of power conferred by Article 262 (and not Article 246 read with the relevant entry in the Seventh Sechedule) of the Consti tution.
A State Legislature can have no power to legislate with regard to a water dispute as it would be incongruous to confer or infer such power in a State legislature to destroy what a judicial body has done under a Central law; (b) the impugned legislation purporting to be under Entry 17 of List II has extra territorial operation, in that, it directly impinges on the rights of the people of Tamil Nadu to the use of Cauvery waters.
(c) the impugned legislation is con trary to the Rule of Law and a power not comprehended even by Article 262 cannot be read into the legislative power of the State for it would pervert the basic concept of justice, and (d) the impugned legislation is violative of the fundamental fights of the inhabitants of Tamil Nadu guranteed by Articles 14 and 21 of the Constitution, in that, the action of Karnataka is wholly arbitrary and in total disregard of the right to life of those inhab itants in Tamil Nadu who survive on Cauvery waters.
539 The State of Tamil Nadu strongly contends that in a civi lised society governed by the Rule of Law, a party to a 'lis ' water dispute cannot be owed to arrogate to itself the fight to decide on the dispute or to nullify an interim order made by a Tribunal in obedience to the decision of the apex court by abusing the legislative power under Entry 17 under which the impugned legislation purports to be.
Without raising any preliminary objection and without prejudice to its afore mentioned contentions, the State of Tamil Nadu contends that the jurisdiction of this Court under Article 143 of the Constitution is discretionary and this Court should refrain from answering a Reference which i in general terms without background facts and is likely to entail a roving inquiry which may ultimately prove academic only.
Secondly, the State of Karnataka has immediately after the interim order instituted a suit, being Original Suit No.1 of 1991, in this Court in which it has prayed for a declaration that the interim order of the Tribunal dated 25th June, 1991 is without jurisdiction, null and void, and for setting aside the said order.
It is contended that while on the one hand the decision of this Court, per Kasliwal, J., has become final and is res judicate between the parties thereto, on the other hand the State of Karnataka is raking up the same question of jurisdiction before this court in a substantive suit with a view to overreaching this Court 's earlier order.
The Presidential Reference in terms refers to disputes and differences having arisen out of the Tribunal 's interim order which, it is said, has given rise to a public controversy likely to result in undesirable consequences.
Such matters, contends the State of Tamil Nadu, can be effectively countered by the concerned Government and do not call for a Presidential Reference.
If there is any doubt or difficulty in the implementation of the impugned order recourse can always be had to section 5(3) of the Act.
In the circumstances it is urged that this Court should refuse to answer the Reference.
The Union Territory of Pondicherry contends that the promulgation of the Ordinance (now Act) is intended to further protract the long standing water dispute which came to be referred to the Tribunal only after this Court issued a mandamus in that behalf and is likely to prejudicially affect the interest of the State as well as the farmers and other inhabitants who utilise the water from river Cauvery.
It is contended that the said legislation is unconstitution al and is a piece of colourable legislation for the follow ing reasons: (a) the power of the State Legislature to enact a law on the subject falling in Entry 17 List II, is subject to the provisions of Entry 56 in List 1, and once Parliament had made a declaration in that behalf in section 2 of the River Boards 540 Act, the State Legislature was not competent to enact the impugned law, (b) once the Central Government had entrusted the Cauvery water dispute to an independent Tribunal under the provisions of the Act, it was not constitutionally permissi ble for Karnataka to enact the impugned law, (c) in the case of flowing water the riparian States have no ownership or proprie tary right therein except in the usufruct thereof and, therefore, the power to legislate therein under Entry 17 of List II can extend to only the usufructurary right subject to the right of a riparian State to get the customary quantity of water, (d) the objective of the impugned legis lation is to set at naught the interim order of the Tribunal and to the extent it seeks to interfere with the exercise of judicial powers it is unconstitutional, (e) the impugned legislation is violative of Article 21 of the Constitution as it is intended to diminish the supply of water to Tamil Nadu and Pondicherry which is also against the spirit of Articles 38 and 39 of the Constitution, and (f) the impugned legislation seeks to eclipse the interim order of the Tribunal constituted under an Act made in virtue of Article 262 of the Constitution and being in conflict with the Central legislation is void for repugnancy.
For the above reasons, Pondicherry contends that the Ordinance (now the Act) is constitutionally invalid.
As regards Question 2 it is contended that the water dispute referred to the Tribunal comprised the issue regard ing the grant of interim relief as held by Kasliwal, J. and hence the interim order made by the Tribunal constitutes a report within the meaning of section 5(2) of the Act and consequently the Central Government is obliged to publish it is required by section 6 of the Act.
Once it is so published it will operate as a decision in rem but even without publi cation it is binding on Karnataka as a decision in personam.
If any explanation or guidance is required it can be had from the Tribunal by virtue of section 5(3) of the Act.
Once the time for seeking explanation or guidance is over the law enjoins on the Central Government the obligation to publish the report under section 6 of 541 the Act.
Both the elements of Question 2 must, contends Pondicherry, be answered in the affirmative.
So far as Question 3 is concerned, it is contended that the Tribunal constituted under the Act, though not a Court, has all the attributes of a Court since it is expected to discharge a judicial function and must, therefore, be pre sumed to have 'incidental and ancilliary powers ' to grant interim relief, if equity so demands.
That is so because the jurisdiction of all courts including this Court is taken away by virtue of section 11 of the Act read with Article 262(2) of the Constitution.
The Tribunal is, therefore, required to discharge the judicial function of adjudicating a water dispute between two or more States and must, there fore, be deemed to possess the inherent power to grant interim relief which inheres in all such judicial bodies.
Absence of an express provision conferring power to grant interim relief does not detract from the view that such power inheres in a Tribunal which is called upon to dis charge an essentially judicial function.
For discharging such a function it is essential that the Tribunal must possess inherent power to pass interim orders from time to time in aid of adjudication.
The Union Territory of Pondi cherry is, therefore, of the view that Question 3 must be answered in the affirmative.
Six intervention applications have been filed by differ ent persons and bodies from Karnataka including the Advocate General of the State in support of the case of Karnataka raising contentions more or less similar to those raised by the State itself.
One intervention application is filed by the Tamil Nadu Society which had preferred the original Writ Petition in which a mandate to constitute a Tribunal under the Act was given.
The contentions raised by the interveners are covered in the written submissions filed by the State of Tamil Nadu and need not be reiterated.
The said intervener has also filed written submissions through counsel Shri Ashok Sen which we shall deal with in the course of this judgment.
Of the three questions which have been referred to this Court under Article 143(1) of the Constitution, there can be no dispute, and indeed there was none, that question 2 arises solely and entirely out of the Tribunal 's order granting interim relief.
The question is whether that order constitutes a report within the meaning of section 5(2) of the Act and is required to be published in the gazette of the Central Government to make it effective.
The first question refers ' to the constitutional validity of the Karnataka Ordinance (now the Act).
Although this question does not specifically refer to the Cauvery water dispute or the interim order passed by the Tribunal, the preamble of the said statute leaves no doubt that it is concerned with the protection and preservation of irrigation in irrigable 542 areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries '.
The provi sions of the said law extracted earlier leave no manner of doubt that the State Government has been charged with the duty to abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite, from the flows of river Cauvery and its tributaries, 'not withstanding anything contained in any order, report or decision of any. .
Tribunal ', whether made before or after the commencement of the said law, save and except a final decision under section 5(2) read with section 6 of the Act.
There can, therefore, be no doubt that if the provi sions of this special Karnataka enactment become legally effective, the Tribunal 's order dated 25th June, 1991 grant ing interim relief would stand eclipsed.
In that view of the matter Question 1 is clearly intertwined with the Cauvery water dispute referred to the Tribunal and the interim order made by that body.
The third question, it was contended by Tamil Nadu and Pondicherry, though innocent in appearance and apparently general in nature, is in fact likely to nullify the interim order of the Tribunal.
There can be no doubt that this Court 's opinion on Question 3 will certainly have a bearing on the interim order of the Tribunal.
Bearing this in mind we may now proceed to deal with the questions referred to this Court in the light of the submissions made at the Bar. 7.
We will deal with the respective contentions with refer ence to each of the questions.
Question No. I To examine the validity of the contentions advanced on this question it is first necessary to analyse the relevant provisions of the Constitution.
The distribution of legislative powers is provided for in Chapter I of Part XI of the Constitution.
Article 245, inter alia states that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India and the legislature of the State may make laws for the whole or any part of the State.
Article 246 provides, among other things, that subject to clauses (I)and (2) of the said Article, the legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumer ated in the State List in the Seventh Schedule.
Clauses (1) and (2) of the said Article refer to the Parliament 's exclu sive powers to make laws with respect to any of the matters enumerated in the Union List and the power of the Parliament and the legislature of the State to make laws with respect to any of the matters enumerated in the Concurrent List.
Article 248 gives 543 the Parliament exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or the State List.
Entry 56 of the Union List reads as follows: "Regulation and development of inter State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Par liament by law to be expedient in the public interest.
" A reading of this Entry shows that so far as inter State rivers and river valleys are concerned, their regulation and development can be taken over by the Union by a Parliamen tary enactment.
However, that enactment must declare that such regulation and development under the control of the Union is expedient in the public interest.
Entry 17 in the State List reads as follows: "Water, that is to say, water supplies, irri gation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56 of List I." An examination of both the Entries shows that the State has competence to legislate with respect to all aspect of water including water flowing through inter State rivers, subject to certain limitations, viz. the control over the regulation and development of the inter State river waters should not have been taken over by the Union and secondly, the State cannot pass legislation with respect to or affect ing any aspect of the waters beyond its territory.
The competence of the State legislature in respect of inter State river waters is, however, denuded by the Parliamentary legislation only to the extent to which the latter legisla tion occupies the field and no more, and only if the Parlia mentary legislation in question declares that the control of the regulation and development of the inter State rivers and river valleys is expedient in the public interest, and not otherwise.
In other words, if a legislation is made which fails to make the said declaration it would not affect the powers of the State to make legislation in respect of inter State river water under Entry 17.
Entry 14 of List II relates, among other things, to agriculture.
In so far as agriculture depends upon water including river water, the State legislature while enacting legislation with regard to agriculture may be competent to provide for the regulation and development of its water resources including water supplies, irrigation and canals, drainage and embankments, water storage and water power which are the subjects men 544 tioned in Entry 17.
However, such a legislation enacted under Entry 14 in so far as it relates to inter State river water and its different uses and the manners of using it, would also be, it is needless to say, subject to the provi sions of Entry 56.
So also Entry 18 of List II which speaks, among other things, of land improvement which may give the State Legislature the powers to enact similar legislation as under Entries 14 and 17 and subject to the same restric tions.
Entry 97 of the Union List is residuary and under it the Union has the power to make legislation in respect of any matter touching inter State river water which is not enumer ated in the State List or the Concurrent List.
Correspond ingly, the State legislature cannot legislate in relation to the said aspects or matters.
Article 131 of the Constitution deals with original jurisdiction of the Supreme Court and states as follows: "131.
Original Jurisdiction of the Supreme Court Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other; or (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends: Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad or other similar instrument which, having been entered into or executed before the commence ment of this Constitution, continues in opera tion after such commencement, or which pro vides that the said jurisdiction shall not extend to such a dispute.
" It is clear from the Article that this Court has origi nal jurisdiction, among other things, in any dispute between two or more States where the 545 dispute involves any question whether of law or fact on which the existence and extent of a legal right depends except those matters which are specifically excluded from the said jurisdiction by the proviso.
However, the Parlia ment has also been given power by Article 262 of the Consti tution to provide by law that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any dispute or complaint with respect to the use, distribu tion or control of the water of, or in, any interState river or river valley.
Section 11 of the Act, namely, the Inter State Water Disputes Act, 1956 has in terms provided for such exclusion of the jurisdiction of the courts.
It reads as follows: "Sec.
11 Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdiction in respect of any water dispute which may be referred to a Tribunal under this Act.
" This provision of the Act read with Article 262 thus excludes original cognizance or jurisdiction of the inter State water dispute which may be 'referred to the Tribunal established under the Act, from the purview of any Court including the Supreme Court under Article 13 1. 9.
We may now analyse the provisions of the Karnataka Ordinance in question the text of which is already repro duced.
Its preamble states, that it is issued (i) to provide for the protection and preservation of irrigation in irriga ble areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries, and (ii) that the Governor of Karnataka was satisfied that circum stances existed which rendered it necessary for him to take immediate action for the said protection and preservation.
The irrigable areas of which protection and preservation is sought by the Ordinance are mentioned in the Schedule to the Ordinance.
Admittedly the Schedule includes the irrigable area as existing in 1972 during the tenure of the agreement of 1924 between Karnataka and Tamil Nadu as well as the increase in the same since 1972 till the date of the Ordi nance as well as the areas which are committed to be brought under irrigation on account of some of the projects men tioned in Column II of the Schedule.
Clause 3(1) of the Ordinance then makes a declaration of the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the said irrigable area.
Sub clause (2) of the said clause then gives powers to the State Government to abstract or cause to be abstracted during every water year (which is defined as the year commencing with 1st of June of a calendar year and ending with 31st May of next calendar year), such quantity of water as it may deem requisite, from the flows of the Cauvery river and its tributaries and in such manner and during such intervals as 546 the State Government or any officer not below the rank of an Engineer inChief designated by it may deem fit and proper.
(Emphasis supplied).
This clause, therefore, vests in the State Government or the Officer designated by it, an abso lute power to appropriate any quantity of water from the Cauvery river and its tributaries and in any manner and at any interval as may be deemed fit and proper.
The power given by the clause is unrestricted and uninhibited by any consideration save and except the protection and preserva tion of the irrigable area of the Karnataka State.
Clause 4 is still more absolute in its terms and opera tion inasmuch as it declares that the Ordinance and any rules and orders made thereunder shall have effect notwith standing anything contained in any Order, report or decision of any court or tribunal (whether made before or after the commencement of the Ordinance) save and except a final decision under the provisions of sub Section (2) of Section 5 read with Section 6 of the .
Clause (5) states that when any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion requires, do anything which appears to be necessary for the purpose of removing the difficulty, and clause (6) gives power to the State Government to make rules to carry out the purpose of the Ordinance.
Clauses (4), (5) and (6) read together show that the Ordinance, Rules and Order made thereunder will prevail over any order, report or decision of any court including the Supreme Court and, of course, of the Tribunal under the Inter State Water Dispute Act.
The only decision which is excluded from the overriding effect of the Ordinance is the final decision of the Water Disputes Tribunal given under Section 5 (2) read with Section 6 of the . 10.
The object of these provisions of the Ordinance is obvious.
Coming close on the Order dated 25th June, 1991 of the Tribunal and in the context of the stand taken by the State of Karnataka that the Tribunal has no power or juris diction to pass any interim order or grant any interim relief, it is to override the said decision of the Tribunal and its implementation.
The Ordinance has thus the effect of defying and nullifying any interim order of the Tribunal appointed under a law of the Parliament.
This position is not disputed before us on behalf of the State of Karnataka.
The other effect of the Ordinance is to reserve to the State of Karnataka exclusively the right to appropriate as much of the water of river Cauvery and its tributaries as it deems requisite and in a manner and at periods it deems fit and proper, although pending the final adjudication by the Tribunal.
It cannot be disputed that the Act, viz., the Inter State Water Disputes Act, 1956 is not a legislation under Entry 56.
In the first instance Entry 56 547 speaks of regulation and development of inter State rivers and river valleys and does not relate to the disputes be tween the riparian States with regard to the same and adju dication thereof.
Secondly, and even assuming that the expression "regulation and development" would in its width, include resolution of disputes arising therefrom and a provision for adjudicating them, the Act does not make the ' declaration required by Entry 56.
This is obviously not an accidental omission but a deliberate disregard of the Entry since it is not applicable to the subject matter of the legislation.
Thirdly, no Entry in either of the three Lists refers specifically to the adjudication of disputes with regard to inter State river waters.
The reason why none of the Entries in the Seventh Sched ule mention the topic of adjudication of disputes relating to the inter State river waters is not far to seek.
Article 262 of the Constitution specifically provides for such adjudication.
The Article appears under the heading "Dis putes relating to Waters", and reads as follows: "262.
Adjudication of disputes relating to waters of interState rivers or river valleys. ******************************************* (1) Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter State river or river valley.
(2) Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is re ferred to in clause (1).
" An analysis of the Article shows that an exclusive power is given to the Parliament to enact a law providing for the adjudication of such disputes.
The disputes or complaints for which adjudication may be provided relate to the "use, distribution or control" of the waters of, or in any inter State river or river valley.
The words "use", "distribution" and "control" are of wide import and may include regulation and development of the said waters.
The provisions clearly indicate the amplitude of the scope of adjudication inasmuch as it would take within its sweep the determination of the extent, and the manner, of the use of the said waters, and the power to give directions in respect of the same.
The language of the Article has, further to be distinguished from that of Entry 56 and Entry 17.
Whereas Article 262 (1) speaks of adjudication of any dispute or complaint and that too with respect to the use, distribution or control of the waters of or 548 in any inter State river or river valleys, Entry 56 speaks of regulation and development of inter State rivers and river valley.
Thus the distinction between Article 262 and Entry 56 is that whereas former speaks of adjudication of disputes with respect to use, distribution or control of the waters ' of any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
(Emphasis supplied).
Entry 17 likewise speaks of water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56.
It does not speak either of adjudication of disputes or of an inter State river as a whole as indeed it cannot, for a State can only deal with water within its territory.
It is necessary to bear in mind these distinctions between Article 262, Entry 56 and Entry 17 as the arguments and counter arguments on the validity of the Ordinance have a bearing on them.
We have already pointed out another important aspect of Article 262, viz., Clause (2) of the Article provides that notwithstanding any other provision in the Constitution, Parliament may by law exclude the jurisdiction of any court including the Supreme Court in respect of any dispute or complaint for the adjudication of which the provision is made in such law.
We have also noted that Section 11 of the makes such a provision. 13.
The said Act, as its preamble shows, is an Act to pro vide for the "adjudication of disputes relating to waters of inter State rivers and river valleys".
Clause (c) of Section 2 of the Act defines "water dispute" as follows: "2.
In this Act, unless the context otherwise requires, (a). . . . (b). . . (c) "water dispute" means any dispute or difference between two or more State Govern ments with respect to (i) the use, distribution or control of the waters of, or in, any inter State river or river valley; or (ii) the interpretation of the terms of any agreement relating to the use, distribu tion or control of such waters or the imple mentation of such agreement; or (iii) the levy of any water rate in contravention of the prohibition contained in section 7" 549 Section 3 of the Act states that if it appears to the Government of any State that the water dispute with the Government of another State of the nature stated therein, has arisen or is likely to arise, the State Government may request the Central Government to refer the water dispute to a Tribunal for adjudication.
Section 4 of the Act provides for the constitution of a Tribunal when a request is re ceived for referring the dispute to a Tribunal and the Central Government is of the opinion that the water dispute cannot be settled by negotiations.
Section 5 of the Act requires the Tribunal to investigate the matter referred to it and forward to the Central Government the report of its findings and its decision.
The Central Government has then to publish the decision under Section 6 of the Act which decision is final and binding on the parties to the dispute and has to be given effect to by them.
These dominant provi sions, among others, of the Act clearly show that apart from its title, the Act is made by the Parliament pursuant to the provisions of Article 262 of the Constitution specifically for the adjudication of the disputes between the riparian States with.
regard to the use, distribution or control of the waters of the inter State rivers or river valleys.
The Act is not relatable to Entry 56 and, therefore, does not cover either the field occupied by Entry 56 or by Entry 17.
Since the subject of adjudication of the said disputes is taken care of specifically and exclusively by Article 262, by necessary implication the subject stands excluded from the field covered by Entries 56 and 17.
It is not, there fore, premissible either for the Parliament under Entry 56 or for a State legislature under Entry 17 to enact a legis lation providing for adjudication of the said disputes or in any manner affecting or interferring with the adjudication or adjudicatory process of the machinery for adjudication established by law under Article 262.
This is apart from the fact that the State legislature would even otherwise be incompetent to provide for adjudication or to affect in any manner the adjudicatory process or the adjudication made in respect of the inter State river waters beyond its territory or with regard to disputes between itself and another State relating to the use, distribution or control of such waters.
Any such act on its part will be extraterritorial in nature and, therefore, beyond its competence.
Shri Venugopal has in this connection urged that it is Entry 97 of the Union List which deals with the topic of the use, distribution and control of waters of an inter State river.
The use, distribution and control of the waters of such rivers, by itself is not a topic which is covered by Article 262.
It is also, according to him, not a topic covered by Entry 56 which only speaks of regulation and development of inter State rivers and river valleys meaning thereby the entirety of the rivers and river valleys and not the waters at or in a particular place (emphasis supplied).
Further, the regulation and development, according to him, has nothing to do with the 550 use, distribution or allocation of the waters of the inter State river between different riparian States.
That topic should, therefore, be deemed to have been covered by the said residuary Entry 97.
With respect to the learned counsel, it is not possible to accept this interpretation of the Entry 97.
This is so firstly because, according to us, the expression "regulation and development of Inter State rivers and river valleys" in Entry 56 would include the use, distribution and allocation of the waters of the inter State rivers and river valleys between different riparian States.
Otherwise the intention of the Constituent Assembly to provide for the Union to take over the regulation and development under its control makes no sense and serves no purpose.
What is further, the which is admittedly eracted under Entry 56 for the regulation and development of inter State rivers and river valleys does cover the field of the use, distribution and allocation of the waters of the inter State rivers and river valleys.
This shows that the expression "regulation and development" of the inter State rivers and river valleys in Entry 56 has legislatively also been construed to include the use, distribution or allocation of the waters of the inter State rivers and river valleys between riparian States.
We are also of the view that to contain the opera tion of Entry 17 to the waters of an inter State river and river valleys within the boundaries of a State and to deny the competence to the State legislature to interfere with or to affect or to extend to the use, distribution and alloca tion of the waters of such river or river valley beyond its territory, directly or indirectly, it is not necessary to fail back on the residuary Entry 97 as an appropriate decla ration under Entry 56 would suffice.
The very basis of a federal Constitution like ours mandates such interpretation and would not bear an interpretation to the contrary which will destroy the constitutional scheme and the Constitution itself.
Although, therefore, it is possible technically to separate the "regulation and development" of the inter State river and river valley from the "use, distribution and allocation" of its water, it is neither warranted nor neces sary to do so.
The above analysis of the relevant legal provisions dealing with the inter State rivers and river valleys and their waters shows that the Act, viz., the can be enacted and has been enacted only under Article 262 of the Constitution.
It has not been enacted under Entry 56 as it relates to the adjudication of the disputes and with no other aspect either of the inter State river as a whole or of the waters in it.
It will be pertinent at this stage also to note the true legal position about the inter State river water and the rights of the riparian States to the 551 same.
In State of Kansas vs State of Colorado, [206] US 46 the Supreme Court of the United States has in this connec tion observed as follows: "One cardinal rule, underlying all the rela tions of the States to each other, is that of equality of right.
Each State stands on the same level with all the rest.
It can impose its own legislation on no one of the others and is bound to yield its own view to none". " . the action of one State reaches, through the agency of natural laws into the territory of another State, the question of the extent and the limitation of the rights of the two States becomes a matter of justiciable dispute between them . this court is called upon to settle that dispute in such a way as will recognise the equal rights of both and at the same time establish justice between them".
"The dispute is of a justiciable nature to be adjudicated by the Tribunal and is not a matter for legislative jurisdiction of one State. ".
"The right to flowing water is now well set tled to be a right incident to property in the land; it is a right publici juris, of such character that, whilst it is common and equal to all through whose land it runs, and no one can obstruct or divert it, yet as one of the beneficial gifts of Providence, each proprie tor has a right to a just and reasonable use of it, as it passes through his land, and so long as it is not wholly obstructed or divert ed, or no larger appropriation of the water running through it is made than a just and reasonable use, it cannot be said to be wrong ful or injurious to a proprietor lower down".
"The right to the use of the flowing water is publici juris, and common to all the riparian proprietors; it is not an absolute and exclu sive right to all the water flowing past their land so that any obstruction would give a cause of action; but it is a right to the flow and enjoyment of the water subject to a simi lar right in all the proprietors to the rea sonable enjoyment of the same gift of provi dence.
It is therefore only for an abstraction and deprivation of this common benefit or for an unreasonable and unautho rised use of it that an action will lie." 16.
Though the waters of an inter State river pass through the territories of the riparian States such waters cannot be said to be located in any one 522 State.
They are in a state of flow and no State can claim exclusive ownership of such waters so as to deprive the other States of their equitable share.
Hence in respect of such waters, no State can effectively legislate for the use of such waters since its legislative power does not extend beyond its territories.
It is further an acknowledged prin ciple of distribution and allocation of waters between the riparian States that the same has to be done on the basis of the equitable share of each State.
What the equitable share will be will depend upon the facts of each case.
It is against the background of these principles and the provi sions of law we have already discussed that we have to examine the respective contentions of the parties.
The Ordinance is unconstitutional because it affects the jurisdiction of the Tribunal appointed under the Central Act, viz., the which legisla tion has been made under Article 262 of the Constitution.
As has been pointed out above, while analysing the provisions of the Ordinance, its obvious purpose is to nullify the effect of the interim order passed by the Tribunal on 25th June, 1991.
The Ordinance makes no secret of the said fact and the written statement filed and the submissions made on behalf of the State of Karnataka show that since according to the State of Karnataka the Tribunal has no power to pass any interim order or grant any interim relief as it has done by the order of 25th June, 1991, the order is without juris diction and.
therefore, void ab initio.
This being so.
it is not a decision, according to Karnaaka, within the meaning of Section 6 and not binding on it and in order to protect itself against the possible effects of the said order, the Ordinance has been issued.
The State of Karnataka has thus arrogated to itself the power to decide unilaterally whether the Tribunal has jurisdiction to pass the interim order or not and whether the order is binding on it or not.
Secondly, the State has also presumed that till a final order is passed by the Tribunal, the State has the power to appropri ate the waters of the river Cauvery to itself unmindful of and unconcerned with the consequences of such action on the lower riparian States.
Karnataka has thus presumed that it has superior rights over the said waters and it can deal with them in any manner in the process, the State of Karna taka has also presumed that the lower ripar in States have no equitable rights and it is the sole judge as to the share of the other riparian States in the said waters.
What is further, the State of Karnataka has assumed the role of a judge in its own cause.
Thus, apart from the fact that the Ordinance directly nullifies the decision of the Tribunal dated 25th June, 1991.
it also challenges the decision dated 26th April, 1991 of this Court which has ruled that the Tribunal had power to consider the question of granting interim relief since it was specifically referred to it.
The Ordinance further has an extra territorial 553 operation insasmuch as it interferes with the equitable rights of Tamil Nadu and Pondicherry to the waters of the Cauvery river.
To the extent that the Ordinance interferes with the decision of this Court and of the Tribunal appoint ed under the Central legislation, it is clearly unconstitu tional being not only in direct conflict with the provisions of Article 262 of the Constitution under which the said enactment is made but being also in conflict with the judi cial power of the State.
In this connection, we may refer to a decision of this Court in Municipal Corporation of the City of Ahmedabad etc.
vs New Shorock Spg.
& Wvg.
Co., Ltd. etc.
; , The facts in this case were that the High Court as well as this Court had held that property tax collected for certain years by the Ahmedabad Municipal Corporation was illegal.
In order to nullify the effect of the decision, the State Government introduced Section 152A by amendment to the Bombay Provincial Municipal Corporation Act the effect of which was to command the Municipal Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court.
This Court held that the said provision makes a direct in road into the judicial powers of the State.
The legislatures under the Constitution have, within the prescribed limits, power to make laws prospec tively as well as retrospectively.
By exercise of those powers a legislature can remove the basis of a decision rendered by a competent court thereby rendering the decision ineffective.
But no legislature in the country has power to ask the instrumentalities of the State to disobey or disre gard the decisions given by the courts.
Consequently, the provisions of sub section (3) of section 152A were held repugnant to the Constitution and were struck down.
To the same effect is another decision of this court in Madan Mohan Pathak vs Union of India & Ors.
; , In this case a settlement arrived at between the Life Insurance Corporation and its employees had become the basis of a decision of the High Court of Calcutta.
This settlement was sought to be scuttled by the Corporation on the ground that they had received instructions from the Central Government that no payment of bonus should be made by the Corporation to its employees without getting the same cleared by the Government.
The employees, therefore, moved the High Court, and the High Court allowed the petition.
Against that, a Letters Patent Appeal was filed and while it was pending, the Parliament passed the Life Insurance Corporation (Modi fication of Settlement) Act, 1976 the effect of which was to deprive the employees of bonus payable to them in accordance with the terms of the settlement and the decision of the Single Judge of the High Court.
On this amendment of the Act, the Corporation withdrew its appeal and refused to pay the bonus.
The employees having approached this Court chal lenging the constitutional validity of the said 554 legislation, the Court held that it would be unfair to adopt legislative procedure to undo a settlement which had become the basis of a decision of the High Court.
Even if legisla tion can remove the basis of a decision, it has to do it by alteration of general rights of class but not by simply excluding the specific settlement which had been held to be valid and enforceable by a High Court.
The object of the Act was in effect to take away the force of the judgment of the High Court.
The rights under the judgment would be said to arise independently of Article 19 of the Constitution.
Yet another decision of this Court on the point is P. Sambamurthy & Ors.
vs State of Andhra Pradesh & Anr.
, ; In this case what was called in question was the insertion of Article 371 D of the Consti tution.
Clause (5) of the Article provided that the order of the Administrative Tribunal finally disposing of the case would become effective upon its confirmation by the State Government or on the expiry of three months from the date on which the order was made, whichever was earlier.
The proviso to the clause provided that the State Government may by special order made in writing for reasons to be specified therein, modify or annul any order of the Administrative Tribunal before it became effective and in such a case the order of the Tribunal shall have effect only in such modi fied form or be of no effect.
This court held that it is a basic principle of the rule of law that the exercise of power by the executive or any other authority must not only be conditioned by the Constitution but must also be in accordance with law, and the power of judicial review is conferred by the constitution with a view to ensuring that the law is observed and there is compliance with the re quirement of the law on the part of the executive and other authorities.
It is through the power of judicial review conferred on an independent institutional authority such as the High Court that the rule of law is maintained and every organ of the State is kept within the limits of the law.
If the exercise of the power of judicial review can be set at naught by the State Government by overriding the decision given against it.
it would sound the death knell of the rule of law.
The rule of law would be meaningless as it would be open to the State Government to defy the law and yet get away with it.
The proviso to el.
(5) of article 37 I D was therefore, violative of the basic structure doctrine.
The principle which emerges from these authorities is that the legislature can change the basis on which a deci sion is given by the Court and thus change the law in gener al which will affect a class of persons and events at large.
It cannot, however, set aside an individual decision inter parties and affect their rights and liabilities alone.
Such an act on the part 555 of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or Tribunal.
The effect of the provisions of section 11 of the present Act, viz., the read with Article 262 of the Constitution is that the entire judicial power of the State and, therefore, of the courts including that of the Supreme Court to adjudicate upon original dispute or complaint with respect to the use, distribution or control of the water of, or in any inter State river or river valleys has been vested in the Tribunal appointed under Section 4 of the said Act.
It is, therefore, not possible to accept the submission that the question of grant of interim relief falls outside the purview of the said provisions and can be agitated under Article 131 of the Constitution.
Hence any executive order or a legislative enactment of a State which interferes with the adjudicatory process and adjudication by such Tribunal is an interference with the judicial power of the State.
In view of the fact that the Ordinance in question seeks directly to nullify the order of the Tribunal passed on 25th June, 1991, it impinges upon the judicial power of the State and is, therefore, ultra vires the Constitution.
Further, admittedly, the effect of the Ordinance is to affect the flow of the waters of the river Cauvery into the territory of Tamil Nadu and pondicherry which are the lower riparian States.
The Ordinance has, therefore, an extra territorial operation.
Hence the Ordinance is on that ac count beyond the legislative competence of the State and is ultra vires the provisions of Article 245 (1) of the Consti tution.
The Ordiance is also against the basic tenets of the rule of law inasmuch as the State of Karnataka by issuing the Ordinance has sought to take law in its own hand and to be above the law.
Such an act is an invitation to lawless ness and anarchy, inasmuch as the Ordinance is a manifesta tion of a desire on the part of the State to be a judge in its own cause and to defy the decisions of the judicial authorities.
The action forebodes evil consequences to the federal structure under the Constitution and opens doors for each State to act in the way it desires disregarding not only the rights of the other States, the orders passed by instrumentalities constituted under an Act of Parliament but also the provisions of the Constitution.
If the power of a State to issue such an Ordinance is upheld it will lead to the break down of the Constitutional mechanism and affect the unity and integrity of the nation.
In view of our findings as above on the unconstitution ality of the Ordinance, it is not necessary for us to deal with the contention advanced 556 on behalf of Tamil Nadu and Pondicherry that the Ordinance is unconstitutional also because it is repugnant to the provisions of the which is admittedly enacted under Entry 56. 19.
We also do not propose to deal with the contentions advanced on behalf of both sides with reference to Articles 19 (1) (g) and 21 of the Constitution.
On behalf of Karnata ka the said Articles are invoked to support the Ordinance contending that the Ordinance has been issued to protect the fundamental rights of its inhabitants guaranteed to them by the said Articles which rights were otherwise been denied by the Tribunals ' order of 25th June, 1991.
As against it, it was contended on behalf of Tamil Nadu that it was the Ordi nance which was designed to deny to its inhabitants the said rights.
Underlying the contentions of both is the presump tion that the Tribunal 's order denies to Karnataka and ensures to Tamil Nadu the equitable share in the river water.
To deal with the said contentions is, therefore, to deal with the factual merits of the said order which it is not for us to examine.
Of the same genre are the contentions advanced on behalf of Karnataka, viz., that they"order creats new rights in favour of Tamil Nadu and leads to inequitable consequences so far as Karnataka is concerned.
For the same reasons, we cannot deal with these contentions either.
Question No. 3: 20.
Question 3 is intimately connected with Question 2.
However, Question 3 itself has to be answered in two parts, viz., whether a Water Disputes Tribunal constituted under the Act is competent to grant any interim relief (i) when no reference for grant of interim relief is made to the Tribu nal, and (ii) when such reference is made to it.
It was contended on behalf of Karnataka and Kerala that the answer to the second part of the question will also depend upon the answer to the first part.
For if the Tribunal has no power to grant interim relief, the Central Government would be incompetent to make a reference for the purpose and the Tribunal in turn will have no jurisdiction to entertain such reference, even if made.
And if the Tribunal has no power to grant interim relief, then the order made by the tribunal will not constitute a report and a decision within the meaning of Section 5 (2) and hence it would not be required to be published by the Central Government under Section 6 of the Act in order to make it effective.
Further if the Tribu nal has no such power to grant interim relief then the order passed by the Tribunal on 25th June, 1991 will be void being without jurisdiction and, therefore, to that extent the Ordinance issued by the State of Karnataka will not be in conflict with the provisions of the Act, viz., the Inter State Water Disputes Act, 1956.
557 21.
This Court by its decision of April 26, 1991 has held, as pointed out above, ,that the Central Government had made a reference to the Tribunal for the :consideration of the claim for interim relief prayed for by the State of Tamil Nadu and hence the Tribunal had jurisdiction to consider the said request being a part of the Reference itself.
Implicit in the said decision is the finding that the subject of interim relief is a matter connected with or relevant to the water dispute within the meaning of Section 5 (1) of the Act.
Hence the Central Government could refer the matter of granting interim relief to the Tribunal for adjudication.
Although this Court by the said decision has kept open the question, viz., whether the Tribunal has incidental, ancil lary, inherent or implied power to grant the interim relief when no reference for grant of such relief is made to it, it has in terms concluded the second part of the question.
We cannot, therefore, countenance a situation whereby Question 3 and for that matter Questions 1 and 2 may be so construed as to invite our opinion on the said decision of this Court.
That would obviously be tantamount to our sitting in appeal on the said decision which it is impermissible for us to do even in adjudicatory jurisdiction.
Nor is it competent for the President to invest us with an appellate jurisdiction over the said.
decision through a Reference under Article 143 of the Constitution.
Shri Nariman, however, contended that the President can refer any question of law under Article 143 and, therefore, also ask this Court to reconsider any of its decisions.
For this purpose, he relied upon the language of clause (1) of Article 143 which is as follows: "143.
Power of president to consult Supreme Court(1) If at any time it appears to the President that a question of law or fact has arisen, or is likely to arise, which is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court upon it, he may refer the question to that Court for consideration and the Court may, after such hearing as it thinks fit, report to the President its opinion thereon.
" In support of his contention he also referred us to the opinion expressed by this Court in re: The , The Ajmer Merwara (Extension of Laws) act, 1947 and the States (Laws) Act, 1950 ; For the reasons which follow, we are unable to accept this conten tion.
In the first instance, the language of clause (1) of Article 143 far from supporting Shri Nariman 's contention is opposed to it.
The said clause empowers the President to refer for this Court 's opinion a question of law or fact which has arisen or is likely to arise.
When this 558 Court in its adjudicatory jurisdiction pronounces its au thoritative opinion on a question of law it cannot be said that there is any doubt about the question of law of the same is res integra so as to require the President to know what the true position of law on the question is.
The deci sion of this Court on a question of law is binding on all courts and authorities.
Hence under the said clause the, President can refer a question of law only when this Court has not decided it.
Secondly, a decision given by this Court can be reviewed only under Article 137 read with Rule 1 of Order XL of the Supreme Court Rules 1966 and on the condi tions mentioned therein.
When, further, this Court overrules the view of law expressed by it in an earlier case, it does not do so sitting in appeal and exercising an appellate jurisdiction over the earlier decision.
It does so in exer cise of its inherent power and only in exceptional circum stances such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and productive of public mischief.
See: The Bengal Immunity Company Ltd. vs The Stale of Bihar & Ors., Under the Constitution such appel late jurisdiction does not vest in this Court; nor can it be vested in it by the President under Article 143.
To accept Shri Nariman 's contention would mean that the advisory jurisdiction under Article 143 is also an appellate juris diction of this Court over its own decision between the same parties and the executive has a power to ask this Court to revise its decision.
If such power is read in Article 143 it would be a serious inroad into the independence of judici ary.
So far as the opinion expressed by this Court in re The (supra) is concerned, as the Reference itself makes clear, what was referred was a doubt expressed by the President on the decision of the Federal Court in Jatindra Nath Gupta vs The Province of Bihar & Ors., which was delivered on 20th May, 1949.
The Federal Court at that time was not the apex court.
Upto 10th Octo ber, 1949, the appeals from its decisions lay to the Privy Council including the appeal from the decision in question.
The decisions of the Federal Court were not binding on the Supreme Court as held in Hari Vishnu Kamath vs Syed Ahmad Ishaque & Ors., ; Hence it was not a case where the President had referred to this Court for its opinion a decision which had become a law of the land.
Hence the case in re The (supra) does not support the contention.
The provisions of clause (2) of Article 374 of the Constitution also do not help Shri Nariman 's contention since the said provisions relate to the transitional period and the "judgments and orders of the Federal Court" referred to therein are obviously the interim judgments and orders in the 559 suits, appeals and proceedings pending in the Federal Court at the commencement of the Constitution and which stood transferred to the Supreme Court thereafter.
This is also the view taken by a Division Bench of Bombay High Court in State of Bombay vs Gajanan Mahadev Badley, AIR [1954] Bombay 351.
This view has been confirmed by this Court in Delhi Judicial Service Association, Tis Hazari Court, Delhi etc.
vs State of Gujrat & Ors. etc.
JT Para graphs 32 to 37 of the judgment deal with this subject specifically.
Both Shri Parasaran and Shri Venugopal requested us not to answer the first part of Question 3 on the ground that the said part of the question is purely theoretical and general in nature, and any answer given would be academic because there will be no occasion to make any further inter im order or grant another interim relief in this Reference.
According to him, the recitals of the order of Reference have bearing only on Questions 1 and 2, and the second part of Question 3.
They have no bearing on the first part of Question 3 and since the Reference has been made in the context of particular facts which have no connection with the theoretical part of Question 3, the same should be returned unanswered as being factually unwarranted.
On behalf of karnataka and Kerala, however as pointed out above, it was urged that we should answer the said part of the question for the reasons stated there.
Shri Shanti Bhushan in this connection relied upon the decision of this Court in A.R. Antulay vs
R.S Nayak & Anr,.
[1988] Suppl.
1 SCR 1.
He pointed out that by the said decision the direc tions given by this Court in its earlier decision were held to be void being without jurisdiction and the same were quashed.
In view of this precedent he submitted that a similar course is open to this Court and the decision dated April 26,1991 given by this Court may also be declared as being without jurisdiction and void.
In A.R. Antulay 's case (supra) two questions were specifically raised, viz., (i) whether the directions given by this Court in R.S. Nayak vs A.R. Antulay, ; , (hereinafter referred to as 'R.S Nayak 's case ') withdrawing the Special Case No.24 of 1982 and Special Case No.3 of 1983 arising out of a com plaint filed by a private individual pending in the court of Special Judge, Greater Bombay and transferring the same to the High Court of Bombay in breach of Section 7 (1) of the Criminal Law Amendment Act, 1952 (which mandates that the offences as in the said case shall be tried by a Special Judge only) thereby denying at least one right of appeal to the appellant, was violative of Articles 14 and 21 of the Constitution and whether such directions were at all valid or legal and, (ii) if such directions were not valid or legal, whether in view of the subsequent orders passed by this 560 Court on 17th of April, 1984 in a writ petition challenging the validity of the order and judgment of this Court in R.S. Nayak 's case whereby this Court had dismissed the writ petition without prejudice to the right of the petitioner 10 approach this Court with an appropriate review petition or to file any other application which he may be entitled in law to file, the appeal filed was sustainable and the grounds of the appeal were justiciable.
The latter question was further explained by stating that the question was whether the directions given in R.S. Navak 's case in a proceedings interparties were binding even if bad in law or violative of Articles 14 and 21 of the Constitution and as such were immune from correction by this Court even though they caused prejudice and did injury.
It may be stated here that the said proceedings had come before this Court by way of a special leave petition against an order passed by the learned Judge of the High Court to whom the said case came to be assigned subsequently in pursuance of the directions given in R.S. Nayak 's case.
By the order passed by the learned judge, as many as 79 charges were framed against the appellant and it was decided not to proceed against other named coconspirators.
In the special leave petition filed to challenge the said order, two questions which we have stated above were raised and leave was granted.
This Court in that case held that (i) the directions given by this Court in R.S. Nayak 's case were violative of the limits of jurisdic tion of this Court since this Court could not confer juris diction on a High Court which was exclusively vested in the Special Judge under the provisions of the criminal Law Amendment Act of 1952; (ii) the said directions deprived the appellant of his fundamental rights guaranteed under Arti cles 14 and 21 of the Constitution since the appellant had been treated differently from other offenders and he was deprived of a right of appeal to the High Court; (iii) the directions were issued without observing the principle of audi alteram partem and (iv) the decision given was per incuriam.
Shri Shanti Bhushan urged that since in that case this Court had quashed its own earlier directions on the ground that the High Court had no jurisdiction to try the offence and this Court could not confer such jurisdiction on it, in the present case also the decision of the Court dated April 26, 1991 may be ignored for having proceeded on the basis that the Tribunal had jurisdiction to pass interim relief when it had no such jurisdiction.
We are afraid that the facts in A.R. Antulay 's case (supra) are peculiar and the decision has to be confined to those special facts.
As this court has pointed out in the said decision, in the first instance, the directions which were given for withdrawing the case from the Special Judge to the High Court were without hearing the appellant.
Those directions deprived the appellant of a right of appeal to the High Court and thus were prejudicial to him.
There was, therefore, a manifest breach of the 561 rule of audi alteram paneto.
Secondly, while giving the impugned directions, the Court had not noticed that under the said Act of 1952, the Special Judge had an exclusive jurisdiction to try the offence in question and this being a legislative provision, this court could not confer the said jurisdiction on the High Court.
The Court also pointed out that to the extent that the case was withdrawn from the Special Judge find sent to the High Court, both Articles 14 and 21 were violated.
The appellant was discriminated against and the appellant 's right of appeal which was an aspect of Article 21 was affected.
It would, thus, appear that not only the directions given by this Court were with out jurisdiction but they were also per incuriam and in breach of the principles of natural justice.
They were further violative of the appellant 's fundamental rights under Articles 14 and 21 of the Constitution.
None of the said defects exists in the decision of this Court dated April 26, 1991.
It cannot be said that this Court had not noticed the relevant provisions of the The Court after perusing the relevant provi sions of the Act which were undoubtedly brought to its notice, has come to the conclusion that the Tribunal had jurisdiction to grant interim relief when the question of granting interim relief formed part of the Reference.
There is further no violation of any of the principles of natural justice or of any provision of the Constitution.
The deci sion also does not transgress the limits of the jurisdiction of this Court.
We are, therefore, of the view that the decision being inter parties operates as res judicata on the said point and it cannot be reopened.
We, however, agree with the contention that it is not necessary to answer the first part of Question 3.
The con text in which all the questions are referred to as and the preamble of the Reference amply bear out that the questions have been raised against the background a particular set of facts.
These facts have no bearing on the first part of Question 3 which is theoretical in nature.
It is also legit imate to conclude that this part of the question was not prompted by the need to have a theoretical answer to compre hend situations in general.
Our answer to the second part of the question should meet the exigencies of the situation.
Question No. 2: 25.
Coming now to Question 2, although the question is split into two parts, they deal with the same aspect of the sub ject inasmuch as the answer to the first part would automat ically answer the second part of the question.
This situa tion, like the first question, relates to the specific order of the Tribunal dated June 25, 1991.
Hence, our opinion will have to be he legal merits of the said order.
562 Sub section (1) of Section 5 expressly empowers the Central Government to refer to the Tribunal not only the main water dispute but any matter appearing to be connected with or relevant to it.
It cannot be disputed that a request for an interim relief whether in the nature of mandatory direction or prohibitory order, whether for the maintenance of status quo or for the grant of urgent relief or to pre vent the final relief being rendered infructuous, would be a matter connected with or relevant to the main dispute.
In fact, this Court, by its said decision of April 26, 1991, has in terms held that the request of the State of Tamil Nadu for granting interim relief had been referred by the Central Government to the Tribunal and directed the Tribunal to consider the request on merits, the same being a part of the Reference.
Hence the order of the Tribunal will be a report and decision within the meaning of Section 5 (2) and would have, therefore, to be published under Section 6 of the Act in order to make it effective.
One of the contentions advanced in this behalf was that the Order of the Tribunal dated June 25, 1991 does not purport to be and does not state to be a report and deci sion.
It only states that it is an order.
Secondly, the said order cannot be report and decision within the meaning of Section 5 (2) of the Act because: (i) the Tribunal can make report only after final adjudication of the dispute and there cannot be adjudication without investigation.
There is no provision for interim investigation and interim finding and report; (ii) the Tribunal could not have made the report because its own showing: (a) pleadings were not complete, parties had not yet placed on record all their documents and papers etc.; (b) there was no investigation of the matters, the investigation could have been done only after disclosure of documents followed by a detailed hearing, the evidence and arguments of the parties and judicial finding in conso nance with natural justice; (c) the assessors appointed to assess on the technical matters conducted their proceedings without consultation with the engineers of the State.
Some times the engineers of Tamil Nadu were called for consulta tion in the absence of engineers of Karnataka.
The summoning of documents and information by the assessors was also casual and did not conform to the principles of natural justice and fair play.
A copy of the advice given by the assessors to the members of the Tribunal was not made avail able to the parties; (d) the Tribunal has stated "at this stage it would not be feasible nor reasonable to determine how to satisfy the needs of each State to the greatest possible extent with the minimum detriment to others".
Such an approach is contrary to the concept of an investigation contemplated by the Act and hence no interim order for interim relief could be made on such investigation not contemplated under the Act before making any order; (ii) it is only the decision which find 563 support from the report of the Tribunal which in turn must be the result of a full and final investigation in full which is required to be published under Section 6 of the Act and not an order such as the one passed by the Tribunal.
The present order is neither a decision nor an adjudication and hence cannot be published.
The contention that since the Order does not say that it is a report and decision and, therefore, it is not so under Section 5(2) of the Act is to say the least facetious.
Either the Order is such a report and decision because of its contents or not so at all.
If the contents do not show that it is such a report, it will not become one because the Order states so.
As is pointed out a little later the con tents of the Order clearly show that it is a report and a decision within the meaning of Section 5(2).
Some of the aforesaid submissions relate to the merits of the Order passed and its consequences rather than to the jurisdiction and the power of the Tribunal to pass the said Order.
While giving our opinion on the present question, we are not concerned with the merits of the order and with the question whether there was sufficient material before the Tribunal, whether the Tribunal had supplied the copies of the advice given by the assessor to the respective parties and whether it had heard them on the same before passing the Order in question.
The limited question we are required to answer is whether the order granting interim relief is a report and a decision within the meaning of Section 5(2) and is required to be published in the official Gazette under Section 6 of the Act.
It is needless to observe in this connection that the scope of the investigation that a Tribu nal or a court makes at the stage of passing an interim order is limited compared to that made before making the final adjudication.
The extent and the nature of the inves tigation and the degree of satisfaction required for grant ing or rejecting the application for interim relief would depend upon the nature of the dispute and the circumstances in each case.
No hard and fast rule can be laid down in this respect.
However, no Tribunal or court is prevented or prohibited from passing interim order on the ground that it does not have at that stage all the material required to take the final decision.
To read such an inhibition in the power of the Tribunal or a court is to deny to it the power to grant interim relief when Reference for such relief is made.
Hence, it will have to be held that the Tribunal constituted under the Act is not prevented from passing an interim order or direction, or granting an interim relief pursuant to the reference merely because at the interim stage it has not carried out a complete investigation which is required to be done before it makes its final report and gives its final decision.
It can pass interim orders on such material as according to it is appropriate to the nature of the interim order.
564 28.
The interim orders passed or reliefs granted by the Tribunal when they are not of purely procedural nature and have to be implemented by the parties to make them effec tive, are deemed to be a report and a decision within the meaning of Sections 5 (2) and 6 of the Act.
The present Order of the Tribunal discusses the material on the basis of which it is made and gives a direction to the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC of water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. It makes the order effective from 1st July, 1991 and also lays down time table to regulate the release of water from month to month.
It also provides for adjustment of the supply of water during the said period.
It further directs the State of Tamil Nadu to deliver 6 TMC of water for the Karaikal region of the Union Territory of Pondicherry.
In addition, it directs the State of Karnataka not to increase its area under irrigation by the waters of the river Cauvery beyond the existing 11.2 lakh acres.
It further declares that it will remain operative till the final adjudication of the dispute.
Thus the Order is not meant to be merely declarato ry in nature but is meant to be implemented and given effect to by the parties.
Hence, the order in question constitutes a report and a decision within the meaning of Section 5 (2) and is required to be published by the Central Government under Section 6 of the Act in order to be binding on the parties and to make it effective.
The contention that Section 5 (3) of the Act cannot apply to the interim orders as it is only the final decision which is meant to undergo the second reference to the Tribu nal provided for in it has no merit.
If the Tribunal has, as held above, power to make an interim decision when a refer ence for the same is made, that decision will also attract the said provisions.
The Central Government or any State Government after considering even such decision may require an explanation or guidance from the Tribunal as stated in the said provisions and such explanation and guidance may be sought within three months from the date of such decision.
The Tribunal may then reconsider the decision and forward to the Central Government a further report giving such explana tion or guidance as it deems fit.
In such cases it is the interim decision thus reconsidered which has to be published by the Central Government under Section 6 of the Act and becomes binding and effective.
We see, therefore, no reason why the provisions of Section 5(3) should prevent or inca pacitate the Tribunal from passing the interim order.
Once a decision, whether interim or final, is made under Section 5(2) it attracts the provisions both of subSection (3) of that Section as well as the provisions of Section 6 of the Act.
As pointed out earlier, the present Order having been made pursuant to the decision of this Court dated April 26, 1991 in C.As.
Nos.303 04 of 565 1991 on a matter which was part of the Reference as held by this Court in the said decision, cannot but be a report and a decision under Section 5(2) and has to be published under Section 6 of the Act to make it effective and binding on the parties.
This legal position of the said order is not open for doubt.
To question its efficacy under the Act would be tantamount to flouting it.
Before concluding we may add that the question whether the opinion given by this Court on a Presidential Reference under Article 143 of the Constitution such as the present one is binding on all courts was debated before us for a considerable length of time.
We are, however, of the view that we need not record our opinion on the said question firstly, because the question does not form part of the Reference and secondly, any opinion we may express on it would again be advisory in nature.
We will, therefore, leave the matter where it stands.
It has been held adjudicatively that the advisory opinion is entitled to due weight and respect and normally it will be followed.
We feel that the said view which holds the field today may usefully continue to do so till a more opportune time.
Our opinion on the questions referred to us is, there fore, as follows:.
Question No.1.
The Karnataka Cauvery Basin Irrigation Pro tection Ordinance, 1991 passed by the Governor of Karnataka on 25th July, 1991 (now the Act) is beyond the legislative competence of the State and is, therefore, ultra vires the Constitution.
Question No.2.
(i) The Order of the Tribu nal dated June 25, 1991 constitutes report and decision within the meaning of Section 5 (2) of the ; (ii) the said Order is, therefore, required to be published by the Central Gov ernment in the official Gazette under Section 6 of the Act in order to make it effective.
Question No.3.
(i) A Water Disputes Tribu nal constituted under the Act is competent to grant any interim relief to the parties to the dispute when a reference for such relief is made by the Central Government; (ii) whether the tribunal has power to grant interim relief when no reference is made by the Central 566 Government for such relief is a question which does not arise in the facts and circumstances under which the Reference is made.
Hence we do not deem it necessary to answer the same.
| The then Satguru of the appellant Creed was assessed for the assessment years 1937 38, 1938 39 for the first time.
He was a retired Govt.
servant.
His pension as well as the income from the institution were assessed together.
On appeal, the Assistant Commissioner of Income tax confirmed the assessments made by the Income tax Officer.
The Income tax Commissioner under reference made under section 66(2) of the Income tax Act, 1922 held that the offerings made to the assessee Satguru were offerings as held in trust and same were exempted under section 4(3)(1) of the Act.
When an application under Section 35 of the Act was made for ratification, whether the offerings received by the assessee consisted of interest income, property income, and income derived from sale of books and photographs etc.
to be excluded, the Commissioner directed deletion thereof.
For the year 1939 40, though the Income tax Officer did not allow exemption u/s.4(3)(1) of the Act, the Appellate Assistant Commissioner allowed exemption.
Till 1963 64 the appellant was not taxed and its refund applications were accepted by the respondent Revenue.
For the assessment years 1964 65, 1965 66, 1966 67, 1967 68, 1968 69, 1969 70, the assessee appellant was as sessed, treating it to be an association of persons, and held that the donations and contributions received volun tarily had limited religious use.
When the appellant assesses appealed, the appellate authority upheld the assessments.
313 Against the orders of the Appellate authority the asses see appealed before the Income tax Tribunal.
The Tribunal allowing the appeals of the assessee, held that the assessee was entitled to the exemption claimed under Section 11 of the Income tax Act, 1961.
On the question, referred to the High Court by the Tribunal, "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the income derived by the Radha Swami Satsang, a religious institution, was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961?", the High Court answered the question in favour of the Revenuerespondent, holding that the trust deed was revocable and the conditions for exemption under Sections 11 and 12 of the Act were not satisfied.
Allowing the appeals of the assessee, this Court, HELD: 1.01.
Assessments are quasi judicial.
Each assess ment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have al lowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
[320H, 321 A B] 1.02.
No formal document is necessary to create a trust.
The conditions which have to be satisfied to entitled one for exemption are: (a) the property from which the income is derived should be held under trust or legal obli gation, (b) the property should be so held for charitable or religious purposes which enure for the benefit of the pub lic.
[317 E G] 1.03.
The property was given to the Satguru for the common purpose of furthering the objects of the Sat Guru.
The property was therefore subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
[319 E, F] 1.04.
The Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961.
[321 D] Patel Chhotahhai and Ors.
Janan Chandra Bask and Ors., AIR 314 1935 Privy Council 97; Acharya Jagdish Waranand Avadhuta & Ors.
vs Commissioner of Police, Calcutta & Ant., , The Secretary of State for India in Council vs Radha Swami Sat Sang, ; All India Spinners 'Associ ation vs Commissioner of Income Tax, Bombay, ; TM.M. Sankaralinga Nadar & Bros. & Ors.
vs Commissioner of Income tax, Madras, ; Hoystead & Ors.
vs Commis sioner of Taxation, and Parashuram Pottery Works Co. Ltd. vs Income tax Officer, Circle 1, Ward A Rajkot, at p.10, referred to.
|
vil Appeal No. 528 (NT) of 1989.
From the Judgment and Order dated 7.8.1987 of the Set tlement Commission (IT & WT), New Delhi in Settlement Appln.
No. 22/1/3/ 77 IT.
Harish N. Salve and Miss Bina Gupta for the Appellant.
Dr. V. Gauri Shankar and Miss A. Subhashini for the Respond ents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This is an appeal against the judgment and order of the Settle 338 ment Commission dated 7th August, 1987.
The fact that an appeal under Article 136 of the Constitution lies against the Order of the Settlement Commission is now beyond pale of any controversy in view of the decision of this Court in Commissioner of Income Tax (Central), Calcutta vs B.N. Bhattachargee and another, [1979] Vol.
118 Income Tax Re ports 461.
The appellant had applied to the Settlement Commission for settlement of his assessment for the assess ment years 1948 49 to 1975 76 under the Income tax Act, 196 1 (hereinafter referred to as 'the Act ').
That application had to be proceeded in accordance with section 245C of the Act which is as follows: "245C. (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner and containing such particulars as may be prescribed to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided.
" Sub sections (2) and (3) of section 245C of the Act are not relevant for our present purpose.
The application made by the appellant was a composite one for settlement of his assessments for the assessment years 1948 49 to 197576.
The purpose for the introduction of the Settlement Commission has been explained by this Court in the aforesaid decision.
This Court observed that these are contained in Chapter XIX A of the Income tax Act, 1961.
The said Chapter was enacted by the Taxation Laws (Amend ment) Act, 1975 whose beneficiaries were ordinarily those whose tax liability was astronomical and criminal culpabili ty perilous.
As has been observed that this Chapter was introduced with the debatable policy, fraught with dubious potentialities in the context of Third World conditions of political peculium and bureaucratic abetment, that composi tion and collection of public revenue from tycoons is better than prosecution of their tax related crime and litigation for total revenue recovery.
The Wanchoo Committee appointed by the Government of India had recommended this step.
It appears that on 12th August, 1977 the Commissioner of Income tax objected to the proposal of the appellant under section 245D(1) of the Act.
The Commissioner objected to the settlement for the years 1948 49 to 1959 60, but agreed to the settlement for later years.
The Commissioner, it ap pears, accordingly made an order on 24th August, 1977 re jecting the application for settlement for the years 339 1948 49 to 1959 60.
The appellant on 20th September, 1977 applied to the Commission to recall its earlier order dated 24th August, 1977 since the same had been made without furnishing any opportunity of hearing to the appellant.
Section 245D(1) provides as follows: "245D. PROCEDURE ON RECEIPT OF AN APPLI CATION UNDER SECTION 245C (1) On receipt of an application under Section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Set tlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub section unless an opportunity has been given to the applicant of being heard.
Provided further that an application shall not be proceeded under this sub section if the Commissioner objects to the application on being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under the Indian Income tax Act, 1922 (XI of 1922), or under this Act, has been established or is likely to be established by any Income tax authority, in relation to the case.
" About hearing the applicant prior to the rejection of the application this Court in the aforesaid decision at page 472 of the report held that an applicant before the Settle ment Commission was entitled to a hearing before his appli cation for composition was rejected.
This Court observed that section 245D(1) does not negate natural justice and in the absence of an express exclusion of the rule of audi alteram partem, it is fair, and indeed fundamental, that no man be prejudiced by action without opportunity to show to the contrary.
Natural justice must be followed.
This also is the natural corollary of the decisions of this Court in M.S. Gill vs Chief Election Commissioner, 405 and Maneka Gandhi vs Union of India, [1978] 1 SCC 248.
The Finance Act, 1979, however, was amended with effect from ist April, 1979 and sub section (1A) was inserted to section 245D which empowered the Settlement Commission to overrule the objection of the Commissioner.
Sub section (1A) of section 245D reads as follows: "Notwithstanding anything contained in sub section (1), an application shall not be proceeded with under that subsection if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under this Act, has been estab lished or is likely to be established by any Income tax Authority in relation to the case: Provided that where the Settlement Commission is not satisfied with the correct ness of the objection raised by the Commis sioner the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under sub section (1) and send a copy of its order to the Commissioner." Though the Commission is empowered not to accept the objec tion of the Commissioner yet the Commissioner 's objection is of "lethal potency" as described by Krishna Iyer, J. in the aforesaid decision.
From the facts of this case, however, it has to be noted that the appellant applied to the Settlement Commission to permit him to contest the objections of the Commissioner on the proviso now inserted as mentioned above.
It has to be borne in mind that this was done after the proceedings had proceeded to a certain extent.
As mentioned hereinbefore, the appellant had applied to the Settlement Commission as aforesaid on 22nd January, 1977.
On 12th August, 1977 the Commissioner had tendered the objections as mentioned hereinbefore.
On 24th August, 1977, the Settlement Commissioner made an order rejecting the application for settlement for the assessment years 194849 to 1959 60.
This had been done without hearing the appellant.
On , 20th September, 1977 the appellant applied to the Commission to recall its order dated 24th August, 1977 since it had been passed without giving an opportunity of hearing to the appellant.
That application 341 was pending.
In the meantime, as mentioned hereinbefore, on Ist April, 1979, the Finance Act, 1979 inserted sub section (1A) to section 245(D) which empowered the Settlement Com mission to overrule the objections of the Commissioner.
On 29th May, 1979 the appellant applied to the settlement Commission to permit him to contest the objections of the Commissioner under the said proviso now inserted.
The matter was taken up after a long gap in June 1987 and it was heard on 18th June, 1987 and Ist July, 1987.
The appellant con tended that the order of 24th August, 1977 should be re called and the objections of the Commissioner be dealt with in accordance with the amended provisions of section 245D(1A) and it also contended that if the Commissioner 's objections were not to be interfered with then the entire application should be dismissed.
On 7th August, 1987, which is the date of impugned order in this appeal, the Settlement Commission accepted the first part of the contentions and held that the applicant was entitled to a reheating since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) proviso, but rejected the second part of the submission that the application for settlement made by the petitioner would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
The Commis sion, however, held that since the Commissioner had objected only to some of the years under settlement, the entire application would have to be rejected.
It is this order which is under challenge before us.
We are definitely of the opinion that on the relevant date when the order was passed, that is to say, 24th August, 1977 the order was a nullity because it was in violation of principles of natural justice.
See in this connection, the principles enunciated by this Court in State of Orissa vs Dr. (Miss) Binapani Dei and Ors., ; as also the observations in Administrative Law by H.W.R. Wade, 5th Edition, pages 3 10 311 that the act in violation of the principles of natural justice or a quasi judicial act in violation of the principles of natural justice is void or of no value.
In Ridge vs Baldwin, ; and Anisminic Ltd. vs Foreign Compensation Commission, ; the House of Lords in English has made it clear that breach of natural justice nullifies the order made in breach.
If that is so then the order made in violation of the princi ples of natural justice was of no value.
If that is so then the application made for the settlement under section 245C was still pending before the Commission when the amendment made by Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objec 342 tions of the Commissioner.
Dr. V. Gauri Shanker, appearing for the Revenue, did not seriously contest that position.
He accepted the position that the law as it is, after the amendment authorises the Commission to consider and overrule the Commissioner 's objection.
He also very fairly, in our opinion, and rightly accepted the position that the appel lant was entitled to be heard on the Commissioner 's objec tions.
It appears to us, therefore, if that is the position then, in our opinion, the appellant was entitled to be heard on the objections of the Commissioner.
As mentioned herein before, the only short ground which was sought to be con vassed before us was whether after the amended Act the order had been rightly set aside and whether the appellant had a fight to be heard on the objections of the Commissioner.
Mr. Harish Salve, counsel for the appellant contends that it had a right to be heard.
On the other hand, Dr. V. Gauri Shan kar, learned counsel for the respondents submitted that the order proceeded on the assumption that the objections had been heard.
He did not, in fairness to him it must be con ceded, contest that in a matter of this nature the appellant had a fight to be heard.
Reading the order, it appears to us, that though the appellant had made submissions on the Commissioner 's objections.
but there was no clear opportuni ty given to the appellant to make submissions on the Commis sioner 's objections in the sense to demonstrate that the Commissioner was not justified in making the objections and secondly, the Commission should not accept or accede to the objections in the facts and circumstances of he present case.
We are of the opinion that in view of the facts and circumstances of the case and in the context in which these objections had been made, it is necessary as a concomitant of the fulfilment of natural justice that the appellant should be heard on the objections made by the Commissioner.
It is true that for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities.
But it may be that in spite of this concealment it may be possi ble for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
In exercise of our power of judicial review of the decision of the Settlement Commission we are concerned with the legality of procedure followed and not with validity of the order.
See the observations of Lord Hailsham in Chief Constable of the North Wales Police vs Evans; , Judicial Review is concerned not with the decision but with the decision making process.
343 We therefore allow the appeal.
We set aside the order of 7th August, 1987 and remand the matter back to the Settle ment Commission to hear and dispose of the settlement peti tion made by the appellant dated 22nd January, 1977 taking into consideration objections made by the Commissioner and the objections made by the appellant to the Commissioner 's objections and after giving the appellant an opportunity of showing reasons and causes why the Commissioner 's objections should not be accepted by the Commission.
After considering the said objections of the Commissioner as well as the objections to the Commissioner 's objections made by the appellant, the Settlement Commission would be free to pass such orders as it considers fit and proper in accordance with the law.
Since the matter is pending for a long time, we do hope that the Settlement Commission will dispose of the matter as expeditiously as possible.
It is not necessary for us in this appeal to express any opinion on the correct ness or otherwise of the Commissioner 's objections or on the validity of the appellant 's objections to the Commissioner 's objections.
The appeal is disposed of accordingly.
There will be no order as to costs.
P.S.S. Appeal disposed of.
| Sub section (1) of section 245C of the Income Tax Act, 1961 entitles an assessee, at any stage of the case, to make an application to the Settlement Commission to have his case settled.
Sub section (1) of section 245D requires the Set tlement Commission, as and when such an application is made to call for a report from the Commissioner of Income Tax.
The first proviso thereto interdicts rejection of the appli cation under that sub section unless an opportunity has been given to the applicant of being heard.
The second proviso thereto provides that no application shall be proceeded with under that sub section if the Commissioner objects to the same on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax has been established or is likely to be established.
Sub section (IA) inserted in section 245D by the Finance Act, 1979 empowered the Settlement Commission to overrule the objections of the Commissioner.
The appellant made a composite application under section 245C of the Act for settlement of his assessments for the assessment years 1948 49 to 1975 76.
The Commissioner ob jected to the proposals under sec 336 tion 245D(1) for settlement for the years 1948 49 to 1959 60, but agreed to the settlement for the later years.
The Commission accordingly made an order an 24th August, 1977 rejecting the application for settlement for the years 1948 49 to 1959 60.
The appellant thereupon applied to the Commission to recall its order since the same had been made without furnishing him any opportunity of hearing.
That application was pending.
When sub section (IA) was inserted to section 245D, the appellant applied to the Commission to permit him to contest the objections of the Commissioner contending that these should be dealt with in accordance with the amended provisions of section 245D(IA).
On 7th August, 1987 the Settlement Commission accepted the first part of the contentions holding that the applicant was entitled to a re hearing since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) provi so, but rejected the second part of the submission on the view that the application for settlement would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
It further held that since the Commissioner had objected only to some of the years under settlement the entire application would have to be rejected.
Allowing the appeal by Special Leave, HELD: 1.
It is necessary as a concomitant of the fulfil ment of natural justice that an applicant before the Settle ment Commission should be heard before his application under Section 245C of the Act is rejected.
The order made by the Commission on 24th August, 1977 in the instant case in violation of the principles of natural justice was, there fore, of no value.
If that is so, then the application made for settlement was still pending before the Commission when the amendment made by the Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner.
[342E; 341E, G H] Income Tax (Central), Calcutta vs B.N. Bhattachargee & Anr., [1979] Vol. ; M.S. Gill.
vs Chief Election Commissioner, ; ; Maneka Gandhi vs Union of India, [1978] 1 SCC 248; State of Orissa vs Dr. (Miss) Binapani Dei & Ors., ; ; Ridge vs Baldwin, ; ; Anisminic Ltd. vs Foreign Compensation Commission, ; and Administrative Law, by H.W.R. Wade,5th Edn.
310 311 referred to.
2.1 The appellant had a right to be heard on the objections of the 337 Commissioner.
But no clear opportunity was given to him to make submissions in the sense to demonstrate that the Com missioner was not justified in making the objections and that the Commission should not accept or accede to the objections.
He should, therefore, be heard on the said objections.
[342D E].
2.2 Though for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities, but in spite of this it may be possible for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
[342F G] 3.
In exercise of its power of judicial review of the decision of the Settlement Commission under Article 136 of the Constitution the Court is concerned with the legality of procedure followed and not with the validity of the order.
[342G] Chief Constable of the North Wales Police vs Evans, ; referred to.
The order dated 7th August, 1987 is set aside and the matter is remanded hack to the Settlement Commission to hear and dispose of the settlement petition in accordance with law.
[343A]
|
section 1347 60/81, 132 143, 3405 16, 342Q 22, 3423 25 of 1980, 806 18 of 1981,4251,9500 05, 9511 13 9514 of 1981, 21 23,37 43, 45 56, 63, 91 1 l l, 166 67, 174, 181 192 of 1980, 407 11 of 1979, 412 415, 416 18 of 1979, 193 220, 237 48, 825 36, 7) 1 722 of 1982, 723 39, 3 19 30,969 78, 2171 73 of 1982 and 3864 69 of 1980,1227 33 of 1981,5520 22 of 1980, 1001 07 of 1981, 1109 30 1384,1453 62, 1469 of 1981, 805 24,866, 972, 1453 62, 1498, 4667 68, 975 83, 854, 984, 1469 78, 787, 1319 24, 1400 02, 1504 05, 1608 11, 1621 25, 1934 63, 2172 77, 2228 31, 2251 53, 2374 75, 2327 61 2556 65, 2612 13, 2625 27, 2624, 3070 88, 3178 95, 985, 4158 65 4527 32, 5113 19, 9196 98 of 1982, 5727, 8397, 9583, 9719 22 of 1982, 8262 67 of 1981, 10039, 10223 of 1982, 2682 84 of 1983, 3885 86 of 1983, 66 67, 68 69, 1139 2759 of 1983, 2379 of 1982, 2703, 1119 of 1983, 7993 of 1982, 1172 of 1983, 6498 of 1982 (Under Article 32 of the Constitution of India) 971 FOR THE APPEARING PARTIES Shanti Bhushan, R. K Garg P. R. Mridul R. K. Jain, Pradeep Kumar Jain, B. R. Kapoor, section R. Srivastava.
P. H. Parekh, Miss Nisha Srivastava, Hemant Sharma, Miss Indu Sharma.
K R Mohan, and Geetanjali Moham.
O. P. Rana, D. D. Thakur, E. C. Agarawala, Raju Ramachandran, R. Sathish, V. K Pandita and R. Rana Dr. L. M. Singhvi, L. N Sinha, Y. section Chitale, and G. N. Dikshit.
Miss Shobha Dikshit, Pradeep Mishra, section K. Kulshrestha, and A. M. Singhvi, Advocates Ravindra Bana, Sarva Mittra, Rajiv Datta, B. Tawakley, R. B. Mebrotra, Pramod Swarup, R. N. Poddar & N. N. Sharma.
The following Judgments were delivered VARADARAJAN, J. Writ Petitions 1347 to 1360 of 1981 and Writ Petition 174 of 1982 are by manufacturers of Khandsari sugar in the open pan process and sellers thereof in Uttar Pradesh.
Writ Petitions 21 to 23 of 1982, Writ Petitions 3178 to 3195 of 1982, Writ k. Petitions 3178 to 3195 of 1982, Writ Petitions 4527 to 4532 of 1982 and Writ Petition 3890 of 1983 are by traders in that product in U. P. The pleadings in W. Ps. 1347 to 1360 of 1981 were referred to by the learned counsel for the parties when common arguments were advanced in all the writ petitions.
Therefore, the pleadings in those writ petitions alone are referred to in this judgment.
These W. Ps. 1347 to 1360 of 1981 under Article 32 of the Constitution are for declaring the provisions of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 as ultra vires the Constitution and for restraining the respondents from realising market fee and licence fee from the petitioners under the provisions of that Adhiniyam (hereinafter referred to as 'the Adhiniyam ').
The case of the petitioners/firms which manufacture Khandsari sugar by the open pan process in the State of Uttar Pradesh and sell the same in that State is this.
972 In the process of manufacture of Khandsari sugar there is not only a physical change of the sugarcane used but also a chemical change and the white crystalline sugar of 90 per cent sucros purity is obtained after drying, grading and vagging by eliminating all the ingredients of sugarcane except sucros.
But in the case of desi khandsari, gur, jaggery, rab and shakkar which are all manufactured from raw sugarcane juice, pectins, live saps, motals, minerals, nitrogenous compounds, wages and salts are not removed and there is no chemical change in the manufacturing process.
The Adhiniyam was enacted to reduce multiple trade charges and provide amenities to the producers and sellers of agricultural produce, for certification of accurate weights and scales and for the establishment of market committees to ensure that the agricultural producer has a say in the matter of utilisation of the market funds.
The Adhiniyam applies to agricultural products which according to section 2 (a) are 'such items of produce of agriculture, horticulture, viticulture, sericulture, pisciculture, animal husbandary or forest, as are specified in the schedule, and include and mixture of two or more such items and also include any such item in processed form and further include gur, rab, shakkar, Khandsari and jaggery '.
The Adhiniyam does not define khandsari sugar but it is defined in clause 2 of the U. P. Khandsari Sugar (Levy) Order, 1975 as "whole crystalline sugar containing more than 90 per cent and manufactured at a sulphitation unit by open pan process including a bel".
The khandsari sugar produced by the petitioners who hold licence for operating hydraulic power crushers is not khandsari but crystalline sugar as produced by sugar mills.
The sugar produced by the petitioners is physically and chemically different from sugarcane which is one of the items specified in the schedule to the Adhiniyam and also from gur, rab, jaggery and khandsari and cannot be treated as a processed form of sugarcane. 'therefore, the Adhiniyam cannot apply to the product manufactured by the petitioners which is plantation white sugar.
The petitioners/firms which are producers of sugar are not liable to pay market fee under the Adhiniyam, section 17 (iii) (b) whereof provides that the market committee shall have power to levy and collect market fee which shall be payable on transactions of sale of specified agricultural produce in the market area at seh rates being not less than one per cent and not more than one and a half per cent of the price of the agricultural produce so sold as the State Government may specify by notification.
Section 17 (iii) is ultra vires the Constitution as it permits excessive delegation of legislative power and does not lay down any 973 guideline for the State Government fixing the market fees and only A market committees rendering services can determine the quantum of market fees.
The illegal levy of market fees on the petitioners is violative of Articles 19 (1) (f) and 301 of the Constitution.
The action of the respondents in seeking to apply the provisions of the Adhiniyam to the petitioners leaving out other manufacturers similarly situate is violative of article 14 of the Constitution.
Section 8 of the Adhiniyam is violative of article 14 as it does not provide any guideline regarding the basis on which the State Government can include or exclude any agricultural produce from the list of notified commodities under section 6.
The market fees and licence fees are in the nature of payments for services rendered.
But the market committees render no service at all to the petitioners and therefore the levies are really in the nature of tax.
The levies deprive the petitioners of their right to property without any authority of law and are therefore violative of Articles 265, 31 and 19 (1) (f) and (g) of the Constitution.
It is in these circumstances that the petitioners have prayed for declaration of the provisions of the Adhiniyam as being ultra vires the Constitution and for the issue of a writ of mandamus restraining the respondents from realising market fee and licence fee from the petitioners under the Adhiniyam.
The contentions of the Mandi Samiti/respondents who oppose the petitions are these: The petitioners who are manufacturers of khandsari/khandsari sugar are fully covered by the Adhiniyam in view of the definition of 'agricultural produce ' in section 2 (a).
Khandsari is mentioned in schedule 'Kha ' to the notification No. 584/XII 8 104176 dated 11.4.1978.
Khandsari sugar is not sugar as is evident from the definition of sugar in section 2 (f) of the Sugar (Regulation of Production) Act.
1961 according to which sugar means any form of sugar whether wholly or partially manufactured but does not include khandsari sugar, that is to say, sugar in the manufacture of which neither a vacuum pan process nor a vacuum operator is employed; or palmyra sugar, that is to say, sugar manufactured from jaggery obtained by boiling the juice of palmyra palm. 'Khandsari ' is the short form of 'Khandsari sugar ' in the Adhiniyam and the notification and there is nothing like khandsari different from khandsari sugar in any of the concerned laws or in common parlance.
There as only one khandsari and it is called khandsari sugar and it is manufactured 974 by mechanical power process, The word 'sugar ' has been used everywhere for the sugar manufactured by the vacuum pan process by mills and factories and the words 'khandsari sugar ' have been used for the material produced by open pan process In the Sugarcane (Control) Order, 1966 by clause 2 (d), khandsari sugar is defined as sugar produced by the open pan process Khandsari sugar is defined in clause 2 (f) of the U. r. Khandsari Sugar Manufacturing Order, 1967 as sugar containing more than 90 per cent sucros and manufactured by the open pan process including bels.
There is no chemical change in the process adopted by the petitioners in the manufacture of Khandsari sugar and there is nothing like desi Khandsari sugar.
What the petitioners call desi khandsari is shakkar produced by manual efforts.
It is true that khandsari sugar manufactured by the petitioners contains more than 90 per cent sucros but it is denied that the sugar manufactured by the petitioners is not khandsari or that it is crystalline sugar as produced by sugar mills or that the khandsari sugar produced by the petitioners is not physically and chemically different from the sugar produced by mills.
The produce manufactured by the petitioners is processed form of sugarcane, namely, sugarcane from which the chaff has been removed and the sweet material has been retained for human consumption Gur, rab, jaggery and khandsari sugar are all manufactured by the open pan process while sugar produced by mills is manufactured by the vacuum pan process.
The producers of khandsari sugar by open pan process and the producers of sugar by vacuum pan process have to take out licences under different order namely, U. P. Khandsari Sugar Manufacturing Order, 1967 and U. P. Vacuum Pan Sugar Factories Licensing Order, 1969 Thus khandsari sugar produced by the petitioners is different from sugar produced by sugar mills and it is fully covered by section 2 (a) of the Adhiniyam.
Market fee is not claimed from the petitioners in any manner different from the one stipulated in section 17 (iii) (b) of the Adhiniyam Section 17 (iii) (b) is not ultra vires the Constitution and does not suffer from any excessive delegation of legislative power.
The levy of market fee and licence fee is not violative of any constitutional provision.
article 19 (1) (f) does not exist any longer and article 301 does not confer any fundamental right on the petitioners. 'There is no discrimination against the petitioners and section 8 of the Adhiniyam is not violative of article 14 The market fee and licence fee are fees 975 and not taxes.
A major portion of the funds of the market committees is applied for development of the market area.
The Rajya Krishi Utpadan Mandi Parishad (hereinafter referred to as 'the Parishad '), impleaded as respondent in the petitions has filed separate counter affidavit raising similar contentions as the market committees.
The additional contentions raised by that Board which also opposes the petitions are these: The original definition of agricultural produce in section 2 (a) of the Adhiniyam did not contain the words "and further includes gur, rab, shakkar, khandsari and jaggery".
These words were added in the definition by the U. P. Amendment Act 10 of 1970 in order to remove anomalies in the words "processed agricultural produce".
The Government issued the said notification No. 584/X11 8 10 :176 dated 11.
4. 1978 after considering all the objections raised, specifically mentioning Khandsari along with gur, rab, shakkar and jaggery in the list of 115 commodities liable for the levy of market fees.
The sale of khandsari is free without any Government control and it is effected in the market areas by commission agents by mutual negotiation or open auction while a large part of the sugar produced by the vacuum pan process is controlled by the Central Government.
Sugar and khandsari are distinct and different from each other.
The sugar produced in vacuum pan process is standardized as per India Sugar Standards and graded into A30, B30, C30, D30, E30, A29, B29 C29, D29 and E29 whereas khandsari sugar produced by the open pan process is called khandsari, khandsari sugar, rab and sugar in the market.
There is no levy on khandsari and it is sold in the open market whereas 65 per cent of the sugar produced in the mills by the vacuum pan process is taken by the Central Government for feeding the public distribution system by levy and the remaining 35 per cent along is left with the factories for free sale through wholesale dealers approved under the control orders.
The producers of khandsari sugar are not liable to pay the impugned market fee.
they are liable to pay it only if they also hold licences as commission agents or wholesale dealers and sell the product.
Mr. Shanti Bhushan, learned counsel for the petitioners advanced arguments in these petitions under three main heads, namely (i) whether khandsari sugar manufactured by the petitioners in their mills by the open pan process is an agricultural produce, covered by the Adhiniyam as amended by the U. P. Ace 10 of 1970; (ii) whether khandsari sugar manufactured by the petitioners in their 976 industrial units employing a large number of workmen to whom the Industrial Disputes Act, Employees Provident Fund Act, Factories Act and Minimum Wages Act apply and which is subject to levy of excise duty under the is subject to the levy of market fee under the Adhiniyam and (iii) whether on account of the interpretation of the Adhiniyam, khandsari sugar manufactured by the petitioners could be said to be subject to the levy of market fee under the Adhiniyam there is any difference between khandsari sugar produced by the petitioners in the open pan process, and the plantation white sugar produced by the other mills in the vacuum pan process, and there is no discrimination between khandsari sugar sought to be subjected to the levy of market fee under the Adhiniyam and the plantation white sugar produced by the vacuum pan process which is not subject to the levy under the Adhiniyam.
He clubbed his arguments on points (i) and (ii) and submitted that khandsari sugar produced by the petitioners in their mills by the open pan process is not an agricultural produce contemplated to be covered by the provisions of the Adhiniyam for the purpose of levy of the market fee as it is not produced by the agricultural producer but produced in mills employing modern methods though under the open pan process.
On the third point he submitted that there is no difference between the khandsari sugar produced by the petitioners in their mills by the open pan process and the plantation white sugar produced by the other mills by the vacuum pan process except that khandsari sugar is produced by the open pan process while the plantation white sugar is produced by the vacuum pan process and the difference in the composition of the two products is only as regards CAO, filterability and conductivity and consequently there is discrimination hit by article 14 of the Constitution in leaving plantation white sugar out of the levy and seeking to subject the khandsari sugar produced by the petitioners mills alone to the levy of market fee under the Adhiniyam.
On the other hand, Mr. L. N. Sinha, learned counsel for the Parishad submitted that the original object of the Adhiniyam was protection of agricultural produce as originally defined in the Adhiniyam and that the position has changed now and it has become a marketing legislation covered by entry 28 of List II (Market) of the Seventh Schedule to the Constitution.
He further submitted that if the Adhiniyam has become a marketing legislation as contended by him industrial produce also can be included in the schedule of produce appended to the Adhiniyam and khandsari is genus and 977 khandsari sugar is a specie and it is liable to be subjected to the A levy of market fee under the Adhiniyam.
As regards discrimination Mr. Sinha submitted that similarity is one thing and identity is another and that article 14 will be attracted only in the case of identity and there is difference between Khandsari sugar and plantation white sugar and therefore there is no question of discrimination.
Mr. D. D. Thakur, learned counsel for the Market Committees submitted that it is not the only object of the Adhiniyam to benefit the agricultural producer, but 2 number of other objects are noticeable in the Adhiniyam and that if the object is to protect the agricultural producer alone the levy of market fee would have been confined to the first sale alone.
He further submitted that the Adhiniyam covers sales by producers to traders and sales by traders to other traders subject to the requirement that what is sold is an agricultural produce and no market fee is livable on retail sales etc.
having regard to the proviso to section 17 of the Adhiniyam.
He submitted that the levy is not on khandsari producers but on khandsari traders and that what is contained in the preamble to the Adhiniyam is slightly different from the scheme of the Adhiniyam, and section 2 (a) of the Adhiniyam has to be looked into independently of the preamble which in turn can be looked into only in case of ambiguity.
He too submitted that khandsari is a genus and khandsari sugar is a specie.
He however.
admitted that agriculturists producing khandsari without the use of power need not obtain licence for its remanufacture while producers of khandsari sugar by the open pan process in the khandsari industry are bound to obtain licence.
He contended that what is produced by the petitioners would fall within the ambit of section 2 (a) of the Adhiniyam.
On the question of discrimination he submitted that plantation white sugar manufactured by the vacuum pan process does not require regulation, unlike khandsari sugar produced by the open pan process and that if that is so there is no question of discrimination in not subjecting the plantation white sugar to the levy of market fee under the Adhiniyam.
Dr. Y. S: Chitale, learned counsel for the Parishad, Samiti and Mandi, the respondents in W. Ps.
1348 to 1360 of 1981 submitted that section 2 (a) of the Adhiniyam deals also with traders as held in Laxmi Khandsari Etc.
vs State of U. P. and Others(1) and that what the petitioners produce is khandsari though it may (1) ; 978 be more refined than khandsari produced by the agriculturists with out the aid of power.
On the question of discrimination he submitted that whatever was considered necessary to be regulated was included in the schedule to the Adhiniyam and that there is no discrimination in not subjecting plantation white sugar produced by the vacuum pan process to the levy of market fee under the Adhiniyam. 'I he prefatory note to the Adhiniyam as extracted from the 'Statement of Objects and Reasons may be noted.
It reads: "The present chaotic state of affairs as obtaining in agricultural produce markets is an acknowledged fact.
There are innumerable charges, levies and exactions which the agricultural producer is required to pay without having any say in the proper utilisation of the amount so paid by him.
In matters of dispute between the seller and the buyer, the former is generally put at a disadvantage by being given arbitrary awards.
The producer is also denied a large part of his produce by manipulation and defective use of weights and scales in the market The Government of India and the various committees and commissions appointed to study the condition of agricultural markets in the country have also been inviting the attention of the State Government from time to lime towards improving the conditions of these markets.
The proposal to enact a marketing legislation was first taken up in 1938; but it could not go through as the then Ministry went out of office soon.
after its inception .
The Planning Commission stressed long ago that legislation in respect c f regulation of markets should be enacted and enforced by 1955 56.
Most of the other States have already passed legislation in this respect.
The proposed measure to regulate the markets in this State has been designed with a view to achieving the following direction (i) to reduce the multiple trade charges, levies and exactions charged at present from the producer sellers; (ii) to provide for the verification of accurate weights and scales and see that the producer seller is not denied his legitimate due; 979 (iii) to establish market committees in which the A agricultural producer will have his due representation; (iv) to ensure that the agricultural producer has his say in the utilisation of market funds for the improvement of the market as a whole; (v) to provide for fair settlement of disputes relating to the sale of agricultural produce; (vi) to provide amenities to the producer seller in the market; (vii) to arrange for better storage facilities; (vii) to stop inequitable and unauthorised charges and levies from the Producer seller; and (ix) to make adequate arrangements for market intelligence with a view to posting the agricultural producer with the latest position in respect of the markets dealing with his produce".
(emphasis supplied) The prefatory note shows that the object of the Adhiniyam is to save the agricultural producer from innumerable charges, levies and exactions and to enable him to have a say in the proper utilisation of the amounts paid by him, to reduce the multiple charges, levies exactions charged from producer sellers and generally to help the agricultural producer to sell his produce to his best advantage.
The objects set out in the prefatory note are reflected in a concised form in the preamble to the Adhiniyam which says that it is "An Act to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of markets therefore in Uttar Pradesh".
The preamble also speaks of the necessity to provide for the regulation of sale and purchase of agricultural produce and the establishment, superintendence and control of markets therefore in Uttar Pradesh. 'Thus the object of the Adhiniyam as seen from the prefatory note and preamble is to protect the agricultural producer from exploitation.
Protection of any industrial producer is not the object of the Adhiniyam.
Section 2(p) of the Adhiniyam defines a "producer" as meaning "a person who, whether by himself or through hired 980 labour, produces, rears or catches any agricultural produce, not being a producer who also works as a trader, broker or dalal, commission agent or arhatiya or who is otherwise ordinarily engaged m the business of storage of agricultural produce".
agricultural produce is defined in section 2(a) of the Adhiniyam as meaning "such items of produce of agriculture, horticulture, viticulture, agriculture, siriculture, pisciculture, animal husbandry or forest as are specified in the schedule and includes admixture of two or more of such items and also includes any such item in processed form and further includes gur, rab, shakkar, khandsari and jaggery".
The words "and further includes gur, rab, shakkar, khandsari and jaggery" have been introduced into section 2(a) of the Adhiniyam by the U.P. Amendment Act 10 of 1970.
Trader is defined in section 2(y) of the Adhiniyam as meaning "a person who is engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more principals and includes a person engaged in producing agricultural produce".
Thus it is seen from the definition of producer and trader in the Adhiniyam that emphasis is on the product produced, reared or caught by agriculturists whether by their own or through hired labour and that such producer does not include a producer who also works as a trader, broker, dalal, commission agent or arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce.
Therefore, it is not possible to hold that manufacturer producing khandsari sugar by the modern method in the open pan process is a producer within the meaning of section 2(p) of the Adhiniyam.
The schedule to the Adhiniyam consists of 175 items including paddy, honey, silk, eggs and ghee which were in the schedule from the inception.
But, as stated earlier "Khandsari" is one of the items introduced into the definition of agricultural produce in section 2(a) of the Adhiniyam by the Amendment Act 10 of 1970.
It is seen from Annexure VIII to the counter affidavit of the respondent Parishad filed in W. Ps.
1347 1360 of 1981 that "The technique of sugar manufactured through the indigenous process without the use of complicated machinery has been known in this country from time immemorial.
The sugar thus produced is known as khandsari".
In the counter affidavit of Shri Ram Sharan, Deputy Director (Marketing) of the Parishad filed for the petitioners ' additional affidavit it is admitted that farmers and sugarcane growers produce, what he calls, khandsari sugar with the help of small electric motors, diesel engines or their own tractors.
Mr. Shanti Bhushan submitted that khandsari introduced in section 2(a) of the Andhiniyam by the Amendment Act 10 of 1970 is khandsari produced 981 by agriculturists and sugarcane growers in the old and primitive method and not khandsari sugar produced in khandsari mills in the modern sulphitation open pan process.
Annexure Vl to the counter affidavit filed by the Parishad in W. Ps 1347 1360 of 1981 is the report of the Director of National Sugar Institute, Government of India, Kanpur regarding the approximate composition of khandsari sugar produced by the modern sulphitation process and that of plantation white sugar produced by the vacuum pan sugar factories.
It is extracted for ready reference: Particulars Vacuam pan sugar Khandsari sugar Pol 99.8 to 99.95 99.4 to 99.9 Reducing sugars 0.04 to 0.25 0.10 to 0.40 CAO (Mg/l00 gm) 10 to 35 45 to 80 SO2 (ppm) 2.25 5.25 Viscosity CP 20.30 20.30 Conductivity x 10(6) 3 to 15 50 to 200 Turbidity % 10 to 30 40 to 70 Filterability (FK) 0.3 to 2.5 50 to 400 Shape of crystals Monoclinic Flattened or a cubd Moisture 0.04 to 0.15 00.15 to 0.S0 Water insoluble by wt.
% Colour OD 400 OD 500 0.02 to 0.05 0.04 to 0.015 It is seen from this report that the difference between plantation white sugar produced by the vacuum pan process and khandsari sugar produced by the open pan process in their composition is marked only as regards CAO, filterability, and conductivity and that the other items are more or less the same.
In the aforesaid counter affidavit of Shri Ram Sharan it is stated that "khandsari produced by non sulphur units and khandsari produced by non sulphur units is similar in process, raw materials and sucros contents.
There may be slight difference in colour and crystalline nature of the substance which is attributable to the better clarification method and better equipment adopted by sulphur units which are all improvements and which create no difference in the nature of the product, i.e. khandsari".
982 In the counter affidavit of Shri Zorawar Singh, Secretary, Krishi Utpadan Mandi Samiti, Moradabad filed in W.P.1359 of 1981 it is admitted that the juice of sugarcane boiled in the open pan by the producers and the khandsari sugar manufactured by them contains more than 90 per cent sucros.
In Annexure VIII to the counter affidavit filed in W.P. 1347 1360 of 1981 it is stated that the improved process of khandsari manufacture as evolved by the Gur and Khandsari Research Scheme of the National Sugar Institute, Kanpur is a simplified form of the single sulphitation process as employed in the vacuum pan factories and that as a result of the improvements it is now possible to get a recovery of 7.5 to 8.0 per cent of sugar on cane of average quality and the first sugar produced is quite comparable to ordinary grade crystal sugar produced by the vacuum pan process.
That process which has been set out in that Annexure though brief is quite elaborate and not far different from the one adopted in the manufacture of plantation white sugar by the vacuum pan process.
On an inspection of the samples of khandsari sugar and plantation white sugar produced in the Court during the arguments in these writ petitions it was noticed that both khandsari sugar and plantation white sugar are white in colour and crystalline in form though the plantation white sugar is a little more lustrous than khandsari sugar.
But khandsari produced by the agriculturists or sugarcane growers in the indigenous method is powdery in form and yellowish in colour.
In these circumstances, I am of the opinion that khandsari sugar produced by the petitioners in their mills with the aid of power in the open pan process by employing large number of employees to whom the Industrial Disputes Act, Minimum Wages Act, Factories Act, Employees Provident Fund Act and similar enactments apply is an industrial product which is very different from khandsari produced by agriculturists of sugarcane growers in the old indigenous method.
According to section 2(d) of the Sugarcane (Control) Order, 1966 khandsari sugar means sugar produced by the open pan process.
According to section 2(f) of the U.P. Khandsari Sugar Manufacturers Licensing Order, 1967 khandsari means sugar containing more than 90 per cent sucros and manufactured by the open pan process.
Section 3 of that Order makes it obligatory to obtain a licence for the manufacture of khandsari sugar.
Section 3(4) (a) of that Order regulates the khandsari sugar manufacturing industry in the best interest of that industry.
As mentioned above, it is admitted that no licence is necessary for the manufacture of khandsari by the agriculturists or producers of sugarcane in the indigenous method without the use of power.
It is not disputed that khandsari sugar produced by the petitioners is subject to excise duty under the Sugar (Special 983 Duty) Act, 1959.
Clause (ii) of section 2(c) of that Act illustrates one of the sugars not subjected to the duty, namely, palmyra sugar, that is to say, sugar manufactured from jaggery obtained by boiling the juice of palmyra palm.
The word 'sugar ' has been too broadly employed in the Sugar (Special Duty) Act, 1959.
But it is significant to note that in the Sugarcane (Control) Order, 1966 and the U.P. Khandsari Sugar Manufacturers Licensing Order, 1967, what is covered is khandsari sugar, whereas what has been introduced into s 2(a) of the Act by the Amendment Act 10 of 1970 is "khandsari".
Thus it would appear that what is sought to be subjected to the levy of market fee under the Adhiniyam is khandsari produced by the agriculturist or producer of sugarcane in the old indigenous method and not khandsari sugar produced by persons like the petitioners in their modern mills by the open pan process.
Mr. Lal Narain Sinha, appearing for the Parishad and Mr. Thakur appearing for the Market Committees have, in my view, conceded by their submission that khandsari is genus and khandsari sugar is a speci that what the petitioners produce in their mills by the open pan process is ` 'khandsari sugar" and not "khandsari".
Dr. Chitale appearing for the respondents in W. Ps.
13 8 60 of 1981 has also done so but in a slightly different way by saying that what the petitioners produce is khandsari, whether it is more or less refined than khandsari as such.
Mr. Sinha conceded in the course of his arguments that protection of the agricultural producer was the object when the original idea of the Adhiniyam started and he submitted that the object has now become widened and it is now not a legislation for protecting the interests of only agricultural producers and that it has become a marketing legislation under entry 28 of List II in the Seventh Schedule to the Constitution and industrial products also can be included in the schedule.
There is a further implied submission in this argument of Mr. Sinha that khandsari sugar is an industrial product as it undoubtedly is.
If the original idea as indicated in the prefatory note and preamble of the Adhiniyam was to protect the interests of agricultural producers in disposing of his products such as paddy, rice, silk, eggs, honey, fish and the like, and the Adhiniyam was enacted with that object in my view.
it cannot be converted into a general marketing legislation by the mere inclusion of industrial products, not possible of production by agricultural producers, either in the schedule or in the definition of agricultural produce in section 2 (a) of the Adhiniyam.
Therefore, it is not possible to accept the argument of Mr. Sinha that the Adhiniyam originally intended to protect the interests of agricultural producers has become a marketing legislation under 984 entry 28 of List II in the Seventh Schedule by the mere fact of inclusion of one or more industrial products in the definition of agricultural produce in s 2 (a) of the Adhiniyam.
Mr. Thakur submitted that it is not the only purpose of the Adhiniyam to protect the interests of the agricultural producer that a number of other objects are sought to be achieved by the Adhiniyam and that if the object of the Adhiniyam was to protect the interests of agricultural producers alone, the levy of market foe would have been confined to first sales of agricultural produce.
Mr. Thakur would thus say that the only object of the Adhiniyam is not protection of the interests of the agricultural producer in the disposal of his products to his best advantage.
The question whether the levy of market fee under the Adhiniyam is at a single point or whether it is a multi point levy was not elaborated by Mr. Thakur.
Therefore, it is not possible to draw any inference from his submission based on the point of levy of market fee under the Act though it was pointed out by him that under the scheme of the Adhiniyam sales by producers to traders and by traders to other traders but not retail sales to consumers are subject to the levy of market fee provided that the produce sold is agricultural produce.
Mr. Thakur submitted that the levy under the Adhiniyam is on the khandsari trader and not on khandsari producer.
That would be 80 if the item with reference to which levy is made is one produced by an agricultural producer to protect whose interests the Adhiniyam has been enacted.
Khandsari sugar produced by the petitioners in their mills by the open pan process is not an agricultural produce but an industrial produce.
Mr. Thakur is right in his submission that the preamble could be looked into only in the case of ambiguity.
The prefatory note and the preamble can be looked into only in the present case as there is dispute between the parties on the question whether khandsari sugar" produced by the petitioners, which is not included in the schedule or definition of agricultural produce in the Adhiniyam, while "khandsari" is mentioned in the definition of agricultural produce in section 2(a) thereof can be the subject matter of levy of market fee under the Adhiniyam.
It is not possible to accept the submission of Dr Chitale that what the petitioners produce is an agricultural produce, be it more or less refined than khandsari.
What the petitioners produce in their modern mills by the open pan process is khandsari sugar, an industrial produce, and not an agricultural produce which is produced by agriculturists.
It is admitted by Dr. Chitale that the petitioners ' factories are working under licences and that it is not obligatory on agricultural producers producing khandsari in the indigenous method to obtain licences for producing the same.
985 Reference is made at page 3 in the judgment of my learned A brother Thakkar, J. in these Writ Petitions, to the judgment of a Division Bench of the Allahabad High Court in Special Appeal No. 175 of 1973 filed against the decision of a Single Judge of that court in W P. No. 4636 of 1969.
It is Annexure II to the counter affidavit of the Parishad in W.P. 1350 etc.
Of 1981.
The reliefs claimed in that Writ Petition were a writ of certioraris quashing the U.P. Ordinance 8 of 1979 which was replaced by the Amendment Act 10 of 1970 and a writ of mandamus directing the respondents State of Uttar Pradesh and others not to enforce the Ordinance against the petitioners therein.
The appellants in that case were commission agents carrying on business in the sale and purchase of gur, shakkar and khandsari in the New Mandi, Muzaffarnagar.
The State Government issued a notification dated 8.11.1968 under section 5 (1) of the Adhiniyam declaring their intention to regulate the sale and purchase of specified agricultural produce in the areas including the New Mandi, Muzaffarnagar.
That notification included among other things gur, rab, shakkar and khandsari.
After the issue of that notification the Mandi Samiti authorities required the writ petitioners in that case to obtain licences for carrying on their business in gur, rab, shakkar and khandsari.
Thereupon, a writ petition, out of which Special Appeal No. 49 of 1969 arose, was filed by one Nanak Chand, challenging the enforcement of the Adhiniyam against him.
In that appeal, decided on 11.3.1969 a Division Bench of the High Court held that gur, rab and jaggery are not agricultural produce within the meaning of section 2(a).
It was after that decision that Ordinance No. 8 of 1970 was promulgated including gur, rab, shakkar, khandsari and jaggery in section 2(a) of the Adhiniyam.
The points raised in the aforesaid Special Appeal No. 175 of 1973 were: (1) The State Legislature was not competent to enlarge the definition of agricultural produce so as to include gur, rab, shakkar, khandsari and jaggery within the term 'agricultural produce"; (2) The State Legislature had no legislative competence to enact the U P. Amendment Act 10 of 1970 as that Act was with reference to subject of industries the control of which lay with the Union Government as declared by Parliament by law to be expedient in the public interest within the meaning of entry 52 of List I to the Seventh Schedule; (3) The provisions of the Amendment Act 10 of 1970 are repugnant to the Industries Development and Regulation Act, 1951; (4) The provisions of the Amendment Act 10 of 1970 are discriminatory as vacuum pan sugar is not included in the definition of agricultural produce in section 2(a); and (5) The provisions of the Amendment Act 10 of 1970 infringe the fundamental right guaranteed by article 19(1) (f) and (g) of the Constitution.
986 The High Court held in Special Appeal No. 175 of 1973 relying upon this Court 's decision in Paunakram vs State of Punjab(l) that in view of the extended definition of agricultural produce after the Amendment Act 10 of 1970 an enquiry whether gur, rab, shakkar and khandsari are agricultural produce or not is beyond the purview of the Court and that there is no discrimination as there is essential U difference between gur, rab, shakkar and khandsari under one head and vacuum pan sugar on the other, as the former are manufactured by the open pan process and the latter is manufactured by the vacuum pan process and the vacuum pan process sugar industry is in existence since 1931 and involves big sugar factories whereas industries producing khandsari sugar by open pan process are of recent origin and those units carry on small scale business.
In my view, these may be good reasons for not subjecting khandsari sugar to the levy of market fee and subjecting plantation white sugar to the levy.
It is not necessary to refer to the decision of the High Court on the other three points.
It is sufficient to say that in my view that decision relates to the necessity to obtain a licence under the Adhiniyam for dealing in khandsari sugar and certain other commodities introduced into the definition of agricultural produce by the Ordinance which was replaced by the U.P. Amendment Act 10 of 1970 and it had nothing to do with the liability of khandsari sugar manufacturers sellers to pay market fee under the Adhiniyam.
In these circumstances, I hold that what the petitioners produce in their modern khandsari mills by the open pan process is khandsari sugar, an industrial product like plantation white sugar and not khandsari which is produced by agricultural producers in the indigenous method and that the levy of market fee on sales of khandsari sugar under the Adhiniyam is unwarranted as the Adhiniyam is intended for the protection of agricultural producers in the disposal of their products and only khandsari produced by agricultural producers is included in the definition of agriculture produce in section 2(a) thereof and not khandsari sugar.
On the question of discrimination, Mr. Shanti Bhushan submitted that plantation white sugar produced is by the vacuum pan process, in the same manner as khandsari sugar is produced by the open pan process and that there is 110 major difference between the two industrial products and there is discrimination in so far as plantation white sugar is not sought to be subjected to the levy of market fee under the Adhiniyam where only khandsari sugar is (1) AIR 1995 SC 187.
987 sought t 1 be subjected to the levy.
He submitted that the difference A in the process of manufacture alone is not a distinguishing factor and that the difference in the process of manufacture cannot be a ground for holding that there is no discrimination if the levy could be made on khandsari sugar under the Adhiniyam, leaving plantation white sugar out of its purview.
He further submitted that plantation white sugar is produced in larger quantity than khandsari sugar and that traders in plantation white sugar also derive advantage by the use of the market area in the whole of the State of Uttar Pradesh which has been divided into 250 market areas and no part of that State is left uncovered by the Adhiniyam.
In this connection, Mr. Shanti Bhushan invited the attention of this Court to the decision in Laksmi Khandsari etc.
vs State of U.P. and Ors.(l) where it is observed at page 94 that the restriction may be partial, complete, permanent or temporary but this must bear a close nexus with the object sought to be achieved.
As stated earlier, Mr. Sinha submitted that the two products must be identical for attracting the bar of article 14 of the Constitution and that similarity alone will not do.
But it must be remembered that the Adhiniyam is concerned with the levy of market fee on a variety of products, namely, agricultural produce and that if khandsari sugar produced by the petitioners in their mills by the open pan process out of sugarcane juice could be brought under the purview of the Adhiniyam it is difficult to understand how plantation white sugar for the production of which also sugarcane is the raw material could be exempted from the levy.
The levy of market fee could not be said to depend upon the exact chemical composition of the commodity.
Mr. Thakur submitted that plantation white sugar produced by the vacuum pan process does not require regulation and, therefore, there is no discrimination in not subjecting it to the levy under Adhiniyam.
Similarly, Dr. Chitale submitted that whatever was considered necessary to be regulated was brought under the Adhiniyam and that there is no discrimination.
It is not possible to accept this submission of Mr. Thakur and Dr. Chitale.
Plantation white sugar does not require less regulation than khandsari sugar.
Reference was made to this Court 's decision in Andhra Sugars Ltd. and Anr.
v State of Andhra Pradesh and Ors.(2) where it has been held that factories producing plantation white sugar by the vacuum pan (1) ; at 94.
(2) ; 988 process and khandsari units producing sugar by the open pan process are distinct and separate units.
That case related to imposition of tax on sugar and exemption of khandsari and jaggery from the levy.
The principle underlying the levy of tax cannot be made applicable to the levy of market fee under the Adhiniyam.
Both plantation white sugar and khandsari sugar are industrial products and there is clear discrimination, in my view, against khandsari sugar in seeking to subject it to the levy under the Adhiniyam leaving out plantation white sugar.
For the reasons mentioned above I am of the opinion that the Writ Petitions deserve to succeed They are accordingly allowed but without any order as to costs.
THAKKAR, J.
The petitioners in the Present group of fourteen Writ petitions under Art 32 of the Constitution of India, are owners of Khandsari factories in Uttar Pradesh They seek appropriate relief on the premise that what they produce is 'Khandsari Sugar ' and not 'Khandsari which is covered by the definition of 'Agricultural Produce ' in section 2(a) of U.P. Krishi Utpadan Mandi Adhiniyam Act, 1964 (hereinafter referred to as the 'Act ') which read as under: "agricultural produce" means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture; animal husbandry or forest as are specified in the Schedule, and includes admixture of two or more of such items, and also includes any such item in processed form, and further includes gur, rab, shakkar, khandsari and jaggery; Accordingly they contend that they are not liable to obtain a licence under Rule 67 of the Rules framed in exercise of powers under section 40 of the Act or to pay the licence fees (Rs. 100 per annum) payable for such licence.
So also they contend that the Market Committee (Mandi Samiti) constituted under section 12 of the Act cannot levy and collect market fee of I % of the value, under section 17 (iii) of the Act, on the transactions in respect of what they produce, from the traders who purchase the product from them.
Resistance to the regulation of the trade in 'Khandsari ' and the collection of market fees thereon dates back to 1969.
It was on November 5, 1969 that an Ordinance, U.P. Krishi UtPadan Mandi 989 Adhiniyam, 1964 (Amendment and validation Ordinance No. 1969) A was passed, where under, the definition of 'agricultural produce ' embodied in section 2(a) of the Act was amended by including 'gur, rab, shakkar, khandsari and jaggery '.
The said Ordinance was subsequently converted into U.P. Krishi Utpadan Mandi (Amendment and Validation) Act of 1970.
Thus, 'Khandsari ' stood covered by the definition of section 2(a) of the Act SO amended.
And this provided the starting point of resistance in the form of a Writ Petition on the part of a few Commission Agents carrying on the business of sale and purchase of Khandsari.
They instituted a Writ Petition, being Misc.
Writ Petition No. 4835 of 1969 in the High Court of Allahabad, challenging the validity of the inclusion of 'Khandsari ' in the definition of 'agricultural produce ' contained in section 2(a).
The challenge was made on several grounds but no distinction was sought to be made between Khandsari produced indigenously on the one hand and Khandsari produced in the factories like the petitioners ' factories on the other hands by calling the latter as 'Khandsari Sugar '.
A learned single judge, by his judgment and order dated February 18, 1972, repelled the challenge and dismissed the Writ Petition.
A Division Bench of the Allahabad High Court confirmed the decision in Special Appeal No. 175 of 1973 on September 7, 1977.
The matter appears to have rested there till 1981.
Market fees were being collected in respect of 'Khandsari ' produced by the factories like the Petitioners ' factories under the Act ever since 1969 70.
So also the factory owners were obtaining the requisite licence under the Act since 1969 70 Eleven years later, some of the factory owners, petitioners herein, have woken up to the problem and have renewed the challenge by way of the present petitions.
The definition embodied in section 2(a) of the Act is an inclusive one.
It in terms provides that 'Khandsari is included within the coverage of "agricultural produce" The Act however does not define the term 'Khandsari '.
The owners of the 'Khandsari factories ', petitioners herein, therefore contend that what they produce is "Khandsari Sugar" and not 'Khandsari '.
But then it is not Q sufficient for the petitioners to describe their product as "Khandsari Sugar" in order to successfully contend that it is not 'Khandsari '.
It is further more necessary for them to show that they produce is popularly or commercially known as "Khandsari Sugar" and not as 'Khandsari '.
And this they have failed to establish.
It is not shown that "Khandsari Sugar" is the nomenclature employed in the 990 world of trade and commerce in respect of their product.
Neither the traders, nor the consumers are shown to have done so in their day to day dealings.
It appears that the term "Khandsari Sugar" owes its origin to U.P. KHANDSARI SUGAR MANUFACTURING ORDER of 1977 issued under section 3 of the , 1955.
But then "Khandsari Sugar" was defined by clause 2(f) of the said order as meaning "sugar containing more than 90% sucrose and manufactured by open pan process including bels.
" It is a statutory definition enacted for the 'purpose ' of the aforesaid Control Order issued under section 3 of the which Control Order uses the expression 'Khandsari Sugar '.
It has nothing to do with the meaning and content of the term 'Khandsari as used by the trade in U.P.
Since the term 'Khandsari ' has not been defined by the Act, it must be construed in its popular sense.
That is to say in the sense in which people conversant with the subject matter with which the statute is dealing, would attribute to it.
This principle of construction has been affirmed and reaffirmed by this Court in Commissioner of Income tax, Andhra Pradesh vs Taj Mahal Hotel(1) and Porrits & Spencer (Asia) Ltd. vs State of Haryana(Z) as also in numerous other decisions.
It is unnecessary for the present purpose to cite all the decisions.
Or to undertake a journey through the factual hinterland of each decision.
Or to turn the headlights on the observations made in each of the decisions.
For, the principle, though garbed in different apparel, is simply this.
In legislations pertaining to the world of business and commerce, the dictionary to refer to is the dictionary of the inhabitants of that world.
What they understand by the term 'Khandsari ' is precisely what that term means in the statute designed to regulate their dealings and transactions The best test, therefore, is to ask the question what they themselves have understood by the term 'Khandsari ', how they themselves have interpreted it, and on what basis they themselves have moulded their own conduct, for all these years.
The factory owners similarly situated as petitioners as also the traders in general have understood the term 'Khandsari ' as being applicable to the Khandsari produced by the factories by open pan process as also to Khandsari produced indigenously.
They have been obtaining licence under the Act and paying market (1) at p. 47.
(2) ; 991 fee at 1% of the value since 1969 70 till 1981 without demur.
even A though the coverage of 'Khandsari ' by virtue of the definition of section 2(a) as amended in 1969 70 was challenged in 1969 it was not on this ground.
As mentioned earlier, the challenge initiated in 1969 ended in 1979 with the decision of the Division Bench of the Allahabad High Court rendered in Special Appeal No 175 of 197 3.
A copy of this judgment has been placed on record of the present group of petitions at annexure II.
[t is not necessary to advert to the judgment in detail for the purposes of the discussion of the present point.
Suffice it to say that the challenge was made on five grounds indicated in the judgment and that none of these grounds pertained to the aspect relating to the meaning and content of the term 'Khandsari '.
Thus, for more then ten years even the petitioners have not felt that 'Khandsari ' means something other than what they produce.
The petitioners have not established that their produce is marketed under a different name in the market.
There is no material for holding that the petitioners sell their product under the name "Khandsari Sugar" to the traders.
Or that the traders inter se in transacting their business refer to the same as Khandsari Sugar.
Or that any consumer desirous of purchasing factory produced Khandsari would ask for "Khandsari Sugar".
I is not shown that either the petitioners or the traders or the consumers refer to the product as "Khandsari Sugar".
Nor is it shown that it is not marketed under the name 'Khandsari '.
In other words, it is not shown that in the popular or commercial sense, the product is not known as 'Khandsari ', but is known as Khandsari Sugar.
In this context one significant fact needs to be stressed, namely, that the term "Khandsari Sugar" saw the light of day seven years after the Act was enacted in 1970 when U.P Khandsari Sugar Order of 1977 was born and the artificial nomenclature was coined for the restricted purpose of the Order.
There is no material even to show that this nomenclature was known to the petitioners or to the traders themselves there to before The contention that the article produced by the petitioners is not Khandsari must, therefore, be firmly and unhesitatingly negatived.
The legislature, it is also argued, 'could not have intended ' to cover the produce turned out by producers like the petitioners The principal object of the Act is to protect the producers from exploitation.
Those who own or run Khandsari units, like the petitioners, engaged in large scale production with the aid of relatively modern plant and machinery worth lacs of rupees, and employ a large number of workers, need no such protection.
Such is the 992 argument.
In our opinion the argument is untenable.
The legislature has in terms encompassed 'Khandsari ' within the definition of section 2(a) of the Act.
And the term 'khandsari ' is sufficiently wide to cover all varieties of Khandsari including the article produced by the factories like those of the petitioners.
Besides, the basic premise assured by the petitioners that the object of the Act is merely to protect the producers from exploitation is fallacious.
Of course, one of the main objects of the Act is to protect the producers from being cheated by unscrupulous traders in the matter of price, weight, payment, unlawful market charges etc.
and to render them immune from exploitation as indicated by the 'prefatory note ' and by the provisions contained in sections 16(i), (ii), (iii), (iv), (viii) etc.
While this is one of the objects of the Act, it is not the sole or only object of the Act.
The Act has many more objects and a much wider perspective such as development of new market areas, efficient collection of data, and processing of arrivals in Mandis with a view to enable the World Bank to give substantial economic assistance to establish various markets in Uttar Pradesh, as also protection of consumers and even traders from being exploited in the matter of quality, weight and price This needs no elaboration in view of the pronouncements of this Court.
For instance in Ramesh Chandra vs State of U.P.(1) this Court has observed thus: "The long title of the Act in indicates that it is an Act "to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence, and control of markets therefor in Uttar Pradesh." From the Objects and Reasons of the enactment it would appear that this Act was passed,for the development of new market areas and for efficient data collection and processing of arrivals in the Mandis to enable the World Bank to give a substantial help for the establishment of ' various markets in the state of Uttar Pradesh.
In other States the Act is mainly meant to protect an agriculturist producer from being exploited when he comes to the Mandis for selling his agricultural produce.
As pointed out by the High Court certain other transactions also have been roped in the levy of the fee, in which both sides are traders and neither side is an agriculturist.
This has been done for the effec (1) ; 993 tive implementation of the scheme of establishment of markets mainly for the benefit of the producers. " And in Ramesh Chandra Chandra Kaehardas Porwal & Ors vs State of Maharashtra & Ors.
etc.(1) it has been stated that: "It is true that one of the principal objects sought to be achieved by the Act is the securing of a fair price to the agriculturist for his produce, by the elimination of middle men and other detracting factors.
But, it would be wholly incorrect to say that the only object of the ,Act is to secure a fair price to the agriculturist.
As the long title of the Act itself says, the Act is intended to regulate the marketing of agricultural and certain other produce.
The marketing of agricultural produce is not confined to the first transaction of sale by the producer to the trader but must necessarily include all subsequent transactions in the course of the movement of the commodity into the ultimate hands of the consumer, 80 long, of course, as the commodity retains its original character as agricultural produce.
While middlemen are sought to be eliminated, it is wrong to view the Act as one aimed at legitimate and genuine traders.
Far from it.
The regulation and control order is as much for their benefit as it is t`or the benefit of the producer and the ultimate consumer.
The elimination of middlemen is as much in the interest of the trader as it is in the interest of the producer.
Promotion of grading and standardisation of agricultural produce is as much to his benefit as to the benefit of the producer or consumer.
So also proper weighment.
The provision for settlement of disputes arising out of transactions connected with the marketing of agricultural produce and ancillary matters is also for the benefit of the trader.
It is because of these and various other services performed by the Market Committee for the benefit of the trader that the trader is required to pay a fee.
It is, therefore, clear that the regulation of marketing contemplated by the Act involves benefits too traders to in a large way.
It is also clear to our mind that the regulation of marketing of agricultural produce, if confined to the sales by producers within the market area to traders, will very soon lead to its circum (1) 11981] 2 S.C.R. 866 994 vention in the guise of sales by traders to traders or import of agricultural produce from outside the market area to within the market area.
" In the face of these pronouncements it cannot be success fully urged that the object of the Act is merely to protect the producer from exploitation.
As pointed out in the aforesaid decisions, while the analogous Acts in other States had a limited perspective, so far as Uttar Pradesh is concerned, the Act has a much wider horizon, and even transactions where both the sides are traders and neither side is an agriculturist, are brought within the coverage of the Act.
There is, therefore, no merit in this nuance of the challenge.
The petitioners have next contended that having regard to the definition of 'Producer ' contained in section 2(p) of the Act, this Act could not have been intended to cover the article produced by them We do not see anything in the definition which would justify overriding the clear language of the statute read in the l) light of the perspective of the Act and the history of the levy.
While the term 'Khandsari ' has not been defined it is obviously wide enough to cover Khandsari produced by any process regardless of its quality or variety As discussed earlier, one of the objects of the Act inter alia is to protect the consumer as also the trader.
We need not reiterate the reasoning articulated by us a moment ago in dealing with the first facet of this argument.
The argument based on the supposed intendment of the Act.
in our opinion, is wholly misconceived.
We have, therefore, no hesitation in repelling this contention Lastly section 2(a) of the Act has been challenged on the ground that it is discriminatory and violative of article 14 They have contended that section 2(a) of the Act, in so far as it includes Khandsari in the definition of agricultural produce and thereby subjects the trade in the said product to regulation under the relevant provision of the Act is ultra vires Art 14 of the Constitution of India inasmuch as it introduces a hostile discrimination.
According to the petitioners, the article produced by them, which they call Khandsari sugar, is almost indistinguishable from the plantation sugar mills.
Whether the article produced by the petitioners is very much similar to plantation sugar or not is a moot question.
The other side has controverted this averment.
The process of manufacture is different.
The market price of Khandsari is lower depending on the quality.
995 The most inferior variety would be more like the Khandsari A produced by the indigenous process (yellowish in colour and powdery in form) and would fetch a lesser price in the market.
It would appear from the affidavit that the most superior variety might perhaps be approximate in appearance to the plantation sugar manufactured by the sugar mills but would all the same fetch a somewhat lesser price than the price fetched by plantation sugar It is a different commercial product known by a different name in the trade Be that as it may, the argument that unless both are regulated under the Act article 14 would be offended, is meritless.
This Court has had several occasions to deal with a similar problem in the context of taxing statutes And this Court has consistently taken the view that is the matter of classification the Legislature has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others.
Everything or nothing argument is basically fallacious.
For, the Legislature may tax or regulate the trade in some objects and not in others Or may bring within its net some objects initially and may cast the net wider later on Or may tax or regulate the trade in only such objects which it considers expedient or worthwhile.
The decision, essentially a policy decision, may depend on several factors.
Factors, such as, the felt necessity for such an impost or regulation of a trade in a particular article, likely impact of the decision on the trade, industry, or consumer, viability of the same from the stand point of its own management resources Or from the angle of the net advantage to be secured in the balance sheet of pros and cons taking into account the anticipated administrative and management inputs required to be invested in the exercise.
In substance, it is a policy decision turning on numerous and complex factors.
In East India Tobacco Co. vs State of Andhra Pradesh(t) this Court has quoted with approval the following passage from Willis on Constitutional Law(2): "A State does not have to tax everything in order to tax something.
It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonable .
The Supreme (1) [1963] 1 S.C.R 404 (2) Willis on Constitutional Law p. 857 996 Court has been practical and has permitted a very wide latitude In classification for taxation.
" And this Curt has turned down the plea that in order to respect Art 14, both varieties of tobacco (Virginia tobacco on the one hand and country tobacco on the other) must be taxed or none.
says the Court: "if a State can validly pick and choose one commodity for taxation and that is not open to attack under Article 14 the same result must follow when the State picks up one category of goods and subjects it to taxation.
" In the matter of market regulation also Khandsari and Mill sugar are governed by different regulations As a matter of fact mill sugar is subject to control and regulation of no mean order under Sugar (Control) Order of 1966 where under the sugar mills are obliged to make available a significant quantity of sugar by way of levy at stipulated prices which are very much lower than prevailing open market prices Khandsari ' produced by the petitioners was not subject to similar control, for all these years.
The producers of Khandsari like petitioners, it is obvious have benefited thereby.
It 15 true than for a short period Khandsari was also subjected to levy under Khandsari Sugar (Levy) Order of 1981 on a relatively small portion of its production That however makes little difference from the standpoint of challenge to section 2(a) of the Act on the ground that Mill sugar is not included in the definition of 'agricultural produce and not subjected to the provisions of the Act.
So also the mere fact that both are sweetening agents will not justify condemnation of the classification which is based on a totality of the factors of differentiation There is therefore no substance in the challenge from the standpoint of article 14 of the Constitution of India.
It is not for this Court to question why Khandsari produced by the petitioners is Included when sugar produced by the Mills Is not so included.
It is not a question to which we can legitimately address ourselves, for, essentially it is a question of legislative wisdom and legislative policy dictated by countless and complex considerations.
The Court cannot, and will not, substitute its own wisdom in place of the legislative wisdom in such matters.
The 997 Court will not impose on itself this responsibility, if not for any A other reason, than for the reason that it is beyond its province, The arguments advanced on this wavelength need not, therefore, detain us any a longer.
The petitions, accordingly, fail.
Rule issued in each of the petitions will stand discharged There will be no order regarding costs.
Interim orders will stand vacated.
In view of the majority decision, all the writ petitions are dismissed.
There will be no order regarding costs.
Interim orders will stand vacated.
| An Ordinance, U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (Amendment and Validation Ordnance No. 1969) passed on November 5, 1969 amended the definition of "agricultural produce" embodied in section 2(a) of the U P. Krishi Utpadan Mandi Adhiniyam Act 1964 and 'gur, rab, shakkar, khandsari and jaggery ' were included in the amended definition.
This Ordinance was subsequently converted into U.P. Krishi Utpadan Mandi (Amendment and Validation) Act 1970.
Thus 'Khandsari ' stood covered a by the definition of section 2 (a) of the Act so amended.
The petitioners, who are owners of Khandsari factories, have alleged that what they produce is "Khandsari Sugar" and not 'Khandsari ', which is covered by the definition of "agricultural produce".
It was contended; (1) that they are not liable to obtain a licence under Rule 67 of the Rules framed under s, 40 of the Act or to pay the licence fees (Rs. 100 per 967 annum) payable for such licence; (2) that the Market Committee (Mandi A Samiti) constituted under section 12 of the Act cannot levy and collect market fee of 1% of the value, under section 17(iii) of the Act, on the transactions in respect of what they produce, from the traders who purchase the product from them; and (l) that section 2 (a) of the Act is discriminatory and violative of Article 14 of the Constitution Dismissing the petitions, ^ HELD: (Per Majority) 1.
The definition embodied in section 2(a) of the Act is an inclusive one.
It in terms provides that 'Khandsari ' is included within the coverage of "agricultural produce".
The Act, however. does not define the term 'Khandsari '.
It is not sufficient to contend that what the petitioners produce is "Khandsari Sugar" and not 'Khandsari '.
It has also to be shown by them that what they produce is popularly or commercially known as "Khandsari Sugar" and not as "Khandsari".
And thus they have failed to establish.
It is not shown that "Khandsari Sugar" is the nomenclature employed in the world of trade and commerce in respect of their product.
Neither the traders, nor the consumers are shown to have done so in their day to day dealings.
[989F H; 990A] 1 2.
The term 'Khandsari Sugar" owes its origin to U.P. KHANDSARI SUGAR MANUFACTURING ORDER of 1977 issued under section 3 of the ESSENTlAL COMMODITIES ACT, 1955.
"Khandsari Sugar" was defined by cl. 2(f) of the said Order as meaning "sugar containing more than 90% sucrose and manufactured by open pan process including bels.
" It is a statutory definition enacted for the 'purpose ' of the aforesaid Control Order which uses the expression "Khandsari Sugar".
It has nothing to do with the moaning and content of the term Khandsari ' as used by the trade in U.P. [990B C] 2.
(i) It is unnecessary for the present purpose to cite all the decisions.
Or to undertake a journey through the factual hinterland of each decision.
Or to turn the headlights on the observations made in each of p the decisions.
For, the principle, though Barbed in different apparel, is simply this.
In legislations pertaining to the world of business and commerce, the dictionary to refer to is the dictionary of the inhabitants of that world.
What they understand by the term 'Khandsari ' is precisely what that term means in the statute designed to regulate their dealings and transactions.
The best test therefore is to ask the question what they themselves have understood by the term Khandsari, bow they themselves have interpreted it, and on what basis they themselves have moulded their own conduct, for all these years.
The factory owners similarly situated as petitioners as also the traders in general have understood the term 'Khandsari ' as being applicable to the Khandsari produced by the factories by open pan process as also to Khandsari produced indigenously.
[990E G] Commissioner of Income tax, Andhra Pradesh v Taj Mahal Hotel, at p. 47 and Porrits & Spencer (Asia) Ltd. vs State of Haryana, [1979] I S.C.R. 545, relied on.
968 2.
(ii) Inclusion of Khandsari in the definition of "agricultural produced by virtue of amendment of section 2(a) was challenged by a few commission agents carrying on business of sale and Purchase of Khandsari in 1969 by instituting writ petitions in the High Court of Allahabad.
ever, none of the grounds of challenge pertained to the aspect relating to the meaning and content of the term Khandsari '.
The petitions were dismissed by a Single Judge and that decision was confirmed by the Division Bench.
[989C D] 2.
(iii) Factory owners producing Khandsari have been obtaining licence under the Act and paying, without demur, market fee at 1% of the value since 1969 70 till 1981, when fresh challenge was made through the instant petitions.
For more than ten years even the petitioners have not felt that 'Khandsari ' means something other than what they produce.
It is not shown that in the popular or commercial sense, the product is not known as Khandsari ' but is known as Khandsari Sugar".
The term "Khandsari Sugar" saw the light of day seven years after the Act was enacted in 1970 when U.P. Khandsari Sugar Order of 1977 was born and the artificial nomenclature was coined for the restricted purpose of the order.
There is no material even to show that this nomenclature was known to the petitioners or to the traders themselves there to before.
[990H; 991C; E F] 3.
The Legislature has in terms encompassed 'Khandsari ' within the definition of section 2(a) of the Act.
And the term 'Khandsari ' is sufficiently wide to cover all varieties of Khandsari including the article produced by the factories like those of the petitioners.
Besides, the basic premise assumed by the petitioners that the object of the Act is merely to protect the producers from exploitation is fallacious.
This is one of the objects and not the sole or only object of the Act.
The Act has many more objects and a much wider horizon, and oven transactions where both the sides are traders and neither side is agriculturist, are brought within the coverage of the Act.
[992A D] Ramesh Chandra vs State of U.P., ; and Ramesh Chandra Kachardas Porwal & Ors.
v State of Maharashtra & Ors.
; , , relied on.
There is nothing in the definition of 'Producer ' contained in section 2(p) of the Act which would justify overriding the clear language of the statutes read in the light of the perspective of the Act and the history of the levy.
While the term 'Khandsari ' has not been defined, it is obviously wide enough to cover Khandsari produced by any process regardless of its quality or variety [994D E] 5.
This Court has had several occasions to deal with a similar problem in the context of taxing statutes.
And this Court has consistently taken the view that in the matter of classification the Legislature has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. 'Everything or nothing ' argument is basically fallacious.
For, the Legislature may tax or regulate the trade in some 969 Objects and not in others.
Or may bring within its net some objects A initially and may cast the net wider later on.
Or may tax or regulate the trade in only such objects which it considers expedient or worthwhile.
The decision essentially a policy decision, may depend on several factors.
Factors, such as, the felt necessity for such an impost or regulation of a trade in a particular article, likely impact of the decision on the trade, industry, or consumer, viability of the same from the stand point of its own management resources.
Or from the angle of the net advantage to be secured in the balance sheet of pros and cons taking into account the anticipated administrative and management inputs required to be invested in the exercise.
In substance, it is a policy decision turning on numerous and complex factors.
[99B E] 5 (i) It is not for this court to question why Khandsari produced by the petitioners is included when sugar produced by the Mills is not so included.
It is not a question to which we can legitimately address ourselves, for, essentially it is a question of legislative wisdom and legislative policy dictated by countless and complex considerations.
The Court cannot, and will not substitute its own wisdom in place of the legislative wisdom in such matters.
The Court will not impose on itself this responsibility, if not for any other reason, than for the reason that it is beyond its province.
Hence section 2(a) of the Act is not discriminatory and violative of Article 14.
[996G H; 997Al East India Tobacco Co. vs State of Andhra Pradesh, [1963] I S.C R. 404, relied on.
Willie on Constitutional Law p. 857, referred to.
Per A. Varadarajan, J (Dissenting) 1.
What the petitioners, produce in their modern Khandsari mills by the open pan process is Khandsari sugar, an industrial product like plantation white sugar and not Khandsari which is produced by agricultural producers in the indigenous method and the levy of market fee on sales of khandsari sugar under the Adhiniyam is unwarranted as the Adhiniyam is intended for the protection of agricultural producers in the disposal of their products and only Khandsari produced by agricultural producers is included in the definition of agricultural produce" in section 2(a) thereof and not Khandsari sugar.
[986P G] 2.
A manufacturer producing Khandsari Sugar by the modern method in the open pan process is not a producer within the meaning of section 2(p) of the Adhiniyam.
[980E] 3.
The object of the Adhiniyam as seen from the prefatory note and preamble is to protect the agricultural producer from exploitation.
Protection of any industrial producer is not the object of the Adhiniyam.
[979G] 4.
The Khandsari sugar produced by the petitioners in their mills with the aid of power in the open pan process by employing large number of employees to whom the Industrial Disputes Act, Minimum Wages Act, Factories Act.
Employees Provident Fund Act and similar enactments apply 970 is an industrial product which is very different from Khandsari produced by agricultural or sugarcane growers in the old indigenous method.
[982E F] 5.
The Adhiniyam originally intended to protect the interests of agricultural producers has not become a marketing legislation under entry 28 of List II in the Seventh Schedule by the mere fact of inclusion of one or more industrial products in the definition of agricultural produce in section 2(a) of the Adhiniyam.
[983H; 984A] 6.
The prefatory note and the preamble can be looked into in the present case as there is dispute between the parties on the question whether "Khandsari sugar" produced by the petitioners, which is not included in the schedule or definition of agricultural produce in the Adhiniyam, while "Khandsari" is mentioned in the definition of agricultural produce in section 2(a) thereof can be the subject matter of levy of market fee under the Adhiniyam.
[984F G] 7.
The principle underlying the levy of tax cannot be made applicable to the levy of market fee under the Adhiniyam.
Both Plantation While Sugar and Khandsari Sugar are industrial products and there is discrimination against Khandsari Sugar in seeking to subject it to the levy under the Adhiniyam leaving out plantation White Sugar [988B] Laxmi Khandsari Etc.
vs State of U.P. & others; , Paunakram vs State of Punjab, AIR 1975 SC 187 and Andhra Sugars ltd.& Anr. etc.
vs State of Andhra Pradesh & Ors., [1968] I SCR, 705 referred to.
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